One Corporate Center
Rye, NY 10580-1422 t914.921.3700 GABELLI.COM |
For Immediate Release: | Contact: | Robert S. Zuccaro |
| | | Executive Vice President and Chief Financial Officer |
| | | (914) 921-5088 |
| | | |
| | | For further information please visit |
| | | www.gabelli.com |
GAMCO Investors, Inc. Reports Record Second Quarter Results
| · | Assets under Management Record $40.5 Billion |
| · | Earnings Per Share increase to $1.09 per share from $0.57 per share, up 91%, Bolstered by a $0.40 Per Share Swing in Other Income |
| · | $99 million Debt Repaid May 15, 2013 |
Rye, New York, August 6, 2013 – GAMCO Investors, Inc. ("GAMCO") (NYSE: GBL) today reported its 2013 second quarter results including revenues of $92.3 million, net income of $27.9 million and earnings per diluted share of $1.09. On a comparable basis, revenues were $81.0 million, net income was $15.1 million, and earnings per diluted share were $0.57 in the second quarter of 2012.
Assets Under Management ("AUM") rose to a record $40.5 billion, up 1.0% from $40.1 billion at March 31, 2013 and up 13.5% from $35.7 billion at June 30, 2012.
Results for the first half of 2013 include revenues of $178.5 million, net income of $50.4 million and earnings per diluted share of $1.96, an increase of 33.3% from earnings of $1.47 in the first half of 2012.
| Financial Highlights | | Second Quarter | | | | | | Year-to-date | | | | | |
| ($'s in 000's except AUM and per share data) | | 2013 | | | 2012 | | | %D | | | | 2013 | | | | | 2012 | | | %D | | |
| | | | | | | | | | | | | | | | | | | | | | |
AUM - end of period (in millions) | | $ | 40,478 | | | $ | 35,662 | | | | 13.5 | % | | $ | 40,478 | | | | $ | 35,662 | | | | 13.5 | % | |
AUM - average (in millions) | | | 40,331 | | | | 35,640 | | | | 13.2 | | | | 39,389 | | | | | 35,977 | | | | 9.5 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Revenues | | | 92,290 | | | | 81,024 | | | | 13.9 | | | | 178,471 | | | | | 162,773 | | | | 9.6 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating income before management fee | | | 36,630 | | | | 32,982 | | | | 11.1 | | | | 71,337 | | | | | 64,178 | | | | 11.2 | | |
| Operating margin before management fee | | | 39.7 | % | | | 40.7 | % | | | | | | | 40.0 | % | | | | 39.4 | % | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating income after management fee | | | 31,784 | | | | 30,367 | | | | 4.7 | | | | 62,511 | | | | | 57,379 | | | | 8.9 | | |
| Operating margin after management fee | | | 34.4 | % | | | 37.5 | % | | | | | | | 35.0 | % | | | | 35.3 | % | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other income/(expense), net | | | 11,852 | | | | (6,818 | ) | | | | | | | 17,000 | | (a) | | | 3,892 | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income | | | 27,893 | | | | 15,105 | | | | 84.7 | | | | 50,438 | | | | | 38,941 | | | | 29.5 | | |
| Net income per share | | $ | 1.09 | | | $ | 0.57 | | | | 91.2 | % | | $ | 1.96 | | (a) | | $ | 1.47 | | | | 33.3 | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Shares outstanding at June 30 | | | 25,630 | | | | 26,631 | | | | | | | | 25,630 | | | | | 26,631 | | | | | | |
(a) Includes $5.0 million pre-tax or $0.11 per fully diluted share charge in the first quarter for shareholder-designated charitable contribution program.
Assets Under Management
Our second quarter 2013 net inflows were $240 million, market appreciation totaled $293 million and Fund distributions (net of reinvestments) were $145 million. This compares with net inflows of $498 million, market appreciation of $3.3 billion and Fund distributions of $145 million in the first quarter and net inflows of $111 million, market depreciation of $1.0 billion and Fund distributions of $109 million in the second quarter of 2012.
During the quarter total firm AUM increased $388 million to a record $40.5 billion at June 30, 2013 driven largely by net inflows of $417 million into our open-end equity funds. Open-end equity funds totaled $14.2 billion, 2.7% ahead of the previous quarter end AUM and 13.5% higher than the year ago period end.
Institutional and private wealth management business ended the quarter with $17.3 billion in AUM, 1.6% ahead of the March 2013 quarter end and 19.4% above the comparable 2012 quarter end.
Net inflows during the first six months of 2013 were $738 million, market appreciation totaled $3.6 billion and Fund distributions, net of reinvestments, were $290 million. This compares with net inflows of $466 million, market appreciation of $1.3 billion and Fund distributions of $217 million in the first half of 2012.
Revenues
Investment advisory and incentive fees were $77.4 million in the second quarter of 2013, an increase of $10.2 million or 15.2% from the comparable 2012 quarter. Revenues were generally driven by growth in average AUM in our open- and closed-end funds, higher billable assets in our institutional and private wealth management accounts and an increase in incentive fees earned. Average AUM in the open-end equity funds were $14.1 billion, an increase of 12.8% from $12.5 billion in the comparable 2012 quarter. Average AUM in the institutional and private wealth management accounts were $17.1 billion, 17.7% higher than the prior year period. Incentive fees earned during the 2013 quarter totaled $2.1 million versus $1.1 million in the second quarter of 2012.
Revenues from the distribution of our open-end funds and other income were $12.5 million for the second quarter 2013, an increase of $1.5 million or 13.8% from the prior year quarter of $11.0 million.
Our institutional research services generated revenues of $2.3 million in the second quarter 2013, down 17.2% from the $2.8 million in the prior year period.
Operating Income
Operating income before management fee was $36.6 million in the second quarter 2013 versus $33.0 million in the second quarter 2012. For the second quarter 2013, the operating margin before management fee was 39.7% versus 40.7% in the second quarter of 2012. Management believes evaluating operating income before management fee is an important measure in analyzing the Company's operating results. Further information regarding Non-GAAP measures is included in Notes on Non-GAAP Financial Measures and Table VII included elsewhere herein.
Operating income, which is net of management fee expense, was $31.8 million in the second quarter of 2013 versus $30.4 million in the prior year period, an increase of $1.4 million, or 4.6%. The operating margin was 34.4% in the second quarter of 2013 versus 37.5% in the comparable prior year period. Higher distribution costs related to increased sales through third party brokers and higher client services expense and regulatory costs impacted the 2013 quarter, partially offset by lower stock compensation costs and lower expense reimbursements for certain mutual funds resulting from increased levels of AUM.
Other income (expense)
Other income/(expense), net, was $11.9 million, or $0.26 per diluted share, in the 2013 quarter versus an expense of ($6.8) million, or ($0.14) per diluted share, in the second quarter of 2012. Gains from investments in mutual funds, alternative products and proprietary accounts were $12.1 million in the 2013 quarter versus losses of ($4.2) million in the second quarter of 2012. Included in the 2013 trading profits is $9.6 million, or $0.21 per diluted share, of gains from the sale of available for sale securities. Dividend and interest income totaled $2.5 million up from $1.8 million in the prior year period. Interest expense was $2.8 million in the 2013 second quarter, $1.6 million lower than the prior year quarter due to the third quarter 2012 repurchase of $64.1 million (face value) in 0% debentures through a tender offer as well as the $99 million of 5.5% senior notes which matured on May 15, 2013.
Income Taxes
The effective tax rate for the quarter ended June 30, 2013 was 36.0% compared to the 2012 quarter effective tax rate of 36.9%.
Business and Investment Highlights
| - | In June 2013, the Gabelli Global Utility & Income Trust completed a rights offering in which the fund issued 1 million shares of common stock and 1 million shares of Series A Cumulative Puttable and Callable Preferred Shares totaling approximately $70 million. In the offering, the fund's existing common shareholders received one transferrable right (the "Right") for each share of common stock held on the record date. The Rights entitled holders to purchase one common share and one share of Series A Preferred by submitting three Rights plus $68.50. The offering was greatly over-subscribed. |
| - | The Gabelli Healthcare & WellnessRx Trust commenced a rights offering of $33 million which was completed in July and heavily oversubscribed. |
| - | In the May 27, 2013 issue of Pensions & Investments Report on the Largest Money Managers-Worldwide Institutional Assets Under Management GAMCO was ranked #175 for the year ended December 31, 2012 and #182 for the year ended December 31, 2011. |
| - | Our "In the News" and "On the Air" section of our website features interviews with Portfolio Managers including Barbara Marcin, Howard Ward, Chris Marangi, Jeff Jonas, Kevin Dreyer, and Caesar Bryan as they address world markets, industries, and specific stocks. Please visit the Gabelli website at www.gabelli.com/inthenews.html. |
| - | In May 2013, the GAMCO Global Gold, Natural Resources & Income Trust completed an offering of 4 million 5.0% Series B Cumulative Preferred Shares valued at $100 million. The Series B Preferred is a perpetual preferred rated "A1" by Moody's Investor Service, Inc. and is non-callable for five years. |
| - | In May 2013, G.research, Inc. hosted its 7th annual Omaha research trip in conjunction with the Berkshire Hathaway Annual Meeting as well as its 5th annual Movie & Entertainment Conference. |
| - | On May 15, 2013 we repaid the remaining $99 million of outstanding 5.5% senior notes originally issued in May 2003. |
Balance Sheet - $590.1 million of Cash and Investments at Quarter End
We ended the quarter with cash and investments of $590.1 million, debt of $117.0 million ($120.5 million face value) and equity attributable to GAMCO shareholders of $408.4 million. We have $400 million available on our universal shelf registration which provides us with the flexibility to issue any combination of senior and subordinated debt securities, convertible debt securities and common and preferred equity. Together with earnings from operations, the shelf provides us with opportunities to do acquisitions, lift-outs, seed new investment strategies, co-invest as well as shareholder compensation including share repurchase and dividends.
Shareholder Compensation
During the first half of 2013 we returned $8.9 million of our earnings to shareholders through dividends and stock repurchases. We repurchased 118,402 shares at an average price of $52.99 per share through our stock buyback program, for a total investment of $6.3 million. We also returned $2.6 million in regular quarterly cash dividends of $0.10 per share.
On August 6, 2013 GAMCO's Board of Directors increased its quarterly dividend by 20% to $0.06 per share payable on September 24, 2013 to its Class A and Class B shareholders of record on September 10, 2013.
NOTES ON NON-GAAP FINANCIAL MEASURES
| A. | Operating income before management fee expense is used by management to evaluate its business operations. We believe this measure is useful in illustrating the operating results of GAMCO Investors, Inc. (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. The reconciliation of operating income before management fee expense to operating income is provided in Table VII. |
| B. | Operating income before management fee expense per share and other income, net per share are used by management for purposes of evaluating its business operations. We believe this measure is useful in comparing the operating and non-operating results of the Company for the purposes of understanding the composition of net income per fully diluted share. The positive swing of $0.40 per fully diluted share is derived by making certain necessary adjustments, as shown in the table below, to arrive at a net impact for each period and then calculating the difference. The reconciliation of operating income before management fee expense per share and other income, net per share to net income per fully diluted share, is provided below. |
| | 2nd Quarter | | | YTD June | |
| | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| Operating income before management fee | | $ | 36,630 | | | $ | 32,982 | | | $ | 71,337 | | | $ | 64,178 | |
| Management fee expense | | | (3,667 | ) | | | (3,297 | ) | | | (7,126 | ) | | | (6,410 | ) |
| Tax expense | | | (11,878 | ) | | | (10,949 | ) | | | (23,354 | ) | | | (21,159 | ) |
| Noncontrolling interest expense | | | 91 | | | | 77 | | | | 177 | | | | 185 | |
| Operating income (after management fee and taxes) | | | 21,176 | | | | 18,813 | | | | 41,034 | | | | 36,794 | |
| Per fully diluted share | | $ | 0.83 | | | $ | 0.71 | | | $ | 1.59 | | | $ | 1.39 | |
| | | | | | | | | | | | | | | | |
| Other income/(expense), net | | $ | 11,852 | | | $ | (6,818 | ) | | $ | 17,000 | | | $ | 3,892 | |
| Management fee (expense)/benefit | | | (1,179 | ) | | | 682 | | | | (1,700 | ) | | | (389 | ) |
| Tax (expense)/benefit | | | (3,846 | ) | | | 2,263 | | | | (5,565 | ) | | | (1,283 | ) |
| Noncontrolling interest (expense)/benefit | | | (110 | ) | | | 165 | | | | (331 | ) | | | (73 | ) |
| Other income/(expense), net (after management fee and taxes) | | $ | 6,717 | | | $ | (3,708 | ) | | $ | 9,404 | | | $ | 2,147 | |
| Per fully diluted share | | $ | 0.26 | | | $ | (0.14 | ) | | $ | 0.37 | | | $ | 0.08 | |
| | | | | | | | | | | | | | | | |
| Net income per fully diluted share | | $ | 1.09 | | | $ | 0.57 | | | $ | 1.96 | | | $ | 1.47 | |
| Diluted weighted average shares outstanding | | | 25,689 | | | | 26,426 | | | | 25,723 | | | | 26,501 | |
| | | | | | | | | | | | | | | | |
C. | Shareholder-designated charitable contribution program expense, net of management fee and tax benefit, per diluted share: |
| | | YTD | |
| (in thousands, except per share data) | | 2013 | |
| Shareholder-designated charitable contribution program | | $ | 5,000 | |
| Management fee and tax benefit | | | 2,156 | |
| Net loss | | $ | 2,844 | |
| | | | |
| Shareholder-designated charitable contribution program charge per share | | $ | 0.11 | |
| Diluted weighted average shares outstanding | | | 25,723 | |
| | | | |
| D. | Realized gains from sales of available for sale securities, net of management fee and tax benefit, per diluted share: |
| | 2nd Quarter | | | YTD | |
| (in thousands, except per share data) | | 2013 | | | 2013 | |
| Realized gains from sales of available for sale securities | | $ | 9,576 | | | $ | 9,576 | |
| Management fee and tax benefit | | | 4,146 | | | | 4,146 | |
| Net gain | | $ | 5,430 | | | $ | 5,430 | |
| | | | | | | | |
| Realized gains from sales of available for sale securities per share | | $ | 0.21 | | | $ | 0.21 | |
| Diluted weighted average shares outstanding | | | 25,689 | | | | 25,723 | |
| | | | | | | | |
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
Our disclosure and analysis in this press release contain some forward-looking statements. Forward-looking statements give 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, there can be no assurance that our actual results will not differ materially from what we expect or believe. Some of the factors that could cause our actual results to differ from our expectations or beliefs include, without limitation: the adverse effect from a decline in the securities markets; a decline in the performance of our products; a general downturn in the economy; changes in government policy or regulation; changes in our ability to attract or retain key employees; and unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations. We also direct your attention to any more specific discussions of risk contained in our Form 10-K and other public filings. We are providing these statements as permitted by the Private Litigation Reform Act of 1995. We do not undertake to update publicly any forward-looking statements if we subsequently learn that we are unlikely to achieve our expectations or if we receive any additional information relating to the subject matters of our forward-looking statements.
| The Company reported Assets Under Management as follows (in millions): | | | | | | | |
| | | | | | | | | | | | | | | |
| Table I: Fund Flows - 2nd Quarter 2013 | | | | | | | | | | | | | |
| | | | | | | | | | | Fund | | | | |
| | | | | Market | | | | | | distributions, | | | | |
| | March 31, | | | appreciation/ | | | Net cash | | | net of | | | June 30, | |
| | 2013 | | | (depreciation) | | | flows | | | reinvestments | | | 2013 | |
| Equities: | | | | | | | | | | | | | | | |
| Open-end Funds | | $ | 13,813 | | | $ | (11 | ) | | $ | 417 | | | $ | (31 | ) | | $ | 14,188 | |
| Closed-end Funds | | | 6,557 | | | | (128 | ) | | | 94 | | | | (114 | ) | | | 6,409 | |
| Institutional & PWM - direct | | | 13,690 | | | | 358 | | | | 21 | | | | - | | | | 14,069 | |
| Institutional & PWM - sub-advisory | | | 3,299 | | | | 69 | | | | (183 | ) | | | - | | | | 3,185 | |
| Investment Partnerships | | | 796 | | | | 5 | | | | (23 | ) | | | - | | | | 778 | |
| SICAV (a) | | | 113 | | | | - | | | | (20 | ) | | | - | | | | 93 | |
| Total Equities | | | 38,268 | | | | 293 | | | | 306 | | | | (145 | ) | | | 38,722 | |
| Fixed Income: | | | | | | | | | | | | | | | | | | | | |
| Money-Market Fund | | | 1,758 | | | | - | | | | (69 | ) | | | - | | | | 1,689 | |
| Institutional & PWM | | | 64 | | | | - | | | | 3 | | | | - | | | | 67 | |
| Total Fixed Income | | | 1,822 | | | | - | | | | (66 | ) | | | - | | | | 1,756 | |
| Total Assets Under Management | | $ | 40,090 | | | $ | 293 | | | $ | 240 | | | $ | (145 | ) | | $ | 40,478 | |
| | | | | | | | | | | | | | | | | | | | |
| The Company reported Assets Under Management as follows (in millions): | | | | | | | |
| | | | | | | | | | | | | | | |
| Table II: Fund Flows - Six months ended June 30, 2013 | | | | | | | | | | |
| | | | | | | | | | | Fund | | | | |
| | | | | Market | | | | | | distributions, | | | | |
| | December 31, | | | appreciation/ | | | Net cash | | | net of | | | June 30, | |
| | 2012 | | | (depreciation) | | | flows | | | reinvestments | | | 2013 | |
| Equities: | | | | | | | | | | | | | | | |
| Open-end Funds | | $ | 12,502 | | | $ | 1,129 | | | $ | 619 | | | $ | (62 | ) | | $ | 14,188 | |
| Closed-end Funds | | | 6,288 | | | | 253 | | | | 96 | | | | (228 | ) | | | 6,409 | |
| Institutional & PWM - direct | | | 12,030 | | | | 1,843 | | | | 196 | | | | - | | | | 14,069 | |
| Institutional & PWM - sub-advisory | | | 2,924 | | | | 385 | | | | (124 | ) | | | - | | | | 3,185 | |
| Investment Partnerships | | | 801 | | | | 13 | | | | (36 | ) | | | - | | | | 778 | |
| SICAV (a) | | | 119 | | | | 2 | | | | (28 | ) | | | - | | | | 93 | |
| Total Equities | | | 34,664 | | | | 3,625 | | | | 723 | | | | (290 | ) | | | 38,722 | |
| Fixed Income: | | | | | | | | | | | | | | | | | | | | |
| Money-Market Fund | | | 1,681 | | | | - | | | | 8 | | | | - | | | | 1,689 | |
| Institutional & PWM | | | 60 | | | | - | | | | 7 | | | | - | | | | 67 | |
| Total Fixed Income | | | 1,741 | | | | - | | | | 15 | | | | - | | | | 1,756 | |
| Total Assets Under Management | | $ | 36,405 | | | $ | 3,625 | | | $ | 738 | | | $ | (290 | ) | | $ | 40,478 | |
| | | | | | | | | | | | | | | | | | | | |
| Table III: Assets Under Management | | | | | | | | | |
| | June 30, | | | June 30, | | | % | |
| | 2012 | | | 2013 | | | Inc.(Dec.) | |
| Equities: | | | | | | | | | |
| Open-end Funds | | $ | 12,496 | | | $ | 14,188 | | | | 13.5 | % |
| Closed-end Funds | | | 5,860 | | | | 6,409 | | | | 9.4 | |
| Institutional & PWM - direct | | | 11,655 | | | | 14,069 | | | | 20.7 | |
| Institutional & PWM - sub-advisory | | | 2,788 | | | | 3,185 | | | | 14.2 | |
| Investment Partnerships | | | 781 | | | | 778 | | | | (0.4 | ) |
| SICAV (a) | | | 126 | | | | 93 | | | | (26.2 | ) |
| Total Equities | | | 33,706 | | | | 38,722 | | | | 14.9 | |
| Fixed Income: | | | | | | | | | | | | |
| Money-Market Fund | | | 1,893 | | | | 1,689 | | | | (10.8 | ) |
| Institutional & PWM | | | 63 | | | | 67 | | | | 6.3 | |
| Total Fixed Income | | | 1,956 | | | | 1,756 | | | | (10.2 | ) |
| Total Assets Under Management | | $ | 35,662 | | | $ | 40,478 | | | | 13.5 | % |
| | | | | | | | | | | | |
| Table IV: Assets Under Management by Quarter | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | % Increase/ | |
| | | | | | | | | | | | | | | | | (decrease) from | |
| | | 6/12 | | | | 9/12 | | | | 12/12 | | | | 3/13 | | | | 6/13 | | | | 6/12 | | | | 3/13 | |
| Equities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Open-end Funds | | $ | 12,496 | | | $ | 12,758 | | | $ | 12,502 | | | $ | 13,813 | | | $ | 14,188 | | | | 13.5 | % | | | 2.7 | % |
| Closed-end Funds | | | 5,860 | | | | 6,365 | | | | 6,288 | | | | 6,557 | | | | 6,409 | | | | 9.4 | | | | (2.3 | ) |
| Institutional & PWM - direct | | | 11,655 | | | | 12,189 | | | | 12,030 | | | | 13,690 | | | | 14,069 | | | | 20.7 | | | | 2.8 | |
| Institutional & PWM - sub-advisory | | | 2,788 | | | | 2,912 | | | | 2,924 | | | | 3,299 | | | | 3,185 | | | | 14.2 | | | | (3.5 | ) |
| Investment Partnerships | | | 781 | | | | 785 | | | | 801 | | | | 796 | | | | 778 | | | | (0.4 | ) | | | (2.3 | ) |
| SICAV (a) | | | 126 | | | | 121 | | | | 119 | | | | 113 | | | | 93 | | | | (26.2 | ) | | | (17.7 | ) |
| Total Equities | | | 33,706 | | | | 35,130 | | | | 34,664 | | | | 38,268 | | | | 38,722 | | | | 14.9 | | | | 1.2 | |
| Fixed Income: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Money-Market Fund | | | 1,893 | | | | 1,752 | | | | 1,681 | | | | 1,758 | | | | 1,689 | | | | (10.8 | ) | | | (3.9 | ) |
| Institutional & PWM | | | 63 | | | | 63 | | | | 60 | | | | 64 | | | | 67 | | | | 6.3 | | | | 4.7 | |
| Total Fixed Income | | | 1,956 | | | | 1,815 | | | | 1,741 | | | | 1,822 | | | | 1,756 | | | | (10.2 | ) | | | (3.6 | ) |
| Total Assets Under Management | | $ | 35,662 | | | $ | 36,945 | | | $ | 36,405 | | | $ | 40,090 | | | $ | 40,478 | | | | 13.5 | % | | | 1.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) Includes $101 million, $102 million, $104 million, $99 million and $90 million of proprietary seed capital at June 30, 2012, | |
| September 30, 2012, December 31, 2012, March 31, 2013 and June 30, 2013, respectively. | | | | | |
| Table V | | | | | | | | | |
| | | | | | | | | |
| GAMCO INVESTORS, INC. | |
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |
| (Dollars in thousands, except per share data) | |
| | | | | | | | | |
| | For the Three Months Ended June 30, | |
| | | | | | | | % Inc. | |
| | 2013 | | | 2012 | | | (Dec.) | |
| | | | | | | | | |
| Investment advisory and incentive fees | | $ | 77,443 | | | $ | 67,210 | | | | 15.2 | % |
| Distribution fees and other income | | | 12,522 | | | | 11,006 | | | | 13.8 | |
| Institutional research services | | | 2,325 | | | | 2,808 | | | | (17.2 | ) |
| Total revenues | | | 92,290 | | | | 81,024 | | | | 13.9 | |
| | | | | | | | | | | | |
| Compensation costs | | | 37,759 | | | | 32,921 | | | | 14.7 | |
| Distribution costs | | | 11,871 | | | | 10,012 | | | | 18.6 | |
| Other operating expenses | | | 6,030 | | | | 5,109 | | | | 18.0 | |
| Total expenses | | | 55,660 | | | | 48,042 | | | | 15.9 | |
| | | | | | | | | | | | |
| Operating income before management fee | | | 36,630 | | | | 32,982 | | | | 11.1 | |
| | | | | | | | | | | | |
| Investment income/(loss) | | | 14,648 | | | | (2,389 | ) | | | | |
| Interest expense | | | (2,796 | ) | | | (4,429 | ) | | | | |
| Other income/(expense), net | | | 11,852 | | | | (6,818 | ) | | | | |
| | | | | | | | | | | | |
| Income before management fee and income taxes | | | 48,482 | | | | 26,164 | | | | 85.3 | |
| Management fee expense | | | 4,846 | | | | 2,615 | | | | | |
| Income before income taxes | | | 43,636 | | | | 23,549 | | | | 85.3 | |
| Income tax expense | | | 15,724 | | | | 8,686 | | | | | |
| Net income | | | 27,912 | | | | 14,863 | | | | 87.8 | |
| Net income/(loss) attributable to noncontrolling interests | | | 19 | | | | (242 | ) | | | | |
| Net income attributable to GAMCO Investors, Inc. | | $ | 27,893 | | | $ | 15,105 | | | | 84.7 | |
| | | | | | | | | | | | |
| Net income per share attributable to GAMCO Investors, Inc.: | | | | | | | | | | | | |
| Basic | | $ | 1.09 | | | $ | 0.58 | | | | 87.9 | |
| | | | | | | | | | | | |
| Diluted | | $ | 1.09 | | | $ | 0.57 | | | | 91.2 | |
| | | | | | | | | | | | |
| Weighted average shares outstanding: | | | | | | | | | | | | |
| Basic | | | 25,679 | | | | 26,258 | | | | (2.2 | ) |
| | | | | | | | | | | | |
| Diluted | | | 25,689 | | | | 26,426 | | | | (2.8 | ) |
| | | | | | | | | | | | |
| Actual shares outstanding (a) | | | 25,630 | | | | 26,631 | | | | (3.8 | %) |
| | | | | | | | | | | | |
| Notes: | | | | | | | | | | | | |
| (a) Includes 0 and 373,500 of RSAs, respectively. | | | | | | | | | | | | |
| See GAAP to non-GAAP reconciliation on page 11. | | | | | | | | | | | | |
| Table VI | | | | | | | | | |
| | | | | | | | | |
| GAMCO INVESTORS, INC. | |
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |
| (Dollars in thousands, except per share data) | |
| | | | | | | | | |
| | For the Six Months Ended June 30, | |
| | | | | | | | % Inc. | |
| | 2013 | | | 2012 | | | (Dec.) | |
| | | | | | | | | |
| Investment advisory and incentive fees | | $ | 150,050 | | | $ | 134,993 | | | | 11.2 | % |
| Distribution fees and other income | | | 23,875 | | | | 22,629 | | | | 5.5 | |
| Institutional research services | | | 4,546 | | | | 5,151 | | | | (11.7 | ) |
| Total revenues | | | 178,471 | | | | 162,773 | | | | 9.6 | |
| | | | | | | | | | | | |
| Compensation costs | | | 73,411 | | | | 67,475 | | | | 8.8 | |
| Distribution costs | | | 22,881 | | | | 20,189 | | | | 13.3 | |
| Other operating expenses | | | 10,842 | | | | 10,931 | | | | (0.8 | ) |
| Total expenses | | | 107,134 | | | | 98,595 | | | | 8.7 | |
| | | | | | | | | | | | |
| Operating income before management fee | | | 71,337 | | | | 64,178 | | | | 11.2 | |
| | | | | | | | | | | | |
| Investment income | | | 28,284 | | | | 12,725 | | | | | |
| Interest expense | | | (6,284 | ) | | | (8,833 | ) | | | | |
| Shareholder-designated contribution | | | (5,000 | ) | | | - | | | | | |
| Other income, net | | | 17,000 | | | | 3,892 | | | | | |
| | | | | | | | | | | | |
| Income before management fee and income taxes | | | 88,337 | | | | 68,070 | | | | 29.8 | |
| Management fee expense | | | 8,826 | | | | 6,799 | | | | | |
| Income before income taxes | | | 79,511 | | | | 61,271 | | | | 29.8 | |
| Income tax expense | | | 28,919 | | | | 22,442 | | | | | |
| Net income | | | 50,592 | | | | 38,829 | | | | 30.3 | |
| Net income attributable to noncontrolling interests | | | 154 | | | | (112 | ) | | | | |
| Net income attributable to GAMCO Investors, Inc. | | $ | 50,438 | | | $ | 38,941 | | | | 29.5 | |
| | | | | | | | | | | | |
| Net income per share attributable to GAMCO Investors, Inc.: | | | | | | | | | | | | |
| Basic | | $ | 1.96 | | | $ | 1.48 | | | | 32.4 | |
| | | | | | | | | | | | |
| Diluted | | $ | 1.96 | | | $ | 1.47 | | | | 33.3 | |
| | | | | | | | | | | | |
| Weighted average shares outstanding: | | | | | | | | | | | | |
| Basic | | | 25,710 | | | | 26,338 | | | | (2.4 | ) |
| | | | | | | | | | | | |
| Diluted | | | 25,723 | | | | 26,501 | | | | (2.9 | ) |
| | | | | | | | | | | | |
| Actual shares outstanding (a) | | | 25,630 | | | | 26,631 | | | | (3.8 | %) |
| | | | | | | | | | | | |
| Notes: | | | | | | | | | | | | |
| (a) Includes 0 and 373,500 of RSAs, respectively. | | | | | | | | | | | | |
| See GAAP to non-GAAP reconciliation on page 11. | | | | | | | | | | | | |
| Table VII | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| GAMCO INVESTORS, INC. | |
| UNAUDITED QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |
| (Dollars in thousands, except per share data) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2013 | | | 2012 | |
| | 1st | | | 2nd | | | YTD | | | 1st | | | 2nd | | | YTD | | | 3rd | | | | 4th | | | | | |
| | Quarter | | | Quarter | | | 2013 | | | Quarter | | | Quarter | | | 2012 | | | Quarter | | | | Quarter | | | | Full Year | |
| Income Statement Data: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Revenues | | $ | 86,181 | | | $ | 92,290 | | | $ | 178,471 | | | $ | 81,749 | | | $ | 81,024 | | | $ | 162,773 | | | $ | 82,231 | | | | $ | 99,277 | | | | $ | 344,281 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Expenses | | | 51,474 | | | | 55,660 | | | | 107,134 | | | | 50,553 | | | | 48,042 | | | | 98,595 | | | | 50,163 | | | | | 71,375 | | (a) | | | 220,133 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating income before | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| management fee | | | 34,707 | | | | 36,630 | | | | 71,337 | | | | 31,196 | | | | 32,982 | | | | 64,178 | | | | 32,068 | | | | | 27,902 | | | | | 124,148 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investment income/(loss) | | | 13,636 | | | | 14,648 | | | | 28,284 | | | | 15,114 | | | | (2,389 | ) | | | 12,725 | | | | 2,140 | | (b) | | | 7,220 | | | | | 22,085 | |
| Interest expense | | | (3,488 | ) | | | (2,796 | ) | | | (6,284 | ) | | | (4,404 | ) | | | (4,429 | ) | | | (8,833 | ) | | | (3,586 | ) | | | | (3,480 | ) | | | | (15,899 | ) |
| Shareholder-designated contribution | | | (5,000 | ) | | | - | | | | (5,000 | ) | | | - | | | | - | | | | - | | | | - | | | | | - | | | | | - | |
| Other income/(expense), net | | | 5,148 | | | | 11,852 | | | | 17,000 | | | | 10,710 | | | | (6,818 | ) | | | 3,892 | | | | (1,446 | ) | | | | 3,740 | | | | | 6,186 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Income before management | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| fee and income taxes | | | 39,855 | | | | 48,482 | | | | 88,337 | | | | 41,906 | | | | 26,164 | | | | 68,070 | | | | 30,622 | | | | | 31,642 | | | | | 130,334 | |
| Management fee expense | | | 3,980 | | | | 4,846 | | | | 8,826 | | | | 4,184 | | | | 2,615 | | | | 6,799 | | | | 3,056 | | | | | 3,163 | | | | | 13,018 | |
| Income before income taxes | | | 35,875 | | | | 43,636 | | | | 79,511 | | | | 37,722 | | | | 23,549 | | | | 61,271 | | | | 27,566 | | | | | 28,479 | | | | | 117,316 | |
| Income tax expense | | | 13,195 | | | | 15,724 | | | | 28,919 | | | | 13,756 | | | | 8,686 | | | | 22,442 | | | | 8,467 | | | | | 10,812 | | | | | 41,721 | |
| Net income | | | 22,680 | | | | 27,912 | | | | 50,592 | | | | 23,966 | | | | 14,863 | | | | 38,829 | | | | 19,099 | | | | | 17,667 | | | | | 75,595 | |
| Net income/(loss) attributable | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| to noncontrolling interests | | | 135 | | | | 19 | | | | 154 | | | | 130 | | | | (242 | ) | | | (112 | ) | | | 95 | | | | | 73 | | | | | 56 | |
| Net income attributable to | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| GAMCO Investors, Inc. | | $ | 22,545 | | | $ | 27,893 | | | $ | 50,438 | | | $ | 23,836 | | | $ | 15,105 | | | $ | 38,941 | | | $ | 19,004 | | | | $ | 17,594 | | | | $ | 75,539 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income per share | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| attributable to GAMCO | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investors, Inc.: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.88 | | | $ | 1.09 | | | $ | 1.96 | | | $ | 0.90 | | | $ | 0.58 | | | $ | 1.48 | | | $ | 0.72 | | | | $ | 0.67 | | | | $ | 2.87 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Diluted | | $ | 0.88 | | | $ | 1.09 | | | $ | 1.96 | | | $ | 0.90 | | | $ | 0.57 | | | $ | 1.47 | | | $ | 0.72 | | | | $ | 0.67 | | | | $ | 2.86 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Weighted average shares outstanding: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Basic | | | 25,742 | | | | 25,679 | | | | 25,710 | | | | 26,415 | | | | 26,258 | | | | 26,338 | | | | 26,250 | | | | | 26,208 | | | | | 26,283 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Diluted | | | 25,758 | | | | 25,689 | | | | 25,723 | | | | 26,533 | | | | 26,426 | | | | 26,501 | | | | 26,439 | | | | | 26,305 | | | | | 26,436 | |
| Reconciliation of non-GAAP | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| financial measures to GAAP: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating income before | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| management fee | | $ | 34,707 | | | $ | 36,630 | | | $ | 71,337 | | | $ | 31,196 | | | $ | 32,982 | | | $ | 64,178 | | | $ | 32,068 | | | | $ | 27,902 | | | | $ | 124,148 | |
| Deduct: management fee expense | | | 3,980 | | | | 4,846 | | | | 8,826 | | | | 4,184 | | | | 2,615 | | | | 6,799 | | | | 3,056 | | | | | 3,163 | | | | | 13,018 | |
| Operating income | | $ | 30,727 | | | $ | 31,784 | | | $ | 62,511 | | | $ | 27,012 | | | $ | 30,367 | | | $ | 57,379 | | | $ | 29,012 | | | | $ | 24,739 | | | | $ | 111,130 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating margin before | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| management fee | | | 40.3 | % | | | 39.7 | % | | | 40.0 | % | | | 38.2 | % | | | 40.7 | % | | | 39.4 | % | | | 39.0 | % | | | | 28.1 | % | | | | 36.1 | % |
| Operating margin after | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| management fee | | | 35.7 | % | | | 34.4 | % | | | 35.0 | % | | | 33.0 | % | | | 37.5 | % | | | 35.3 | % | | | 35.3 | % | | | | 24.9 | % | | | | 32.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) Includes $10.1 million in expenses from the acceleration of RSAs. | | | | | | | | | | | | | | | | | | | | | | | |
| (b) Includes $6.3 million loss on extinguishment of $64.6 million (face value) of 0% Subordinated Debentures. | | | | | | | | | | | | | | | |
| Table VIII | | | | | | | | | |
| GAMCO INVESTORS, INC. | |
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | |
| (Dollars in thousands, except per share data) | |
| | | | | | | | | |
| | June 30, | | | December 31, | | | June 30, | |
| | 2013 | | | 2012 | | | 2012 | |
| | | | | | | | | |
| ASSETS | | | | | | | | | |
| | | | | | | | | |
| Cash and cash equivalents | | $ | 222,776 | | | $ | 190,608 | | | $ | 324,440 | |
| Investments (a) | | | 367,315 | | | | 378,263 | | | | 411,310 | |
| Receivable from brokers | | | 39,669 | | | | 50,655 | | | | 41,513 | |
| Other receivables | | | 35,722 | | | | 52,600 | | | | 32,847 | |
| Income tax receivable | | | 413 | | | | 1,014 | | | | 402 | |
| Other assets | | | 17,606 | | | | 17,589 | | | | 16,218 | |
| | | | | | | | | | | | |
| Total assets | | $ | 683,501 | | | $ | 690,729 | | | $ | 826,730 | |
| | | | | | | | | | | | |
| LIABILITIES AND EQUITY | | | | | | | | | | | | |
| | | | | | | | | | | | |
| Payable to brokers | | $ | 14,986 | | | $ | 14,346 | | | $ | 20,113 | |
| Income taxes payable and deferred tax liabilities | | | 27,864 | | | | 25,394 | | | | 12,846 | |
| Compensation payable | | | 59,643 | | | | 10,535 | | | | 28,985 | |
| Securities sold short, not yet purchased | | | 7,598 | | | | 3,136 | | | | 7,010 | |
| Accrued expenses and other liabilities | | | 38,170 | | | | 32,656 | | | | 36,006 | |
| Sub-total | | | 148,261 | | | | 86,067 | | | | 104,960 | |
| | | | | | | | | | | | |
| 5.5% Senior notes (repaid May 15, 2013) | | | - | | | | 99,000 | | | | 99,000 | |
| 5.875% Senior notes (due June 1, 2021) | | | 100,000 | | �� | | 100,000 | | | | 100,000 | |
| 0% Subordinated Debentures (due December 31, 2015) (b) | | | 17,028 | | | | 17,366 | | | | 66,598 | |
| Total debt | | | 117,028 | | | | 216,366 | | | | 265,598 | |
| Total liabilities | | | 265,289 | | | | 302,433 | | | | 370,558 | |
| | | | | | | | | | | | |
| Redeemable noncontrolling interests | | | 7,021 | | | | 17,362 | | | | 26,162 | |
| | | | | | | | | | | | |
| GAMCO Investors, Inc.'s stockholders' equity | | | 408,413 | | | | 367,608 | | | | 426,659 | |
| Noncontrolling interests | | | 2,778 | | | | 3,326 | | | | 3,351 | |
| Total equity | | | 411,191 | | | | 370,934 | | | | 430,010 | |
| | | | | | | | | | | | |
| Total liabilities and equity | | $ | 683,501 | | | $ | 690,729 | | | $ | 826,730 | |
| | | | | | | | | | | | |
| (a) Includes investments in sponsored registered investment companies of $52.3 million, $61.9 million and $59.6 million, respectively. | |
| (b) The 0% Subordinated Debentures due December 31, 2015 have a face value of $20.5 million, $86.3 million and $86.3 million, | |
| respectively. | | | | | | | | | | | | |
