ASSOCIATED CAPITAL GROUP, INC. Reports Third Quarter Results

 

·	Assets Under Management (AUM) of $1.25 billion at September 30, 2016, versus $1.19 billion at June 30, 2016

·	Diluted EPS increases to $0.16 per share for the quarter versus a loss of $0.30 per share for the comparable quarter in 2015

·	GAMCO Note reduced to $100 million as of September 30, 2016 from $250 million as of June 30, 2016 which bolstered GAAP book value per share to $35.41 per share at September 30, 2016 from $29.66 per share at June 30, 2016

·	Repurchased 93,627 shares during the quarter at an average of $30.78 per share

 

Rye, New York, November 4, 2016 – Associated Capital Group, Inc. (“AC” or the “Company”) reported financial results for the third quarter ended September 30, 2016, its third full quarter as a stand-alone public company since its spin-off from GAMCO Investors, Inc. (“GAMCO”) on November 30, 2015.

Third Quarter Overview

Financial Highlights			Q3									Year to Date
($'s in 000's except AUM and per share data)			2016					2015					2016				2015
AUM - end of period (in millions)		$	1,251				$	1,085
Revenues			5,451					4,690					14,932				13,847
Operating loss, before management fee (a)			(3,856	)				(2,455	)				(11,298	)			(9,307	)
Investment and other non-operating income/(expense), net			10,333					(11,311	)				21,978				485
Income/(loss) before income taxes			5,836					(12,392	)				9,614				(7,944	)
Net income/(loss)			3,959					(7,540	)				6,571				(4,300	)
Net income/(loss) per share		$	0.16				$	(0.30	)			$	0.26			$	(0.17	)
Shares outstanding at September 30			25,361		(b)			25,538		(c)			25,361				25,538
(a) See GAAP to non-GAAP reconciliation on page 6.
(b) Shares outstanding consist of 24,934 non-RSA shares and 427 RSA shares.
(c) Based on GAMCO shares outstanding as of September 30, 2015 as this was prior to the spin-off.

Financial Condition

Third Quarter Results of Operations

Assets Under Management (AUM)

 

		September 30,				June 30,				December 31,				September 30,
		2016				2016				2015				2015
Event Merger Arbitrage		$	1,044			$	989			$	869			$	860
Event-Driven Value			144				141				145				159
Other			63				61				66				66
Total AUM		$	1,251			$	1,191			$	1,080			$	1,085

 

About Associated Capital Group, Inc.

The Company was spun-off from GAMCO on November 30, 2015. The Company manages proprietary capital and operates businesses via Gabelli Securities, Inc. (“GSI”), its 100% owned subsidiary.

 

GSI and its wholly owned subsidiary, Gabelli & Partners, collectively serve as general partners or investment managers to investment funds including limited partnerships, offshore companies and separate accounts. The Company primarily manages assets in equity event-driven strategies, across a range of risk and event arbitrage portfolios. The business earns fees from its advisory assets, and income (loss) from proprietary trading and investment portfolio activities. The advisory fees include management and incentive fees. Management fees are largely based on a percentage of the portfolios assets under management. Incentive fees are based on the percentage of profits derived from the investment performance delivered to clients' invested assets. GSI is registered with the Securities and Exchange Commission as an investment advisor under the Investment Advisers Act of 1940, as amended.

The Company operates its institutional research services business through G.research, a wholly owned subsidiary of GSI. G.research is a broker-dealer registered under the Securities Exchange Act of 1934, as amended, that provides institutional research services and acts as an underwriter.

NOTES ON NON-GAAP FINANCIAL MEASURES

 

  

Associated Capital Group, Inc.
Reconciliation of Total Equity to Adjusted Economic Book Value
		Total				Per Share
Total equity as reported		$	898,069			$	35.41
Add: GAMCO Note			100,000				3.94
Adjusted Economic book value		$	998,069			$	39.35

 

 

  

Associated Capital Group, Inc.
Reconciliation of non-GAAP financial measures to GAAP
			Q3				Q3			YTD				YTD
			2016				2015				2016				2015
Operating loss before management fee		$	(3,856	)		$	(2,455	)		$	(11,298	)		$	(9,307	)
Deduct: management fee expense			641				(1,374	)			1,066				(878	)
Operating loss		$	(4,497	)		$	(1,081	)		$	(12,364	)		$	(8,429	)

 

 

Table I
ASSOCIATED CAPITAL GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
		September 30,				December 31,				September 30,
		2016				2015				2015
ASSETS
Cash and cash equivalents		$	402,403			$	205,750			$	363,055
Investments			360,892				420,991				308,890
Investment in GAMCO stock			125,070				136,360				-
Receivable from brokers			19,807				56,510				52,595
Other receivables			10,577				13,229				2,702
Other assets			6,062				3,908				3,627
Total assets		$	924,811			$	836,748			$	730,869
LIABILITIES AND EQUITY
Payable to brokers		$	1,549			$	50,648			$	49,365
Income taxes payable and deferred tax liabilities			2,014				5,669				8,832
Compensation payable			8,499				10,926				5,046
Securities sold short, not yet purchased			4,215				9,623				5,577
Accrued expenses and other liabilities			6,466				2,595				26,472
Sub-total			22,743				79,461				95,292
Redeemable noncontrolling interests			3,999				5,738				6,018
Equity			1,005,702				1,003,406				624,792
4% PIK Note due from GAMCO			(100,000	)			(250,000	)			-
Accumulated comprehensive income (loss)			(7,633	)			(1,857	)			4,767
Total equity			898,069				751,549				629,559
Total liabilities and equity		$	924,811			$	836,748			$	730,869

 

Table II
ASSOCIATED CAPITAL GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
		For the Quarter Ended September 30,
		2016					2015
Investment advisory and incentive fees		$	2,294				$	2,240
Institutional research services			2,609					2,063
Other revenues			548					387
Total revenues			5,451					4,690
Compensation costs			6,415					5,079
Stock based compensation			727					630
Other operating expenses			2,165					1,436
Total expenses			9,307					7,145
Operating loss before management fee			(3,856	)				(2,455	)
Investment gain/(loss)			7,566					(11,539	)
Interest and dividend income from GAMCO			1,836					-
Interest and dividend income, net			931					228
Investment and other non-operating income/(expense), net			10,333					(11,311	)
Gain/(loss) before management fee and income taxes			6,477					(13,766	)
Management fee			641					(1,374	)
Income/(loss) before income taxes			5,836					(12,392	)
Income tax			1,807					(4,388	)
Net income/(loss)			4,029					(8,004	)
Net income/(loss) attributable to noncontrolling interests			70					(464	)
Net income/(loss) attributable to Associated Capital Group, Inc.		$	3,959				$	(7,540	)
Net income/(loss) per share attributable to Associated Capital Group, Inc.:
Basic		$	0.16				$	(0.30	)
Diluted		$	0.16				$	(0.30	)
Weighted average shares outstanding:
Basic			24,918					24,947
Diluted			25,219					25,241
Actual shares outstanding			25,361		(a)			25,538		(a)
Notes:
(a) Includes 427,290 and 688,550 of RSAs at September 30, 2016 and 2015, respectively.

 

 

Table III
ASSOCIATED CAPITAL GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
		For the Nine Months Ended September 30,
		2016					2015
Investment advisory and incentive fees		$	6,586				$	6,295
Institutional research services			6,954					6,130
Other revenues			1,392					1,422
Total revenues			14,932					13,847
Compensation costs			18,168					16,555
Stock based compensation			2,015					1,895
Other operating expenses			6,047					4,704
Total expenses			26,230					23,154
Operating loss before management fee			(11,298	)				(9,307	)
Investment gain/(loss)			12,770					(834	)
Interest and dividend income from GAMCO			7,012					-
Interest and dividend income, net			2,196					1,319
Investment and other non-operating income, net			21,978					485
Gain/(loss) before management fee and income taxes			10,680					(8,822	)
Management fee			1,066					(878	)
Income/(loss) before income taxes			9,614					(7,944	)
Income tax			2,773					(3,154	)
Net income/(loss)			6,841					(4,790	)
Net income/(loss) attributable to noncontrolling interests			270					(490	)
Net income/(loss) attributable to Associated Capital Group, Inc.		$	6,571				$	(4,300	)
Net income/(loss) per share attributable to Associated Capital Group, Inc.:
Basic		$	0.26				$	(0.17	)
Diluted		$	0.26				$	(0.17	)
Weighted average shares outstanding:
Basic			24,879					25,047
Diluted			25,194					25,337
Actual shares outstanding			25,361		(a)			25,538		(a)
Notes:
(a) Includes 427,290 and 688,550 of RSAs at September 30, 2016 and 2015, respectively.

 

 

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.