- September Quarter-end Book Value was $42.24 per share vs.
$38.25 a year ago
- AUM increased to $1.7 billion at September 30, 2021 vs.
$1.3 billion at September 30, 2020
- Launch of a Private Equity Fund approved (additional
information to be provided in due course)
- Approved a $6.6 million, or $0.30 cents per share,
shareholder designated contribution to 501(c)(3)
organizations
Associated Capital Group, Inc. (“AC” or the “Company”), a
diversified financial services company, today reported its
financial results for the third quarter ended September 30,
2021.
Financial Highlights – GAAP
basis
($’s in 000’s except AUM and per share
data)
Three months ended
Nine months ended
September 30,
September 30,
(Unaudited)
2021
2020
2021
2020
AUM – end of period (in millions)
$
1,680
$
1,251
$
1,680
$
1,251
AUM – average (in millions)
1,651
1,280
1,548
1,437
Revenues
2,112
1,945
6,926
6,974
Operating Loss
(169
)
(3,552
)
(16,945
)
(7,853
)
Investment and other non-operating income,
net
6,157
14,007
85,454
(33,248
)
Income/(loss) before income taxes
5,988
10,455
68,509
(41,101
)
Net income/(loss) to shareholders:
Continuing operations, net of NCI
1,503
5,954
49,774
(31,671
)
Discontinued operations, net of NCI
-
(139
)
-
(632
)
Net income/(loss)
1,503
5,815
49,774
(32,303
)
Net income/(loss) per share-diluted
$
0.07
$
0.26
$
2.25
$
(1.44
)
Class A shares outstanding (thousands)
3,099
3,370
3,099
3,370
Class B shares outstanding (thousands)
18,963
18,963
18,963
18,963
Total shares outstanding at September 30
(thousands)
22,062
22,333
22,062
22,333
Book Value Per Share at September 30
$
42.24
$
38.25
$
42.24
$
38.25
Giving Back to Society – (Y)our “S” in ESG
On November 5, the Board of Directors of Associated Capital
approved a $0.30 per share shareholder designated charitable
contribution (“SDCC”) for registered shareholders. This is an
increase from last year’s $0.20 per share contribution. Including
the approximate $6.6 million contribution, Associated Capital’s
SDCC program of corporate giving has resulted in nearly $32 million
in donations to over 160 501(c)(3) institutions across the United
States since AC was created in 2015.
To be eligible for the 2021 program, shareholders must
register their shares by December 1, 2021 in order to
participate.
Third Quarter Financial Data
- At September 30, 2021 the book value was
$42.24 per share versus $42.21 at June 30, 2021, and $40.36 per
share at December 31, 2020.
- Assets under management ended the quarter
at $1.68 billion compared to $1.61 billion at June 30, 2021, $1.35
billion at December 31, 2020 and $1.25 billion at September 30,
2020.
Third Quarter Results
Third quarter revenues were $2.1 million, $0.2 million higher
than the $1.9 million in revenues for the third quarter of 2020,
largely due to higher AUM. Operating expenses were $2.3 million in
the third quarter 2021, compared to $5.5 million in the comparable
2020 period primarily due to a $2.4 million one-time credit
recorded in the third quarter of 2021. Excluding the one-time item,
operating expenses were $4.8 million, $0.7 million lower than 2020,
which included start-up costs related to the launch of PMV
SPAC.
Net investment and other non-operating income was $6.2 million
for the quarter, $7.8 million lower than the $14.0 million
generated in the prior year period, driven mainly by lower market
performance in Q3 2021.
Our provision for income taxes was $0.5 million for the quarter
compared to $3.6 million in the comparable period of 2020.
The increase in book value per share is driven by income during
the period, partially offset by the impact of accretion of
redeemable non-controlling interest. The discount amount related to
the issuance of redeemable noncontrolling interest is being
amortized over a period of 18 months through an adjustment to
additional paid-in capital and noncontrolling interest
(proportionate to our ownership of the SPAC Sponsor) and is also
adjusted periodically for income/loss allocated to redeemable
noncontrolling interest. Accumulated accretion is expected to
reverse upon the consummation of a business combination, which is
expected to result in the deconsolidation of PMV SPAC.
Assets Under Management (AUM)
Assets under management at September 30, 2021 were $1.7 billion,
up $329 million from year-end 2020 due to net inflows of $268
million and $61 million in market appreciation.
($ in millions)
September 30,
2021
December 31,
2020
September 30,
2020
Merger Arbitrage
$
1,438
$
1,126
$
1,091
Event-Driven Value(a)
198
180
105
Other
44
45
55
Total AUM
$
1,680
$
1,351
$
1,251
(a) Assets under management represent the assets invested in
this strategy that are attributable to Associated Capital Group,
Inc.
Alternative Investment Management
The alternative investment strategies focus on the merger
arbitrage strategy which has an absolute return focus of generating
returns in excess of short term Treasury Bills, as well as
strategies using fundamental, active, event-driven special
situations.
Merger Arbitrage
For the third quarter 2021, merger arbitrage generated gross
returns of 0.27% (0.02% net of fees), for the year to date period,
gross returns were 8.2% (5.9% net of fees), adding to its
historical record of positive net returns in 34 of the last 36
years. A summary of our performance by strategy is as follows:
Since
Performance(a) 3Q '21 YTD
'21
2020
2019
2018
5 Year(b) Inception
(b)(c) Merger Arb
Gross
0.27
8.23
9.45
8.55
4.35
7.49
10.38
Net
0.02
5.94
6.70
5.98
2.65
5.14
7.36
(a) All performance is net of fees and expenses, unless
otherwise noted. Performance shown for actual fund in this
strategy. Other fund performance in this strategy may vary.
Performance is no guarantee of future results. (b) Represents
annualized returns through September 30, 2021 (c) Inception Date:
Merger Arb - Feb-85
Global M&A activity continued its vigorous pace in the third
quarter, with deal making reaching $4.4 trillion year to date, an
increase of more than 90% compared to 2020. The first nine months
of 2021 have already surpassed the full year M&A record set in
2015 at $4.3 trillion. Excluding the $550 billion in SPAC deals in
2021, M&A activity has totaled $3.85 trillion. Acquisitions by
private equity funds accounted for 19% of M&A, or about $840
billion, more than double their activity in 2020. Private equity
firms are taking advantage of low interest rates, accommodative
debt markets, and they are looking to deploy capital from
record-breaking fund raises in recent years. The U.S. remains the
primary venue for deals, with targets totaling $2 trillion in
announced deals, with Technology, Financials and Industrials
remaining the most active sectors.
The Merger Arbitrage strategy is offered domestically through
partnerships as well as to institutional investors.
Internationally, the strategy is offered through a number of
vehicles, including EU regulated UCITS structures and the London
Stock Exchange listed investment company, Gabelli Merger Plus +
Trust Plc (GMP-LN).
Shareholder Dividends and Buybacks
On November 5, 2021, AC’s board of directors declared a
semi-annual dividend of $0.10 per share, which is payable on
December 15, 2021 to class A and class B shareholders of record on
December 1, 2021.
During the third quarter, AC repurchased approximately 38,577
Class A shares, for $1.4 million, at an average investment of
$36.19 per share.
Since our spin-off from GBL on November 30, 2015, AC has
returned $153.6 million to shareholders through share repurchases,
exchange offers, and dividends of $25 million, including the $4.4
million tax-free distribution of Morgan Group Holdings (MGHL) on
August 5, 2020.
At September 30, 2021, there were 3.1 million Class A shares and
19.0 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” f/k/a Gabelli
Securities, Inc.). The proprietary capital is earmarked for our
direct investment business that invests in new and existing
businesses. The direct investment business long term plan has three
core pillars; Gabelli Private Equity Partners, LLC (“GPEP”), formed
in August 2017 with $150 million of authorized capital as a
“fund-less” sponsor; the SPAC business (Gabelli special purpose
acquisition vehicles), launched in April 2018; and, Gabelli
Principal Strategies Group, LLC (“GPS”) created to pursue strategic
operating initiatives.
Operating Loss Before Management Fee
Operating loss before management fee expense represents a
non-GAAP financial measure used by management to evaluate its
business operations. We believe this measure is useful in
illustrating the operating results of the Company as management fee
expense is based on pre-tax income before management fee expense,
which includes non-operating items including investment gains and
losses from the Company’s proprietary investment portfolio and
interest expense.
Year-to-date
($ in 000’s)
2021
2020
Operating loss – GAAP
$
(16,945
)
$
(7,853
)
Add: management fee expense
7,209
-
Operating loss before management fee –
Non-GAAP
$
(9,736
)
$
(7,853
)
Table I
ASSOCIATED CAPITAL GROUP,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Amounts in thousands)
September 30,
2021
December 31,
2020
September 30,
2020
ASSETS
Cash, cash equivalents and US Treasury
Bills (a)
$
619,772
$
383,962
$
47,331
Investments in securities and partnerships
(a)
500,367
495,579
784,963
Investment in GAMCO stock (b)
65,578
48,907
33,921
Receivable from brokers (a)
43,481
24,677
21,065
Deferred tax assets
-
2,207
10,059
Other receivables
7,071
15,273
7,227
Other assets (a)
22,879
28,900
21,043
Investments in marketable securities held
in trust (a)
175,085
175,040
175,002
Total assets
$
1,434,233
$
1,174,545
$
1,100,611
LIABILITIES AND EQUITY
Payable to brokers
$
243,282
$
6,496
$
8,443
Income taxes payable, including deferred
tax liabilities, net
12,406
9,746
897
Compensation payable
17,307
18,567
7,445
Securities sold short, not yet purchased
(a)
13,603
17,571
12,827
Accrued expenses and other liabilities
(a)
4,939
7,823
12,668
Deferred underwriting fee payable (a)
6,125
6,125
-
PMV warrant liability
5,590
-
Sub-total
$
303,252
$
66,328
$
42,280
Redeemable noncontrolling interests
(a)
199,793
206,828
204,164
Total equity
931,188
901,389
854,167
Total liabilities and equity
$
1,434,233
$
1,174,545
$
1,100,611
(a) Includes amounts related to consolidated variable interest
entities ("VIEs") and voting interest entities ("VOEs"), refer to
footnote D of the Condensed Consolidated Financial Statements
included in the 10-Q report to be filed for the quarter ended
September 30, 2021 for more details on the impact of consolidating
these entities. (b) 2,485,900, 2,756,876 and 2,931,791 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,
2021
2020
2021
2020
Revenues
Investment advisory and incentive fees
$
2,014
$
1,865
$
6,627
$
6,424
Other
98
80
299
550
Total revenues
2,112
1,945
6,926
6,974
Compensation costs
2,819
3,026
11,710
8,405
Other operating expenses
(764
)
2,471
4,952
6,422
Total expenses
2,055
5,497
16,662
14,827
Operating income/(loss) before management
fee
57
(3,552
)
(9,736
)
(7,853
)
Investment gain/(loss)
5,676
15,603
79,303
(34,770
)
Interest and dividend income from
GAMCO
107
59
5,288
177
Interest and dividend income, net
915
1,127
3,580
4,352
Shareholder-designated contribution
(541
)
(2,782
)
(2,717
)
(3,007
)
Investment and other non-operating
income/(expense), net
6,157
14,007
85,454
(33,248
)
Income/(loss) before management fee and
income taxes
6,214
10,455
75,718
(41,101
)
Management fee
226
-
7,209
-
Income/(loss) before income taxes
5,988
10,455
68,509
(41,101
)
Income tax expense/(benefit)
484
3,564
15,094
(8,858
)
Income/(loss) from continuing operations,
net of taxes
5,504
6,891
53,415
(32,243
)
Income/(loss) from discontinued
operations, net of taxes
-
(139
)
-
(632
)
Income/(loss) before noncontrolling
interests
5,504
6,752
53,415
(32,875
)
Income/(loss) attributable to
noncontrolling interests
4,001
937
3,641
(572
)
Net income/(loss) attributable to
Associated Capital Group, Inc.’s shareholders
$
1,503
$
5,815
$
49,774
$
(32,303
)
Net income/(loss) per share attributable
to Associated Capital Group, Inc.’s shareholders:
Basic - Continuing operations
$
0.07
$
0.27
$
2.25
$
(1.41
)
Basic - Discontinued operations
-
(0.01
)
-
(0.03
)
Basic – Total
$
0.07
$
0.26
$
2.25
$
(1.44
)
Diluted - Continuing operations
$
0.07
$
0.27
$
2.25
$
(1.41
)
Diluted - Discontinued operations
-
(0.01
)
-
(0.03
)
Diluted - Total
$
0.07
$
0.26
$
2.25
$
(1.44
)
Weighted average shares outstanding:
Basic
22,084
22,354
22,141
22,391
Diluted
22,084
22,354
22,141
22,391
Actual shares outstanding – end of
period
22,062
22,333
22,062
22,333
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211105005843/en/
Timothy H. Schott Chief Financial Officer (914) 921 8351
Associated-Capital-Group.com
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