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AC

Associated Capital Group, Inc. (AC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a sharp earnings inflection: revenue of $2.21M, net income of $18.58M, and $0.88 EPS, driven by $32.87M of investment and other non‑operating income; AUM rose to $1.34B and book value increased to $43.30 per share .
  • Year-over-year: revenue declined 14.9% while EPS surged from $0.14 to $0.88 on outsized non‑operating gains; sequentially, EPS stepped up from $0.36 in Q1 2025 as merger arbitrage returns accelerated .
  • Management expects vibrant M&A activity to persist; Board authorized repurchases of up to an additional 150,000 shares, and the semi‑annual dividend of $0.10 was paid on June 26, 2025 .
  • Key catalyst: strong merger arbitrage performance (gross +5.45% / net +4.19% in Q2) alongside improving AUM mix and book value trajectory, amid favorable regulatory tailwinds for dealmaking .

What Went Well and What Went Wrong

What Went Well

  • Merger arbitrage delivered its strongest first‑half performance in over 25 years; Q2 gross returns +5.45% (+4.19% net) and YTD gross +9.43% (+7.12% net). “Expect vibrant M&A activity over the balance of the year.”
  • AUM grew to $1.34B, up $73M sequentially, driven by $49M market appreciation, $23M FX tailwind, and $1M net inflows; book value rose to $43.30 .
  • Non‑operating income surged to $32.87M (vs. $7.25M YoY), with merger arbitrage investments, dividends, and interest as primary drivers; net income reached $18.58M .

What Went Wrong

  • Core revenue contracted YoY to $2.21M (vs. $2.60M), reflecting lower average AUM, with SICAV advisory revenue down to $1.0M (vs. $1.3M) .
  • Operating expenses (ex‑management fee) rose to $7.4M (vs. $5.8M YoY), primarily due to $1.8M of variable compensation tied to proprietary fund performance .
  • Effective tax rate increased to 25.0% (vs. 19.1% YoY), removing a prior-year deferred tax benefit from a foreign investment; management fee also spiked to $2.8M (vs. $0.4M YoY) on elevated pre‑tax income .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenues ($USD Millions)$5.154 $2.129 $2.207
Total Expenses ($USD Millions)$8.213 $6.314 $7.427
Operating Loss before Mgmt Fee (Non‑GAAP) ($USD Millions)$(3.059) $(4.185) $(5.220)
Investment & Other Non‑Operating Income ($USD Millions)$4.372 $15.834 $32.866
Management Fee ($USD Millions)$0.134 $1.103 $2.757
Income Before Taxes ($USD Millions)$1.179 $10.546 $24.889
Net Income ($USD Millions)$4.280 $7.669 $18.584
Diluted EPS ($USD)$0.20 $0.36 $0.88
YoY ComparisonQ2 2024Q2 2025
Revenues ($USD Millions)$2.595 $2.207
Total Expenses ($USD Millions)$5.827 $7.427
Operating Loss before Mgmt Fee (Non‑GAAP) ($USD Millions)$(3.232) $(5.220)
Investment & Other Non‑Operating Income ($USD Millions)$7.252 $32.866
Management Fee ($USD Millions)$0.442 $2.757
Net Income ($USD Millions)$2.985 $18.584
Diluted EPS ($USD)$0.14 $0.88
Effective Tax Rate (%)19.1% 25.0%

Segment revenue breakdown:

Revenue Line ($USD Thousands)Q4 2024Q1 2025Q2 2025
Investment Advisory & Incentive Fees$5,049 $2,004 $2,081
Other Revenues$105 $125 $126
Total Revenues$5,154 $2,129 $2,207

AUM by strategy:

AUM ($USD Millions)Q4 2024Q1 2025Q2 2025
Merger Arbitrage$1,003 $1,012 $1,078
Long/Short Value$209 $221 $228
Other$36 $36 $36
Total AUM$1,248 $1,269 $1,342

KPIs:

KPIQ4 2024Q1 2025Q2 2025
AUM – End of Period ($USD Millions)$1,248 $1,268 $1,342
AUM – Average ($USD Millions)$1,291 $1,261 $1,298
Book Value per Share ($USD)$42.14 $42.51 $43.30
Merger Arbitrage Returns – Gross (%)0.95 3.77 5.45
Merger Arbitrage Returns – Net (%)0.57 2.81 4.19
Effective Tax Rate (%)Benefit (not rate) 26.3% 25.0%
Share Repurchases (Class A)63,075 sh; $2.3M; $35.87 avg 39,018 sh; $1.4M; $36.32 avg 21,241 sh; $0.8M; $36.53 avg

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Share Repurchase AuthorizationOngoingNot disclosedBoard authorized repurchase of up to an additional 150,000 shares Raised capacity
Dividend1H 2025$0.10/share declared 11/8/2024, paid 12/19/2024 $0.10/share declared 5/7/2025, paid 6/26/2025 Maintained
Revenue/EPS Guidance2Q25 / FY25None provided None provided; qualitative “Expect vibrant M&A activity” Maintained (no formal guidance)

Earnings Call Themes & Trends

Note: No Q2 2025 earnings call transcript was available; analysis reflects press releases and the 8‑K exhibit .

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
M&A Environment & Regulatory“Changing of the guard” at FTC/DOJ likely to facilitate deal activity ; Q1 global M&A $890B, +15% YoY; accommodative antitrust and pent‑up demand Regulatory tailwinds table (FTC/DOJ/CMA changes); Q2 global M&A >$1T; sequential +3%, YTD ~$2T (+33% YoY) Improving
AUM FlowsFY24 net outflows of $363M; FX −$29M; market +$49M Q1: net outflows −$25M offset by market +$33M and FX +$13M Q2: net inflows +$1M; market +$49M; FX +$23M
Strategy Performance (Merger Arb)4Q24 gross +0.95% / net +0.57% 1Q25 gross +3.77% / net +2.81% 2Q25 gross +5.45% / net +4.19%; strongest first half in 25+ years
Shareholder ReturnsFY24: $58.6M returned; $2.20/share dividends; buybacks continued Q1: $0.10 dividend declared; buybacks 39k shares Q2: $0.10 dividend paid; buybacks 21k shares; +150k authorization
Corporate InitiativesPrivate equity platform (GPEP) and GPS highlighted Management transition: interim CEO noted Continued focus on acquisitions/alliances; activation of family‑owned business program

Management Commentary

  • “Expect vibrant M&A activity over the balance of the year.” (Press release headline themes)
  • “The primary driver of this quarter's results was our merger arbitrage investments, as well as our dividend and interest income.”
  • “Associated Capital Group's plan is to accelerate the use of its capital… pursuing acquisitions and alliances… may make direct investments in operating businesses.”
  • Q1: “The prospects for Associated Capital Group remain strong and we are well positioned to grow value in the face of an uncertain environment.” — Patrick Huvane, Interim CEO

Q&A Highlights

  • No Q2 2025 earnings call transcript found for AC; the company furnished results via press release and 8‑K exhibit without a public Q&A session .

Estimates Context

  • S&P Global consensus estimates for AC’s Q2 2025 EPS and revenue were not available; Target Price and Recommendation also not available. Actual reported revenue was $2.21M (company disclosure) .
  • Implication: With no formal Street coverage, estimate comparisons are unavailable; investors should focus on sequential/YoY trajectories and non‑operating drivers.
  • S&P Global data retrieval summary: Primary EPS Consensus Mean (N/A), Revenue Consensus Mean (N/A; actual only), Target Price Consensus Mean (N/A), Consensus Recommendation (Text) (N/A).* Values retrieved from S&P Global.

Key Takeaways for Investors

  • The quarter’s strength was non‑operating: investment and other non‑operating income of $32.87M powered $0.88 EPS despite modest revenue; the sustainability hinges on ongoing deal flow and arbitrage spreads .
  • Merger arbitrage performance momentum continues (+5.45% gross in Q2; +9.43% YTD), underpinned by improving global M&A and perceived regulatory tailwinds — a key driver for book value compounding .
  • Core advisory revenues remain soft (down 14.9% YoY); watch average AUM and SICAV flows for a turn in fee income .
  • Expenses rose on variable compensation tied to proprietary fund performance; management fee increased to $2.76M on higher pre‑tax income — both can add volatility to quarterly earnings prints .
  • Capital returns remain supportive: dividend paid ($0.10/share) and expanded repurchase authorization (+150k shares) alongside ongoing buybacks — potential stock support in thin liquidity conditions .
  • AUM mix and FX/market tailwinds aided sequential AUM growth to $1.34B; incremental net inflows suggest stabilization after FY24 outflows .
  • Near-term: traders should watch for deal announcements/spread dynamics and any follow‑up disclosures; medium-term: thesis centers on monetizing capital via merger arb, selective acquisitions, and disciplined shareholder returns .