Hennessy Advisors(US:HNNA)2023-08-02 20:16Financial Performance - Total revenue for the three months ended June 30, 2023, was $5,701,000, a decrease of 17.5% compared to $6,909,000 for the same period in 2022[16] - Net income for the three months ended June 30, 2023, was $1,116,000, down 14.2% from $1,301,000 in the same period last year[16] - Basic earnings per share for the three months ended June 30, 2023, was $0.15, compared to $0.17 for the same period in 2022[16] - Investment advisory fees for the nine months ended June 30, 2023, were $16,325,000, down 24.0% from $21,499,000 for the same period in 2022[16] - Net income for the nine months ended June 30, 2023, was $3,430 million, a decrease of 29% from $4,816 million in 2022[23] - Net cash provided by operating activities decreased to $4,646 million from $6,251 million, reflecting a decline of 25.7%[23] - Total operating expenses for the three months ended June 30, 2023, decreased by 5.7% to $4.3 million, but as a percentage of total revenue, increased by 9.5 percentage points to 75.8%[101] - Compensation and benefits expense for the three months ended June 30, 2023, decreased by 2.3% to $1.9 million, with an increase in percentage to 34.1% of total revenue[103] - General and administrative expense for the three months ended June 30, 2023, increased by 6.3% to $1.3 million, representing 22.9% of total revenue[106] - Sub-advisory fees expense for the three months ended June 30, 2023, decreased by 24.9% to $0.9 million, accounting for 15.8% of total revenue[114] Assets and Liabilities - Total assets as of June 30, 2023, were $144,396,000, a slight increase from $143,652,000 as of September 30, 2022[13] - Total stockholders' equity increased to $87,425,000 as of June 30, 2023, from $86,298,000 as of September 30, 2022[13] - Total current liabilities decreased to $3,489,000 as of June 30, 2023, from $4,717,000 as of September 30, 2022, representing a reduction of 26.0%[13] - Cash and cash equivalents increased to $59,399,000 as of June 30, 2023, from $58,487,000 as of September 30, 2022[13] - Total accrued liabilities and accounts payable decreased from $3.320 million as of September 30, 2022, to $2.569 million as of June 30, 2023, a reduction of approximately 22.6%[54] - Cash and cash equivalents as of June 30, 2023, totaled $59.4 million[127] Dividends and Shareholder Returns - The company declared cash dividends of $0.14 per share for the three months ended June 30, 2023, consistent with the same period in 2022[16] - Dividend payments for the nine months ended June 30, 2023, were $3,077 million, compared to $3,025 million in 2022, an increase of 1.7%[23] - The Company paid a quarterly cash dividend of $0.1375 per share on June 5, 2023, to shareholders of record as of May 23, 2023[69] - The Company did not repurchase any shares under the stock buyback program during the nine months ended June 30, 2023, with 1,096,368 shares remaining available for repurchase[67] Market and Fund Performance - As of June 30, 2023, total assets under management were $3.0 billion, a decrease of $0.2 billion, or 6.1%, compared to June 30, 2022, primarily due to net outflows from the Hennessy Funds[89] - For the nine months ended June 30, 2023, 15 out of 17 Hennessy Funds generated positive returns, with all funds having at least 10 years of operating history posting positive returns over the five-year and ten-year periods[86] - The average assets under management for the Hennessy Mutual Funds decreased to $2.85 billion for the quarter ended June 30, 2023, down from $3.44 billion for the same quarter in 2022[90] - The Hennessy Focus Fund experienced the largest net outflow of $(32) million for the three months ended June 30, 2023[100] - Redemptions as a percentage of assets under management decreased from an average of 3.2% per month during the three months ended June 30, 2022, to 2.1% during the same period in 2023[100] Strategic Initiatives - The company is focused on both organic growth and future acquisitions as part of its business strategy, aiming to retain fund assets and generate inflows[79] - The company has entered into a new sub-advisory agreement with Vident Advisory, following the acquisition that resulted in a change of control of the previous sub-advisor, VIA[72] - The Hennessy Stance ESG ETF's shareholders approved the implementation of a manager of managers structure, allowing the company to appoint and replace unaffiliated sub-advisors without shareholder approval[73] - The company expects to complete the acquisition of CCM Equity Funds, which includes customary representations and warranties[38] - The company capitalized $0.1 million in legal costs related to the acquisition of CCM Equity Funds, expected to close in 2023[38] Tax and Interest Expenses - The effective income tax rate for the nine months ended June 30, 2023, was 26.2%, up from 23.0% for the same period in 2022[57] - Interest income for the three months ended June 30, 2023, rose significantly from $0.02 million to $0.71 million, attributed to rising interest rates[120] - Interest expense for the nine months ended June 30, 2023, increased to $1.7 million, reflecting a full period of interest expense for the 2026 Notes[119] - Income tax expense for the three months ended June 30, 2023, decreased by 15.1% to $0.4 million[121] Other Financial Metrics - The company reported a decrease in stock-based compensation to $784 million from $974 million, a decline of 19.5%[23] - The unrealized gain on marketable securities was $(1) million for the nine months ended June 30, 2023, compared to $0 million in 2022[23] - The principal asset on the balance sheet, management contracts, had a net balance of $81.2 million as of June 30, 2023, reflecting an increase from $80.9 million as of September 30, 2022[91] - The 2026 Notes have a fair value of approximately $36.93 million as of June 30, 2023, based on the last trading price[49] - The total undiscounted cash flows for future maturities of the Company's operating lease liabilities are $381,000, with a present value discount of $9,000[53] - The Company has a total expected compensation expense related to RSUs of $18.082 million, with $1.744 million remaining unrecognized as of June 30, 2023[64]