Associated Capital Group, Inc. (“AC” or the “Company”), a
diversified financial services company, today reported its
financial results for the third quarter ended September
30, 2023.
Financial Highlights - GAAP Basis($ in 000's
except AUM and per share data)
(Unaudited) |
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
AUM - end of period (in millions) |
$ |
1,588 |
|
|
$ |
1,752 |
|
|
$ |
1,588 |
|
|
$ |
1,752 |
|
AUM -
average (in millions) |
|
1,580 |
|
|
|
1,807 |
|
|
|
1,686 |
|
|
|
1,820 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
2,200 |
|
|
|
2,562 |
|
|
|
7,047 |
|
|
|
7,690 |
|
Operating
loss before management fee (Non-GAAP) |
|
(3,533 |
) |
|
|
(3,129 |
) |
|
|
(9,050 |
) |
|
|
(8,646 |
) |
Investment and other non-operating income/(loss), net |
|
3,794 |
|
|
|
(17,789 |
) |
|
|
37,140 |
|
|
|
(68,753 |
) |
Income/(loss) before income taxes |
|
273 |
|
|
|
(20,918 |
) |
|
|
25,015 |
|
|
|
(77,399 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income/(loss) |
|
(16 |
) |
|
|
(16,498 |
) |
|
|
21,109 |
|
|
|
(62,571 |
) |
Net
income/(loss) per share-diluted |
|
0.00 |
|
|
|
(0.75 |
) |
|
|
0.97 |
|
|
|
(2.84 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
shares outstanding (000's) |
|
2,672 |
|
|
|
3,041 |
|
|
|
2,672 |
|
|
|
3,041 |
|
Class B "
" |
|
18,951 |
|
|
|
18,963 |
|
|
|
18,951 |
|
|
|
18,963 |
|
Total "
" |
|
21,623 |
|
|
|
22,004 |
|
|
|
21,623 |
|
|
|
22,004 |
|
Book
Value per share |
$ |
41.43 |
|
|
$ |
39.96 |
|
|
$ |
41.43 |
|
|
$ |
39.96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Giving Back to Society – (Y)our “S” in ESG
AC seeks to be a good corporate citizen by
supporting our community through sponsoring local organizations. On
August 9, 2023, the Board of Directors approved a $0.20 per
share shareholder designated charitable contribution ("SDCC")
for registered shareholders as of October 16, 2023. Based on the
program created by Warren Buffett at Berkshire Hathaway, our
corporate charitable giving is unique in that the recipients of
AC's charitable contributions are chosen directly by our
shareholders, rather than by our corporate officers. Since our spin
off as a public company, the shareholders of AC have donated
approximately $38 million, including the most recent SDCC, to over
190 501(c)(3) organizations that address a broad range of local,
national and international concerns.
Third Quarter Financial
Data
– Assets under management ended the quarter at
$1.59 billion versus $1.75 billion at September
30, 2022.
– Book value was $41.43 per
share compared to $39.96 per share at September
30, 2022.
– For the first nine months, Investment and
other non-operating income was $37.1 million versus a loss of $68.8
million in the year-ago period. The $105.9 million year to date
positive change reflects market appreciation in the current period
versus a decline in the first nine months of 2022.
Third Quarter Results
Third quarter revenues were $2.2
million compared to $2.6 million in the
third quarter of 2022. Total operating expenses, excluding
management fee, were $5.7 million in the third quarter
2023 and $5.7 million in the third quarter
2022.
Net investment and other non-operating
income was $3.8 million for the third quarter, a $21.6 million
change from the $17.8 million loss in the third quarter of 2022.
The primary drivers of this quarter's results included gains
from our GAMCO holdings and merger
arbitrage partnerships. Interest income reflected
higher interest rates in the 2023 quarter as compared to
2022.
There was no management fee in the
third quarter of 2023 or 2022. Year to date management fee was
$3.1 million versus none in the prior year.
Our income tax expense of $0.2 million for
the quarter compares to a benefit of $4.9 million in the
year ago quarter. The income tax expense in the 2023 quarter
is primarily driven by a deferred tax expense from a foreign
investment.
Assets Under Management (AUM)
Assets under management at September 30,
2023 were $1.59 billion, $254 million lower than year-end
2022 reflecting net outflows of $259 million, the impact of
currency fluctuations in non-US dollar denominated classes of
investment funds ($11 million), offset partially by market
appreciation of $16 million.
|
September 30, |
|
|
December 31, |
|
|
September 30, |
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
Merger Arbitrage(a) |
$ |
1,322 |
|
|
$ |
1,588 |
|
|
$ |
1,518 |
|
Long/Short Value(b) |
|
233 |
|
|
|
222 |
|
|
|
203 |
|
Other |
|
33 |
|
|
|
32 |
|
|
|
31 |
|
Total AUM |
$ |
1,588 |
|
|
$ |
1,842 |
|
|
$ |
1,752 |
|
(a) Includes $613, $856, and $775 of
sub-advisory AUM related to GAMCO International SICAV - GAMCO
Merger Arbitrage, and $148, $206 and $74 of 100% U.S. Treasury
Fund managed by GAMCO at September 30, 2023, December 31, 2022 and
September 30, 2022, respectively.
(b) AUM represents the assets invested in this
strategy that are attributable to Associated Capital Group,
Inc.
Alternative Investment Management
The alternative investment strategy offerings
center around our merger arbitrage strategy which has an absolute
return focus of generating returns independent of the broad equity
and fixed income markets. We also offer strategies utilizing
fundamental, active, event-driven and special situations
investments.
Merger Arbitrage
For the third quarter 2023, the longest
continuously offered fund in the merger arbitrage strategy
generated gross returns of 2.88% (2.33% net of fees). A summary of
the performance is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
|
|
|
|
|
|
Performance%(a) |
3Q '23 |
|
|
3Q '22 |
|
|
YTD '23 |
|
|
YTD '22 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
5 Year(b) |
|
|
Since1985(b)(c) |
|
Merger Arb |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross |
|
2.88 |
|
|
|
3.07 |
|
|
|
2.23 |
|
|
|
0.07 |
|
|
|
4.47 |
|
|
|
10.81 |
|
|
|
9.45 |
|
|
|
8.55 |
|
|
|
7.20 |
|
|
|
10.07 |
|
Net |
|
2.33 |
|
|
|
2.10 |
|
|
|
1.17 |
|
|
|
-0.68 |
|
|
|
2.75 |
|
|
|
7.78 |
|
|
|
6.70 |
|
|
|
5.98 |
|
|
|
4.92 |
|
|
|
7.12 |
|
(a) Net performance is net of fees and
expenses, unless otherwise noted. Performance shown for an actual
fund in this strategy. The performance of other funds in this
strategy may vary. Past performance is no guarantee of future
results.(b) Represents annualized returns through September 30,
2023(c) Inception Date: February 1985
Merger and acquisitions activity increased 16%
from the second quarter's levels, reaching $2 trillion for the
year, a decline of 27% compared to 2022 levels but continuing a
trend of higher M&A activity in recent quarters. The U.S.
remained the dominant geography for deal making as U.S. targets
accounted for 44% of deals, an increase compared to 42% in 2022.
Deal making has been most vibrant in the Energy & Power
industry totaling $290 billion, and accounting for 14.5% overall,
followed by Technology and Healthcare, which accounted for 14.4%
and 13.4%, respectively. We believe that despite recent
mark-to-market volatility, we remain well positioned to earn
absolute returns for our clients.
The Merger Arbitrage strategy is offered by
mandate and client type through partnerships and offshore
corporations serving accredited as well as institutional
investors. The strategy is also offered in separately managed
accounts, a Luxembourg UCITS and a London Stock Exchange
listed investment company, Gabelli Merger Plus + Trust Plc
(GMP-LN).
Acquisitions
Associated Capital Group's plan is to accelerate
the use of its capital. We intend to leverage our research and
investment capabilities by pursuing acquisitions and alliances that
will broaden our product offerings and add new sources of
distribution. In addition, we may make direct investments in
operating businesses using a variety of techniques and structures
to accomplish our objectives.
Shareholder Dividends
and Buybacks
On November 8, 2023, the Board of Directors
declared a semi-annual dividend of $0.10 per share which is
payable on December 14, 2023 to shareholders of record on
December 1, 2023.
During the third quarter, AC
repurchased 103,169 Class A shares, for $3.8 million, at an
average price of $36.98 per share.
Since our spin-off from GAMCO on November
30, 2015, AC has returned $169.5 million to shareholders
through share repurchases, exchange offers and dividends of
$34.3 million.
At September 30, 2023, there were 2.672
million Class A shares and 18.951 million Class B shares
outstanding.
About Associated Capital Group,
Inc.
Associated Capital Group, Inc. (NYSE:AC), based
in Greenwich, Connecticut, is a diversified global financial
services company that provides alternative investment management
through Gabelli & Company Investment Advisers, Inc. (“GCIA”).
We have also earmarked proprietary capital for our direct
investment business that invests in new and existing businesses.
The direct investment business is developing along several core
pillars including Gabelli Private Equity Partners, LLC
(“GPEP”), formed in August 2017 with $150 million of authorized
capital as a “fund-less” sponsor. We also created Gabelli
Principal Strategies Group, LLC (“GPS”) in December 2015 to
pursue strategic operating initiatives.
Operating Loss Before Management Fee
Operating loss before management fee expense
represents a non-GAAP financial measure used by management to
evaluate its business operations. We believe this measure is
useful in illustrating the operating results of the Company as
management fee expense is based on pre-tax income before management
fee expense, which includes non-operating items including
investment gains and losses from the Company’s proprietary
investment portfolio and interest expense.
|
Year-to-date |
|
($ in 000's) |
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
Operating loss - GAAP |
$ |
(12,125 |
) |
|
$ |
(8,646 |
) |
|
|
|
|
|
|
|
|
Add: management fee
expense(1) |
|
3,075 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
Operating loss before
management fee - Non-GAAP |
$ |
(9,050 |
) |
|
$ |
(8,646 |
) |
(1) Management fee expense is incentive-based
and is equal to 10% of Income before management fee and income
taxes and excludes the impact of consolidating entities. For the
nine months ended September 30, 2023 and 2022, Income before
management fee, income taxes and excluding consolidated entities
was income of $30,747 and loss of $80,369, respectively. As a
result, $3,075 was accrued for the 10% management fee expense
in 2023. There was no management fee accrual in 2022 due to the
loss in that period.
Table I
ASSOCIATED CAPITAL GROUP, INC. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION |
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
September 30, |
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and US
Treasury Bills |
$ |
384,214 |
|
|
$ |
404,463 |
|
|
$ |
421,933 |
|
Investments in securities and
partnerships |
|
433,480 |
|
|
|
435,610 |
|
|
|
468,702 |
|
Investment in GAMCO stock |
|
48,031 |
|
|
|
36,683 |
|
|
|
41,218 |
|
Receivable from brokers |
|
16,295 |
|
|
|
12,072 |
|
|
|
18,163 |
|
Receivable from brokers (cash
held for real estate purchase) |
|
13,059 |
|
|
|
- |
|
|
|
- |
|
Income taxes receivable,
including deferred tax assets, net |
|
7,804 |
|
|
|
10,320 |
|
|
|
13,170 |
|
Other receivables |
|
1,616 |
|
|
|
6,324 |
|
|
|
1,428 |
|
Other assets |
|
21,883 |
|
|
|
22,218 |
|
|
|
22,147 |
|
Total assets |
$ |
926,382 |
|
|
$ |
927,690 |
|
|
$ |
986,761 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable to brokers |
$ |
5,618 |
|
|
$ |
7,784 |
|
|
$ |
56,356 |
|
Compensation payable |
|
10,915 |
|
|
|
13,936 |
|
|
|
7,662 |
|
Securities sold short, not yet
purchased |
|
5,090 |
|
|
|
2,874 |
|
|
|
3,181 |
|
Accrued expenses and other
liabilities |
|
1,957 |
|
|
|
2,707 |
|
|
|
1,528 |
|
Tendered redeemable
noncontrolling interests payable |
|
- |
|
|
|
- |
|
|
|
29,001 |
|
Total liabilities |
$ |
23,580 |
|
|
$ |
27,301 |
|
|
$ |
97,728 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling
interests |
|
7,133 |
|
|
|
10,193 |
|
|
|
9,778 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Associated Capital
Group, Inc. equity |
|
895,669 |
|
|
|
890,196 |
|
|
|
879,255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
equity |
$ |
926,382 |
|
|
$ |
927,690 |
|
|
$ |
986,761 |
|
(1) Certain captions include amounts
related to consolidated variable interest entities ("VIEs") and
voting interest entities ("VOEs"), refer to footnote 4 of the
Condensed Consolidated Financial Statements included in the 10-Q
report to be filed for the quarter ended September 30,
2023 for more details on the impact of consolidating these
entities.
(2) Investment in GAMCO stock: 2,397,974,
2,407,000 and 2,417,500 shares, respectively.
Table II
ASSOCIATED CAPITAL GROUP, INC. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
INCOME |
(Amounts in thousands, except per share data) |
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment advisory and
incentive fees |
$ |
2,098 |
|
|
$ |
2,472 |
|
|
$ |
6,789 |
|
|
$ |
7,409 |
|
Other revenues |
|
102 |
|
|
|
90 |
|
|
|
258 |
|
|
|
281 |
|
Total revenues |
|
2,200 |
|
|
|
2,562 |
|
|
|
7,047 |
|
|
|
7,690 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation |
|
4,078 |
|
|
|
3,591 |
|
|
|
11,437 |
|
|
|
10,531 |
|
Other operating expenses |
|
1,655 |
|
|
|
2,100 |
|
|
|
4,660 |
|
|
|
5,805 |
|
Total expenses |
|
5,733 |
|
|
|
5,691 |
|
|
|
16,097 |
|
|
|
16,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss before
management fee |
|
(3,533 |
) |
|
|
(3,129 |
) |
|
|
(9,050 |
) |
|
|
(8,646 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment gain/(loss) |
|
(2,173 |
) |
|
|
(19,314 |
) |
|
|
21,635 |
|
|
|
(72,727 |
) |
Interest and dividend income
from GAMCO |
|
96 |
|
|
|
96 |
|
|
|
288 |
|
|
|
369 |
|
Interest and dividend income,
net |
|
6,106 |
|
|
|
2,635 |
|
|
|
16,821 |
|
|
|
5,019 |
|
Shareholder-designated
contribution |
|
(235 |
) |
|
|
(1,206 |
) |
|
|
(1,604 |
) |
|
|
(1,414 |
) |
Investment and other
non-operating income/(loss), net |
|
3,794 |
|
|
|
(17,789 |
) |
|
|
37,140 |
|
|
|
(68,753 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) before
management fee and income taxes |
|
261 |
|
|
|
(20,918 |
) |
|
|
28,090 |
|
|
|
(77,399 |
) |
Management fee |
|
(12 |
) |
|
|
- |
|
|
|
3,075 |
|
|
|
- |
|
Income/(loss) before income
taxes |
|
273 |
|
|
|
(20,918 |
) |
|
|
25,015 |
|
|
|
(77,399 |
) |
Income tax
expense/(benefit) |
|
166 |
|
|
|
(4,914 |
) |
|
|
3,586 |
|
|
|
(17,798 |
) |
Income/(loss) before
noncontrolling interests |
|
107 |
|
|
|
(16,004 |
) |
|
|
21,429 |
|
|
|
(59,601 |
) |
Income/(loss) attributable to
noncontrolling interests |
|
123 |
|
|
|
494 |
|
|
|
320 |
|
|
|
2,970 |
|
Net income/(loss) attributable
to Associated Capital Group, Inc. |
$ |
(16 |
) |
|
$ |
(16,498 |
) |
|
$ |
21,109 |
|
|
$ |
(62,571 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss) per share
attributable to Associated Capital Group, Inc.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.00 |
|
|
$ |
(0.75 |
) |
|
$ |
0.97 |
|
|
$ |
(2.84 |
) |
Diluted |
$ |
0.00 |
|
|
$ |
(0.75 |
) |
|
$ |
0.97 |
|
|
$ |
(2.84 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
21,672 |
|
|
|
22,010 |
|
|
|
21,836 |
|
|
|
22,033 |
|
Diluted |
|
21,672 |
|
|
|
22,010 |
|
|
|
21,836 |
|
|
|
22,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual shares outstanding -
end of period |
|
21,623 |
|
|
|
22,004 |
|
|
|
21,623 |
|
|
|
22,004 |
|
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
The financial results set forth in this press
release are preliminary. 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 could cause
our actual results to differ from our expectations or beliefs
include 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 Form 10 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.
Ian J. McAdamsChief Financial Officer(914) 921
5078Associated-Capital-Group.com
Photos accompanying this announcement are available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/4d74ba59-4205-4ca4-96ec-4cec753ee5c9
https://www.globenewswire.com/NewsRoom/AttachmentNg/264cc779-96f3-4e5f-8503-e95aeb8fd807
https://www.globenewswire.com/NewsRoom/AttachmentNg/8b98e6d8-15f8-44e8-b919-214d5b951996
https://www.globenewswire.com/NewsRoom/AttachmentNg/d06b2126-39e0-48d5-9a5a-122c516845c1
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