Hennessy Advisors(HNNA) - 2025 Q1 - Quarterly Report

Financial Performance - Total revenue for the three months ended December 31, 2024, was $9,708,000, representing a 58.5% increase from $6,144,000 in the same period of 2023[14]. - Net income for the quarter was $2,834,000, compared to $1,200,000 in the prior year, marking a 136.2% increase[14]. - Basic earnings per share rose to $0.36, up from $0.16 in the same quarter of the previous year[14]. - Investment advisory fees increased to $9,061,000, up 60.5% from $5,665,000 year-over-year[14]. - Total revenue for the three months ended December 31, 2024, increased by 58.0%, from $6.1 million to $9.7 million[89]. - Net income for the three months ended December 31, 2024, was $2.834 million, representing 29.2% of total revenue, compared to $1.2 million, or 19.5%, for the same period in 2023[88]. Assets and Equity - Total assets as of December 31, 2024, were $153,298,000, a slight increase from $152,099,000 as of September 30, 2024[11]. - Total stockholders' equity increased to $93,394,000 from $91,311,000 in the previous quarter[11]. - Total assets under management as of December 31, 2024, was $4.8 billion, an increase of $1.5 billion, or 45.7%, compared to December 31, 2023[77]. - The average assets under management for the three months ended December 31, 2024, was $4.8 billion, an increase of $1.8 billion, or 58.8%, compared to the same period in 2023[84]. Cash Flow and Dividends - Cash and cash equivalents at the end of the period were $64,979,000, up from $63,922,000 at the beginning of the period[21]. - The company paid dividends totaling $1,070,000 in the three months ended December 31, 2024, compared to $1,055,000 in the same period of 2023, indicating a slight increase of 1.4%[21]. - The company paid a quarterly cash dividend of $0.1375 per share on November 27, 2024[59]. - The increase in cash provided by operating activities was $1.8 million, primarily due to increased net income[85]. - The company’s operating cash flow for the three months ended December 31, 2024, was $2,234,000, significantly higher than $416,000 in the same period of 2023, representing a 436.5% increase[21]. Operating Expenses - Operating expenses for the quarter totaled $5,878,000, an increase from $4,719,000 in the same quarter of 2023[14]. - Total operating expenses rose by 24.6% from $4.7 million to $5.9 million, while as a percentage of total revenue, they decreased by 16.3 percentage points to 60.5%[97]. - Compensation and benefits expense increased by 48.2% from $1.9 million to $2.8 million, but as a percentage of total revenue, it decreased by 1.9 percentage points to 28.5%[98]. - Fund distribution and other expense surged by 77.9% from $0.1 million to $0.3 million, primarily due to increased average daily net assets across the Hennessy Funds[104]. Market Presence and Services - The company continues to provide investment advisory services to 16 open-end mutual funds and one ETF, indicating ongoing market presence and expansion[25]. - The Company has investment advisory agreements with Hennessy Funds Trust for all classes of the 16 Hennessy Mutual Funds and the Hennessy Stance ESG ETF, with fees based on a percentage of the applicable fund's average daily net asset value[35][37]. - The Hennessy Cornerstone Mid Cap 30 Fund had the largest average daily net assets of $1.7 billion for the three months ended December 31, 2024[91]. - The company serves over 210,000 fund accounts nationwide, including approximately 11,000 financial advisors[76]. Compliance and Governance - The Company maintains a compliance program and conducts ongoing reviews of service providers to ensure adherence to investment objectives and federal securities laws[31]. - The Company has entered into sub-advisory agreements for several funds, with sub-advisors responsible for investment management under the Company's supervision[38]. - The Company is required to adopt ASU 2023-07 in its 10-K filing for fiscal year 2025, which expands disclosures about reportable segments[61]. Tax and Liabilities - The effective income tax rates for the three months ended December 31, 2024, and 2023, were 28.6% and 27.0%, respectively[49]. - The Company reported total accrued liabilities and accounts payable of $2,428,000 as of December 31, 2024, a decrease from $4,441,000 as of September 30, 2024[46]. - Income tax expense rose by 155.2% from $0.4 million to $1.1 million, attributed to increased net operating income and a higher effective income tax rate[110]. Stock and Financing - The Company completed a public offering of 4.875% notes due 2026, raising approximately $38,607,000 after issuance costs[47]. - The Company has 1,096,368 shares remaining available for repurchase under its stock buyback program, which was increased to 2,000,000 shares in August 2022[57]. - The Company has unrecognized compensation expense related to restricted stock units (RSUs) amounting to $2.563 million as of December 31, 2024[55]. - The Company issued 1,984 shares of common stock under the Dividend Reinvestment and Stock Purchase Plan during the three months ended December 31, 2024[56].