GCM Grosvenor(US:GCMG)2022-08-08 16:00Part I - Financial Information Financial Statements (unaudited) Presents GCM Grosvenor Inc.'s unaudited condensed consolidated financial statements for periods ended June 30, 2022, including financial condition, income, equity, and cash flows, with detailed notes Condensed Consolidated Statements of Financial Condition Details the company's assets, liabilities, and equity as of June 30, 2022, showing total assets decreased to $507.8 million and total liabilities to $552.8 million, reducing the deficit to $45.0 million Condensed Consolidated Statements of Financial Condition (in thousands) | | June 30, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | Total assets | $507,809 | $581,624 | | Total liabilities | $552,761 | $637,425 | | Total deficit | $(44,952) | $(55,801) | Condensed Consolidated Statements of Income Presents revenues, expenses, and profitability for periods ended June 30, 2022, showing total operating revenues decreased to $209.5 million, but net income increased to $53.9 million due to warrant liability fair value changes Key Income Statement Data (in thousands) | | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Total operating revenues | $209,488 | $222,922 | | Total operating expenses | $171,685 | $205,370 | | Operating income | $37,803 | $17,552 | | Change in fair value of warrant liabilities | $21,662 | $7,319 | | Net income | $53,910 | $41,839 | | Net income attributable to GCM Grosvenor Inc. | $12,331 | $3,203 | Earnings Per Share of Class A Common Stock | | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Basic EPS | $0.27 | $0.07 | | Diluted EPS | $0.21 | $(0.04) | Condensed Consolidated Statements of Cash Flows Details cash sources and uses for periods ended June 30, 2022, showing operating cash increased to $87.4 million, while financing activities shifted to a $97.9 million use, resulting in a $17.7 million net cash decrease Summary of Cash Flows (in thousands) | | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $87,432 | $63,981 | | Net cash used in investing activities | $(4,789) | $(6,810) | | Net cash provided by (used in) financing activities | $(97,902) | $11,185 | | Net (decrease) increase in cash and cash equivalents | $(17,702) | $67,684 | Notes to Condensed Consolidated Financial Statements Provides detailed explanations of significant accounting policies, including fair value measurements and revenue recognition, along with breakdowns of key financial statement items and disclosures on commitments and related party transactions - The company, as an "emerging growth company" (EGC), elected to use the extended transition period for new accounting standards35 - On January 1, 2022, adopting ASU 2016-02 resulted in recognizing approximately $16 million in lease right-of-use assets and $21 million in lease liabilities47 - On July 2, 2021, GCMH exercised its call right to purchase Mosaic's remaining interest for $165.0 million, eliminating redeemable noncontrolling interest55 Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's perspective on financial condition and results, covering business trends, operating results, Fee-Paying Assets Under Management (FPAUM), non-GAAP measures, liquidity, and capital resources Results of Operations For the six months ended June 30, 2022, management fees increased 10% to $184.9 million, while incentive fees decreased significantly to $22.5 million, and total employee compensation fell 20% to $127.3 million Revenue Comparison (in thousands) | Revenue Type | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Management fees | $184,940 | $168,219 | +10% | | Incentive fees | $22,497 | $50,441 | -55% | | Total operating revenues | $209,488 | $222,922 | -6% | Expense Comparison (in thousands) | Expense Type | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Employee compensation and benefits | $127,334 | $159,187 | -20% | | General, administrative and other | $44,351 | $46,183 | -4% | | Total operating expenses | $171,685 | $205,370 | -16% | Fee-Paying AUM Fee-Paying Assets Under Management (FPAUM) decreased by $1.2 billion (2%) to $57.5 billion in H1 2022, driven by market value decreases and withdrawals, partially offset by contributions FPAUM Roll-Forward for Six Months Ended June 30, 2022 (in millions) | | Private Markets Strategies | Absolute Return Strategies | Total FPAUM | | :--- | :--- | :--- | :--- | | Balance, beginning of period | $33,080 | $25,575 | $58,655 | | Contributions | $2,868 | $344 | $3,212 | | Withdrawals | $(83) | $(957) | $(1,040) | | Distributions | $(781) | $(24) | $(805) | | Change in market value | $(133) | $(2,121) | $(2,254) | | Balance, end of period | $34,773 | $22,679 | $57,452 | - Contracted, not yet Fee-Paying AUM decreased 13% from $7.7 billion at year-end 2021 to $6.7 billion as of June 30, 2022220224 Non-GAAP Financial Measures Discusses non-GAAP measures like Fee-Related Earnings (FRE), Adjusted EBITDA, and Adjusted Net Income, all of which increased for the six months ended June 30, 2022, reflecting improved performance Key Non-GAAP Financial Measures (in thousands) | Measure | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Fee-Related Earnings (FRE) | $64,270 | $52,649 | | Adjusted EBITDA | $72,402 | $60,883 | | Adjusted Net Income | $45,853 | $38,212 | Adjusted Net Income Per Share | | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Adjusted Net Income Per Share - Diluted | $0.24 | $0.20 | Liquidity and Capital Resources Details liquidity and capital resources as of June 30, 2022, including $78.5 million cash, $48.2 million credit facility availability, increased stock repurchase authorization to $65.0 million, and a $0.10 quarterly dividend - The stock repurchase plan authorization increased by $20.0 million in February 2022 and another $20.0 million in May 2022, totaling $65.0 million259 - During the six months ended June 30, 2022, the company spent $12.5 million to repurchase Class A common stock and $2.6 million to repurchase warrants254260 - A quarterly dividend of $0.10 per share of Class A common stock was declared on August 8, 2022148258 Quantitative and Qualitative Disclosures about Market Risk Discusses exposure to market risks, including price, interest-rate, and liquidity, noting no material changes during the six months ended June 30, 2022 - No material changes occurred in the company's market risks during the six months ended June 30, 2022272 Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2022, with no material changes in internal control over financial reporting during the quarter - The principal executive and financial officers concluded the company's disclosure controls and procedures were effective as of June 30, 2022275 - No material changes in internal control over financial reporting occurred during the quarter276 Part II - Other Information Legal Proceedings The company is involved in various lawsuits but does not anticipate any material effect on its financial statements from current litigation - Management does not believe current litigation will materially affect the Company's Condensed Consolidated Financial Statements128278 Risk Factors Reports no material changes to the company's risk factors since the Annual Report on Form 10-K for the fiscal year ended December 31, 2021 - No material changes occurred in the company's risk factors since its Annual Report on Form 10-K for the fiscal year ended December 31, 2021280 Unregistered Sales of Equity Securities and Use of Proceeds Details the company's Q2 2022 repurchase of 2,360,083 warrants and 1,269,525 common stock shares, noting the repurchase plan increased to $65.0 million Repurchases in Q2 2022 | Period | Warrants Purchased | Common Stock Purchased | Average Price Paid (Warrant) | Average Price Paid (Share) | | :--- | :--- | :--- | :--- | :--- | | April 2022 | 77,297 | 151,338 | $1.22 | $9.22 | | May 2022 | 2,282,786 | 504,308 | $0.80 | $8.15 | | June 2022 | — | 613,879 | $— | $7.35 | | Total Q2 | 2,360,083 | 1,269,525 | | | - The stock repurchase plan authorization increased to $65.0 million on May 5, 2022, with approximately $40.3 million remaining available as of June 30, 2022282283 Defaults Upon Senior Securities The company reported no defaults upon its senior securities - No defaults upon senior securities were reported284 Mine Safety Disclosures This item is not applicable to the company - This item is not applicable285 Other Information The company reported no other information for this item - No other information was reported for this item286 Exhibits Lists exhibits filed as part of the Quarterly Report on Form 10-Q, including CEO and CFO certifications and XBRL data files