Business Wire | Nov 4, 2021 04:15PM EDT

GAMCO Investors, Inc. Reports 2021 Third Quarter Results

Nov. 04, 2021

GREENWICH, Conn.--(BUSINESS WIRE)--Nov. 04, 2021--GAMCO Investors, Inc. ("GAMCO") (NYSE: GBL) today reported its operating results for the quarter ended September 30, 2021.

Third Quarter Results

Financial Highlights (Unaudited) Three Months Ended

September 30, September 30,(In thousands, except per share data) 2021 2020

U.S. GAAP BasisRevenues $ 75,907 $ 61,252

Operating income 40,676 31,842

Net income 29,161 16,435

Diluted earnings per common share $ 1.09 $ 0.62

Weighted average diluted shares outstanding 26,832 26,613

Shares outstanding 27,096 27,485

Assets Under ManagementAUM - end of period (in millions) $ 33,539 $ 29,692

AUM - average (in millions) 34,625 30,326

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

Management plans to ask the Board of Directors of GAMCO to approve a new shareholder designated charitable contribution ("SDCC"). 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 commitment to giving back to society which emanated in part from our management of socially responsible portfolios since 1987. Later, we integrated ESG (environmental, social, and governance) factors into our investment process.

New Climate and Environmental Initiative

In February 2021, we launched Love Our Planet & People (NYSE: LOPP), an actively managed, semi-transparent ETF with an investment emphasis on the "E" in ESG -the environment is essential to the future of our planet. Shareholders of the fund do not pay any fees or expenses of LOPP.

Revenues

* Total revenues for the third quarter of 2021 were $75.9 million compared with $61.3 million in the third quarter of 2020.

* Investment advisory fees were $69.1 million in the third quarter of 2021 versus $54.9 million in the year ago quarter: Gabelli Funds' revenues were $48.0 million compared to $38.9 million in the third quarter of 2020. Institutional and Private Wealth Management revenues, which are generally billed on portfolio values at the beginning of the quarter, were $19.2 million compared to $14.8 million in last year's third quarter SICAV revenues were $1.9 million for the third 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 $6.8 million during the third quarter of 2021 and $6.4 million in the prior year quarter.

Operating Income

For the third quarter of 2021, operating income was $40.7 million versus $31.8 million in the third quarter of 2020.

Non-Operating Income

Mark-to-market investment losses were $1.2 million in the third quarter of 2021 versus losses of $3.1 million in the third quarter of 2020. Interest expense was $0.8 million in the third quarter of 2021 versus $0.7 million in the third quarter of 2020. In the year ago third quarter, SDCC expense was $5.4 million.

Income Taxes

GAMCO's effective tax rate for the quarter ended September 30, 2021 was 24.5% versus 27.4% for the quarter ended September 30, 2020.

Business Highlights

* We completed two rights offerings: On July 21st, the Gabelli Equity Trust (NYSE: GAB) completed a rights offering that raised approximately $144 million. On August 30th, the Gabelli Multimedia Trust Inc. (NYSE: GGT) completed an offering that raised approximately $18 million.

* On September 9th, we hosted our 27th Annual Aerospace & Defense Symposium in New York City. The symposium featured leading companies in the Aerospace and Defense industries.

Subsequent to the end of the 3rd quarter:

* On October 7th, the Gabelli Dividend & Income Trust (NYSE: GDV) completed the offering of $150 million of 4.25% Series K Cumulative Preferred Shares.

* On October 15th, the Gabelli Healthcare & Wellness Trust (NYSE: GRX) completed a private placement of $40 million of 4% Series E Cumulative Preferred Shares.

* On November 1st, the Gabelli Global Small and Mid Cap Value Trust (NYSE: GGZ) raised a similar $40 million via a private placement of 4% Series B Cumulative Preferred Shares.

* On November 1 st and 2 nd, we hosted our 45th Annual Automotive Symposium, "Batteries Included" in Las Vegas. The symposium featured presentations from senior management of leading automotive and electric vehicle suppliers, with an emphasis on the battery ecosystem, technological innovation, and industry dynamics.

Balance Sheet

GAMCO ended the quarter with cash and investments of $182.2 million and $52.1 million of subordinated debt maturing on June 15, 2023.

Return to Shareholders

During the quarter, GAMCO paid a regular dividend of $0.02 per share and purchased 92,427 shares for $2.5 million at an average price of $26.65 per share. From October 1, 2021 to November 4, 2021, the Company has purchased 86,028 shares at an average price of $24.65 per share.

On November 4, 2021, GAMCO's board of directors declared a regular quarterly dividend of $0.04 per share, an increase of 100%, which is payable on December 28, 2021 to class A and class B shareholders of record on December 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, 14 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 - 3rd Quarter2021 (in millions) Fund

Market distributions,

June 30, Client Client appreciation/ net of September September 30, 30,

2021 Inflows Outflows (depreciation) reinvestments 2021 2020

Equities:

Mutual Funds $ 10,206 $ 235 $ (400 ) $ (179 ) $ (6 ) $ 9,856 $ 8,855

Closed-end 8,499 163 (213 ) (88 ) (123 ) 8,238 7,017FundsInstitutional 13,590 111 (382 ) (268 ) - 13,051 10,539& PWM (a)SICAV 665 88 (11 ) (14 ) - 728 437

Total 32,960 597 (1,006 ) (549 ) (129 ) 31,873 26,848Equities 100% U.S. 1,633 667 (666 ) - - 1,634 2,822Treasury FundInstitutional 32 - - - - 32 22& PWM FixedIncomeTotal 1,665 667 (666 ) - - 1,666 2,844Treasuries &Fixed IncomeTotal Assets $ 34,625 $ 1,264 $ (1,672 ) $ (549 ) $ (129 ) $ 33,539 $ 29,692UnderManagement (a) Includes $154, $178, and $196 of 100% U.S. Treasury Fund AUM at June 30,2021, September 30, 2021, and September 30, 2020, respectively.Table IIGAMCO INVESTORS, INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share data)Three Months Ended

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

Investment advisory and incentive fees$

69,147

$

54,894

$

199,502

$

168,637

Distribution fees and other income6,760

6,358

19,957

19,741

Total revenues75,907

61,252

219,459

188,378

Compensation costs (a) (b)21,965

17,722

83,945

72,488

Management fee expense (b)-

-

5,552

3,725

Distribution costs7,781

6,994

22,523

21,258

Other operating expenses5,485

4,694

19,460

14,982

Total expenses35,231

29,410

131,480

112,453

Operating income40,676

31,842

87,979

75,925

Investment gain/(loss)(1,218

)

(3,092

)

2,735

(12,361

)

Interest expense(814

)

(691

)

(2,101

)

(1,985

)

Shareholder-designated contribution-

(5,436

)

-

(5,436

)

Non-operating gain/(loss)(2,032

)

(9,219

)

634

(19,782

)

Income before income taxes38,644

22,623

88,613

56,143

Provision for income taxes9,483

6,188

26,401

17,173

Net income$

29,161

$

16,435

$

62,212

$

38,970

Net income:Basic$

1.11

$

0.62

$

2.36

$

1.46

Diluted$

1.09

$

0.62

$

2.32

$

1.46

Weighted average shares outstanding:Basic26,222

26,531

26,310

26,615

Diluted26,832

26,613

26,863

26,679

Actual shares outstanding (c)27,096

27,485

27,096

27,485

(a) For the nine months ended September 30, 2020, compensation costs were reduced by $1,409 due to indexing of deferred compensation to the GBL stock price.(b) The CEO waiver reduced compensation costs by $10,063, $8,546, $10,063, and $8,546, respectively and management fee expense by $2,858, $1,408, $2,858, and $1,408, respectively.(c) Includes 909 and 1,020 RSA shares at September 30, 2021 and 2020, respectively.Table IIGAMCO INVESTORS, INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share data) Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Investment advisory and $ 69,147 $ 54,894 $ 199,502 $ 168,637 incentive feesDistribution fees and 6,760 6,358 19,957 19,741 other incomeTotal revenues 75,907 61,252 219,459 188,378

Compensation costs (a) (b) 21,965 17,722 83,945 72,488

Management fee expense (b) - - 5,552 3,725

Distribution costs 7,781 6,994 22,523 21,258

Other operating expenses 5,485 4,694 19,460 14,982

Total expenses 35,231 29,410 131,480 112,453

Operating income 40,676 31,842 87,979 75,925

Investment gain/(loss) (1,218 ) (3,092 ) 2,735 (12,361 )

Interest expense (814 ) (691 ) (2,101 ) (1,985 )

Shareholder-designated - (5,436 ) - (5,436 )contributionNon-operating gain/(loss) (2,032 ) (9,219 ) 634 (19,782 )

Income before income taxes 38,644 22,623 88,613 56,143

Provision for income taxes 9,483 6,188 26,401 17,173

Net income $ 29,161 $ 16,435 $ 62,212 $ 38,970

Net income:Basic $ 1.11 $ 0.62 $ 2.36 $ 1.46

Diluted $ 1.09 $ 0.62 $ 2.32 $ 1.46

Weighted average sharesoutstanding:Basic 26,222 26,531 26,310 26,615

Diluted 26,832 26,613 26,863 26,679

Actual shares outstanding 27,096 27,485 27,096 27,485 (c) (a) For the nine months ended September 30, 2020, compensation costs werereduced by $1,409 due to indexing of deferred compensation to the GBL stockprice.(b) The CEO waiver reduced compensation costs by $10,063, $8,546, $10,063, and$8,546, respectively and management fee expense by $2,858, $1,408, $2,858, and$1,408, respectively.(c) Includes 909 and 1,020 RSA shares at September 30, 2021 and 2020,respectively.Table IIIGAMCO INVESTORS, INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION(In thousands)September 30,

December 31,

September 30,

2021

2020

2020

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

152,615

$

98,313

$

125,242

Investments in securities29,561

25,845

15,071

Receivable from brokers4,629

5,833

5,688

Other receivables28,137

34,054

23,232

Deferred tax asset and income tax receivable9,058

9,462

10,608

Other assets12,330

11,895

11,318

Total assets$

236,330

$

185,402

$

191,159

LIABILITIES AND STOCKHOLDERS' EQUITYPayable to brokers$

75

$

1

$

-

Securities sold, not yet purchased-

799

-

Income taxes payable2,414

3,910

360

Compensation payable47,767

21,543

32,094

Accrued expenses and other liabilities45,787

48,023

42,766

Sub-total96,043

74,276

75,220

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

24,215

24,209

Subordinated Notes (due June 15, 2023)52,102

-

-

Total liabilities148,145

98,491

99,429

Stockholders' equity (a)88,185

86,911

91,730

Total liabilities and stockholders' equity$

236,330

$

185,402

$

191,159

(a) Shares outstanding of 27,096, 27,503, and 27,485, 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211104006120/en/

CONTACT: Howard Green SVP of Corporate Development (914) 921-7729

CONTACT: For further information please visit www.gabelli.com