GCM Grosvenor(US:GCMG)2025-08-07 20:14Part I Item 1. Financial Statements (unaudited) GCM Grosvenor Inc. reported significant net income growth in Q2 and H1 2025, driven by fair value changes and improved financial position Condensed Consolidated Statements of Financial Condition Total assets increased to $636.9 million while total liabilities decreased, significantly improving the total deficit to $(20.6) million Condensed Consolidated Statements of Financial Condition (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $136,334 | $89,454 | | Investments | $262,755 | $257,807 | | Total assets | $636,859 | $612,731 | | Liabilities and Equity | | | | Accrued compensation | $60,782 | $112,519 | | Debt | $430,235 | $432,039 | | Warrant liabilities | $11,280 | $22,510 | | Total liabilities | $657,498 | $703,070 | | Total deficit | $(20,639) | $(90,339) | | Total liabilities and equity (deficit) | $636,859 | $612,731 | Condensed Consolidated Statements of Income (Loss) Net income significantly increased in Q2 and H1 2025, driven by higher operating revenues and a positive change in warrant liabilities fair value Key Income Statement Data (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Management fees | $101,924 | $99,843 | $211,239 | $195,728 | | Incentive fees | $16,258 | $16,037 | $31,326 | $26,155 | | Total operating revenues | $119,657 | $116,954 | $245,503 | $225,820 | | Operating income (loss) | $19,245 | $20,835 | $34,575 | $4,875 | | Change in fair value of warrant liabilities | $19,388 | $(180) | $10,612 | $(2,324) | | Net income (loss) | $39,891 | $12,961 | $38,801 | $(5,946) | | Net income attributable to GCMG Inc. | $15,437 | $4,800 | $15,900 | $6,924 | | Diluted EPS | $0.05 | $0.04 | $0.07 | $(0.08) | Condensed Consolidated Statements of Cash Flows Operating cash flow significantly increased in H1 2025, while investing cash outflow decreased and financing activities shifted to a net use of cash Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $75,241 | $41,682 | | Net cash used in investing activities | $(7,631) | $(16,497) | | Net cash provided by (used in) financing activities | $(22,052) | $5,664 | | Net increase in cash and cash equivalents | $46,880 | $29,567 | Notes to Condensed Consolidated Financial Statements Notes provide detailed insights into revenue, investments, fair value measurements, equity changes, debt structure, and commitments - In Q2 2025, the company entered into a Share Purchase Agreement with Sumitomo Mitsui Trust Bank, selling 3,752,965 shares of Class A common stock for net proceeds of $49.8 million70 - The Board of Directors increased the stock repurchase authorization by $50 million in February 2025 and another $30 million in August 2025, bringing the total to $220 million. As of June 30, 2025, $57.2 million remained available757778 - In May 2024, the company amended its Term Loan Facility, increasing the principal amount to $438.0 million and extending the maturity to February 2030111 - The company has unfunded investment commitments of $126.6 million as of June 30, 2025, up from $90.5 million at year-end 2024138 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, highlighting AUM growth, revenue and expense trends, non-GAAP measures, liquidity, and capital resources Results of Operations H1 2025 saw increased operating revenues and decreased expenses, leading to significant improvements in operating and net income Revenue Breakdown (in thousands) | Revenue Type | H1 2025 | H1 2024 | Change % | | :--- | :--- | :--- | :--- | | Management fees | $211,239 | $195,728 | +8% | | Incentive fees | $31,326 | $26,155 | +20% | | Total operating revenues | $245,503 | $225,820 | +9% | Expense Breakdown (in thousands) | Expense Type | H1 2025 | H1 2024 | Change % | | :--- | :--- | :--- | :--- | | Employee compensation and benefits | $157,103 | $167,602 | -6% | | General, administrative and other | $53,825 | $53,343 | +1% | | Total operating expenses | $210,928 | $220,945 | -5% | - The 6% decrease in H1 2025 employee compensation was primarily driven by a $13.0 million (31%) reduction in partnership interest-based compensation, partially offset by a $5.2 million (55%) increase in carried interest compensation224 Fee-Paying AUM Fee-Paying AUM (FPAUM) and total AUM significantly increased in H1 2025, driven by contributions and positive market value changes FPAUM Roll-Forward for Six Months Ended June 30, 2025 (in millions) | FPAUM Activity | Private Markets | Absolute Return | Total FPAUM | | :--- | :--- | :--- | :--- | | Balance, beginning of period | $42,717 | $22,048 | $64,765 | | Contributions | $3,707 | $977 | $4,684 | | Withdrawals | $(79) | $(517) | $(596) | | Distributions | $(1,045) | $(78) | $(1,123) | | Change in market value | $53 | $1,065 | $1,118 | | Balance, end of period | $45,461 | $23,612 | $69,073 | - Contracted, not yet Fee-Paying AUM (CNYFPAUM) stood at $8.7 billion as of June 30, 2025, an increase from $8.2 billion at the end of 2024239 - Total Assets Under Management (AUM) increased by $5.9 billion (7%) to $85.9 billion during the first six months of 2025245 Non-GAAP Financial Measures Non-GAAP measures like Fee-Related Earnings (FRE), Adjusted EBITDA, and Adjusted Net Income (ANI) showed significant improvement in H1 2025 Key Non-GAAP Financial Measures (in thousands, except per share data) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Fee-Related Revenue | $206,120 | $192,386 | | Fee-Related Earnings | $88,274 | $77,373 | | Fee-Related Earnings Margin | 43% | 40% | | Adjusted EBITDA | $102,892 | $87,840 | | Adjusted Net Income | $67,364 | $56,598 | | Adjusted Net Income Per Share | $0.34 | $0.30 | Liquidity and Capital Resources The company maintains strong liquidity with significant cash and revolver availability, managing capital through investments, debt, and shareholder returns - The company maintains a strong liquidity position with $136.3 million in cash and $50.0 million available on its revolver as of June 30, 2025268 - The stock repurchase plan authorization was increased to $220 million. In H1 2025, $24.9 million was used to settle employee equity awards284285 - The payable under the Tax Receivable Agreement (TRA) was $60.6 million as of June 30, 2025, with an increase of approximately $9.0 million during the period due to an exchange of partnership units287 - A quarterly dividend of $0.11 per share of Class A common stock was declared on August 4, 2025281 Quantitative and Qualitative Disclosures about Market Risk The company's market risk primarily stems from fund investment performance and interest rate sensitivity on its floating-rate debt - The company's main market risk is tied to the performance of its funds' investments, which impacts management fees, incentive fees, and investment income297 - A 100 basis point increase in the SOFR would result in an estimated $4.3 million increase in annual interest expense on the company's floating-rate debt, before considering the effect of interest rate hedges298 Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025300 - No material changes were made to the internal control over financial reporting during the three months ended June 30, 2025301 Part II Legal Proceedings The company is involved in routine legal proceedings, but management does not anticipate a material impact on financial statements - Management does not expect current litigation to have a material impact on the company's financial condition or results of operations303 Risk Factors No material changes to the company's risk factors were reported since the last annual filing - No material changes to risk factors were reported for the period305 Unregistered Sales of Equity Securities and Use of Proceeds The company did not make open market purchases of equity securities in Q2 2025, aside from employee equity award settlements - The company did not purchase any shares of Class A common stock or warrants during the three months ended June 30, 2025, apart from shares withheld for employee tax obligations on vested RSUs306 Other Information No directors or executive officers adopted or terminated insider trading plans during the second quarter of 2025 - No directors or executive officers adopted or terminated an insider trading plan (Rule 10b5-1 or other) during Q2 2025313