GAMCO Investors, Inc. (“GAMI”) Reports Results for the First Quarter 2023

GAMCO Investors, Inc. (“GAMI”) (OTCQX: GAMI) today reported its operating results for the quarter ended March 31, 2023.

Giving Back to Society - $74 million since IPO

Since our initial public offering in February 1999, our firm’s combined charitable donations total approximately $74 million, including $48 million through the shareholder designated charitable contribution (“SDCC”) program. In 2013, GAMI initiated the SDCC program whereby shareholders have designated charitable gifts to approximately 350 charitable organizations, including $11.3 million distributed in 2022.

Results for the First Quarter

Financial Highlights (Unaudited)
U.S. GAAP Basis	Three Months Ended
(In thousands, except per share data)	March 31,2023		March 31,2022

Revenues	$	59,906	$	69,623
Operating income		16,398		25,961
Net income		15,897		17,454

Diluted earnings per common share	$	0.62	$	0.66

Weighted average diluted shares outstanding		25,529		26,493
Shares outstanding		25,398		26,584

Assets Under Management
AUM - end of period (in millions)	$	30,672	$	33,378
AUM - average (in millions)		30,763		33,286

Revenues

Revenues for the first quarter of 2023 were $59.9 million compared with $69.6 million in the first quarter of 2022.
Investment advisory fees were $55.0 million in the first quarter of 2023 versus $63.8 million in the year ago quarter:
- Fund revenues were $37.5 million compared to $43.0 million in the first quarter of 2022.
- Institutional and Private Wealth Management revenues, which are generally billed on portfolio values at the beginning of the quarter, were $15.3 million compared to $18.6 million in last year’s first quarter.
- SICAV revenues were $2.2 million compared to $2.2 million in the year ago quarter.
Distribution fees from our equity mutual funds and other income were $4.9 million during the first quarter of 2023 and $5.8 million in the prior year quarter.

Operating Income

Operating income was $16.4 million versus $26.0 million in the first quarter of 2022. We note, on a comparable basis, the waiver of CEO compensation bolstered the first quarter 2022 operating income by $4.1 million.

Non-Operating Income

Mark-to-market investment gains were $2.2 million in the first quarter of 2023 versus losses of $2.6 million in the first quarter of 2022. In the first quarter, interest expense (for finance lease accounting) was $0.3 million versus interest expense of $0.8 million in the first quarter of 2022.

Income Taxes

GAMI’s effective tax rate for the full year 2023 is estimated to be 22.5% versus the 20.2% for the full year 2022.

Balance Sheet

GAMI ended the quarter with cash and investments of $154.6 million and $21.9 million of seed capital investments.

Business Highlights

On January 4th, we launched our fifth ETF, The Gabelli Commercial Aerospace & Defense ETF (NYSE: GCAD). The Fund’s adviser has agreed to absorb all expenses including management fees on the first $25 million of net assets. The agreement can be terminated by the Fund’s board at any time.
On February 23rd, we hosted our 33rd Annual Pump, Valve & Water Systems Symposium. The meeting featured presentations by senior management of several leading industrial companies with an emphasis on industrial and municipal water use and the role of technology.
On March 16th, we hosted our 14th Annual Specialty Chemicals Symposium. The symposium featured presentations from senior management of leading specialty chemicals companies.

Subsequent to the end of the 1st quarter:

On April 25th to April 27th, Gabelli Funds was the Principal Sponsor of Morningstar’s Annual Investor Conference held in Chicago.
On May 5th, GAMI hosted the 17th Annual Omaha Research Trip in conjunction with the Berkshire Hathaway Annual Meeting. This Value Investor Conference attracted a record number of participants with Gabelli portfolio managers anchoring panels with noted Berkshire experts and regional CEOs.
On May 11th, GAMI will host its 9th Annual Waste & Sustainability Symposium at the Harvard Club in New York City.

Gabelli U.S. Treasury Money Market Fund

The Gabelli U.S. Treasury Money Market Fund (NASDAQ: GABXX), had net inflows of $1.1 billion ending the quarter at $3.6 billion. The fund is the lowest cost 100% U.S. Treasury Money market fund with a total expense ratio of 8 bps (0.08%) and is SALT free - exempt from state and local income taxes.

Return to Shareholders

During the first quarter, GAMI paid a dividend of $0.04 per share for a total of $1.0 million and purchased 281,370 shares for $4.9 million at an average price of $17.49 per share. From April 1, 2023, to May 9, 2023, the Company has purchased 34,767 shares at an average price of $19.10 per share.

On May 9, 2023, GAMI’s board of directors declared a regular quarterly dividend of $0.04 per share, which is payable on June 27, 2023, to class A and class B shareholders of record on June 13, 2023.

About GAMCO Investors, Inc.

GAMI is best known for its research-driven value approach to equity investing (known as PMV with a Catalyst™). GAMI conducts its investment advisory business principally through two subsidiaries: Gabelli Funds, LLC (24 open-end funds, 14 closed-end funds, 5 actively managed semi-transparent ETFs, and a SICAV) and GAMCO Asset Management Inc. (approximately 1,400 institutional and private wealth separate accounts). GAMI serves a broad client base including institutions, intermediaries, private wealth, and direct retail investors. In recent years, GAMI has successfully integrated new teams of RIAs by providing attractive compensation arrangements and extensive research capabilities.

Gabelli Funds offers a wide range of solutions for clients across Value and Growth Equity, SRI, Convertibles, sector-focused strategies including Gold and Utilities, Merger Arbitrage, and U.S. Treasury Money Market Fixed Income.

Table I: Assets Under Management and Fund Flows - 1st Quarter 2023 (in millions)
										Fund
								Market		distributions,
	December 31,							appreciation/		net of			March 31,		March 31,
		2022	Inflows		Outflows			(depreciation)		reinvestments				2023		2022
Equities:
Mutual Funds	$	8,140	$	242	$	(378	)	$	288	$	(4	)	$	8,288	$	9,824
Closed-end Funds		7,046		24		(15	)		233		(133	)		7,155		8,097
Institutional & PWM (a)		10,714		61		(558	)		547		-			10,764		12,674
SICAV		867		124		(176	)		9		-			824		879
Total Equities		26,767		451		(1,127	)		1,077		(137	)		27,031		31,474

100% U.S. Treasury Money Market Fund		2,462		1,845		(732	)		34		-			3,609		1,872
Institutional & PWM Fixed Income		32		-		-			-		-			32		32
Total Treasuries & Fixed Income		2,494		1,845		(732	)		34		-			3,641		1,904
Total Assets Under Management	$	29,261	$	2,296	$	(1,859	)	$	1,111	$	(137	)	$	30,672	$	33,378

(a) Includes $223, $224, and $185 of 100% U.S. Treasury Fund AUM at December 31, 2022, March 31, 2023, and March 31, 2022, respectively.

Table II
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)

	Three Months Ended
	March 31,
		2023			2022

Investment advisory and incentive fees	$	54,995		$	63,762
Distribution fees and other income		4,911			5,861
Total revenues		59,906			69,623

Compensation costs (a)		29,186			29,058
Management fee expense (a)		2,036			1,312
Distribution costs		6,473			7,145
Other operating expenses		5,813			6,147
Total expenses		43,508			43,662

Operating income		16,398			25,961

Investment gain/(loss), net		2,222			(2,594	)
Interest expense		(298	)		(816	)
Non-operating gain/(loss)		1,924			(3,410	)

Income before income taxes		18,322			22,551
Provision for income taxes		2,425			5,097
Net income	$	15,897		$	17,454

Net income:
Basic	$	0.62		$	0.67
Diluted	$	0.62		$	0.66

Weighted average shares outstanding:
Basic		25,529			26,237
Diluted		25,529			26,493

Actual shares outstanding (b)		25,398			26,584

(a) For the three months ended March 31, 2022, the CEO waiver reduced compensation
costs by $3,385, and management fee expense by $736.
(b) Includes 0 and 411 RSA shares at March 31, 2023 and 2022, respectively.

Table III
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands)

	March 31,		December 31,		March 31,
		2023		2022		2022

ASSETS
Cash, cash equivalents, and U.S. Treasury Bills	$	133,277	$	66,381	$	144,369
Investments in securities		21,327		84,742		22,308
Seed capital investments		21,911		18,347		15,674
Receivable from brokers		1,558		1,932		2,873
Other receivables		21,439		25,839		25,517
Deferred tax asset and income tax receivable		12,871		16,701		7,456
Other assets		13,759		9,879		11,985
Total assets	$	226,142	$	223,821	$	230,182

LIABILITIES AND STOCKHOLDERS' EQUITY
Payable for investments purchased	$	-	$	2,980	$	-
Income taxes payable		6		-		7,373
Compensation payable		32,902		33,919		20,139
Accrued expenses and other liabilities		43,750		47,868		44,320
Sub-total		76,658		84,767		71,832
Subordinated Notes (due June 15, 2023)		-		-		50,935
Total liabilities		76,658		84,767		122,767

Stockholders' equity (a)		149,484		139,054		107,415

Total liabilities and stockholders' equity	$	226,142	$	223,821	$	230,182

(a) Shares outstanding of 25,398; 25,680; and 26,584, respectively.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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 may cause our actual results to differ from our expectations include risks associated with the duration and scope of the ongoing coronavirus pandemic resulting in volatile market conditions, 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 Annual Report 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.

Gabelli Funds, LLC is a registered investment adviser with the Securities and Exchange Commission and is a wholly owned subsidiary of GAMCO Investors, Inc. (OTCQX: GAMI).

Investors should carefully consider the investment objectives, risks, charges and expenses of the Fund before investing. The prospectus, which contains more complete information about this and other matters, should be read carefully before investing. To obtain a prospectus, please call 800 GABELLI or visit www.gabelli.com