Delaware
|
|
1-14761
|
|
13-4007862
|
(State or other
jurisdiction of incorporation)
|
|
(Commission File Number)
|
|
(IRS Employer
Identification No.)
|
|
|
|
||
One Corporate Center, Rye, NY
|
|
|
|
10580
|
(Address of principal executive offices)
|
|
|
|
(Zip Code)
|
|
|
|
Item 2.02
|
|
Results of Operations and Financial Condition.
|
|
|
|
Item 9.01
|
|
Financial Statements and Exhibits.
|
For Immediate Release:
|
Contact:
|
Kieran Caterina or Diane M. LaPointe
|
|
|
SVPs and Co-Chief Accounting Officers
|
|
|
(914) 921-5149 or 7763
|
|
|
|
|
|
For further information please visit
|
|
|
www.gabelli.com
|
-
|
Third quarter net income $35.0 million vs. $16.6 million a year ago
|
-
|
Fully diluted earnings were $1.22 per share versus $0.55 per share
|
-
|
Average AUM for quarter was $41.0 billion vs. $42.3 billion in 2017 quarter
|
-
-
|
Investment grade rating reaffirmed by Standard & Poor’s
Our “Giving Back” program unfolded with shareholder designated contributions totaling nearly $5 million bringing total contributions to $47 million
|
-
|
Total revenues for the third quarter of 2018 were $85.8 million compared to $88.3 million in the prior year.
|
-
|
Investment advisory fees were $75.9 million in the third quarter versus $77.3 million in the third quarter of 2017. Open-end and closed-end fund revenues were unchanged at $50.0 million in the third quarter. Institutional and Private Wealth Management revenues were $24.3 million compared to $26.0 million in 2017. SICAV revenues increased to $1.6 million from $1.3 million in the prior year quarter.
|
-
|
Distribution fees from our open-end equity funds and other income were $9.9 million for the third quarter of 2018 versus $11.0 million in the prior-year quarter.
|
Financial Highlights
|
||||||||||||||||||||||||||||||||
|
Third Quarter
|
YTD
|
||||||||||||||||||||||||||||||
($'s in 000's except AUM and per share data)
|
2018
|
2017
|
2018
|
2017
|
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
AUM - average (in millions)
|
$
|
41,037
|
$
|
42,323
|
$
|
41,341
|
$
|
41,696
|
||||||||||||||||||||||||
AUM - end of period (in millions)
|
40,646
|
43,089
|
40,646
|
43,089
|
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Revenues
|
$
|
85,788
|
$
|
88,341
|
$
|
260,478
|
$
|
261,858
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Operating income
|
51,700
|
23,393
|
134,329
|
105,496
|
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Income before income taxes
|
46,436
|
20,434
|
124,023
|
98,002
|
||||||||||||||||||||||||||||
Effective tax rate
|
24.6
|
%
|
18.8
|
%
|
24.3
|
%
|
34.4
|
%
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Net income
|
35,016
|
16,600
|
93,859
|
64,314
|
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Net income per fully diluted share
|
$
|
1.22
|
$
|
0.55
|
$
|
3.26
|
$
|
2.14
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Weighted average diluted shares outstanding
|
28,739
|
31,173
|
28,824
|
31,144
|
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Shares outstanding at September 30,
|
29,066
|
29,168
|
29,066
|
29,168
|
||||||||||||||||||||||||||||
|
-
|
On August 21, 2018, we announced that Ian Lapey joined us as portfolio manager for the newly registered Gabelli Global Financial Services Fund. The Fund launched on October 1, 2018. Ian was a Partner, Research Analyst, and Portfolio Manager at Third Avenue Management, after which he joined Moerus Capital Management LLC. In 2009 he was appointed Co-Manager of the firm’s flagship Third Avenue Value Fund, and was subsequently named sole Portfolio Manager of that fund in 2012.
|
-
|
We also launched the Gabelli Global Mini Mites Fund. The fund will invest on a global basis in equity securities that have a market capitalization of $250 million or less.
|
-
|
On August 27, 2018, Trevor, Stewart, Burton & Jacobson (“TSB&J”), an RIA firm, agreed to assign their private wealth clients to GAMCO Asset Management. Carl Kempner, Jr. and Melody Bryant joined GAMCO to manage the portfolios for the former TSB&J clients.
|
-
|
On September 28, 2018, Fitch Ratings gave the Gabelli U.S. Treasury Fund its highest rating, AAAmmf.
|
The Company reported Assets Under Management as follows (in millions):
|
||||||||
|
||||||||
|
September 30,
|
September 30,
|
||||||
|
2018
|
2017
|
||||||
Equities:
|
||||||||
Open-end Funds
|
$
|
12,799
|
$
|
13,762
|
||||
Closed-end Funds
|
7,895
|
7,668
|
||||||
Institutional & PWM - direct (a)
|
11,940
|
13,893
|
||||||
Institutional & PWM - sub-advisory
|
5,434
|
5,346
|
||||||
SICAV
|
548
|
504
|
||||||
Total Equities
|
38,616
|
41,173
|
||||||
Fixed Income:
|
||||||||
100% U.S. Treasury Fund
|
2,004
|
1,890
|
||||||
Institutional & PWM
|
26
|
26
|
||||||
Total Fixed Income
|
2,030
|
1,916
|
||||||
Total Assets Under Management
|
$
|
40,646
|
$
|
43,089
|
||||
(a) Includes $324 million and $280 million of 100% U.S. Treasury Fund AUM at
|
||||||||
September 30, 2018 and September 30, 2017, respectively.
|
Table I: Fund Flows - 3rd Quarter 2018
|
||||||||||||||||||||
|
Fund
|
|||||||||||||||||||
|
Market
|
distributions,
|
||||||||||||||||||
|
June 30,
|
appreciation/
|
Net cash
|
net of
|
September 30,
|
|||||||||||||||
|
2018
|
(depreciation)
|
flows
|
reinvestments
|
2018
|
|||||||||||||||
Equities:
|
||||||||||||||||||||
Open-end Funds
|
$
|
12,906
|
$
|
480
|
$
|
(566
|
)
|
$
|
(21
|
)
|
$
|
12,799
|
||||||||
Closed-end Funds
|
7,778
|
252
|
(9
|
)
|
(126
|
)
|
7,895
|
|||||||||||||
Institutional & PWM - direct
|
11,982
|
418
|
(460
|
)
|
-
|
11,940
|
||||||||||||||
Institutional & PWM - sub-advisory
|
5,459
|
55
|
(80
|
)
|
-
|
5,434
|
||||||||||||||
SICAV
|
559
|
1
|
(12
|
)
|
-
|
548
|
||||||||||||||
Total Equities
|
38,684
|
1,206
|
(1,127
|
)
|
(147
|
)
|
38,616
|
|||||||||||||
Fixed Income:
|
||||||||||||||||||||
100% U.S. Treasury Fund
|
1,961
|
10
|
33
|
-
|
2,004
|
|||||||||||||||
Institutional & PWM
|
26
|
-
|
-
|
-
|
26
|
|||||||||||||||
Total Fixed Income
|
1,987
|
10
|
33
|
-
|
2,030
|
|||||||||||||||
Total Assets Under Management
|
$
|
40,671
|
$
|
1,216
|
$
|
(1,094
|
)
|
$
|
(147
|
)
|
$
|
40,646
|
||||||||
|
Table II: Fund Flows - Year to date September 30, 2018
|
||||||||||||||||||||
|
Fund
|
|||||||||||||||||||
|
Market
|
distributions,
|
||||||||||||||||||
|
December 31,
|
appreciation/
|
Net cash
|
net of
|
September 30,
|
|||||||||||||||
|
2017
|
(depreciation)
|
flows
|
reinvestments
|
2018
|
|||||||||||||||
Equities:
|
||||||||||||||||||||
Open-end Funds
|
$
|
13,747
|
$
|
503
|
$
|
(1,413
|
)
|
$
|
(38
|
)
|
$
|
12,799
|
||||||||
Closed-end Funds
|
8,053
|
269
|
(47
|
)
|
(380
|
)
|
7,895
|
|||||||||||||
Institutional & PWM - direct
|
13,420
|
227
|
(1,707
|
)
|
-
|
11,940
|
||||||||||||||
Institutional & PWM - sub-advisory
|
5,432
|
122
|
(120
|
)
|
-
|
5,434
|
||||||||||||||
SICAV
|
510
|
(14
|
)
|
52
|
-
|
548
|
||||||||||||||
Total Equities
|
41,162
|
1,107
|
(3,235
|
)
|
(418
|
)
|
38,616
|
|||||||||||||
Fixed Income:
|
||||||||||||||||||||
100% U.S. Treasury Fund
|
1,870
|
24
|
110
|
-
|
2,004
|
|||||||||||||||
Institutional & PWM
|
31
|
1
|
(6
|
)
|
-
|
26
|
||||||||||||||
Total Fixed Income
|
1,901
|
25
|
104
|
-
|
2,030
|
|||||||||||||||
Total Assets Under Management
|
$
|
43,063
|
$
|
1,132
|
$
|
(3,131
|
)
|
$
|
(418
|
)
|
$
|
40,646
|
||||||||
|
||||||||||||||||||||
|
Table III
|
||||||||
|
||||||||
GAMCO INVESTORS, INC.
|
||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
||||||||
(Dollars in thousands, except per share data)
|
||||||||
|
||||||||
|
For the Quarter Ended
|
|||||||
|
September 30,
|
|||||||
|
2018
|
2017
|
||||||
|
||||||||
Investment advisory and incentive fees
|
$
|
75,934
|
$
|
77,328
|
||||
Distribution fees and other income
|
9,854
|
11,013
|
||||||
Total revenues
|
85,788
|
88,341
|
||||||
|
||||||||
Compensation costs
|
17,562
|
42,919
|
||||||
Distribution costs
|
9,819
|
11,665
|
||||||
Other operating expenses
|
5,258
|
5,429
|
||||||
Total expenses
|
32,639
|
60,013
|
||||||
|
||||||||
Operating income before management fee
|
53,149
|
28,328
|
||||||
|
||||||||
Investment income
|
(3,797
|
)
|
3,586
|
|||||
Interest expense
|
(759
|
)
|
(2,688
|
)
|
||||
Shareholder-designated contribution
|
(708
|
)
|
(3,857
|
)
|
||||
Other expense, net
|
(5,264
|
)
|
(2,959
|
)
|
||||
|
||||||||
Income before management fee and income taxes
|
47,885
|
25,369
|
||||||
Management fee expense
|
1,449
|
4,935
|
||||||
Income before income taxes
|
46,436
|
20,434
|
||||||
Income tax expense
|
11,420
|
3,834
|
||||||
Net income attributable to GAMCO Investors, Inc.
|
$
|
35,016
|
$
|
16,600
|
||||
|
||||||||
Net income per share attributable to GAMCO Investors, Inc.:
|
||||||||
Basic
|
$
|
1.22
|
$
|
0.57
|
||||
|
||||||||
Diluted
|
$
|
1.22
|
$
|
0.55
|
||||
|
||||||||
Weighted average shares outstanding:
|
||||||||
Basic
|
28,677
|
28,926
|
||||||
|
||||||||
Diluted
|
28,739
|
31,173
|
||||||
|
||||||||
Actual shares outstanding (a)
|
29,066
|
29,168
|
||||||
|
||||||||
Notes:
|
||||||||
(a) Includes 434,750 and 164,050 of RSAs, respectively.
|
||||||||
|
||||||||
See GAAP to non-GAAP reconciliation on page 8.
|
Table IV
|
||||||||
|
||||||||
GAMCO INVESTORS, INC.
|
||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
||||||||
(Dollars in thousands, except per share data)
|
||||||||
|
||||||||
|
For the Nine Months Ended
|
|||||||
|
September 30,
|
|||||||
|
2018
|
2017
|
||||||
|
||||||||
Investment advisory and incentive fees
|
$
|
230,616
|
$
|
228,942
|
||||
Distribution fees and other income
|
29,862
|
32,916
|
||||||
Total revenues
|
260,478
|
261,858
|
||||||
|
||||||||
Compensation costs
|
72,464
|
97,634
|
||||||
Distribution costs
|
29,875
|
33,373
|
||||||
Other operating expenses
|
16,245
|
15,900
|
||||||
Total expenses
|
118,584
|
146,907
|
||||||
|
||||||||
Operating income before management fee
|
141,894
|
114,951
|
||||||
|
||||||||
Investment income
|
(6,541
|
)
|
4,632
|
|||||
Interest expense
|
(2,881
|
)
|
(8,269
|
)
|
||||
Shareholder-designated contribution
|
(884
|
)
|
(3,857
|
)
|
||||
Other expense, net
|
(10,306
|
)
|
(7,494
|
)
|
||||
|
||||||||
Income before management fee and income taxes
|
131,588
|
107,457
|
||||||
Management fee expense
|
7,565
|
9,455
|
||||||
Income before income taxes
|
124,023
|
98,002
|
||||||
Income tax expense
|
30,164
|
33,688
|
||||||
Net income attributable to GAMCO Investors, Inc.
|
$
|
93,859
|
$
|
64,314
|
||||
|
||||||||
Net income per share attributable to GAMCO Investors, Inc.:
|
||||||||
Basic
|
$
|
3.26
|
$
|
2.22
|
||||
|
||||||||
Diluted
|
$
|
3.26
|
$
|
2.14
|
||||
|
||||||||
Weighted average shares outstanding:
|
||||||||
Basic
|
28,789
|
28,930
|
||||||
|
||||||||
Diluted
|
28,824
|
31,144
|
||||||
|
||||||||
Actual shares outstanding (a)
|
29,066
|
29,168
|
||||||
|
||||||||
Notes:
|
||||||||
(a) Includes 434,750 and 164,050 of RSAs, respectively.
|
||||||||
|
||||||||
See GAAP to non-GAAP reconciliation on page 8.
|
Table V
|
||||||||||||||||||||||||||||||||||||
GAMCO INVESTORS, INC.
|
||||||||||||||||||||||||||||||||||||
UNAUDITED QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
||||||||||||||||||||||||||||||||||||
(Dollars in thousands, except per share data)
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
2018
|
2017
|
||||||||||||||||||||||||||||||||||
|
1st
|
2nd
|
3rd
|
Year |
1st
|
2nd
|
3rd
|
4th
|
||||||||||||||||||||||||||||
|
Quarter
|
Quarter
|
Quarter
|
to Date
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
Full Year
|
|||||||||||||||||||||||||||
Income Statement Data:
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Revenues
|
$
|
87,497
|
$
|
87,193
|
$
|
85,788
|
$
|
260,478
|
$
|
85,917
|
$
|
87,600
|
$
|
88,341
|
$
|
98,666
|
$
|
360,524
|
||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Expenses
|
41,607
|
44,338
|
32,639
|
118,584
|
41,310
|
45,584
|
60,013
|
54,931
|
201,838
|
|||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Operating income before
|
||||||||||||||||||||||||||||||||||||
management fee
|
45,890
|
42,855
|
53,149
|
141,894
|
44,607
|
42,016
|
28,328
|
43,735
|
158,686
|
|||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Investment income
|
(4,855
|
)
|
2,111
|
(3,797
|
)
|
(6,541
|
)
|
509
|
537
|
3,586
|
(2,467
|
)
|
2,165
|
|||||||||||||||||||||||
Interest expense
|
(1,200
|
)
|
(922
|
)
|
(759
|
)
|
(2,881
|
)
|
(2,832
|
)
|
(2,749
|
)
|
(2,688
|
)
|
(1,891
|
)
|
(10,160
|
)
|
||||||||||||||||||
Shareholder-designated contribution
|
-
|
(176
|
)
|
(708
|
)
|
(884
|
)
|
-
|
-
|
(3,857
|
)
|
(280
|
)
|
(4,137
|
)
|
|||||||||||||||||||||
Other income/(expense), net
|
(6,055
|
)
|
1,013
|
(5,264
|
)
|
(10,306
|
)
|
(2,323
|
)
|
(2,212
|
)
|
(2,959
|
)
|
(4,638
|
)
|
(12,132
|
)
|
|||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Income before management
|
||||||||||||||||||||||||||||||||||||
fee and income taxes
|
39,835
|
43,868
|
47,885
|
131,588
|
42,284
|
39,804
|
25,369
|
39,097
|
146,554
|
|||||||||||||||||||||||||||
Management fee expense
|
4,634
|
1,482
|
1,449
|
7,565
|
2,164
|
2,356
|
4,935
|
4,211
|
13,666
|
|||||||||||||||||||||||||||
Income before income taxes
|
35,201
|
42,386
|
46,436
|
124,023
|
40,120
|
37,448
|
20,434
|
34,886
|
132,888
|
|||||||||||||||||||||||||||
Income tax expense
|
7,940
|
10,804
|
11,420
|
30,164
|
15,300
|
14,554
|
3,834
|
21,391
|
55,079
|
|||||||||||||||||||||||||||
Net income attributable to
|
||||||||||||||||||||||||||||||||||||
GAMCO Investors, Inc.
|
$
|
27,261
|
$
|
31,582
|
$
|
35,016
|
$
|
93,859
|
$
|
24,820
|
$
|
22,894
|
$
|
16,600
|
$
|
13,495
|
$
|
77,809
|
||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Net income per share
|
||||||||||||||||||||||||||||||||||||
attributable to GAMCO
|
||||||||||||||||||||||||||||||||||||
Investors, Inc.:
|
||||||||||||||||||||||||||||||||||||
Basic
|
$
|
0.94
|
$
|
1.10
|
$
|
1.22
|
$
|
3.26
|
$
|
0.86
|
$
|
0.79
|
$
|
0.57
|
$
|
0.46
|
$
|
2.68
|
||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Diluted
|
$
|
0.94
|
$
|
1.10
|
$
|
1.22
|
$
|
3.26
|
$
|
0.82
|
$
|
0.76
|
$
|
0.55
|
$
|
0.46
|
$
|
2.60
|
||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Weighted average shares outstanding:
|
||||||||||||||||||||||||||||||||||||
Basic
|
28,916
|
28,777
|
28,677
|
28,789
|
28,970
|
28,896
|
28,926
|
29,103
|
28,980
|
|||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Diluted
|
28,916
|
28,819
|
28,739
|
28,824
|
31,160
|
31,100
|
31,173
|
30,336
|
30,947
|
|||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Reconciliation of non-GAAP
|
||||||||||||||||||||||||||||||||||||
financial measures to GAAP:
|
||||||||||||||||||||||||||||||||||||
Operating income before
|
||||||||||||||||||||||||||||||||||||
management fee
|
45,890
|
42,855
|
53,149
|
141,894
|
44,607
|
42,016
|
28,328
|
43,735
|
158,686
|
|||||||||||||||||||||||||||
Deduct: management fee expense
|
4,634
|
1,482
|
1,449
|
7,565
|
2,164
|
2,356
|
4,935
|
4,211
|
13,666
|
|||||||||||||||||||||||||||
Operating income
|
$
|
41,256
|
$
|
41,373
|
$
|
51,700
|
$
|
134,329
|
$
|
42,443
|
$
|
39,660
|
$
|
23,393
|
$
|
39,524
|
$
|
145,020
|
||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Operating margin before
|
||||||||||||||||||||||||||||||||||||
management fee
|
52.4
|
%
|
49.1
|
%
|
62.0
|
%
|
54.5
|
%
|
51.9
|
%
|
48.0
|
%
|
32.1
|
%
|
44.3
|
%
|
44.0
|
%
|
||||||||||||||||||
Operating margin after
|
||||||||||||||||||||||||||||||||||||
management fee
|
47.2
|
%
|
47.4
|
%
|
60.3
|
%
|
51.6
|
%
|
49.4
|
%
|
45.3
|
%
|
26.5
|
%
|
40.1
|
%
|
40.2
|
%
|
||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Notes on Non-GAAP Financial Measures:
|
||||||||||||||||||||||||||||||||||||
Operating income before management fee 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.
|
Table VI
|
||||||||
GAMCO INVESTORS, INC.
|
||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
|
||||||||
(Dollars in thousands, except per share data)
|
||||||||
|
||||||||
|
September 30,
|
December 31,
|
||||||
|
2018
|
2017
|
||||||
|
||||||||
ASSETS
|
||||||||
|
||||||||
Cash and cash equivalents
|
$
|
34,334
|
$
|
17,821
|
||||
Investments
|
29,704
|
36,790
|
||||||
Receivable from brokers
|
2,654
|
1,578
|
||||||
Other receivables
|
30,616
|
45,621
|
||||||
Deferred tax asset and income tax receivable
|
11,532
|
15,615
|
||||||
Other assets
|
9,617
|
10,861
|
||||||
|
||||||||
Total assets
|
$
|
118,457
|
$
|
128,286
|
||||
|
||||||||
LIABILITIES AND EQUITY
|
||||||||
|
||||||||
Payable to brokers
|
$
|
-
|
$
|
14,926
|
||||
Income taxes payable and deferred tax liabilities
|
3,555
|
3,128
|
||||||
Compensation payable (a)
|
70,385
|
82,907
|
||||||
Accrued expenses and other liabilities
|
32,545
|
34,454
|
||||||
Sub-total
|
106,485
|
135,415
|
||||||
|
||||||||
5.875% Senior notes (due June 1, 2021)
|
24,162
|
24,144
|
||||||
4% PIK note (due November 30, 2020)
|
-
|
50,000
|
||||||
1.6% AC Note (due February 28, 2018)
|
-
|
15,000
|
||||||
Total debt
|
24,162
|
89,144
|
||||||
Total liabilities
|
130,647
|
224,559
|
||||||
|
||||||||
GAMCO Investors, Inc.'s stockholders' deficit
|
(12,190
|
)
|
(96,273
|
)
|
||||
|
||||||||
Total liabilities and equity
|
$
|
118,457
|
$
|
128,286
|
||||
|
||||||||
(a) Excludes $21.1 million and $59.0 million of DCCA expense that is not yet recorded under GAAP as of
|
||||||||
September 30, 2018 and December 31, 2017, respectively.
|
||||||||
|
GAMCO’s non-GAAP measures include adjusted operating income, adjusted income before taxes, adjusted effective tax rate, adjusted net income and adjusted net income per fully diluted share. GAMCO’s calculation of these non-GAAP measures may not be comparable to similarly titled measures of other companies due to potential differences between companies in the method of calculation. As a result, the use of these non-GAAP measures has limitations and should not be considered superior to, in isolation from, or a substitute for, related U.S. GAAP measures.
These non-GAAP measures allow management and investors to view operating trends, perform analytical comparisons and benchmark performance between periods to understand operating performance without regard to items that we do not consider to be a component of our core operating performance. Management uses these measures in its financial, investment and operational decision-making processes, for internal reporting and as part of its forecasting and budgeting processes. For these reasons we believe these non-GAAP measures are useful for our investors.
Adjusted operating income, adjusted income before taxes, adjusted effective tax rate, adjusted net income and adjusted net income per fully diluted share can be used by investors to review our results on a consistent basis. Examples of adjustments to these measures include the GAAP impact of the 2016 Deferred Cash Compensation Agreement (“DCCA”), First Half 2017 DCCA, and the Fourth Quarter 2017 DCCA that were put in place to enable the Company to more quickly pay down its debt.
|
|
For the three months ended September 30, 2018
|
|||||||||||||||||||
|
Impact of
|
Impact of
|
||||||||||||||||||
|
Reported
|
Fourth Quarter
|
First Half
|
Impact of
|
||||||||||||||||
|
GAAP
|
2017 DCCA
|
2017 DCCA
|
2016 DCCA
|
Adjusted
|
|||||||||||||||
|
||||||||||||||||||||
Total revenues
|
$
|
85,788
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
85,788
|
||||||||||
|
||||||||||||||||||||
Compensation costs
|
17,562
|
(766
|
)
|
(441
|
)
|
2,474
|
18,829
|
|||||||||||||
Distribution costs
|
9,819
|
-
|
-
|
-
|
9,819
|
|||||||||||||||
Other operating expenses
|
5,258
|
-
|
-
|
-
|
5,258
|
|||||||||||||||
Total expenses
|
32,639
|
(766
|
)
|
(441
|
)
|
2,474
|
33,906
|
|||||||||||||
|
||||||||||||||||||||
Operating income before management fee
|
53,149
|
766
|
441
|
(2,474
|
)
|
51,882
|
||||||||||||||
|
||||||||||||||||||||
Other income/(expense), net
|
(5,264
|
)
|
-
|
-
|
-
|
(5,264
|
)
|
|||||||||||||
|
||||||||||||||||||||
Income before management fee and income taxes
|
47,885
|
766
|
441
|
(2,474
|
)
|
46,618
|
||||||||||||||
Management fee expense
|
1,449
|
(419
|
)
|
-
|
(1,030
|
)
|
-
|
|||||||||||||
Income before income taxes
|
46,436
|
1,185
|
441
|
(1,444
|
)
|
46,618
|
||||||||||||||
Income tax expense
|
11,420
|
296
|
110
|
(361
|
)
|
11,465
|
||||||||||||||
Net income attributable to GAMCO Investors, Inc.
|
$
|
35,016
|
$
|
889
|
$
|
331
|
$
|
(1,083
|
)
|
$
|
35,153
|
|||||||||
|
||||||||||||||||||||
Net income per share attributable to GAMCO Investors, Inc.:
|
||||||||||||||||||||
Basic
|
$
|
1.22
|
$
|
0.03
|
$
|
0.01
|
$
|
(0.04
|
)
|
$
|
1.23
|
|||||||||
Diluted
|
$
|
1.22
|
$
|
0.03
|
$
|
0.01
|
$
|
(0.04
|
)
|
$
|
1.22
|
|||||||||
|
||||||||||||||||||||
Reconciliation of non-GAAP financial measures to GAAP:
|
||||||||||||||||||||
|
||||||||||||||||||||
Operating income before management fee
|
$
|
53,149
|
$
|
766
|
$
|
441
|
$
|
(2,474
|
)
|
$
|
51,882
|
|||||||||
Deduct: management fee expense
|
(1,449
|
)
|
419
|
-
|
1,030
|
-
|
||||||||||||||
Operating income
|
$
|
51,700
|
$
|
1,185
|
$
|
441
|
$
|
(1,444
|
)
|
$
|
51,882
|
|||||||||
|
|
For the three months ended September 30, 2017
|
|||||||||||||||
|
||||||||||||||||
|
Reported
|
First Half
|
||||||||||||||
|
GAAP
|
2017 DCCA
|
2016 DCCA
|
Adjusted
|
||||||||||||
|
||||||||||||||||
Total revenues
|
$
|
88,341
|
$
|
-
|
$
|
-
|
$
|
88,341
|
||||||||
|
||||||||||||||||
Compensation costs
|
42,919
|
(4,816
|
)
|
(3,415
|
)
|
34,688
|
||||||||||
Distribution costs
|
11,665
|
-
|
-
|
11,665
|
||||||||||||
Other operating expenses
|
5,429
|
-
|
-
|
5,429
|
||||||||||||
Total expenses
|
60,013
|
(4,816
|
)
|
(3,415
|
)
|
51,782
|
||||||||||
|
||||||||||||||||
Operating income before management fee
|
28,328
|
4,816
|
3,415
|
36,559
|
||||||||||||
|
||||||||||||||||
Other expense, net
|
(2,959
|
)
|
-
|
-
|
(2,959
|
)
|
||||||||||
|
||||||||||||||||
Income before management fee and income taxes
|
25,369
|
4,816
|
3,415
|
33,600
|
||||||||||||
Management fee expense
|
4,935
|
(886
|
)
|
(688
|
)
|
3,361
|
||||||||||
Income before income taxes
|
20,434
|
5,702
|
4,103
|
30,239
|
||||||||||||
Income tax expense
|
3,834
|
2,167
|
1,559
|
7,560
|
||||||||||||
Net income attributable to GAMCO Investors, Inc.
|
$
|
16,600
|
$
|
3,535
|
$
|
2,544
|
$
|
22,679
|
||||||||
|
||||||||||||||||
Net income per share attributable to GAMCO Investors, Inc.:
|
||||||||||||||||
Basic
|
$
|
0.57
|
$
|
0.12
|
$
|
0.09
|
$
|
0.78
|
||||||||
Diluted
|
$
|
0.55
|
$
|
0.11
|
$
|
0.08
|
$
|
0.75
|
||||||||
|
||||||||||||||||
Reconciliation of non-GAAP financial measures to GAAP:
|
||||||||||||||||
|
||||||||||||||||
Operating income before management fee
|
$
|
28,328
|
$
|
4,816
|
$
|
3,415
|
$
|
36,559
|
||||||||
Deduct: management fee expense
|
(4,935
|
)
|
886
|
688
|
(3,361
|
)
|
||||||||||
Operating income
|
$
|
23,393
|
$
|
5,702
|
$
|
4,103
|
$
|
33,198
|
||||||||
|
|
For the nine months ended September 30, 2018
|
|||||||||||||||||||
|
Impact of
|
Impact of
|
||||||||||||||||||
|
Reported
|
Fourth Quarter
|
First Half
|
Impact of
|
||||||||||||||||
|
GAAP
|
2017 DCCA
|
2017 DCCA
|
2016 DCCA
|
Non-GAAP
|
|||||||||||||||
|
||||||||||||||||||||
Total revenues
|
$
|
260,478
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
260,478
|
||||||||||
|
||||||||||||||||||||
Compensation costs
|
72,464
|
(4,446
|
)
|
(2,335
|
)
|
135
|
65,818
|
|||||||||||||
Distribution costs
|
29,875
|
-
|
-
|
-
|
29,875
|
|||||||||||||||
Other operating expenses
|
16,245
|
-
|
-
|
-
|
16,245
|
|||||||||||||||
Total expenses
|
118,584
|
(4,446
|
)
|
(2,335
|
)
|
135
|
111,938
|
|||||||||||||
|
||||||||||||||||||||
Operating income before management fee
|
141,894
|
4,446
|
2,335
|
(135
|
)
|
148,540
|
||||||||||||||
|
||||||||||||||||||||
Other expense, net
|
(10,306
|
)
|
-
|
-
|
-
|
(10,306
|
)
|
|||||||||||||
|
||||||||||||||||||||
Income before management fee and income taxes
|
131,588
|
4,446
|
2,335
|
(135
|
)
|
138,234
|
||||||||||||||
Management fee expense
|
7,565
|
(1,257
|
)
|
(1,401
|
)
|
(3,090
|
)
|
1,817
|
||||||||||||
Income before income taxes
|
124,023
|
5,703
|
3,736
|
2,955
|
136,417
|
|||||||||||||||
Income tax expense
|
30,164
|
1,426
|
934
|
738
|
33,262
|
|||||||||||||||
Net income attributable to GAMCO Investors, Inc.
|
$
|
93,859
|
$
|
4,277
|
$
|
2,802
|
$
|
2,217
|
$
|
103,155
|
||||||||||
|
||||||||||||||||||||
Net income per share attributable to GAMCO Investors, Inc.:
|
||||||||||||||||||||
Basic
|
$
|
3.26
|
$
|
0.15
|
$
|
0.10
|
$
|
0.08
|
$
|
3.58
|
||||||||||
Diluted
|
$
|
3.26
|
$
|
0.15
|
$
|
0.10
|
$
|
0.08
|
$
|
3.58
|
||||||||||
|
|
For the nine months ended September 30, 2017
|
|||||||||||||||
|
||||||||||||||||
|
Reported
|
First Half
|
||||||||||||||
|
GAAP
|
2017 DCCA
|
2016 DCCA
|
Adjusted
|
||||||||||||
|
||||||||||||||||
Total revenues
|
$
|
261,858
|
$
|
-
|
$
|
-
|
$
|
261,858
|
||||||||
|
||||||||||||||||
Compensation costs
|
97,634
|
14,390
|
(9,174
|
)
|
102,850
|
|||||||||||
Distribution costs
|
33,373
|
-
|
-
|
33,373
|
||||||||||||
Other operating expenses
|
15,900
|
-
|
-
|
15,900
|
||||||||||||
Total expenses
|
146,907
|
14,390
|
(9,174
|
)
|
152,123
|
|||||||||||
|
||||||||||||||||
Operating income before management fee
|
114,951
|
(14,390
|
)
|
9,174
|
109,735
|
|||||||||||
|
||||||||||||||||
Other expense, net
|
(7,494
|
)
|
-
|
-
|
(7,494
|
)
|
||||||||||
|
||||||||||||||||
Income before management fee and income taxes
|
107,457
|
(14,390
|
)
|
9,174
|
102,241
|
|||||||||||
Management fee expense
|
9,455
|
2,666
|
(2,172
|
)
|
9,949
|
|||||||||||
Income before income taxes
|
98,002
|
(17,056
|
)
|
11,346
|
92,292
|
|||||||||||
Income tax expense
|
33,688
|
(6,594
|
)
|
4,350
|
31,444
|
|||||||||||
Net income attributable to GAMCO Investors, Inc.
|
$
|
64,314
|
$
|
(10,462
|
)
|
$
|
6,996
|
$
|
60,848
|
|||||||
|
||||||||||||||||
Net income per share attributable to GAMCO Investors, Inc.:
|
||||||||||||||||
Basic
|
$
|
2.22
|
$
|
(0.36
|
)
|
$
|
0.24
|
$
|
2.10
|
|||||||
Diluted
|
$
|
2.14
|
$
|
(0.34
|
)
|
$
|
0.22
|
$
|
2.02
|
|||||||
|