GCM Grosvenor(US:GCMG)2022-11-08 16:00Part I Item 1. Financial Statements (unaudited) The unaudited financial statements detail the company's financial condition and operating results, showing a decrease in total assets and an increase in net income Condensed Consolidated Statements of Financial Condition (Selected Items) | Account | Sep 30, 2022 (Unaudited) (in thousands) | Dec 31, 2021 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $101,575 | $96,185 | | Investments | $223,969 | $226,345 | | Total assets | $549,054 | $581,624 | | Liabilities & Equity | | | | Debt | $388,348 | $390,516 | | Warrant liabilities | $10,540 | $30,981 | | Total liabilities | $596,021 | $637,425 | | Total deficit | $(46,967) | $(55,801) | Condensed Consolidated Statements of Income (Selected Items) | Account | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $137,214 | $118,075 | $346,702 | $340,997 | | Operating income | $28,730 | $25,077 | $66,533 | $42,629 | | Net income | $14,165 | $22,706 | $68,075 | $64,545 | | Net income attributable to GCM Grosvenor Inc. | $3,099 | $4,056 | $15,430 | $7,259 | | Diluted EPS | $0.02 | $0.03 | $0.23 | $0.03 | Condensed Consolidated Statements of Cash Flows (Nine Months Ended Sep 30) | Cash Flow Activity | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $159,929 | $144,796 | | Net cash used in investing activities | $(10,338) | $(11,953) | | Net cash used in financing activities | $(140,219) | $(209,962) | | Net increase (decrease) in cash | $5,390 | $(78,165) | Notes to Condensed Consolidated Financial Statements Key notes detail revenue composition, equity, debt, and subsequent events, including lease accounting adoption and capital management activities - The company adopted ASU 2016-02, Leases (Topic 842) on January 1, 2022, resulting in the recognition of approximately $16 million of lease right-of-use assets and $21 million of lease liabilities52 Revenue Breakdown (Nine Months Ended Sep 30, 2022) | Revenue Type | Amount (in thousands) | | :--- | :--- | | Management fees, net | $267,669 | | Fund expense reimbursement revenue | $7,986 | | Total management fees | $275,655 | | Performance fees | $2,324 | | Carried interest | $65,640 | | Total incentive fees | $67,964 | - On August 6, 2021, the Board authorized a stock repurchase plan, subsequently increased multiple times to $65.0 million by May 5, 2022, with $26.4 million remaining available as of September 30, 2022818485 2022 Dividend Declarations | Declaration Date | Dividend per Common Share ($) | Record Date | Payment Date | | :--- | :--- | :--- | :--- | | February 10, 2022 | $0.10 | March 1, 2022 | March 15, 2022 | | May 5, 2022 | $0.10 | June 1, 2022 | June 15, 2022 | | August 8, 2022 | $0.10 | September 1, 2022 | September 15, 2022 | | November 7, 2022 | $0.11 | December 1, 2022 | December 15, 2022 | - Subsequent to quarter-end, on November 7, 2022, the Board increased the stock repurchase authorization by $25 million to $90 million and declared a quarterly dividend of $0.11 per share161 - In October 2022, the company terminated existing interest rate swap agreements, receiving $40.3 million in cash, and entered a new swap agreement with a notional amount of $300 million at a fixed rate of 4.37% effective November 1, 2022162163 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, highlighting capital raising, fee trends, FPAUM changes, and improvements in non-GAAP metrics - The company's business is affected by its ability to retain and attract investors, expand into new business lines, realize investments, identify suitable opportunities, and generate strong returns amidst a complex regulatory environment and geopolitical turmoil170171173 Fee-Paying AUM (FPAUM) Roll-Forward (Nine Months Ended Sep 30, 2022) | FPAUM (in millions) | Private Markets (in millions) | Absolute Return (in millions) | Total FPAUM (in millions) | | :--- | :--- | :--- | :--- | | Balance, beginning of period | $33,080 | $25,575 | $58,655 | | Contributions | $3,842 | $534 | $4,376 | | Withdrawals | $(141) | $(1,537) | $(1,678) | | Distributions | $(987) | $(24) | $(1,011) | | Change in market value | $(79) | $(1,795) | $(1,874) | | Balance, end of period | $35,488 | $22,563 | $58,051 | - Contracted, not yet fee-paying AUM increased to $8.0 billion as of September 30, 2022, from $7.7 billion at year-end 2021, indicating a pipeline for future management fees235242 Non-GAAP Financial Measures (Nine Months Ended Sep 30) | Metric (in thousands) | 2022 (in thousands) | 2021 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Fee-Related Earnings | $95,637 | $83,619 | +14.4% | | Adjusted EBITDA | $113,769 | $98,504 | +15.5% | | Adjusted Net Income | $72,420 | $62,048 | +16.7% | - The company maintains adequate liquidity with $101.6 million in cash and $48.2 million of available borrowing capacity under its Revolving Credit Facility as of September 30, 2022179269 Item 3. Quantitative and Qualitative Disclosures about Market Risk No material changes in market risks are reported, with primary exposure linked to fair value movements of fund investments - There have been no material changes in market risks since the fiscal year ended December 31, 2021, with predominant exposure related to the fair value of fund investments, affecting investment income, management fees, and incentive fees296 Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - Based on an evaluation, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period298 - No changes in internal control over financial reporting during the third quarter of 2022 have materially affected, or are reasonably likely to materially affect, these controls299 Part II Item 1. Legal Proceedings The company is involved in routine lawsuits, but management does not expect a material effect on its financial statements - Management does not believe that the outcome of any current litigation will have a material effect on the Company's Condensed Consolidated Financial Statements301 Item 1A. Risk Factors There have been no material changes to the company's risk factors since its Annual Report on Form 10-K for the fiscal year ended December 31, 2021 - There have been no material changes to risk factors since the Annual Report on Form 10-K for the fiscal year ended December 31, 2021303 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased Class A common stock during the quarter, with a significant amount remaining available under the repurchase plan Share Repurchases (Three Months Ended Sep 30, 2022) | Period | Total Shares Purchased | Average Price Paid Per Share ($) | Approximate Dollar Value of Shares that May Yet Be Purchased ($) | | :--- | :--- | :--- | :--- | | July 1-31, 2022 | 410,102 | $7.07 | $37,386,095 | | August 1-31, 2022 | 319,954 | $8.22 | $28,902,728 | | September 1-30, 2022 | 312,215 | $8.00 | $26,404,802 | | Total | 1,042,271 | | | - The stock repurchase plan authorization was increased to $65.0 million on May 5, 2022, and further increased by $25 million to a total of $90 million on November 7, 2022305 Item 3. Defaults Upon Senior Securities None reported Item 4. Mine Safety Disclosures Not applicable Item 5. Other Information None reported Item 6. Exhibits This section lists exhibits filed as part of the Quarterly Report on Form 10-Q