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Associated Capital Group, Inc. Reports Second Quarter Results

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-Book Value per share ended the quarter at $41.41 per share vs $40.30 at June 30, 2022

-AUM: $1.55 billion at June 30, 2023 compared to $1.80 billion at June 30, 2022

-Board approves $0.20 per share Shareholder Designated Charitable Contribution (“SDCC”)

GREENWICH, Conn.--(BUSINESS WIRE)-- Associated Capital Group, Inc. (“AC” or the “Company”), a diversified financial services company, today reported its financial results for the second quarter ended June 30, 2023.

Financial Highlights - GAAP Basis

($ in 000's except AUM and per share data)

(Unaudited)

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

AUM - end of period (in millions)

 

$

1,549

 

 

$

1,802

 

 

$

1,549

 

 

$

1,802

 

AUM - average (in millions)

 

 

1,640

 

 

 

1,851

 

 

 

1,740

 

 

 

1,826

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

2,382

 

 

 

2,546

 

 

 

4,847

 

 

 

5,128

 

Operating loss before management fee (Non-GAAP)

 

 

(2,927

)

 

 

(2,211

)

 

 

(5,517

)

 

 

(5,517

)

Investment and other non-operating income/(loss), net

 

 

8,611

 

 

 

(35,917

)

 

 

33,346

 

 

 

(50,964

)

Income/(loss) before income taxes

 

 

5,140

 

 

 

(38,128

)

 

 

24,742

 

 

 

(56,481

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss)

 

 

3,371

 

 

 

(29,887

)

 

 

21,125

 

 

 

(46,073

)

Net income/(loss) per share-diluted

 

 

0.15

 

 

 

(1.36

)

 

0.96

 

 

(2.09

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A shares outstanding (000’s)

 

 

2,763

 

 

 

3,052

 

 

 

2,763

 

 

 

3,052

 

Class B " "

 

 

18,963

 

 

 

18,963

 

 

 

18,963

 

 

 

18,963

 

Total " "

 

 

21,726

 

 

 

22,015

 

 

 

21,726

 

 

 

22,015

 

Book Value Per Share

 

$

41.41

 

 

$

40.30

 

 

$

41.41

 

 

$

40.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter Financial Data

-Assets under management ended the quarter at $1.55 billion versus $1.80 billion at June 30, 2022.

-Book value was $41.41 per share compared to $40.30 per share at June 30, 2022.

-For the first six months, Investment and other non-operating income was $33.3 million versus a loss of $51.0 million in the year-ago period. The nearly $84 million year to date positive swing reflects market appreciation in the current period versus a decline in the first half of 2022.

Second Quarter Results

Second quarter revenues were $2.4 million compared to $2.5 million in the second quarter of 2022. Total operating expenses, excluding management fee, were $5.3 million compared to $4.8 million in the comparable 2022 period. The difference is primarily due to higher stock based compensation expense in the 2023 quarter.

Net investment and other non-operating income was $8.6 million for the second quarter, a $44.5 million swing from the $35.9 million loss in the second quarter of 2022. The primary drivers of this quarter's results included gains from our mutual fund and GAMCO holdings, various partnership investments and interest income. Interest income reflected higher interest rates in the 2023 quarter as compared to 2022.

Management fee was $0.5 million. There was no management fee in the second quarter of 2022 due to pre-tax losses.

Our income tax expense of $1.8 million for the quarter compares to a benefit of $8.0 million in the comparable period of 2022. The effective tax rate applied to our pre-tax income for the quarter ended June 30, 2023 was 35.8%. The effective rate in calendar 2023 is primarily driven by a deferred tax expense from a foreign investment, increasing the current quarter's effective tax rate.

Assets Under Management (AUM)

Assets under management at June 30, 2023 were $1.55 billion, $293 million lower than 2022 due to net outflows of $287 million and a market decline of $17 million, partially offset by the impact of currency fluctuations of non-US dollar classes of investment funds of $11 million.

 

 

June 30,

 

 

December 31,

 

 

June 30,

 

 

 

2023

 

 

2022

 

 

2022

 

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Merger Arbitrage(a)

 

$

1,286

 

 

$

1,588

 

 

$

1,591

 

Long/Short Value(b)

 

 

230

 

 

 

222

 

 

 

174

 

Other

 

 

33

 

 

 

32

 

 

 

37

 

Total AUM

 

$

1,549

 

 

$

1,842

 

 

$

1,802

 

(a) Includes $579, $856, and $866 of sub-advisory AUM related to GAMCO International SICAV – GAMCO Merger Arbitrage, and $141, $206 and $66 of 100% U.S. Treasury Fund managed by GAMCO at June 30, 2023, December 31, 2022 and June 30, 2022, respectively.
(b) AUM represents the assets invested in this strategy that are attributable to Associated Capital Group, Inc.

Alternative Investment Management

The alternative investment strategy offerings center around our merger arbitrage strategy which has an absolute return focus of generating returns independent of the broad equity and fixed income markets. We also offer strategies utilizing fundamental, active, event-driven and special situations investments.

Merger Arbitrage

For the second quarter 2023, the longest continuously offered fund in the merger arbitrage strategy generated gross returns of -0.24% (-0.50% net of fees). A summary of the performance is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Full Year

 

 

 

 

 

 

 

 

 

Performance%(a)

 

2Q '23

 

 

2Q '22

 

 

YTD '23

 

 

YTD '22

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

5 Year(b)

 

 

Since
1985(b)(c)

 

Merger Arb

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

 

-0.24

 

 

 

-3.05

 

 

 

-0.63

 

 

 

-2.24

 

 

 

4.47

 

 

 

10.81

 

 

 

9.45

 

 

 

8.55

 

 

 

6.84

 

 

 

10.06

 

Net

 

 

-0.50

 

 

 

-3.18

 

 

 

Associated Capital Group, Inc.

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