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GAMCO Investors, Inc. Reports Results for the First Quarter 2024

  • Quarter End AUM of $31.7 billion; Average AUM of $30.7 billion for the First Quarter
  • Operating Margin of 27.0% for the First Quarter
  • First Quarter Fully Diluted EPS of $0.64 versus $0.62 in the First Quarter of 2023
  • Gabelli U.S. Treasury Fund surpassed $5.0 billion of AUM in April
  • $221.1 million in Cash, Cash Equivalents, and Investments with no Debt
  • Declared Regular Quarterly Dividend of $0.04 per share and a Special Dividend of $0.20 per share

GREENWICH, Conn., May 08, 2024 (GLOBE NEWSWIRE) -- GAMCO Investors, Inc. (“GAMI”) (OTCQX: GAMI) today reported its operating results for the quarter ended March 31, 2024.

Financial Highlights

(In thousands, except percentages and per share data)              
    Three Months Ended   % Change From  
    March 31, 2024   December 31, 2023   March 31, 2023   December 31, 2023   March 31, 2023  
U.S. GAAP                      
Revenue   $ 56,945     $ 57,313     $ 59,906     -0.6 %   -4.9 %  
Expenses     41,597       41,517       43,508     0.2 %   -4.4 %  
Operating income     15,348       15,796       16,398     -2.8 %   -6.4 %  
Non-operating income     4,372       6,199       1,924     -29.5 %   127.2 %  
Net income     15,810       16,560       15,897     -4.5 %   -0.5 %  
Diluted earnings per share   $ 0.64     $ 0.66     $ 0.62     -3.0 %   3.2 %  
Operating margin     27.0 %     27.6 %     27.4 %   (60) bps   (40) bps  
                       


Giving Back to Society - $75 million since IPO

Since our initial public offering in February 1999, our firm’s combined charitable donations total approximately $75 million, including $48 million through the shareholder designated charitable contribution program. Based on the program created by Warren Buffett at Berkshire Hathaway, our corporate charitable giving is unique in that the recipients of GAMI’s charitable contributions are chosen directly by our shareholders, rather than by our corporate officers. Since its inception in 2013, GAMI shareholders have designated charitable gifts to approximately 350 charitable organizations.

Revenue

(In thousands)   Three Months Ended          
    March 31, 2024   March 31, 2023   $ Change   % Change  
Investment advisory and incentive fees                  
Fund revenues   $ 37,270   $ 37,467   $ (197 )   -0.5 %  
Institutional and Private Wealth Management     15,196     15,337     (141 )   -0.9 %  
SICAV     6     2,191     (2,185 )   -99.7 %  
Total   $ 52,472   $ 54,995   $ (2,523 )   -4.6 %  
Distribution fees and other income     4,473     4,911     (438 )   -8.9 %  
Total revenue   $ 56,945   $ 59,906   $ (2,961 )   -4.9 %  
                   

The modest quarter over quarter decline in Funds and Institutional and Private Wealth Management revenues was primarily the result of lower average equity assets under management in those areas. The decline in the SICAV revenues relates to a change in the agreement for the merger arbitrage SICAV.

Expenses

(In thousands)   Three Months Ended          
    March 31, 2024   March 31, 2023   $ Change   % Change  
Compensation   $ 28,554   $ 29,186   $ (632 )   -2.2 %  
Management fee     2,191     2,036     155     7.6 %  
Distribution costs     5,950     6,473     (523 )   -8.1 %  
Other operating expenses     4,902     5,813     (911 )   -15.7 %  
Total expenses   $ 41,597   $ 43,508   $ (1,911 )   -4.4 %  
                   
  • The lower compensation expense in the first quarter of 2024 reflected lower variable compensation ($1.0 million), partially offset by higher fixed compensation ($0.2 million) and stock-based compensation ($0.2 million).
  • The $0.2 million increase in management fee is attributable to the higher pre-management fee income of $1.6 million.
  • Lower open-end fund equity assets led to year over year decline in distribution costs; and,
  • Other operating expenses this quarter were lower versus the first quarter of 2023 reflecting the change in the agreement for the merger arbitrage SICAV.

Operating Margin

The operating margin, which represents the ratio of operating income to revenue, was 27.0% for the first quarter of 2024 compared with 27.4% for the first quarter of 2023.

Non-Operating Income

(In thousands)   Three Months Ended          
    March 31, 2024   March 31, 2023   $ Change   % Change  
Gain / (loss) from investments, net   $ 1,632     $ 561     $ 1,071   190.9 %  
Interest and dividend income     3,033       1,661       1,372   82.6 %  
Interest expense     (293 )     (298 )     5   -1.7 %  
Total non-operating income   $ 4,372     $ 1,924     $ 2,448   127.2 %  
                   

Non-operating income increased $2.4 million for the quarter, reflecting the higher mark-to-market values on our investment portfolio for the quarter and the higher earnings on our cash and cash equivalents balances.

Other Financial Highlights

The effective income tax rate for the first quarter of 2024 was 19.8% versus 13.2% for the first quarter of 2023. The increase in the effective income tax rate for the first quarter of 2024 was due to decreased reversals of prior year uncertain tax accruals.

Cash, cash equivalents, and investments were $221.1 million with no debt at March 31, 2024.

Assets Under Management

(In millions)   As of   % Change  
    March 31, 2024   December 31, 2023   March 31, 2023   December 31, 2023   March 31, 2023  
                       
Mutual Funds   $ 8,235   $ 7,973   $ 8,288   3.3 %   -0.6 %  
Closed-end Funds     7,313     7,097     7,155   3.0 %   2.2 %  
Institutional & PWM (a) (b)     11,146     10,738     10,764   3.8 %   3.5 %  
SICAV (c)     9     631     824   -98.6 %   -98.9 %  
Total Equities     26,703     26,439     27,031   1.0 %   -1.2 %  
                       
100% U.S. Treasury Money Market Fund     4,965     4,615     3,609   7.6 %   37.6 %  
Institutional & PWM Fixed Income     32     32     32   0.0 %   0.0 %  
Total Treasuries & Fixed Income     4,997     4,647     3,641   7.5 %   37.2 %  
Total Assets Under Management   $ 31,700   $ 31,086   $ 30,672   2.0 %   3.4 %  
                       
(a) Includes $345, $370, and $460 of AUM subadvised for Teton Advisors, Inc. at March 31, 2024, December 31, 2023, and March 31, 2023, respectively.
(b) Includes $225, $227, and $224 of 100% U.S. Treasury Money Market Fund AUM at March 31, 2024, December 31, 2023,and March 31, 2023, respectively.
(c) Includes $0, $620, and $812 of the SICAV AUM subadvised by Associated Capital Group, Inc. at March 31, 2024, December 31, 2023, and March 31, 2023, respectively.  
                       

Assets under management on March 31, 2024 were $31.7 billion, an increase of 2.0% from the $31.1 billion on December 31, 2023 reflecting general market trends. The quarter’s increase consisted of net market appreciation of $1.7 billion, net outflows of $422 million, distributions, net of reinvestments, of $131 million, and the reclassification of $620 million of SICAV AUM to assets under administration (“AUA”).

Assets Under Administration

(In millions)   As of   % Change  
    March 31, 2024   December 31, 2023   March 31, 2023   December 31, 2023   March 31, 2023  
                       
Mutual Funds   $ 952   $ 964   $ 1,059   -1.2 %   -10.1 %  
SICAV     580     -     -   n/m   n/m  
Total Assets Under Administration $ 1,532   $ 964   $ 1,059   58.9 %   44.7 %  
                       

AUA on March 31, 2024 were $1.5 billion, as compared to $964 million at December 31, 2023. The first quarter’s increase includes the reclassification of $620 million of SICAV assets from AUM to AUA.

100% U.S. Treasury Money Market Fund

Assets under management in our 100% U.S. Treasury Money Market Fund (GABXX) on March 31, 2024 were $5.0 billion, up from $4.6 billion at December 31, 2023.

Gabelli U.S. Treasury Money Market Fund

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/b193a1c9-10c8-4262-82c9-a013bf327546

Mutual Funds

Assets under management in Mutual Funds on March 31, 2024 were $8.2 billion, an increase of 3.3% from the $8.0 billion at December 31, 2023. The quarterly change was attributed to:

  • Net outflows of $256 million;
  • Net market appreciation of $523 million; and
  • Distributions, net of reinvestment, of $5 million.

Closed-end Funds

Assets under management in Closed-end Funds on March 31, 2024 were $7.3 billion, an increase of 3.0% from the $7.1 billion on December 31, 2023. The quarterly change was comprised of:

  • Net outflows of $62 million, consisting of the redemption of $90 million of preferred shares and $13 million of common stock repurchased by the Funds less the issuance of $41 million preferred shares;
  • Net market appreciation of $404 million; and
  • Distributions, net of reinvestment, of $126 million.

Institutional & PWM

Assets under management in Institutional & PWM on March 31, 2024 were $11.1 billion, an increase of 3.8% from the $10.7 billion on December 31, 2023. The quarterly change was due to:

  • Net market appreciation of $770 million, offset by
  • Net outflows of $362 million.

SICAV

Assets under management in SICAV on March 31, 2024 were $9 million, compared with the $631 million on December 31, 2023. The quarterly change was comprised as follows:

  • Reclassification of $620 million to AUA; and
  • Net outflows of $32 million; and
  • Net market depreciation of $10 million.

Balance Sheet Information        

As of March 31, 2024, cash and cash equivalents were $171.2 million and investments were $49.9 million, compared with cash and cash equivalents of $166.0 million and investments of $38.9 million as of December 31, 2023. As of March 31, 2024, stockholders’ equity was $189.3 million compared to $181.0 million as of December 31, 2023.

Return to Shareholders

During the first quarter of 2024, GAMI paid a dividend of $0.04 per share for a total of $1.0 million and purchased 321,089 shares for $6.4 million at an average investment of $19.92 per share. From April 1, 2024 to May 8, 2024, the Company has purchased 154,749 shares at an average investment of $22.19 per share. On May 7, 2024, the Board of Directors increased the buyback authorization by 500,000 shares to 885,170 shares.

On May 7, 2024, GAMI’s board of directors declared a regular quarterly dividend of $0.04 per share and a special dividend of $0.20 per share, which are payable on June 25, 2024, to class A and class B shareholders of record on June 11, 2024.

Symposiums

  • On February 22nd, we hosted our 34th Annual Pump, Valve & Water Systems Symposium. The symposium focused on themes crucial to this industry, including infrastructure spending, resource security, conservation, and M&A.
  • On March 14th, we hosted our 15th Annual Specialty Chemicals Symposium. The symposium featured presentations from senior management of leading specialty chemicals companies, with a focus on pricing power, margin recovery, interest rates, destocking, global supply chain, global demand trends, and the M&A environment.
  • On April 4th, we hosted the 10th Annual Waste & Environmental Services Symposium. The conference featured presentations by senior management of several leading companies, with a focus on the themes of waste, water treatment, and the environment.
  • In addition to the above, we hosted the following during 2023:
    • 47th Automotive Aftermarket Symposium (October 30)
    • 29th Aerospace & Defense Symposium (September 7)
    • 17th Berkshire Hathaway Annual Meeting Research Trip (May 5)
    • 15th Entertainment & Broadcasting Conference (June 3)
    • 5th Healthcare Symposiums (November 17)
    • 1st PFAS Symposium (September 28)

About GAMCO Investors, Inc.

GAMI is best known for its research-driven value approach to equity investing (known as PMV with a Catalyst™). GAMI conducts its investment advisory business principally through two subsidiaries: Gabelli Funds, LLC (24 open-end funds, 14 closed-end funds, 5 actively managed semi-transparent ETFs, and a SICAV) and GAMCO Asset Management Inc. (approximately 1,400 institutional and private wealth separate accounts). GAMI serves a broad client base including institutions, intermediaries, offshore investors, private wealth, and direct retail investors. In recent years, GAMI has successfully integrated new teams of RIAs by providing attractive compensation arrangements and extensive research capabilities.

GAMI offers a wide range of solutions for clients across Value and Growth Equity, Convertibles, actively managed semi-transparent ETFs, sector-focused strategies including Gold and Utilities, Merger Arbitrage, Fixed Income, and 100% U.S. Treasury Money Market.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Our disclosure and analysis in this press release, which do not present historical information, contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements convey our current expectations or forecasts of future events. You can identify these statements because they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning. They also appear in any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance of our products, expenses, the outcome of any legal proceedings, and financial results. Although we believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know about our business and operations, the economy, and other conditions, there can be no assurance that our actual results will not differ materially from what we expect or believe. Therefore, you should proceed with caution in relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance.

Forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors, some of which are listed below, that are difficult to predict and could cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements. Some of the factors that may cause our actual results to differ from our expectations include risks associated with the duration and scope of the ongoing coronavirus pandemic resulting in volatile market conditions, a decline in the securities markets that adversely affect our assets under management, negative performance of our products, the failure to perform as required under our investment management agreements, and a general downturn in the economy that negatively impacts our operations. We also direct your attention to the more specific discussions of these and other risks, uncertainties and other important factors contained in our Annual Report and other public filings. Other factors that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We do not undertake to update publicly any forward-looking statements if we subsequently learn that we are unlikely to achieve our expectations whether as a result of new information, future developments or otherwise, except as may be required by law.

Gabelli Funds, LLC is a registered investment adviser with the Securities and Exchange Commission and is a wholly owned subsidiary of GAMCO Investors, Inc. (OTCQX: GAMI).

Investors should carefully consider the investment objectives, risks, charges and expenses of the fund before investing. The prospectus, which contains more complete information about this and other matters, should be read carefully before investing. To obtain a prospectus, please call 800 GABELLI or visit www.gabelli.com

Money Market Fund

Investment in the fund is neither guaranteed nor insured by the Federal Deposit Insurance Corporation or any government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time. You could lose money by investing in the fund.

GAMCO Investors, Inc. and Subsidiaries                      
Condensed Consolidated Statements of Operations (Unaudited)                
(in thousands, except per share data)                      
    Three Months Ended   % Change From  
    March 31, 2024   December 31, 2023   March 31, 2023   December 31, 2023   March 31, 2023  
Revenue:                      
Investment advisory and incentive fees   $ 52,472     $ 53,001     $ 54,995            
Distribution fees and other income     4,473       4,312       4,911            
Total revenue     56,945       57,313       59,906     -0.6 %   -4.9 %  
Expenses:                      
Compensation     28,554       27,316       29,186            
Management fee     2,191       2,444       2,036            
Distribution costs     5,950       5,848       6,473            
Other operating expenses     4,902       5,909       5,813            
Total expenses     41,597       41,517       43,508     0.2 %   -4.4 %  
Operating income     15,348       15,796       16,398     -2.8 %   -6.4 %  
Non-operating income:                      
Gain from investments, net     1,632       3,529       561            
Interest and dividend income     3,033       2,951       1,661            
Interest expense     (293 )     (281 )     (298 )          
Total non-operating income     4,372       6,199       1,924     -29.5 %   127.2 %  
Income before provision for income taxes     19,720       21,995       18,322     -10.3 %   7.6 %  
Provision for income taxes     3,910       5,435       2,425            
Net income   $ 15,810     $ 16,560     $ 15,897     -4.5 %   -0.5 %  
                       
Earnings per share attributable to common                    
stockholders:                      
Basic   $ 0.64     $ 0.66     $ 0.62     -3.0 %   3.2 %  
Diluted   $ 0.64     $ 0.66     $ 0.62     -3.0 %   3.2 %  
                       
Weighted average shares outstanding:                      
Basic     24,808       25,038       25,529            
Diluted     24,808       25,038       25,529            
                       
Shares outstanding     24,585       24,906       25,398            
                       

GAMCO Investors, Inc. and Subsidiaries              
Condensed Consolidated Statements of Financial Condition (Unaudited)        
(in thousands)              
       
    March 31,   December 31,   March 31,  
    2024   2023   2023  
Assets              
Cash and cash equivalents   $ 65,467   $ 61,801   $ 133,277  
Investments in securities     129,424     119,023     21,327  
Seed capital investments     26,184     24,044     21,911  
Receivable from brokers     1,111     4,562     1,558  
Other receivables     23,576     21,178     21,439  
Deferred tax asset and income tax receivable     8,384     8,927     12,871  
Other assets     9,614     9,896     13,759  
Total assets   $ 263,760   $ 249,431   $ 226,142  
               
Liabilities and stockholders' equity              
Income taxes payable   $ 3,464   $ 17   $ 6  
Compensation payable     25,100     23,399     32,902  
Accrued expenses and other liabilities     45,910     45,036     43,750  
Total liabilities     74,474     68,452     76,658  
               
Stockholders' equity     189,286     180,979     149,484  
Total liabilities and stockholders' equity   $ 263,760   $ 249,431   $ 226,142  
               
Shares outstanding     24,585     24,906     25,398  
               

GAMCO Investors, Inc. and Subsidiaries                    
Assets Under Management                      
By investment vehicle                      
(in millions)                      
      Three Months Ended   % Changed From  
      March 31,   December 31,   March 31,   December 31,   March 31,  
        2024       2023       2023     2023     2023    
Equities:                      
Mutual Funds                      
Beginning of period assets   $ 7,973     $ 7,546     $ 8,140            
  Inflows     176       153       242            
  Outflows     (432 )     (451 )     (378 )          
  Net inflows (outflows)     (256 )     (298 )     (136 )          
  Market appreciation (depreciation)     523       744       288            
  Fund distributions, net of reinvestment     (5 )     (19 )     (4 )          
  Total increase (decrease)     262       427       148            
Assets under management, end of period   $ 8,235     $ 7,973     $ 8,288     3.3 %   -0.6 %  
Percentage of total assets under management     25.5 %     24.7 %     27.0 %          
Average assets under management   $ 7,965     $ 7,593     $ 8,292     4.9 %   -3.9 %  
                         
Closed-end Funds                      
Beginning of period assets   $ 7,097     $ 6,727     $ 7,046            
  Inflows     41       16       24            
  Outflows     (103 )     (63 )     (15 )          
  Net inflows (outflows)     (62 )     (47 )     9            
  Market appreciation (depreciation)     404       544       233            
  Fund distributions, net of reinvestment     (126 )     (127 )     (133 )          
  Total increase (decrease)     216       370       109            
Assets under management, end of period     7,313     $ 7,097     $ 7,155     3.0 %   2.2 %  
Percentage of total assets under management     22.7 %     22.0 %     23.3 %          
Average assets under management   $ 7,060     $ 6,785     $ 7,211     4.1 %   -2.1 %  
                         
Institutional & PWM                      
Beginning of period assets   $ 10,738     $ 10,034     $ 10,714            
  Inflows     66       63       61            
  Outflows     (428 )     (371 )     (558 )          
  Net inflows (outflows)     (362 )     (308 )     (497 )          
  Market appreciation (depreciation)     770       1,012       547            
  Total increase (decrease)     408       704       50            
Assets under management, end of period   $ 11,146     $ 10,738     $ 10,764     3.8 %   3.5 %  
Percentage of total assets under management     34.5 %     33.3 %     35.1 %          
Average assets under management   $ 10,798     $ 10,005     $ 11,126     7.9 %   -2.9 %  
                         
SICAV                      
Beginning of period assets   $ 631     $ 622     $ 867            
  Inflows     -       82       124            
  Outflows     (2 )     (110 )     (176 )          
  Net inflows (outflows)     (2 )     (28 )     (52 )          
  Market appreciation (depreciation)     -       37       9            
  Reclassification to AUA     (620 )     -       -            
  Total increase (decrease)     (622 )     9       (43 )          
Assets under management, end of period   $ 9     $ 631     $ 824     -98.6 %   -98.9 %  
Percentage of total assets under management     1.8 %     2.0 %     2.7 %          
Average assets under management   $ 10     $ 628     $ 857     -98.4 %   -98.8 %  
                         
Total Equities                      
Beginning of period assets   $ 26,439     $ 24,929     $ 26,767            
  Inflows     283       314       451            
  Outflows     (965 )     (995 )     (1,127 )          
  Net inflows (outflows)     (682 )     (681 )     (676 )          
  Market appreciation (depreciation)     1,697       2,337       1,077            
  Fund distributions, net of reinvestment     (131 )     (146 )     (137 )          
  Reclassification to AUA     (620 )     -       -            
  Total increase (decrease)     264       1,510       264            
Assets under management, end of period   $ 26,703     $ 26,439     $ 27,031     1.0 %   -1.2 %  
Percentage of total assets under management     84.5 %     85.1 %     88.1 %          
Average assets under management   $ 25,833     $ 25,011     $ 27,486     3.3 %   -6.0 %  
                         

                         
GAMCO Investors, Inc. and Subsidiaries                    
Assets Under Management                      
By investment vehicle - continued                      
(in millions)                      
      Three Months Ended   % Changed From  
      March 31,   December 31,   March 31,   December 31,   March 31,  
      2024     2023       2023     2023   2023  
Fixed Income:                      
100% U.S. Treasury fund                      
Beginning of period assets   $ 4,615     $ 4,217     $ 2,462            
  Inflows     1,605       1,424       1,845            
  Outflows     (1,315 )     (1,088 )     (732 )          
  Net inflows (outflows)     290       336       1,113            
  Market appreciation (depreciation)     60       62       34            
  Total increase (decrease)     350       398       1,147            
Assets under management, end of period   $ 4,965     $ 4,615     $ 3,609     7.6 %   37.6 %  
Percentage of total assets under management     15.4 %     14.3 %     11.8 %          
Average assets under management   $ 4,832     $ 4,418     $ 3,245     9.4 %   48.9 %  
                         
Institutional & PWM Fixed Income                      
Beginning of period assets   $ 32     $ 32     $ 32            
  Inflows     -       -       -            
  Outflows     -       -       -            
  Net inflows (outflows)     -       -       -            
  Market appreciation (depreciation)     -       -       -            
  Total increase (decrease)     -       -       -            
Assets under management, end of period   $ 32     $ 32     $ 32     0.0 %   0.0 %  
Percentage of total assets under management     0.1 %     0.1 %     0.1 %          
Average assets under management   $ 32     $ 32     $ 32     0.0 %   0.0 %  
                         
Total Treasuries & Fixed Income                      
Beginning of period assets   $ 4,647     $ 4,249     $ 2,494            
  Inflows     1,605       1,424       1,845            
  Outflows     (1,315 )     (1,088 )     (732 )          
  Net inflows (outflows)     290       336       1,113            
  Market appreciation (depreciation)     60       62       34            
  Total increase (decrease)     350       398       1,147            
Assets under management, end of period   $ 4,997     $ 4,647     $ 3,641     7.5 %   37.2 %  
Percentage of total assets under management     15.5 %     14.9 %     11.9 %          
Average assets under management   $ 4,864     $ 4,450     $ 3,277     9.3 %   48.4 %  
                         
Total AUM                      
Beginning of period assets   $ 31,086     $ 29,178     $ 29,261            
  Inflows     1,888       1,738       2,296            
  Outflows     (2,280 )     (2,083 )     (1,859 )          
  Net inflows (outflows)     (392 )     (345 )     437            
  Market appreciation (depreciation)     1,757       2,399       1,111            
  Fund distributions, net of reinvestment     (131 )     (146 )     (137 )          
  Reclassification to AUA     (620 )     -       -            
  Total increase (decrease)     614       1,908       1,411            
Assets under management, end of period   $ 31,700     $ 31,086     $ 30,672     2.0 %   3.4 %  
Average assets under management   $ 30,697     $ 29,461     $ 30,763     4.2 %   -0.2 %  
                         

  Contact: Kieran Caterina
    Chief Accounting Officer
(914) 921-5149
     
    For further information please visit
    www.gabelli.com

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