Teton Advisors, Inc. Reports Full Year and Fourth Quarter Results, Notice of Annual Meeting and Appointment of Stephen Bondi as Chief Executive

Rhea-AI Summary

Teton Advisors, Inc. (OTCQX: TETAA) reported its Q4 and full-year 2022 financial results, revealing a 16% decline in annual revenue to $13.8 million and a 22% drop in Q4 revenue to $3.2 million. Fully diluted GAAP EPS decreased to $1.18 for the year from $1.85, with Q4 EPS at $0.27, down from $0.43. Cash EPS for the year was $1.62, a decline from $2.10. Average assets under management (AUM) fell 15% year-over-year to $1.7 billion. However, cash, cash equivalents, and marketable securities increased to $21.6 million, reflecting a 60% year-over-year growth. The company also announced the successful transition of its CEO position to Stephen Bondi as of April 24, 2023.

Positive

• Cash, cash equivalents and marketable securities totaled $21.6 million, a 60% increase year-over-year.

Negative

• Full year revenues of $13.8 million, down 16% year-over-year.
• Fourth quarter revenues decreased 22% quarter-over-quarter to $3.2 million
• Full year fully diluted GAAP EPS fell to $1.18 from $1.85 a year ago.
• Fourth quarter fully diluted GAAP EPS dropped to $0.27 from $0.43 a year ago.
• Average AUM decreased 15% year-over-year.

GREENWICH, Conn.--(BUSINESS WIRE)-- Teton Advisors, Inc. (“Teton” or the “Company”) (OTCQX: TETAA) announced its fourth quarter and full year 2022 results including cash and marketable securities. The Company’s Q4-2022 and year end highlights are as follows:

• Full year fully diluted GAAP EPS of $1.18 compared to $1.85 a year ago. Fourth quarter fully diluted GAAP EPS of $0.27 compared to $0.43 a year ago.
• Full year fully diluted Cash EPS¹ of $1.62 compared to $2.10 a year ago. Fourth quarter fully diluted Cash EPS¹ of $0.49 compared to $0.50 a year ago.
• Full year Revenues of $13.8 million, down 16% year-over-year. Fourth quarter Revenues of $3.2 million, down 22% quarter-over-quarter.
• Full year Average AUM of $1.7 billion, down 15% year-over-year.
• Cash, cash equivalents and marketable securities totaling $21.6 million as of December 31, 2022, an increase of 60% compared to $13.5 million at the prior year.
• Successfully completed executive transition with longtime partner, Stephen Bondi appointed as CEO.

“Teton continues to be a strong foundation for growth centered on its strengths in smaller company, active investing. Also, as part of a planned CEO transition commenced 18 months ago, I welcome Steve Bondi in joining as the Company’s CEO. I am delighted we can extend our long relationship with Steve to the executive office,” said Marc Gabelli, interim Chief Executive Officer and Chairman of the Board.

Fourth quarter net income and fully diluted earnings per share were $0.4 million and $0.27, respectively, compared to a net income $0.6 million and $0.43 for the same period a year ago. Excluding certain non-cash items, Cash Earnings¹ and Cash Earnings per fully diluted share were $0.8 million and $0.49, respectively, for the current quarter as compared to $0.6 million and $0.50 for the comparative quarter in 2021.

Revenues were $3.2 million for the quarter versus $4.1 million for the comparative quarter in 2021. Average AUM for the quarter was $1.5 billion versus $2.0 billion for the fourth quarter in 2021.

“I am pleased with the year’s overall results. Our portfolio management remains competitive, with key strengths in smaller company value investing. The Company held its margins well against otherwise broader market declines. Additionally, the Teton platform has further room for efficiencies. The year ahead will bring continued focus on operations,” added Marc Gabelli.

Financial Highlights
($'s in 000's except AUM and per share data)
		Fourth Quarter						Full Year
		2022			2021			2022			2021
AUM - average (in millions)		$	1,541		$	2,000		$	1,691		$	1,999
AUM - end of period (in millions)		$	1,498		$	2,000		$	1,498		$	2,000
Revenues		$	3,190		$	4,082		$	13,778		$	16,438
Income before interest, taxes, depreciation &
amortization, and impairment			1,191			894			2,901			3,429
Impairment of intangible asset			400			-			400			-
Net income			426			550			1,601			2,342
Net income per fully diluted share		$	0.27		$	0.43		$	1.18		$	1.85

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 $400,000 related to its intangible assets for the fourth quarter of 2022. There were no impairment charges in 2021.

Notice of Teton’s Annual General Meeting

The Company cordially invites you to participate in its 2023 Annual Meeting of Shareholders (the “Annual Meeting”) to be held on Wednesday, May 24, 2023 at 8:30 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.

Appointment of Chief Executive Officer

Teton welcomes Stephen G. Bondi as Chief Executive Officer of Teton Advisors, Inc. effective April 24, 2023. Mr. Bondi has been a member of our Board of Directors since 2017 and has over 40 years of experience in the asset management industry. He previously served as Chief Compliance Officer & Chief Financial Officer for Mittleman Investment Management, LLC, a subsidiary of Aimia Inc., and a provider of value-oriented investment advisory services to institutional investors and high-net-worth individuals.

“I am proud to be able to utilize my extensive experience in the asset management business, including with traditional and alternative investment products, to lead the well-experienced and strong-performing teams at Teton. My six years as a Teton Board member and nearly eighteen years of experience at the Gabelli affiliates of Teton, will provide me with the familiarity necessary to excel in my new role,” said Stephen Bondi.

Table I
Teton Advisors, Inc.
Unaudited Condensed Consolidated Statements of Income
		For the Three Months Ended December 31,
		2022			2021
Revenues
Investment advisory fees - mutual funds, net		$	2,353,846		$	3,266,082
Investment advisory fees - separate accounts			650,154			806,615
Distribution fees and other income, net			186,334			9,479
Total revenues			3,190,334			4,082,176
Operating expenses
Compensation			558,462			1,305,221
Sub-advisory fees			460,791			357,972
Distribution costs			392,071			410,745
Marketing and administrative fees			50,140			687,642
Advanced commissions			2,925			7,911
Other operating expenses			535,404			418,980
Total operating expenses			1,999,793			3,188,471
Income before interest, taxes, depreciation, amortization and impairment			1,190,541			893,705
Depreciation and amortization			84,160			100,009
Impairment of intangible asset			400,000			-
Income before income taxes			706,381			793,696
Income tax provision			280,819			243,528
Net income		$	425,562		$	550,168
Net income per share:
Basic		$	0.27		$	0.44
Fully diluted		$	0.27		$	0.43
Weighted average shares outstanding:
Basic			1,600,899			1,260,987
Fully diluted			1,603,082			1,265,923

Table II
Teton Advisors, Inc.
Condensed Consolidated Statements of Income
		For the Years Ended December 31,
		2022			2021
Revenues
Investment advisory fees - mutual funds, net		$	10,596,589		$	13,301,511
Investment advisory fees - separate accounts			2,912,715			3,102,959
Distribution fees and other income, net			268,329			33,547
Total revenues			13,777,633			16,438,017
Operating expenses
Compensation			5,030,627			5,501,495
Sub-advisory fees			2,131,362			2,780,853
Distribution costs			1,629,606			1,704,012
Marketing and administrative fees			169,288			1,436,309
Advanced commissions			20,884			18,296
Other operating expenses			1,894,477			1,567,796
Total operating expenses			10,876,244			13,008,761
Income before interest, taxes, depreciation, amortization and impairment			2,901,389			3,429,256
Depreciation and amortization			336,957			358,077
Impairment of intangible asset			400,000			-
Income before income taxes			2,164,432			3,071,179
Income tax provision			563,493			729,180
Net income		$	1,600,939		$	2,341,999
Net income per share:
Basic		$	1.18		$	1.86
Fully diluted		$	1.18		$	1.85
Weighted average shares outstanding:
Basic			1,357,915			1,260,988
Fully diluted			1,360,949			1,268,828

Table III
Teton Advisors, Inc.
Condensed Consolidated Statements of Financial Condition
		As of December 31,
		2022			2021
ASSETS
Cash and cash equivalents		$	26,995,341		$	21,506,861
Investment advisory fees receivable			999,299			1,374,135
Intangible assets, net			2,974,011			3,699,909
Investments in securities			2,559,401			-
Other assets			3,733,104			4,188,017
Total assets		$	37,261,156		$	30,768,922
LIABILITIES AND STOCKHOLDERS' EQUITY
Due to broker		$	7,947,111		$	7,999,316
Compensation payable			255,038			707,926
Payable to affiliates			436,943			395,745
Distribution costs payable			359,315			233,409
Accrued expenses and other liabilities			1,699,766			1,676,418
Total liabilities			10,698,173			11,012,814
Total stockholders' equity			26,562,983			19,756,108
Total liabilities and stockholders' equity		$	37,261,156		$	30,768,922

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 Cash Earnings, we add back to net income, the non-cash amortization expense associated with our intangible assets that were acquired in the Keeley acquisition. 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 $400,000 in the fourth quarter of 2022. For purposes of calculating Cash Earnings, the Company added back the after-tax amounts associated with this impairment charge of $280,200. There was no non-cash impairment charge in fourth quarter of 2021. 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)		2022			2021
Net income		$	425,562		$	550,168
Add: Intangible amortization - customer relationships			81,475			81,475
Add: Impairment of intangible assets (net of tax impact)			280,200			-
Cash Earnings		$	787,237		$	631,643
Cash Earnings Per Fully Diluted Share		$	0.49		$	0.50

In calculating full year Cash Earnings, we add back to net income the non-cash amortization expense associated with our intangible assets that were acquired in the Keeley acquisition. 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 $400,000 for 2022. For purposes of calculating Cash Earnings, the Company added back the after-tax amounts associated with this impairment charge of $280,200. There was no non-cash impairment charge in 2021. 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 full year periods presented:

		For the Years Ended December 31,
		2022			2021
Net income		$	1,600,939		$	2,341,999
Add: Intangible amortization - customer relationships			325,898			325,898
Add: Impairment of intangible assets (net of tax impact)			280,200			-
Cash Earnings		$	2,207,037		$	2,667,897
Cash Earnings Per Fully Diluted Share		$	1.62		$	2.10

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 traded recently at $16.50 per share on April 5, 2023. 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/20230418006252/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 are the annual revenue results for Teton Advisors (TETAA) in 2022?

Teton Advisors reported total annual revenues of $13.8 million for 2022, which represents a 16% decline year-over-year.

What was Teton Advisors' EPS for Q4 2022?

The fully diluted GAAP EPS for Teton Advisors in Q4 2022 was $0.27, down from $0.43 in the same quarter the previous year.

How did Teton Advisors' cash EPS change in 2022?

The full year cash EPS for Teton Advisors was $1.62 for 2022, down from $2.10 the previous year.

What changes occurred in Teton Advisors' average AUM in 2022?

The average assets under management for Teton Advisors decreased 15% year-over-year to $1.7 billion.

When was the new CEO of Teton Advisors appointed?

The new CEO, Stephen Bondi, was appointed effective April 24, 2023.