RYE, N.Y.--(BUSINESS WIRE)--Aug 7, 2018--In the " Returns to Shareholder" section, second paragraph, second sentence should read: The Board will revisit the dividend policy in November in light of the significantly improved financial condition of the Company (instead of: The Board is evaluating the amount of future dividends).

The corrected release reads:

GAMCO INVESTORS, INC. REPORTS RECORD SECOND QUARTER EARNINGS

Average AUM for quarter was $40.6 billion vs. $41.8 billion in 2017 quarter Second Quarter Net Income of $31.6 million +38.0% from Year Ago Quarter 25.5% Effective Tax Rate in 2018 second quarter vs. 38.9% in comparable 2017 quarter Fully Diluted EPS for quarter was $1.10 versus $0.76 a year ago

GAMCO Investors, Inc. (“GAMCO”) (NYSE:GBL) today reported second quarter 2018 revenues of $87.2 million, net income of $31.6 million, and earnings of $1.10 per diluted share. This compares to second quarter 2017 revenues of $87.6 million, net income of $22.9 million, and earnings of $0.76 per diluted share.

In July 2018, Standard and Poor’s reaffirmed their investment grade rating on our company which they initially provided in December 2017 with a stable outlook reflecting our financial condition.

Average AUM was $40.6 billion for the second quarter of 2018 versus $41.8 billion for the second quarter of 2017 and $42.5 billion for the first quarter of 2018.

Our second quarter 2018 ending AUM was $40.7 billion as compared to $41.7 billion at June 30, 2017 and $40.9 billion at March 31, 2018. Market appreciation was $0.9 billion, outflows were $0.9 billion and distributions, net of reinvestments, were $0.2 billion.

Revenues

Total revenues for the second quarter of 2018 were $87.2 million compared with $87.6 million in the prior year. Investment advisory fees rose to $77.3 million in the second quarter of 2018 from $76.6 million in the second quarter of 2017. Revenues from our open-end and closed-end funds were flat at $49.1 million, compared to $49.2 million in the year-ago quarter. Institutional and Private Wealth Management generated $26.8 million of the revenues in 2018 compared to $26.4 million in 2017. SICAV revenues grew to $1.5 million in the second quarter of 2018 from $1.0 million in the prior period. Distribution fees from our open-end equity funds and other income were $9.9 million for the second quarter of 2018 versus $11.0 million in the prior-year quarter.

Operating Income

Operating income was $41.4 million in the second quarter of 2018 versus $39.7 million in the prior-year period. Higher amortization of deferred compensation, a non-cash charge, impacted operating costs by an incremental $18.6 million. The previously announced waiver of CEO compensation beginning March 1, 2018 boosted second quarter operating income by $17.2 million. Additionally, during the second quarter of 2018, the CEO waived $6 million from one of the three deferred compensation agreements. Excluding GAAP treatment of the deferral, but reflecting the lower compensation expense due to the waivers, adjusted operating income was $52.6 million in the second quarter of 2018 versus $32.3 million in the year-ago quarter. See pages 10 and 11 for a reconciliation of GAAP operating income to this adjusted operating income.

Other income/(expense), net

Mark to market investment gains were $1.9 million in the second quarter of 2018 versus gains of $0.5 million in the prior year quarter. Year-over-year interest expense was lower by $1.8 million.

Income Taxes

The Company’s effective tax rate (“ETR”) for the quarter ended June 30, 2018 was 25.5% versus 38.9% for the quarter ended June 30, 2017. This was primarily attributable to the provisions of the Tax Cuts and Jobs Act.

Shareholder Designated Charitable Contribution Program

Our firm has long held the belief that generating returns for our stakeholders, while important, is not the only factor in measuring our corporate success. The importance of the way we and others conduct business is a key facet to our principles. As evidence of this, we have been involved in the field of responsible investing since 1987. Along these lines, and consistent with the firm’s commitment to Environmental, Social & Governance (ESG) principles, we have always focused on corporate governance, transparency and evaluated corporate responsibility of corporate managements. In our program of corporate giving, our shareholder designated charitable contributions program, GAMCO shareholders select which organizations will be recipients of charitable grants from the firm. This year, the majority of our shareholders registered their shares and are eligible to select a charity to receive a $0.20 per share contribution approved by your Board. With this year’s distribution, we will have donated more than $22 million to over 150 charities across the United States since the inception of our program in 2013.

Business Highlights

In May, the Gabelli Utility Trust completed a significantly over-subscribed rights offering raising $48.5 million.

Balance Sheet

We ended the quarter with cash and investments of $75.5 million and gross debt of $122.2 million. Gross debt includes the deferred compensation payable of $78.0 million, net of tax benefit.

The balance sheet only includes the $73.7 million of deferred compensation expensed to date. The remaining $30.3 million from two of the deferral agreements will be recorded in the second half of 2018 and in 2019, ratably over the vesting periods, in accordance with GAAP.

On July 2, 2018, $28.3 million of the deferred compensation vested and was paid in cash. We will recognize an income tax benefit of $7.1 million in 2018.

Returns to Shareholder

During the quarter ended June 30, 2018, we purchased 137,189 shares at an average price of $25.81 per share for a total investment of $3.5 million. We also distributed $0.6 million in dividends. Since our IPO in February 1999, we have returned $2.0 billion to shareholders consisting of $1.0 billion of spin-offs, $492.2 million in the form of dividends, and $460.0 million through stock buybacks of approximately 10.6 million shares.

On August 7, 2018, GAMCO’s Board of Directors declared a regular quarterly dividend of $0.02 per share payable on September 25, 2018 to its Class A and Class B shareholders of record on September 10, 2018. The Board will revisit the dividend policy in November in light of the significantly improved financial condition of the Company.

About GAMCO Investors, Inc.

GAMCO Investors, Inc., through its subsidiaries, manages open-end funds and closed-end funds (Gabelli Funds, LLC) and private advisory accounts (GAMCO Asset Management Inc.).

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