Hennessy Advisors(HNNA) - 2024 Q2 - Quarterly Report

Financial Performance - Total revenue for the three months ended March 31, 2024, was $6,940,000, representing a 17.3% increase from $5,916,000 in the same period of 2023[15] - Net income for the six months ended March 31, 2024, was $2,740,000, up 18.4% from $2,314,000 in the prior year[21] - Basic earnings per share increased to $0.20 for the three months ended March 31, 2024, compared to $0.16 for the same period in 2023, reflecting a 25% growth[15] - The net income for the three months ended March 31, 2024, was $1.54 million, representing a net income margin of 22.2%, up from 20.2% in the same period last year[87] - Net income increased by 28.9%, from $1.2 million to $1.5 million for the three months ended March 31, 2024[115] Assets and Equity - Total assets as of March 31, 2024, were $147,335,000, a slight increase from $145,719,000 as of September 30, 2023[12] - Total stockholders' equity rose to $88,922,000 as of March 31, 2024, compared to $87,752,000 as of September 30, 2023, marking a 1.3% increase[12] - Total assets under management as of March 31, 2024, increased to $3.9 billion, a rise of $1.0 billion or 35.5% compared to March 31, 2023[83] - Average assets under management for the six months ended March 31, 2024, were $3.2 billion, an increase of $0.2 billion, or 7.7%, compared to the same period in 2023[119] Cash Flow - Net cash provided by operating activities for the six months ended March 31, 2024, was $2,289,000, compared to $1,955,000 in the prior year, reflecting a 17% increase[21] - Cash and cash equivalents decreased to $59,593,000 from $60,476,000 at the end of the previous period, indicating a decline of 1.5%[12] - The increase in cash provided by operating activities was primarily due to timing of cash payments and increased net income[120] Expenses - Operating expenses for the three months ended March 31, 2024, totaled $5,021,000, up from $4,324,000 in the same period of 2023, representing a 16.1% increase[15] - Total operating expenses increased by 16.1%, from $4.3 million to $5.0 million for the three months ended March 31, 2024[93] - Fund distribution and other expense increased by 52.3%, from $0.1 million to $0.2 million for the three months ended March 31, 2024[102] - Compensation and benefits expense increased by 16.7%, from $1.9 million to $2.3 million for the three months ended March 31, 2024[95] Investment and Management - The Company completed asset purchases adding approximately $12 million and $59 million to its assets under management from the CCM Small/Mid-Cap Impact Value Fund and the CCM Core Impact Equity Fund, respectively[37] - The Company has 16 open-end mutual funds and one ETF under management, providing investment advisory services and shareholder services[26] - Investment advisory and shareholder service fee revenues are recognized based on contractual percentages of net asset values, which are affected by market appreciation or depreciation, and net inflows or outflows[32] - The investment advisory fees accounted for 92.7% of total revenue for the three months ended March 31, 2024, compared to 91.9% in the same period last year[87] Shareholder Information - Cash dividends declared per share remained stable at $0.14 for both the three months ended March 31, 2024, and 2023[15] - The Company issued 7,116 shares of common stock under the Dividend Reinvestment and Stock Purchase Plan during the six months ended March 31, 2024[63] - As of March 31, 2024, 1,096,368 shares remain available for repurchase under the stock buyback program, which was increased to 2,000,000 shares in August 2022[64] - The Company paid a quarterly cash dividend of $0.1375 per share on March 4, 2024[66] Tax and Compliance - The Company's effective income tax rates for the six months ended March 31, 2024, and 2023, were 27.2% and 25.8%, respectively[56] - There were no changes in the company's internal control over financial reporting during the fiscal quarter ended March 31, 2024[123] Market and Strategy - The company serves over 170,000 fund accounts nationwide, including approximately 11,000 financial advisors, with nearly 400 advisors purchasing a fund for the first time in the most recent quarter[82] - The company has a robust marketing automation and CRM system with a database of over 100,000 financial advisors, aimed at retaining assets and driving new purchases[81] - The company’s long-term strategy includes a buy-and-hold investment philosophy, focusing on providing superior service to investors[81] - The company anticipates continued growth in earnings, with consensus estimates suggesting strengthened earnings growth for the quarter ended March 31, 2024[77]