- 2021 Year-end Book Value reaches a record $42.48 per share
vs. $40.36 a year ago
- Record level of AUM: $1.78 billion at December 31, 2021 vs.
$1.35 billion at December 31, 2020
- 2021 Net AUM inflows were a record $356 million for the
year
- 2021 Full year diluted EPS reaches a record $2.68 per
share
- Company eyes launch of Private Equity Fund
Associated Capital Group, Inc. (“AC” or the “Company”), a
diversified financial services company, today reported its
financial results for the fourth quarter and full year ended
December 31, 2021.
Financial Highlights – GAAP
basis
($’s in 000’s except AUM and per
share data)
Fourth Quarter
Full Year
(Unaudited)
2021
2020
2021
2020
AUM – end of period (in millions)
$
1,781
$
1,351
$
1,781
$
1,351
AUM – average (in millions)
1,735
1,286
1,595
1,399
Revenues
13,998
12,009
20,924
18,983
Operating Loss
(2,131
)
(4,616
)
(19,076
)
(12,469
)
Investment and other non-operating income,
net
14,961
75,599
100,415
42,352
Income/(loss) before income taxes
12,830
70,983
81,339
29,883
Net income/(loss) to shareholders:
Continuing operations, net of NCI
9,429
51,119
59,203
19,448
Discontinued operations, net of NCI
-
-
-
(632
)
Net income/(loss)
9,429
51,119
59,203
18,816
Net income/(loss) per share-diluted
$
0.43
$
2.29
$
2.68
$
0.84
Class A shares outstanding (thousands)
3,095
3,311
3,095
3,311
Class B shares outstanding (thousands)
18,963
18,963
18,963
18,963
Total shares outstanding (thousands)
22,058
22,274
22,058
22,274
Book Value Per Share
$
42.48
$
40.36
$
42.48
$
40.36
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. AC’s total
contribution, based on the shares registered as of December 1,
2021, is approximately $6.0 million, of which approximately $1.2
million is funded by the GBL SDCC program through AC’s holdings in
GBL. Since November 2015, Associated Capital’s SDCC program of
corporate giving has resulted in nearly $31 million in donations to
over 160 501(c)(3) institutions across the United States.
Fourth Quarter Financial Data
- At December 31, 2021 the book value was $42.48 per share versus
$42.24 at September 30, 2021, and $40.36 per share at December 31,
2020.
- Assets under management ended the quarter at $1.78 billion
compared to $1.68 billion at September 30, 2021 and $1.35 billion
at December 31, 2020. The increase in AUM for the 4th quarter 2021
is driven by net investor inflows of $88 million and market
appreciation of $13 million. For the full year, the increase in AUM
is driven by net investor inflows of $356 million coupled with
market appreciation of $74 million.
Fourth Quarter Results
Fourth quarter revenues of $14.0 million were $2.0 million
higher than the $12.0 million in revenues for the fourth quarter of
2020, largely due to higher AUM. Total operating expenses,
excluding management fee, were $14.9 million in the fourth quarter
2021 compared to $13.5 million in the comparable 2020 period
primarily due to payouts on higher performance fees in 2021.
Net investment and other non-operating income was $15.0 million
for the quarter, $60.6 million lower than the $75.6 million
generated in the prior year period, driven mainly by significant
market performance in Q4 2020 as a result of the market recovery
from the pandemic.
Fourth quarter Management fee expense of $1.2 million was $1.9
million lower than the $3.1 million management fee for the fourth
quarter of 2020 primarily driven by lower investment income in the
fourth quarter of 2021.
Our provision for income taxes was $2.6 million for the quarter
compared to $18.2 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 the
discount on the redeemable non-controlling interest issued by our
consolidated subsidiary, PMV Consumer Acquisition Corporation (“PMV
SPAC”). Accumulated accretion is expected to reverse upon the
consummation of a business combination, which is expected to result
in the deconsolidation of PMV SPAC.
Full Year Results
Revenues for the year ended 2021 reached $20.9 million compared
to $19.0 million in 2020 due to the record levels of both net
inflows as well as total AUM for the year combined with the
positive investment performance.
For 2021, operating loss before management fee was $10.7 million
compared to $9.4 million in 2020, primarily driven by increased
Compensation expense, which was driven by better performance of our
funds in 2021 when compared to the prior year as well as higher
share-based compensation expense due to an increase in our share
price. These items were offset by increases in revenues, and a
one-time credit recorded to Other operating expenses.
Non-operating income increased to $100.4 million compared to
$42.4 million in 2020, primarily driven by a $28.5 million increase
related to our holdings of GBL (including a special $2 per share
dividend declared in 2021) and other portfolio performance
increases.
Management fee expense increased to $8.4 million compared to
$3.1 million in 2020 primarily driven by higher investment income
in 2021.
Our income tax rate for the year was 21.8% and was lower than
the 31.4% rate for the prior year primarily due to foreign
investments impacting the prior year rate.
For the year ended 2021 the Company recorded Net Income of $59.2
million, compared to $18.8 million for 2020. Diluted EPS was $2.68
compared to $0.84 for the prior year.
Book value was a record $42.48 per share at December 31, 2021
versus $40.36 per share at December 31, 2020. The increase in Book
value per share reflects higher net income aided in part by modest
buybacks during the year, partially offset by the accretion of
redeemable noncontrolling interest.
Assets Under Management (AUM)
Assets under management at December 31, 2021 reached a record of
$1.8 billion, up $430 million from year-end 2020 due to record
annual net inflows of $356 million as well as $74 million in market
appreciation.
($ in millions)
December 31,
2021
December 31,
2020
Merger Arbitrage
$
1,542
$
1,126
Event-Driven Value(a)
195
180
Other
44
45
Total AUM
$
1,781
$
1,351
(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 factors.
Merger Arbitrage
For the fourth quarter 2021, merger arbitrage generated gross
returns of 2.39% (1.73% net of fees), for the year to date period,
gross returns were 10.81% (7.78% net of fees), adding to its
historical record of positive net returns in 35 of the last 37
years. A summary of our performance by strategy is as follows:
Performance(a)
4Q ‘21
2021
2020
2019
2018
5 Year(b)
Since
Inception
(b)(c)
Merger Arb
Gross
2.39
10.81
9.45
8.55
4.35
7.54
10.38
Net
1.73
7.78
6.70
5.98
2.65
5.19
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. Past
performance is no guarantee of future results. (b) Represents
annualized returns through December 31, 2021 (c) Inception Date:
Merger Arb - Feb-85
Merger Arbitrage Flagship
Fund
Percent Return (%)
Year
Gross
Return
Net
Return
90 Day
T-Bills
T-Bills +
400bps
Gross
Excess
Return
2021
10.81
7.78
0.05
4.05
6.76
2020
9.45
6.70
0.58
4.58
4.87
2019
8.55
5.98
2.25
6.25
2.30
2018
4.35
2.65
1.86
5.86
-1.52
2017
4.69
2.92
0.84
4.84
-0.15
2016
9.13
6.44
0.27
4.27
4.86
2015
5.33
3.43
0.03
4.03
1.30
2014
3.89
2.29
0.03
4.03
-0.15
2013
5.33
3.43
0.05
4.05
1.28
2012
4.32
2.63
0.07
4.07
0.25
2011
4.89
3.07
0.08
4.08
0.82
2010
9.07
6.35
0.13
4.13
4.94
2009
12.40
9.15
0.16
4.16
8.24
2008
0.06
-0.94
1.80
5.80
-5.74
2007
6.39
4.26
4.74
8.74
-2.35
2006
12.39
8.96
4.76
8.76
3.63
2005
9.40
6.63
3.00
7.00
2.40
2004
5.49
3.69
1.24
5.24
0.25
2003
8.90
6.26
1.07
5.07
3.83
2002
4.56
2.45
1.70
5.70
-1.14
2001
7.11
4.56
4.09
8.09
-0.98
2000
18.10
13.57
5.96
9.96
8.14
1999
16.61
12.31
4.74
8.74
7.87
1998
10.10
7.21
5.06
9.06
1.04
1997
12.69
9.21
5.25
9.25
3.44
1996
12.14
8.84
5.25
9.25
2.89
1995
14.06
10.27
5.75
9.75
4.31
1994
7.90
5.53
4.24
8.24
-0.34
1993
12.29
8.91
3.09
7.09
5.20
1992
7.05
4.78
3.62
7.62
-0.57
1991
12.00
8.76
5.75
9.75
2.25
1990
9.43
6.67
7.92
11.92
-2.49
1989
23.00
17.55
8.63
12.63
10.37
1988
45.84
35.66
6.76
10.76
35.08
1987
-13.67
-14.54
5.90
9.90
-23.57
1986
33.40
26.14
6.24
10.24
23.16
1985
30.47
22.64
7.82
11.82
18.65
Average
3.49
The performance above refers to our merger arbitrage flagship
fund. Both net and gross returns are shown. Net returns are net of
management and incentive fees. Gross returns are gross of
management and incentive fees. Individual investment returns may
differ due to timing of investment and other factors. Past
performance is not indicative of future results.
M&A activity remained vibrant in the fourth quarter of 2021,
totaling $1.5 trillion, the sixth consecutive quarter that M&A
exceeded $1 trillion and the second largest quarter ever. The
strong fourth quarter brought full year M&A activity to $5.9
trillion, the strongest year on record and an increase of 64%
compared to 2020 levels. Excluding SPAC acquisitions of $600
billion, 2021 was still a record year for (traditional)
M&A.
Deal activity was propelled by mid-size deals, those valued
between $1-$5 billion, which totaled $1.9 trillion, an increase of
115% compared to 2020 and a new record. Mega-deals valued over $10
billion totaled $1.1 trillion, a 30% increase year over year. In
terms of geography, the U.S. remained the most active venue for
targets, totaling $2.6 trillion in deals and accounting for 44% of
all deals (up from 39% in 2020). We have said for years that a key
tenet of the current M&A wave is global growth and this was
evidenced by cross-border deal activity which surpassed $2 trillion
for the first time in history, reaching $2.1 trillion, an increase
of 68% compared to 2020.
Following years of record fundraising, private equity acquirers
more than doubled their activity from 2020 with $1.2 trillion in
announced deals, which accounted for 20% of M&A activity in
2021. The most active sectors were Technology ($1.7 trillion in new
deals, an increase of 71% year over year) which accounted for 20%
of deal value, Financials (13% of M&A volume), and Industrials
(11% of M&A volume.)
The drivers remain in place for robust deal activity in 2022 and
beyond. We continue to find attractive investment opportunities in
newly announced and pipeline deals. We remain focused on investing
in highly strategic, well-financed deals with an added focus on
near-term catalysts, and are upbeat about our prospect to generate
absolute returns in 2022.
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
At its meeting on November 5, 2021, the Board of Directors
declared a semi-annual dividend of $0.10 per share which was paid
on December 15, 2021 to shareholders of record on December 1,
2021.
During the fourth quarter, AC repurchased 4,302 Class A shares,
for $0.2 million, at an average investment of $36.49 per share.
Since our spin-off from GBL on November 30, 2015, AC has
returned $153.7 million to shareholders through share repurchases,
and exchange offers, in addition to paying dividends of $27.7
million, including the $4.4 million tax-free distribution of Morgan
Group Holdings (MGHL) on August 5, 2020.
At December 31, 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
$
(19,076
)
$
(12,469
)
Add: management fee expense
8,426
3,101
Operating loss before management
fee – Non-GAAP
$
(10,650
)
$
(9,368
)
Table I
ASSOCIATED CAPITAL GROUP,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Amounts in thousands)
December 31,
2021
December 31,
2020
ASSETS
Cash, cash equivalents and US Treasury
Bills (a)
$
380,044
$
383,962
Investments in securities and partnerships
(a)
501,706
495,579
Investment in GAMCO stock (b)
60,389
48,907
Receivable from brokers (a)
42,478
24,677
Deferred tax assets
-
2,207
Other receivables (a)
18,409
15,273
Other assets (a)
25,201
28,900
Investments in marketable securities held
in trust (a)
175,109
175,040
Total assets
$
1,203,336
$
1,174,545
LIABILITIES AND EQUITY
Payable to brokers (a)
$
9,339
$
6,496
Income taxes payable, including deferred
tax liabilities, net
8,575
9,746
Compensation payable
19,730
18,567
Securities sold short, not yet purchased
(a)
12,905
17,571
Accrued expenses and other liabilities
(a)
3,580
7,823
Deferred underwriting fee payable (a)
6,125
6,125
PMV warrant liability (a)
5,280
-
Sub-total
$
65,534
$
66,328
Redeemable noncontrolling interests
(a)
202,456
206,828
Total equity
935,346
901,389
Total liabilities and equity
$
1,203,336
$
1,174,545
(a) Includes amounts related to consolidated variable interest
entities ("VIEs") and voting interest entities ("VOEs"), refer to
footnote E of the Condensed Consolidated Financial Statements
included in the 10-K report to be filed for the year ended December
31, 2021 for more details on the impact of consolidating these
entities. (b) 2,417,500, and 2,756,876 shares, respectively.
Table II
ASSOCIATED CAPITAL GROUP,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except
per share data)
Three Months Ended
December 31,
Year Ended
December 31,
2021
2020
2021
2020
Revenues
Investment advisory and incentive fees
$
13,903
$
11,864
$
20,530
$
18,288
Other
95
145
394
695
Total revenues
13,998
12,009
20,924
18,983
Compensation costs
12,747
11,031
24,457
19,436
Other operating expenses
2,165
2,493
7,117
8,915
Total expenses
14,912
13,524
31,574
28,351
Operating income/(loss) before management
fee
(914
)
(1,515
)
(10,650
)
(9,368
)
Investment gain/(loss)
14,102
71,635
93,405
36,864
Interest and dividend income from
GAMCO
154
2,635
5,442
2,812
Interest and dividend income, net
2,777
1,329
6,357
5,683
Shareholder-designated contribution
(2,072
)
-
(4,789
)
(3,007
)
Investment and other non-operating
income/(expense), net
14,961
75,599
100,415
42,352
Income/(loss) before management fee and
income taxes
14,047
74,084
89,765
32,984
Management fee
1,217
3,101
8,426
3,101
Income/(loss) before income taxes
12,830
70,983
81,339
29,883
Income tax expense/(benefit)
2,611
18,231
17,705
9,374
Income/(loss) from continuing operations,
net of taxes
10,219
52,752
63,634
20,509
Income/(loss) from discontinued
operations, net of taxes
-
-
-
(632
)
Income/(loss) before noncontrolling
interests
10,219
52,752
63,634
19,877
Income/(loss) attributable to
noncontrolling interests
790
1,633
4,431
1,061
Net income/(loss) attributable to
Associated Capital Group, Inc.’s shareholders
$
9,429
$
51,119
$
59,203
$
18,816
Net income/(loss) per share attributable
to Associated Capital Group, Inc.’s shareholders:
Basic - Continuing operations
$
0.43
$
2.29
$
2.68
$
0.87
Basic - Discontinued operations
-
-
-
(0.03
)
Basic – Total
$
0.43
$
2.29
$
2.68
$
0.84
Diluted - Continuing operations
$
0.43
$
2.29
$
2.68
$
0.87
Diluted - Discontinued operations
-
-
-
(0.03
)
Diluted - Total
$
0.43
$
2.29
$
2.68
$
0.84
Weighted average shares outstanding:
Basic
22,059
22,304
22,120
22,369
Diluted
22,059
22,304
22,120
22,369
Actual shares outstanding – end of
period
22,058
22,274
22,058
22,274
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.
1 References to financial performance records relate to the
Company’s operations as a public company beginning in 2015, unless
otherwise stated.
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version on businesswire.com: https://www.businesswire.com/news/home/20220202006020/en/
Timothy H. Schott Chief Financial Officer (203) 629-9595
Associated-Capital-Group.com
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