GCM Grosvenor(US:GCMG)2025-05-07 22:10Part I - Financial Information Financial Statements (unaudited) The unaudited Q1 2025 financial statements, prepared under GAAP, reflect improved operating income from higher revenues and reduced employee compensation Condensed Consolidated Statements of Financial Condition Total assets decreased to $579.8 million and liabilities to $669.5 million as of March 31, 2025, primarily from reduced incentive fees receivable and accrued compensation Condensed Consolidated Statements of Financial Condition (in thousands) | | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total assets | $579,818 | $612,731 | | Cash and cash equivalents | $94,499 | $89,454 | | Incentive fees receivable | $22,955 | $58,346 | | Investments | $255,206 | $257,807 | | Total liabilities | $669,492 | $703,070 | | Accrued compensation and employee related obligations | $64,354 | $112,519 | | Debt | $431,136 | $432,039 | | Total deficit | $(89,674) | $(90,339) | Condensed Consolidated Statements of Income (Loss) Q1 2025 operating income of $15.3 million marks a significant turnaround from a prior-year loss, driven by increased revenues and decreased expenses Condensed Consolidated Statements of Income (Loss) (in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total operating revenues | $125,846 | $108,866 | | Management fees | $109,315 | $95,885 | | Incentive fees | $15,068 | $10,118 | | Total operating expenses | $110,516 | $124,826 | | Employee compensation and benefits | $82,240 | $99,647 | | Operating income (loss) | $15,330 | $(15,960) | | Net loss | $(1,090) | $(18,907) | | Net income attributable to GCM Grosvenor Inc. | $463 | $2,124 | | Basic EPS | $0.01 | $0.05 | | Diluted EPS | $(0.02) | $(0.13) | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities increased to $33.3 million in Q1 2025, contributing to a $5.0 million rise in cash and equivalents to $94.5 million Summary of Cash Flows (in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $33,264 | $24,204 | | Net cash used in investing activities | $(1,140) | $(8,657) | | Net cash used in financing activities | $(27,703) | $(17,249) | | Net increase (decrease) in cash | $5,045 | $(2,491) | | Cash and cash equivalents, end of period | $94,499 | $41,863 | Notes to Condensed Consolidated Financial Statements Key notes detail a new $15.0 million joint venture, an increased $190 million stock repurchase plan, debt covenant compliance, and a $49.8 million subsequent stock offering - On February 28, 2025, the Company closed a joint venture, Grove Lane Partners LLC, to broaden individual investor access to alternative investments, committing $15.0 million for a 49% interest47 - On February 6, 2025, the Board of Directors increased the stock repurchase authorization by $50 million, bringing the total to $190 million. As of March 31, 2025, $81.7 million remained available under the plan6869 - As of March 31, 2025, the company had $434.7 million of its 2028 Term Loans outstanding and was in compliance with all debt covenants105106 - Subsequent to the quarter end, on April 14, 2025, the company entered into a share purchase agreement with Sumitomo Mitsui Trust Bank for the sale of 3,752,965 shares of Class A common stock, raising net proceeds of approximately $49.8 million157 Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes Q1 2025 performance improvement to strong private markets growth, increased fees, and reduced employee compensation, with FPAUM reaching $66.4 billion and strong non-GAAP results Results of Operations Q1 2025 operating revenues increased 16% to $125.8 million and expenses decreased 11% to $110.5 million, leading to an operating income of $15.3 million from a prior-year loss Operating Results Summary (in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total operating revenues | $125,846 | $108,866 | | Management fees | $109,315 | $95,885 | | Incentive fees | $15,068 | $10,118 | | Total operating expenses | $110,516 | $124,826 | | Employee compensation and benefits | $82,240 | $99,647 | | Operating income (loss) | $15,330 | $(15,960) | - Management fees increased by $13.4 million (14%) YoY, driven by a $11.3 million (20%) increase in private markets strategies fees due to capital raising and deployment207 - Carried interest increased by $7.1 million (172%) YoY due to higher distributions and carry realizations, while performance fees decreased by $2.2 million (36%)210 - Employee compensation and benefits decreased by $17.4 million (17%) YoY, primarily driven by a $17.8 million (59%) decrease in partnership interest-based compensation212 Fee-Paying AUM Fee-Paying AUM increased by $1.6 billion (3%) to $66.4 billion in Q1 2025, driven by $2.7 billion in private markets contributions FPAUM Roll-Forward for Q1 2025 (in thousands) | | Private Markets | Absolute Return | Total FPAUM | | :--- | :--- | :--- | :--- | | Balance, beginning of period | $42,717 | $22,048 | $64,765 | | Contributions | $2,365 | $327 | $2,692 | | Withdrawals | $(27) | $(376) | $(403) | | Distributions | $(515) | $(9) | $(524) | | Balance, end of period | $44,398 | $22,001 | $66,399 | AUM and CNYFPAUM (in thousands) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Contracted, not yet Fee-Paying AUM | $8,239 | $8,202 | | AUM | $81,955 | $80,077 | Non-GAAP Financial Measures Key non-GAAP metrics showed strong growth in Q1 2025, with Fee-Related Earnings (FRE) at $46.7 million (up 22%) and Adjusted EBITDA at $53.4 million (up 26%) Non-GAAP Financial Measures Summary (in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Fee-Related Revenue | $106,163 | $94,815 | | Fee-Related Earnings | $46,657 | $38,124 | | Fee-Related Earnings Margin | 44% | 40% | | Adjusted EBITDA | $53,376 | $42,366 | | Adjusted Pre-Tax Income | $47,032 | $36,138 | | Adjusted Net Income | $35,274 | $27,212 | | Adjusted Net Income Per Share | $0.18 | $0.14 | Liquidity and Capital Resources The company maintains strong liquidity with $94.5 million in cash and $50.0 million available credit, alongside an increased $190 million stock repurchase plan and a declared $0.11 quarterly dividend - As of March 31, 2025, the company had $94.5 million of cash and cash equivalents and $50.0 million of available borrowing capacity under its Revolving Credit Facility253 - The Board of Directors increased the stock repurchase authorization by $50 million to $190 million on February 6, 2025267 - A quarterly dividend of $0.11 per share of Class A common stock was declared on May 5, 2025266 - The liability under the Tax Receivable Agreement was $51.4 million as of March 31, 2025271 Quantitative and Qualitative Disclosures about Market Risk The company's primary market risks are price risk on fund investments and interest-rate risk on floating-rate debt, with a 100 basis point SOFR increase estimated to raise annual interest expense by $4.3 million - The company's main market risks are price risk on fund investments and interest-rate risk on its debt281282 - A 100 basis point increase in SOFR is estimated to increase annual interest expense by $4.3 million, before considering the effect of interest rate hedges283 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of March 31, 2025285 - No material changes were made to internal control over financial reporting during the first quarter of 2025286 Part II - Other Information Legal Proceedings The company is involved in various lawsuits but does not expect current litigation to materially affect its financial statements - Management does not expect current litigation to have a material effect on the Company's financial statements288 Risk Factors No material changes to the company's risk factors were reported since the Annual Report on Form 10-K for fiscal year 2024 - No material changes to risk factors were reported for the period290 Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase Class A common stock or warrants in Q1 2025, but spent $0.3 million to settle RSUs - The company did not repurchase any Class A common stock or warrants during Q1 2025291268 Other Information No directors or executive officers adopted or terminated a Rule 10b5-1 trading plan or arrangement during Q1 2025 - No directors or executive officers adopted or terminated a Rule 10b5-1 trading plan during Q1 2025297 Exhibits This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including agreements, certifications, and XBRL data