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AC

Associated Capital Group, Inc. (AC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $5.15M and diluted EPS was $0.20, with net income of $4.28M driven by $4.37M non‑operating investment income and a $3.11M tax benefit from deferred taxes on the GAMCO share sale .
  • Assets under management (AUM) ended Q4 at $1.25B (down from $1.34B in Q3) and book value per share was $42.14; average AUM was $1.29B .
  • Catalysts included a special cash dividend of $2.00 per share (paid Nov 4) and semi‑annual dividend of $0.10 (paid Dec 19), plus repurchases of 63,075 Class A shares in Q4; AC also sold 1.15M GAMCO shares for $30.4M, and ended 2024 with cash/investments of $40.78 per share .
  • The quarter reflected continued net outflows (FY outflows $363M, notably $198M from GAMCO Merger Arbitrage UCITS) and lower year‑over‑year non‑operating income versus a strong Q4 2023; management expects regulatory changes (FTC/DOJ) to support higher M&A activity ahead .

What Went Well and What Went Wrong

What Went Well

  • Merger Arbitrage performance remained positive: Q4 gross 0.95% (0.57% net), FY 2024 gross 5.83% (3.82% net), continuing 38 of the last 40 years of positive net returns; since 1985, average net return 7.31% vs 3.32% for 90‑day T‑Bills .
  • Shareholder returns and capital actions: special $2.00 dividend (Nov 4), semi‑annual $0.10 dividend (Dec 19), Q4 buybacks of 63,075 shares ($2.3M), and total FY dividends of $46.8M ($2.20/share), with 2024 shareholder returns totaling $58.6M; book value per share held at $42.14 despite distributions .
  • Strategic stance on growth: “Associated Capital Group's plan is to accelerate the use of its capital… pursuing acquisitions and alliances that will broaden our product offerings and add new sources of distribution,” highlighting potential inorganic growth vectors .

What Went Wrong

  • AUM declined by $343M year‑over‑year, driven by net outflows of $363M (notably $198M from the Luxembourg UCITS), and FX headwinds of $29M, only partially offset by $49M market appreciation .
  • Q4 non‑operating income fell sharply year‑over‑year ($4.37M vs $26.67M), as prior‑year quarter benefited from outsized gains; operating loss before management fee widened YoY to $(3.06)M from $(2.45)M .
  • SICAV marketing costs now borne by AC since Dec 2023 (while recognizing 100% of SICAV revenues), modestly lifting OpEx without materially changing net operating results; total operating expenses (ex‑management fee) were $8.2M in Q4 vs $8.1M in Q4 2023 .

Financial Results

Revenue and EPS vs Prior Quarters (USD)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$2.595 $2.415 $5.154
Diluted EPS ($)$0.14 $1.09 $0.20
Net Income ($USD Millions)$2.985 $23.242 $4.280

YoY Q4 Comparison (USD)

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$5.636 $5.154
Diluted EPS ($)$0.76 $0.20
Net Investment & Other Non‑Operating Income ($USD Millions)$26.672 $4.372
Operating Loss Before Management Fee (Non‑GAAP, $USD Millions)$(2.451) $(3.059)

Segment/Revenue Mix (USD Millions)

SegmentQ2 2024Q3 2024Q4 2024
SICAV – GAMCO Merger Arbitrage$1.3 $1.1 $1.0
All Other Revenues$1.3 $1.3 $4.2
Total Revenues$2.595 $2.415 $5.154

KPIs and Balance Sheet Highlights

KPIQ2 2024Q3 2024Q4 2024
AUM – End of Period ($USD Billions)$1.362 $1.340 $1.248
AUM – Average ($USD Billions)$1.446 $1.349 $1.291
Book Value per Share ($)$42.87 $42.02 $42.14
Cash, Cash Equivalents & US T‑Bills ($USD Millions)$387.377 $376.697 $367.850
Investments in Securities & Partnerships ($USD Millions)$442.294 $472.528 $487.623
GAMCO Stock Investment ($USD Millions)$57.346 $56.401 $16.920

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
DividendsQ4 2024N/ASpecial dividend $2.00/share (paid Nov 4, record Oct 21)Announced
DividendsQ4 2024N/ASemi‑annual dividend $0.10/share (paid Dec 19, record Dec 5)Announced
Share RepurchasesQ4 2024N/ARepurchased 63,075 Class A shares for $2.3M (avg $35.87)Executed; intends to continue
Capital DeploymentFY 2025+N/A“Accelerate the use of capital… acquisitions and alliances”Strategic intent
Tax RateFY 2024N/AEffective tax rate 15.8% (driven by deferred tax benefits on GAMCO sale)Historical disclosure

Note: AC does not provide formal quantitative forward guidance on revenues, margins, OpEx, OI&E or segment AUM.

Earnings Call Themes & Trends

No Q4 2024 earnings call transcript was available; themes reflect quarterly press releases.

TopicPrevious Mentions (Q2, Q3)Current Period (Q4)Trend
M&A environment/macroH1 2024 M&A up 18% YoY; US dealmaking strong; tech/energy leading 2024 M&A $3.2T (+10% YoY); tech $500B (+32%); regulatory change at FTC/DOJ likely supportive Improving backdrop; potentially supportive for merger arb
Merger Arbitrage fund performanceQ2: gross −1.37% (net −1.40%); Q3: gross 4.88% (net 3.80%) Q4: gross 0.95% (net 0.57%), FY: gross 5.83% (net 3.82%); 38/40 years positive net returns Consistent positive annual record; quarterly variability
AUM flowsQ2: AUM $1.36B; net outflows $195M; FX −$15M FY outflows $363M; $198M UCITS‑related; FX −$29M; AUM $1.25B Outflows persist; client reallocations cited
SICAV revenue recognition/OpExBegan recognizing 100% SICAV revenue in Dec 2023; AC pays marketing; net effect immaterial Continued approach; Q4 SICAV revenue $1.0M; all other $4.2M; OpEx (ex mgmt fee) $8.2M Run‑rate stable; OpEx reflects marketing costs
Capital allocation (GAMCO stake, buybacks, dividends)Q2/Q3 dividends and buybacks; buyback authorization increased Sold 1.15M GAMCO shares ($30.4M); FY dividends $2.20/share; Q4 buybacks 63,075 shares Active capital returns; portfolio repositioning

Management Commentary

  • Strategic focus: “Associated Capital Group's plan is to accelerate the use of its capital. We intend to leverage our research and investment capabilities by pursuing acquisitions and alliances that will broaden our product offerings and add new sources of distribution.”
  • Regulatory/macro: Management highlighted a “changing of the guard” at the FTC and DOJ that is “likely to facilitate an increase in deal activity as corporate sentiment shifts to move ahead with transformational transactions,” supportive for merger arbitrage pipelines .
  • SICAV economics/rationalization: Since Dec 2023 AC recognizes 100% of SICAV revenues while paying marketing and an administrative fee to Gabelli Funds; “The net effect of this change had no material impact on our net operating results.”
  • Shareholder returns: FY dividends of $46.8M ($2.20/share) and buybacks maintained alongside book value per share at $42.14 .

Q&A Highlights

No Q4 2024 earnings call transcript or Q&A was available for AC; no analyst Q&A themes could be extracted this quarter [ListDocuments returned none].

Estimates Context

  • Wall Street consensus via S&P Global was unavailable at time of query due to vendor request limits; as a result, we cannot determine beats/misses versus consensus for Q4 2024 (values not retrieved from S&P Global).
  • Given AC’s business model, EPS variability is materially influenced by non‑operating investment income and tax effects; estimates will likely need to reflect lower Q4 non‑operating income YoY and continued AUM outflows impacting advisory fee revenue mix .

Key Takeaways for Investors

  • Q4 headline EPS fell year‑over‑year ($0.20 vs $0.76) as non‑operating income normalized versus an unusually strong prior‑year quarter; sequentially, EPS declined from Q3 ($1.09) amid lower non‑operating gains and higher OpEx .
  • AUM pressure remains the core fundamental headwind (FY net outflows $363M), particularly in UCITS vehicles; watch distribution channels and client reallocations for signs of stabilization .
  • Capital returns stayed robust: special $2.00 dividend, semi‑annual $0.10, and ongoing buybacks; book value per share held at $42.14, supported by substantial cash/securities and investment portfolio .
  • Portfolio repositioning (sale of 1.15M GAMCO shares for $30.4M) plus $40.78/share cash/investments provide optionality for the stated acquisition/alliance agenda—monitor deal announcements as potential stock catalysts .
  • Regulatory shifts at FTC/DOJ may support an upswing in M&A volumes, a positive leading indicator for merger arbitrage opportunity sets and potential fee capture over 2025 .
  • Near‑term trading implications: shares could be sensitive to AUM flow prints and investment income volatility; dividend and buyback support may underpin downside, while acquisition announcements or improving M&A pipelines could drive upside .
  • Medium‑term thesis: if AUM stabilizes and M&A activity rises, advisory/incentive fee revenue and strategy performance can normalize; capital deployment via acquisitions/alliances could diversify revenue sources and improve operating leverage .