Business Wire | Aug 3, 2021 04:02PM EDT

GAMCO Investors, Inc. Reports 2021 Second Quarter Results

Aug. 03, 2021

GREENWICH, Conn.--(BUSINESS WIRE)--Aug. 03, 2021--GAMCO Investors, Inc. ("GAMCO") (NYSE: GBL) today reported its operating results for the quarter ended June 30, 2021.

Second Quarter Results

Financial Highlights (Unaudited) Three Months Ended(In thousands, except per share data) June 30, 2021 June 30, 2020 U.S. GAAP BasisRevenues $ 75,624 $ 57,559

Operating income 24,849 18,763

Net income 17,101 11,290

Diluted earnings per common share $ 0.64 $ 0.42

Weighted average diluted shares outstanding 26,869 26,656

Shares outstanding 27,204 27,630

Assets Under ManagementAUM - end of period (in millions) $ 34,625 $ 29,356

AUM - average (in millions) 34,603 29,135

Giving Back to Society - (Y)our "S" in ESG

GAMCO contributed $5.4 million in April 2021 to over sixty 501(c)(3) institutions based on the February 28, 2021 record date for the 2021 shareholder designated charitable contribution ("SDCC") of $0.25 per share. Eligible shareholders chose the recipient of corporate contributions based on their ownership interest. Since the inception of GAMCO's SDCC program in 2013, shareholders have designated charitable gifts of close to $37 million to more than 280 charitable organizations. When combined with our other charitable donations, this boosts our total contributions to approximately $62 million since our initial public offering in February 1999.

This charitable program underscores our giving back to society as part of our commitment to managing socially responsible portfolios since 1987, which has evolved to include integrating ESG (environmental, social, and governance) factors.

Revenues

* Total revenues for the second quarter of 2021 were $75.6 million compared with $57.6 million in the second quarter of 2020.

* Investment advisory fees were $68.9 million in the second quarter of 2021 versus $51.5 million in the year ago quarter: Gabelli Funds' revenues were $48.4 million compared to $35.8 million in the second quarter of 2020. Institutional and Private Wealth Management revenues, which are generally billed on portfolio values at the beginning of the quarter, were $18.6 million compared to $14.5 million in last year's second quarter. SICAV revenues were $1.9 million for the second quarter of 2021 as compared to $1.2 million in the year ago quarter.

* Distribution fees from our equity mutual funds and other income were $6.7 million during the second quarter of 2021 and $6.1 million in the prior year quarter.

Operating Income

For the second quarter of 2021, operating income was $24.8 million versus $18.8 million in the second quarter of 2020.

Non-Operating Income

Mark-to-market investment gains were $3.1 million in the second quarter of 2021 versus gains of $0.4 million in the second quarter of 2020. Interest expense was $0.6 million in the second quarters of 2021 and 2020.

Income Taxes

GAMCO's effective tax rate for the quarter ended June 30, 2021 was 37.4% versus 39.1% for the quarter ended June 30, 2020.

Business Highlights

* On April 15th, the Gabelli Utility Trust (NYSE: GUT) completed an oversubscribed rights offering raising approximately $43 million.

* On May 14th, we hosted our 36th GAMCO Investor Client Symposium with over 500 clients and prospects attending on a virtual basis.

* On June 3rd, more than a dozen media and entertainment companies participated in our 13th Annual Entertainment & Broadcasting Symposium.

* On June 15th, the Company paid a $2.00 dividend in the form of a Subordinated Note totaling $52.2 million to holders of record on June 1, 2021.

* The Company opened a relationship center in Charleston, SC with Christina Bronec, Senior Vice President.

* On July 20th, the Company held a special meeting where shareholders approved an amendment to the Company's Amended and Restated Certificate of Incorporation.

* On July 21st, the Gabelli Equity Trust (NYSE: GAB) completed an oversubscribed rights offering raising approximately $144 million.

* On July 21st, the Company filed a shelf registration statement to register up to $500 million of securities, including common stock, preferred stock, warrants, rights, and convertible securities.

Balance Sheet

GAMCO ended the quarter with cash and investments of $152 million and $52 million of debt maturing on June 15, 2023.

Return to Shareholders

During the quarter, in addition to the $2.00 per share special dividend, GAMCO paid a regular dividend of $0.02 per share. The Company purchased 157,884 shares for $3.5 million at an average price of $22.29 per share.

On August 3, 2021, GAMCO's board of directors declared a regular quarterly dividend of $0.02 per share, which is payable on September 28, 2021 to class A and class B shareholders of record on September 14, 2021.

About GAMCO Investors, Inc.

GAMCO is known for its research-driven approach to equity investing. GAMCO conducts its investment advisory business principally through two subsidiaries: GAMCO Asset Management Inc. (approximately 1,400 institutional and private wealth separate accounts, principally in the U.S.) and Gabelli Funds, LLC (24 open-end funds, 16 closed-end funds, 2 actively managed semi-transparent ETFs, and a SICAV). GAMCO serves a broad client base including institutions, intermediaries, offshore investors, private wealth, and direct retail investors.

GAMCO offers a wide range of solutions for clients across Value, Growth Equity, ESG, Convertibles, actively managed semi-transparent ETFs, sector-focused strategies including Gold and Utilities, Merger Arbitrage, and Fixed Income. In 1977, GAMCO launched its flagship All Cap Value strategy, Gabelli Value, and in 1986 launched its mutual fund business.

Table I: Assets Under Management and Fund Flows - 2nd Quarter2021 (in millions) Fund Market distributions, March Client Client appreciation/ net of June 30, June 30, 31,

2021 Inflows Outflows (depreciation) reinvestments 2021 2020

Equities:Mutual Funds $ 9,825 $ 249 $ (403 ) $ 539 $ (4 ) $ 10,206 $ 8,651

Closed-end 8,100 - 38 483 (122 ) 8,499 6,859FundsInstitutional 13,145 137 (360 ) 668 - 13,590 10,455& PWM (a)SICAV 582 102 (37 ) 18 - 665 451

Total 31,652 488 (762 ) 1,708 (126 ) 32,960 26,416Equities 100% U.S. 1,725 640 (732 ) - - 1,633 2,921Treasury FundInstitutional 32 - - - - 32 19& PWM FixedIncomeTotal 1,757 640 (732 ) - - 1,665 2,940Treasuries &Fixed IncomeTotal Assets $ 33,409 $ 1,128 $ (1,494 ) $ 1,708 $ (126 ) $ 34,625 $ 29,356UnderManagement (a) Includes $180, $154, and $252 of 100% U.S. Treasury Fund AUM at March 31,2021, June 30, 2021, and June 30, 2020, respectively.Table IIGAMCO INVESTORS, INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share data)Three Months EndedSix Months EndedJune 30June 302021

2020

2021

2020

Investment advisory and incentive fees$

68,885

$

51,470

$

130,355

$

113,743

Distribution fees and other income6,739

6,089

13,197

13,383

Total revenues75,624

57,559

143,552

127,126

Compensation costs (a)31,298

25,516

61,980

54,766

Management fee expense3,035

2,060

5,552

3,725

Distribution costs7,771

6,634

14,742

14,264

Other operating expenses8,671

4,586

13,975

10,288

Total expenses50,775

38,796

96,249

83,043

Operating income24,849

18,763

47,303

44,083

Investment gain/(loss)3,088

424

3,953

(9,269

)

Interest expense(625

)

(647

)

(1,287

)

(1,294

)

Non-operating gain/(loss)2,463

(223

)

2,666

(10,563

)

Income before income taxes27,312

18,540

49,969

33,520

Provision for income taxes10,211

7,250

16,918

10,985

Net income$

17,101

$

11,290

$

33,051

$

22,535

Net income:Basic$

0.65

$

0.42

$

1.25

$

0.85

Diluted$

0.64

$

0.42

$

1.24

$

0.84

Weighted average shares outstanding:Basic26,316

26,629

26,354

26,658

Diluted26,869

26,656

26,632

26,713

Actual shares outstanding (b)27,204

27,630

27,204

27,630

Table IIGAMCO INVESTORS, INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share data) Three Months Ended Six Months Ended June 30 June 30 2021 2020 2021 2020

Investment advisory and $ 68,885 $ 51,470 $ 130,355 $ 113,743 incentive feesDistribution fees and other 6,739 6,089 13,197 13,383 incomeTotal revenues 75,624 57,559 143,552 127,126

Compensation costs (a) 31,298 25,516 61,980 54,766

Management fee expense 3,035 2,060 5,552 3,725

Distribution costs 7,771 6,634 14,742 14,264

Other operating expenses 8,671 4,586 13,975 10,288

Total expenses 50,775 38,796 96,249 83,043

Operating income 24,849 18,763 47,303 44,083

Investment gain/(loss) 3,088 424 3,953 (9,269 )

Interest expense (625 ) (647 ) (1,287 ) (1,294 )

Non-operating gain/(loss) 2,463 (223 ) 2,666 (10,563 )

Income before income taxes 27,312 18,540 49,969 33,520

Provision for income taxes 10,211 7,250 16,918 10,985

Net income $ 17,101 $ 11,290 $ 33,051 $ 22,535

Net income:Basic $ 0.65 $ 0.42 $ 1.25 $ 0.85

Diluted $ 0.64 $ 0.42 $ 1.24 $ 0.84

Weighted average sharesoutstanding:Basic 26,316 26,629 26,354 26,658

Diluted 26,869 26,656 26,632 26,713

Actual shares outstanding (b) 27,204 27,630 27,204 27,630

(a)

For the year ended June 30, 2020, compensation costs were reduced by $1,409 due to indexing of deferred compensation to the GBL stock price.

(b)

Includes 967 and 1,031 RSA shares at June 30, 2021 and 2020, respectively.

(a) For the year ended June 30, 2020, compensation costs were reduced by $1,409 due to indexing of deferred compensation to the GBL stock price.

(b) Includes 967 and 1,031 RSA shares at June 30, 2021 and 2020, respectively.

Table IIIGAMCO INVESTORS, INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION(In thousands)June 30,

December 31,

June 30,

2021

2020

2020

ASSETSCash, cash equivalents, and U.S. Treasury Bills$

118,194

$

98,313

$

108,080

Investments in securities33,743

25,845

20,669

Receivable from brokers5,615

5,833

4,677

Other receivables28,626

34,054

22,501

Deferred tax asset and income tax receivable8,616

9,462

9,032

Other assets12,334

11,895

9,353

Total assets$

207,128

$

185,402

$

174,312

LIABILITIES AND STOCKHOLDERS' EQUITYPayable to brokers$

12

$

1

$

-

Securities sold, not yet purchased-

799

-

Income taxes payable1,917

3,910

4,740

Compensation payable44,980

21,543

30,947

Accrued expenses and other liabilities46,895

48,023

37,978

Sub-total93,804

74,276

73,665

5.875% Senior Notes (due June 1, 2021)-

24,215

24,203

Subordinated Notes (due June 15, 2023)52,178

-

-

Total liabilities145,982

98,491

97,868

Stockholders' equity (a)61,146

86,911

76,444

Total liabilities and stockholders' equity$

207,128

$

185,402

$

174,312

(a) Shares outstanding of 27,204, 27,503, and 27,630, respectively. 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, the effects of the Tax Cuts and Jobs Act, 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, a general downturn in the economy that negatively impacts our operations, and the ongoing impacts of the Tax Cuts and Jobs Act with respect to tax rates and the non-deductibility of certain portions of named executive officer compensation. 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 on Form 10-K 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. (NYSE: GBL).

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.

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CONTACT: Howard Green SVP of Corporate Development (914) 921-7729 For further information please visit www.gabelli.com