Teton Advisors, Inc. Reports Full Year and Fourth Quarter Results

Rhea-AI Summary

Teton Advisors, Inc. announced its Q4 and full year 2023 results, revealing a decrease in revenues and earnings compared to the previous year. The company reported fully diluted GAAP EPS of $0.19 for Q4 and $0.75 for the full year. Cash EPS also declined, with $0.26 for Q4 and $0.98 for the full year. Despite these reductions, net cash and marketable securities increased to $23.5 million. Teton's investment strategies focus on small and mid-cap companies, aiming to benefit from the shift back to value equities. The company's CEO highlighted their distribution agreements and product diversification as strengths for future growth.

Positive

• Teton reported a decrease in revenues and earnings for Q4 and full year 2023 compared to the previous year.
• Fully diluted GAAP EPS was $0.19 for Q4 and $0.75 for the full year.
• Cash EPS declined to $0.26 for Q4 and $0.98 for the full year.
• Net cash, cash equivalents, and marketable securities increased to $23.5 million.
• Teton's investment strategies focus on small and mid-cap companies to benefit from the shift back to value equities.
• CEO emphasized distribution agreements and product diversification for future growth.

Negative

• Revenues were down 13% year-over-year for the full year and 11% quarter-over-quarter for Q4.
• Average AUM decreased by 17% year-over-year.
• Net income and earnings per share declined for both Q4 and the full year.
• Impairment charges were recognized for intangible assets in Q4 2023 and 2022.

GREENWICH, Conn.--(BUSINESS WIRE)-- Teton Advisors, Inc. (“Teton” or the “Company”) (OTCQX: TETAA) announced its fourth quarter and full year 2023 results including cash and marketable securities. The Company’s Q4-2023 and full year highlights are as follows:

• Full year fully diluted GAAP EPS of $0.75 compared to $1.18 a year ago. Fourth quarter fully diluted GAAP EPS of $0.19 compared to $0.27 a year ago.

• Full year fully diluted Cash EPS¹ of $0.98 compared to $1.62 a year ago. Fourth quarter fully diluted Cash EPS¹ of $0.26 compared to $0.49 a year ago.

• Full year Revenues of $12.0 million, down 13% year-over-year. Fourth quarter Revenues of $2.9 million, down 11% quarter-over-quarter.

• Full year Average AUM of $1.4 billion, down 17% year-over-year.

• Net cash, cash equivalents and marketable securities totaled $23.5 million or $14.30 per share as of December 31, 2023, an increase of 8.7% compared to a net of $21.6 million or $13.16 per share at the prior year end.

“Our bottom-up, fundamental, research driven, active management investment strategies, with a focus on small and mid-cap companies, stand to benefit from the rotation by investors back to value and inefficiently priced equities,” said Nicholas Galluccio, Chairman of Teton Advisors, LLC, and portfolio manager of the four-star Morningstar rated Teton Westwood SmallCap Equity Fund.

“Teton’s very capable platform, with an extensive amount of distribution agreements in place, serving retail, institutional, and high net worth clients, positions us well to attract new investment teams and client accounts and to grow both organically and through acquisitions,” said Stephen Bondi, Chief Executive Officer. He further stated, “Our multiple investment teams and product diversification provides a strong foundation for future growth.”

Fourth quarter net income and fully diluted earnings per share were $0.3 million and $0.19, respectively, compared to net income of $0.4 million and $0.27, respectively, for the same period a year ago. Excluding certain non-cash items, Cash Earnings¹ and Cash Earnings per fully diluted share were $0.4 million and $0.26, respectively, for the current quarter as compared to $0.8 million and $0.49, respectively, for the comparative quarter in 2022.

Fourth quarter Revenues were $2.9 million for the quarter versus $3.2 million for the comparative quarter in 2022. Average AUM for the quarter was $1.3 billion versus $1.5 billion for the fourth quarter in 2022.

Financial Highlights
($'s in 000's except AUM and per share data)
	Fourth Quarter						Full Year
	2023			2022			2023			2022
AUM - average (in millions)	$	1,277		$	1,541		$	1,408		$	1,691
AUM - end of period (in millions)	$	1,346		$	1,498		$	1,346		$	1,498
Revenues	$	2,850		$	3,190		$	12,043		$	13,778
Income before interest, taxes, depreciation &
amortization, and impairment		631			1,191			1,850			2,901
Impairment of intangible asset		59			400			59			400
Net income		300			426			1,205			1,601
Net income per fully diluted share	$	0.19		$	0.27		$	0.75		$	1.18

¹Cash earnings and cash earnings per fully diluted share are non-GAAP performance measures and are explained and reconciled in the Supplemental Financial Information section starting on page 6 of this press release. The quarterly and full year results include the non-cash amortization expense of our intangible assets. In addition, the Company recognized a non-cash impairment charge of $59,000 and $400,000 related to its intangible assets for the fourth quarter of 2023 and 2022, respectively.

Notice of Teton’s Annual General Meeting

The Company cordially invites you to participate in its 2024 Annual Meeting of Shareholders (the “Annual Meeting”) to be held on Wednesday, May 22, 2024 at 9:00 A.M., Eastern Time as announced. Immediately following the Annual Meeting, a company review for shareholders will commence to discuss operations.

For access to the webcast of each meeting, you must register at https://www.tetonadv.com/register. After registering, you will receive a confirmation email containing information about joining the meeting from a computer or telephone. Any questions can be directed to our Secretary at info@tetonadv.com or (914) 457-1077.

Table I
Teton Advisors, Inc.
Unaudited Condensed Consolidated Statements of Income
		For the Three Months Ended December 31,
		2023			2022
Revenues
Investment advisory fees - mutual funds, net		$	1,906,268		$	2,353,846
Investment advisory fees - separate accounts			587,911			650,154
Distribution fees and other income, net			356,031			186,334
Total revenues			2,850,210			3,190,334
Operating expenses
Compensation			1,075,301			558,462
Sub-advisory fees			323,745			460,791
Distribution costs			319,784			392,071
Marketing and administrative fees			40,913			50,140
Advanced commissions			3,305			2,925
Other operating expenses			456,189			535,404
Total operating expenses			2,219,237			1,999,793
Income before interest, taxes, depreciation, amortization and impairment			630,973			1,190,541
Depreciation and amortization			84,182			84,160
Impairment of intangible asset			59,000			400,000
Income before income taxes			487,791			706,381
Income tax provision			187,896			280,819
Net income		$	299,895		$	425,562
Net income per share:
Basic		$	0.19		$	0.27
Fully diluted		$	0.19		$	0.27
Weighted average shares outstanding:
Basic			1,599,440			1,600,899
Fully diluted			1,616,609			1,603,082

Table II
Teton Advisors, Inc.
Condensed Consolidated Statements of Income
		For the Years Ended December 31,
		2023			2022
Revenues
Investment advisory fees - mutual funds, net		$	10,923,634		$	10,596,589
Investment advisory fees - separate accounts			18,598			2,912,715
Distribution fees and other income, net			1,102,504			268,329
Total revenues			12,044,736			13,777,633
Operating expenses
Compensation			5,102,161			5,030,627
Sub-advisory fees			179,543			2,131,362
Distribution costs			1,369,024			1,629,606
Marketing and administrative fees			18,379			169,288
Advanced commissions			1,505,402			20,884
Other operating expenses			2,020,302			1,894,477
Total operating expenses			10,194,811			10,876,244
Income before interest, taxes, depreciation, amortization and impairment			1,849,925			2,901,389
Depreciation and amortization			336,727			336,957
Impairment of intangible asset			59,000			400,000
Income before income taxes			1,454,198			2,164,432
Income tax provision			249,080			563,493
Net income		$	1,205,118		$	1,600,939
Net income per share:
Basic		$	0.75		$	1.18
Fully diluted		$	0.75		$	1.18
Weighted average shares outstanding:
Basic			1,599,440			1,357,915
Fully diluted			1,612,300			1,360,949

Table III
Teton Advisors, Inc.
Condensed Consolidated Statements of Financial Condition
	As of December 31,
	2023			2022
ASSETS
Cash and cash equivalents	$	20,781,885		$	26,995,341
Investment advisory fees receivable		846,781			999,299
Intangible assets, net		2,589,113			2,974,011
Investments in securities		2,706,683			2,559,401
Deferred tax asset		3,002,595			3,183,152
Other assets		541,782			549,952
Total assets	$	30,468,839		$	37,261,156
LIABILITIES AND STOCKHOLDERS' EQUITY
Due to broker	$	-		$	7,947,111
Compensation payable		746,277			255,038
Payable to affiliates		216,340			436,943
Distribution costs payable		191,801			359,315
Income tax payable		81,040			67,197
Accrued expenses and other liabilities		1,153,112			1,632,569
Total liabilities		2,388,570			10,698,173
Total stockholders' equity		28,080,269			26,562,983
Total liabilities and stockholders' equity	$	30,468,839		$	37,261,156

Supplemental Financial Information

As supplemental information, we provide a non-U.S. generally accepted accounting principles (“non-GAAP”) performance measure that we refer to as Cash Earnings. We provide this measure in addition to, but not as a substitute for, net income reported on a U.S. generally accepted accounting principles (“GAAP”) basis. Our management and the Board of Directors review Cash Earnings to evaluate our ongoing performance, allocate resources and review our dividend policy. We believe that this non-GAAP performance measure, while not a substitute for GAAP net income, is useful for management and investors when evaluating our underlying operating and financial performance and our available resources. We do not advocate that investors consider this non-GAAP measure without considering financial information prepared in accordance with GAAP.

In calculating quarterly and full year Cash Earnings, we add back to net income, the non-cash amortization expense associated with our intangible assets. In addition, as a result of an assessment of the carrying value of the intangible assets, the Company recognized a non-cash impairment charge of $59,000 and $400,000 in the fourth quarters and full years ended December 31, 2023 and 2022, respectively. For purposes of calculating Cash Earnings, the Company added back the after-tax amounts associated with this impairment charge of $41,330 and $280,200 for the fourth quarters and full years ended December 31, 2023 and 2022, respectively. Although depreciation on property & equipment and amortization of leaseholds are also non-cash expenses, we do not add it back when calculating Cash Earnings because those charges represent a decline in the value of the related assets that will ultimately require replacement.

The following table provides a reconciliation of net income to Cash Earnings and Cash Earnings Per Share for the quarterly periods presented:

	For the Quarter Ended December 31,
(unaudited)	2023			2022
Net income	$	299,895		$	425,562
Add: Intangible amortization - customer relationships		81,475			81,475
Add: Impairment of intangible assets (net of tax impact)		41,330			280,200
Cash Earnings	$	422,700		$	787,237
Cash Earnings Per Fully Diluted Share	$	0.26		$	0.49

The following table provides a reconciliation of net income to Cash Earnings and Cash Earnings Per Share for the full year periods presented:

	For the Years Ended December 31,
	2023			2022
Net income	$	1,205,118		$	1,600,939
Add: Intangible amortization - customer relationships		325,898			325,898
Add: Impairment of intangible assets (net of tax impact)		41,330			280,200
Cash Earnings	$	1,572,346		$	2,207,037
Cash Earnings Per Fully Diluted Share	$	0.98		$	1.62

ABOUT TETON

Teton Advisors, Inc. (OTCQX: TETAA) is a specialist in smaller company investing, serving a diverse client base of institutional, high net worth and mutual fund investors under brands including Teton Westwood, Gabelli and Keeley. The Company was founded on a commitment to uncover value by focusing on companies that are misunderstood or ignored by the market utilizing methodologies developed by investment pioneers Mario Gabelli and John L. Keeley, Jr. As active, fundamental investors, the Teton portfolio teams think independently and focus on identifying short-term market inefficiencies to generate long-term alpha. Teton’s investment professionals share in the belief that being different is the cornerstone to discovering hidden value in equities. The Teton time-tested investment approaches can help set apart your client portfolios, delivering differentiated attributes to round out a broader portfolio. From modest beginnings over 40 years ago, to today, The Disciplined Discovery of Value™ shapes the cornerstone for our clients' long-term success.

Notification to all Teton Advisors, Inc. Class B Shareholders

Class B shares are convertible on a one-for-one basis into Class A shares that trade through multiple market makers on OTCQX: TETAA. Teton shareholders may convert their Class B Shares into Class A Shares, which most recently traded at $15.00 per share. For those Class B shareholders interested in conversion, please see the Investor Relations page on Teton’s website to complete a Conversion Notice Request Form - (http://tetonadv.com/documents/ConversionNotice.pdf).

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

Our disclosure and analysis in this press release contain some forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. Such statements are subject to contingencies and uncertainties, some or all of which may be material. We direct your attention to the cautionary statements regarding forward-looking information set forth in documents on Teton’s website. We do not undertake to update publicly any forward-looking statements if we subsequently learn that we are unlikely to achieve our expectations or if we receive any additional information relating to the subject matter of our forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240402196958/en/

Patrick Huvane, CPA, CFA

Chief Financial Officer

(914) 457-1074

For further information, please visit: www.tetonadv.com

Source: Teton Advisors, Inc.

FAQ

What was Teton Advisors, Inc.'s fully diluted GAAP EPS for the full year 2023?

Teton Advisors, Inc.'s fully diluted GAAP EPS for the full year 2023 was $0.75.

How did Teton's revenues perform in the fourth quarter of 2023?

Teton's revenues in the fourth quarter of 2023 were $2.9 million, down 11% quarter-over-quarter.

What was the average AUM for Teton in the fourth quarter of 2022?

The average AUM for Teton in the fourth quarter of 2022 was $1.5 billion.

What is Teton's CEO's outlook on future growth?

Teton's CEO highlighted distribution agreements and product diversification as strengths for future growth.

When is Teton Advisors, Inc.'s 2024 Annual Meeting of Shareholders scheduled?

Teton Advisors, Inc.'s 2024 Annual Meeting of Shareholders is scheduled for Wednesday, May 22, 2024, at 9:00 A.M., Eastern Time.