GAMCO Investors, Inc. Reports Fourth Quarter 2017 Results

GAMCO Investors, Inc. (“GAMCO”) (NYSE:GBL) today reported fourth quarter 2017 revenues of $98.7 million, net income of $13.5 million, and earnings of $0.46 per diluted share. This compares to fourth quarter 2016 revenues of $100.0 million, net income of $32.7 million, and earnings of $1.07 per diluted share. On an adjusted basis, fourth quarter 2017 net income was $23.1 million, and earnings were $0.78 per diluted share versus fourth quarter 2016 net income of $23.6 million and earnings of $0.78 per diluted share. Adjusted net income and adjusted earnings per share are non-GAAP performance measures and are explained and reconciled with the most comparable GAAP numbers starting on page 11.

Our fourth quarter 2017 AUM was up 7.8% from the prior year and unchanged from $43.1 billion at September 30, 2017. Market appreciation of $1.2 billion was offset by net outflows of $1.1 billion and distributions, net of reinvestments, of $0.1 billion.

Average AUM was $43.0 billion for the fourth quarter of 2017 versus $42.3 billion for the third quarter of 2017 and $39.3 billion for the fourth quarter of 2016.

As previously disclosed, the Company entered into deferred compensation agreements for the Chief Executive Officer for three distinct periods: 2016 (entire year); the first half of 2017 and the fourth quarter of 2017. These agreements provided the Company with increased flexibility to pay down debt related to the spin-off of Associated Capital in November 2015. The deferred compensation expense is recognized ratably over its vesting period, resulting in a $12.7 million increase in compensation expense and management fee year-over-year. The Company also incurred expenses in the fourth quarter of 2017 relating to the revaluation of deferred tax assets and liabilities, net, related to the Tax Cuts and Jobs Act (the “Act”) ($8.2 million), early extinguishment of the $110 million 4.5% convertible note ($3.3 million) and the accelerated vesting of RSAs ($1.3 million).

This contributed to lowering operating income to $39.5 million in the fourth quarter of 2017 from the $52.0 million in the year-ago quarter.

Financial Highlights
				Fourth Quarter										YTD
($'s in 000's except AUM and per share data)				2017				2016						2017						2016
AUM - end of period (in millions)				$	43,063			$	39,954		(a)			$	43,063					$	39,954		(a)
AUM - average (in millions)					42,965				39,328						42,016						38,878
GAAP
Revenues				$	89,613			$	84,650					$	351,382					$	337,579
Incentive fees					9,053				15,300						9,142						15,421
Total revenues				$	98,666			$	99,950					$	360,524					$	353,000
Operating income					39,524				52,031						145,020						191,796
Income before income taxes					34,886				50,569						132,888						182,227
Effective tax rate						61.3	%				35.4	%					41.4	%					35.7	%
Net income					13,495				32,692						77,809						117,121
Net income per fully diluted share				$	0.46			$	1.07					$	2.60					$	3.92
Non-GAAP
Operating income				$	42,667			$	41,455					$	158,949					$	153,218
Adjusted income before income taxes					37,197				35,995						136,314						129,285
Adjusted effective tax rate						37.8	%				34.5	%					37.8	%					37.0	%
Adjusted net income					23,147				23,583						84,811						81,399
Adjusted net income per fully diluted share				$	0.78			$	0.78					$	2.82					$	2.74
Weighted average diluted shares outstanding					30,336				31,241						30,947						30,170
Shares outstanding at December 31					28,974				29,463						28,974						29,463

See the reconciliation to the comparable U.S. GAAP measures starting on page 11.

(a) Adjusted to include $270 million of Merger Arbitrage assets at December 31, 2016.

Revenues

• Total revenues for the fourth quarter of 2017 were $98.7 million compared with $100.0 million in the prior year.
• Investment advisory fees, excluding incentive fees, rose to $78.7 million in the fourth quarter of 2017 from $73.6 million in the fourth quarter of 2016 highlighted by revenues from our open-end and closed-end funds of $51.1 million, an increase from $47.5 million in the year-ago quarter. Institutional and Private Wealth Management accounted for $26.2 million of the revenues in 2017 compared to $25.3 million in 2016. SICAV revenues accelerated to $1.4 million in 2017 from $0.7 million in 2016.
• Incentive fees earned were $9.1 million and $15.3 million during the fourth quarter ended December 31, 2017 and December 31, 2016, respectively.
• Distribution fees from our open-end equity funds and other income were $10.9 million for the fourth quarter of 2017 versus $11.1 million in the prior-year quarter.

Operating Income

As noted, there were several distinct items in both quarters that impacted our results. Operating income before management fee was $39.5 million in the fourth quarter of 2017 versus $52.0 million in the prior-year period. The cash compensation deferrals raised operating costs by $12.7 million, comprised of the absence of the $14.6 million expense in the fourth quarter of 2016 coupled with a $1.9 million expense reduction in the fourth quarter of 2017. The Company also recorded $1.3 million of compensation expense for the acceleration of most of the RSAs outstanding. Excluding these items adjusted operating income before management fee was $38.5 million in the fourth quarter of 2017 versus $37.5 million in the year-ago quarter.

Other expense

We recognized $4.6 million in net other expenses in the fourth quarter of 2017 versus net other expenses of $1.5 million in the fourth quarter of 2016. During the fourth quarter of 2017, we repurchased the $110 million convertible note at $103, resulting in a $3.3 million loss on extinguishment of debt. In the fourth quarter of 2017, we also made $0.3 million of charitable contributions. Interest expense decreased by $1.0 million year-over-year, reflecting a reduction in outstanding debt to $89.1 million at December 31, 2017 from $234.0 million at December 31, 2016. Investment income for 2017 was $0.8 million vs. $1.5 million in 2016.

Income Taxes

The Company’s effective tax rate (“ETR”) for the quarter ended December 31, 2017 was 61.3% versus 35.4% for the quarter ended December 31, 2016. The Act that was enacted in December 2017 resulted in an $8.2 million, or $0.27 per fully diluted share, write down of net deferred tax assets. Absent this change the effective rate for the quarter would have been 37.8%.

Included in the fourth quarter 2017 income tax expense relating to the Act enacted in the United States in December 2017 were the following:

• $10.7 million tax expense related to the revaluation of certain deferred income tax assets;
• $2.5 million non-cash tax benefit related to the revaluation of certain deferred income tax liabilities

These amounts, which are based on reasonable estimates, may require further adjustments as additional guidance from the U.S. Department of Treasury is provided, as changes in GAMCO’s assumptions occur, and as further information and interpretations become available.

In addition, the fourth quarter income tax expense included a $0.5 million discrete tax expense related to the acceleration of stock-based compensation awards.

We previously disclosed an estimated ETR for 2018 of between 33% and 36%. We now expect the 2018 ETR to be lower than that range, but we continue to evaluate the impact of the Act’s provisions.

Balance Sheet

GAMCO made substantial progress in reducing its debt since the November 2015 spin-off of Associated Capital Group, Inc. from $357 million to $89.1 million as of December 31, 2017. As a result, Standard & Poor’s recently revised its outlook to stable from negative and reaffirmed our debt rating at BBB-.

During the quarter, we fully extinguished the $110 million 4.5% convertible note and prepaid $20 million of the amount outstanding on the 4% PIK note.

Total deferred compensation payable at December 31, 2017 was $120.5 million, of which $61.5 million is included in the GAAP balance sheet and $59.0 million of which will be recorded in 2018 and 2019, ratably over the vesting periods of each of the three deferral agreements, in accordance with GAAP.

We ended the quarter with cash of $17.8 million, investments of $36.8 million, and gross debt of $89.1 million. We have $500 million available on our universal shelf registration. Together with earnings from operations, the shelf provides us with flexibility to pay down debt, do acquisitions, perform lift-outs, seed new investment strategies, and co-invest, as well as to fund shareholder compensation, including share repurchases and dividends.

Deferred Compensation

GAMCO entered into a third agreement with its Chief Executive Officer on September 30, 2017, which deferred his cash compensation for the fourth quarter of 2017 until April 2019 under similar terms to the prior two deferrals.

Total deferred compensation payable at December 31, 2017 was $120.5 million, of which $61.5 million is included in the GAAP balance sheet and $59.0 million of which will be recorded in 2018 and 2019, ratably over the vesting periods of each of the three deferral agreements, in accordance with GAAP.

Returns to Shareholder

During the quarter ended December 31, 2017, we repurchased 194,226 shares at an average price of $29.33 per share for a total investment of $5.7 million. We also distributed $0.6 million in dividends. Since our IPO in February 1999, we have returned $1.9 billion in total to shareholders consisting of $1.0 billion of spin-offs, $491.0 million in the form of dividends, and $453.1 million through stock buybacks of approximately 10.4 million shares.

On February 6, 2018, GAMCO’s Board of Directors declared a regular quarterly dividend of $0.02 per share payable on March 27, 2018 to its Class A and Class B shareholders of record on March 13, 2018.

Business Highlights

• On October 26, 2017, the GAMCO Natural Resources, Gold & Income Trust completed its offering of $30 million of 5.2% Series A Cumulative Preferred Stock. The preferred stock is perpetual, non-callable for five years, and was issued at $25 per share.
• During December 2017, the Company completed two rights offerings for two of its closed-end funds, The Gabelli Equity Trust Inc. and The Gabelli Global Small and Mid Cap Value Trust, which raised a combined $203 million. Both offerings were heavily oversubscribed.
• We will be launching our third exchange traded managed fund, the Gabelli RBI^TM NextShares^TM Trust (the “Fund”). The Fund will invest primarily in equity securities, such as common stock of domestic and foreign services and equipment companies focused on physical asset development, including roads, bridges, and infrastructure (“RBI”).

Subsequent Event

As previously disclosed, on February 1, 2018, our affiliate, Associated Capital Group, Inc. (“AC”), commenced an exchange offer for up to one million shares of its Class A shares. Tendering shareholders will receive 1.35 GAMCO Class A shares that AC holds in exchange for each share of AC tendered. The exchange offer is scheduled to expire at 5:00 p.m., New York City time, on March 5, 2018, unless earlier extended or terminated. This AC exchange offer has no impact on the number of issued and outstanding GAMCO shares.

About GAMCO Investors, Inc.

GAMCO Investors, Inc., through its subsidiaries, manages open-end funds and closed-end funds (Gabelli Funds, LLC) and private advisory accounts (GAMCO Asset Management Inc.).

				December 31,			December 31,
				2017			2016
Equities:
Open-end Funds				$	13,747		$	13,462
Closed-end Funds					8,053			7,150
Institutional & PWM - direct (a)					13,420			13,441
Institutional & PWM - sub-advisory					5,432			3,783
SICAV					510			320	(b)
Total Equities					41,162			38,156
Fixed Income:
Money-Market Fund					1,870			1,767
Institutional & PWM					31			31
Total Fixed Income					1,901			1,798
Total Assets Under Management				$	43,063		$	39,954

(a)		Includes $261 million and $290 million of Money Market Fund AUM at December 31, 2017 and December 31, 2016, respectively.
(b)		Adjusted to include $270 million of Merger Arbitrage assets.

The Company reported Assets Under Management as follows (in millions):

Table I: Fund Flows - 4th Quarter 2017
														Fund
							Market							distributions,
				September 30,			appreciation/			Net cash				net of				December 31,
				2017			(depreciation)			flows				reinvestments				2017
Equities:
Open-end Funds				$	13,762		$	278		$	(255	)		$	(38	)		$	13,747
Closed-end Funds					7,668			282			230				(127	)			8,053
Institutional & PWM - direct					13,893			523			(996	)			-				13,420
Institutional & PWM - sub-advisory					5,346			139			(53	)			-				5,432
SICAV (a)					504			12			(6	)			-				510
Total Equities					41,173			1,234			(1,080	)			(165	)			41,162
Fixed Income:
Money-Market Fund					1,890			5			(25	)			-				1,870
Institutional & PWM					26			-			5				-				31
Total Fixed Income					1,916			5			(20	)			-				1,901
Total Assets Under Management				$	43,089		$	1,239		$	(1,100	)		$	(165	)		$	43,063
Table II: Fund Flows - Full Year 2017
														Fund
							Market							distributions,
				December 31,			appreciation/			Net cash				net of				December 31,
				2016			(depreciation)			flows				reinvestments				2017
Equities:
Open-end Funds				$	13,462		$	1,632		$	(1,264	)		$	(83	)		$	13,747
Closed-end Funds					7,150			994			392				(483	)			8,053
Institutional & PWM - direct					13,441			2,046			(2,067	)			-				13,420
Institutional & PWM - sub-advisory					3,783			661			988		(b)		-				5,432
SICAV (a)					320			41			149				-				510
Total Equities					38,156			5,374			(1,802	)			(566	)			41,162
Fixed Income:
Money-Market Fund					1,767			14			89				-				1,870
Institutional & PWM					31			-			-				-				31
Total Fixed Income					1,798			14			89				-				1,901
Total Assets Under Management				$	39,954		$	5,388		$	(1,713	)		$	(566	)		$	43,063

(a)		Adjusted to include $270 million of Merger Arbitrage assets at December 31, 2016.
(b)		Includes $1.2 billion from being approved as the sub-advisor on two sub-advisory entities as of February 27, 2017.

Table III
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
				For the Quarter Ended
				December 31,
				2017				2016
Investment advisory and incentive fees				$	87,763			$	88,865
Distribution fees and other income					10,903				11,085
Total revenues					98,666				99,950
Compensation costs					36,536				24,442
Distribution costs					11,074				11,403
Other operating expenses					7,321				8,932
Total expenses					54,931				44,777
Operating income before management fee					43,735				55,173
Investment income					833				1,483
Loss on extinguishment of debt					(3,300	)			-
Interest expense					(1,891	)			(2,945	)
Shareholder-designated contribution					(280	)			-
Other expense, net					(4,638	)			(1,462	)
Income before management fee and income taxes					39,097				53,711
Management fee expense					4,211				3,142
Income before income taxes					34,886				50,569
Income tax expense					21,391				17,877
Net income attributable to GAMCO Investors, Inc.				$	13,495			$	32,692
Net income per share attributable to GAMCO Investors, Inc.:
Basic				$	0.46			$	1.12
Diluted				$	0.46			$	1.07
Weighted average shares outstanding:
Basic					29,103				29,062
Diluted					30,336				31,241
Actual shares outstanding (a)					28,974				29,463

Notes:

(a) Includes 19,400 and 424,340 of RSAs, respectively.

See GAAP to non-GAAP reconciliation on page 9.

Table IV
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
				For the Year Ended
				December 31,
				2017				2016
Investment advisory and incentive fees				$	316,705			$	308,459
Distribution fees and other income					43,819				44,541
Total revenues					360,524				353,000
Compensation costs					134,170				86,572
Distribution costs					44,447				44,189
Other operating expenses					23,221				23,925
Total expenses					201,838				154,686
Operating income before management fee					158,686				198,314
Investment income					5,465				3,105
Loss on extinguishment of debt					(3,300	)			-
Interest expense					(10,160	)			(12,674	)
Shareholder-designated contribution					(4,137	)			-
Other expense, net					(12,132	)			(9,569	)
Income before management fee and income taxes					146,554				188,745
Management fee expense					13,666				6,518
Income before income taxes					132,888				182,227
Income tax expense					55,079				65,106
Net income attributable to GAMCO Investors, Inc.				$	77,809			$	117,121
Net income per share attributable to GAMCO Investors, Inc.:
Basic				$	2.68			$	4.01
Diluted				$	2.60			$	3.92
Weighted average shares outstanding:
Basic					28,980				29,182
Diluted					30,947				30,170
Actual shares outstanding (a)					28,974				29,463

Notes:

(a) Includes 19,400 and 424,340 of RSAs, respectively.

See GAAP to non-GAAP reconciliation on page 9.

Table V
GAMCO INVESTORS, INC.
UNAUDITED QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
				2017																				2016
				1st				2nd				3rd				4th								1st				2nd				3rd				4th
				Quarter				Quarter				Quarter				Quarter				Full Year				Quarter				Quarter				Quarter				Quarter				Full Year
Income Statement Data:
Revenues				$	85,917			$	87,600			$	88,341			$	98,666			$	360,524			$	81,385			$	83,944			$	87,721			$	99,950			$	353,000
Expenses					41,310				45,584				60,013				54,931				201,838				35,363				36,064				38,482				44,777				154,686
Operating income before
management fee					44,607				42,016				28,328				43,735				158,686				46,022				47,880				49,239				55,173				198,314
Investment income					509				537				(271	)			(2,747	)			(1,972	)			591				605				426				1,483				3,105
Interest expense					(2,832	)			(2,749	)			(2,688	)			(1,891	)			(10,160	)			(3,406	)			(3,168	)			(3,155	)			(2,945	)			(12,674	)
Other expense, net					(2,323	)			(2,212	)			(2,959	)			(4,638	)			(12,132	)			(2,815	)			(2,563	)			(2,729	)			(1,462	)			(9,569	)
Income before management
fee and income taxes					42,284				39,804				25,369				39,097				146,554				43,207				45,317				46,510				53,711				188,745
Management fee expense					2,164				2,356				4,935				4,211				13,666				1,080				1,133				1,163				3,142				6,518
Income before income taxes					40,120				37,448				20,434				34,886				132,888				42,127				44,184				45,347				50,569				182,227
Income tax expense					15,300				14,554				3,834				21,391				55,079				16,102				16,641				14,486				17,877				65,106
Net income attributable to
GAMCO Investors, Inc.				$	24,820			$	22,894			$	16,600			$	13,495			$	77,809			$	26,025			$	27,543			$	30,861			$	32,692			$	117,121
Net income per share
attributable to GAMCO
Investors, Inc.:
Basic				$	0.86			$	0.79			$	0.57			$	0.46			$	2.68			$	0.89			$	0.94			$	1.06			$	1.12			$	4.01
Diluted				$	0.82			$	0.76			$	0.55			$	0.46			$	2.60			$	0.88			$	0.93			$	1.03			$	1.07			$	3.92
Weighted average shares outstanding:
Basic					28,970				28,896				28,926				29,103				28,980				29,247				29,234				29,185				29,062				29,182
Diluted					31,160				31,100				31,173				30,336				30,947				29,684				29,522				30,406				31,241				30,170
Reconciliation of non-GAAP
financial measures to GAAP:
Operating income before
management fee					44,607				42,016				28,328				43,735				158,686				46,022				47,880				49,239				55,173				198,314
Deduct: management fee expense					2,164				2,356				4,935				4,211				13,666				1,080				1,133				1,163				3,142				6,518
Operating income				$	42,443			$	39,660			$	23,393			$	39,524			$	145,020			$	44,942			$	46,747			$	48,076			$	52,031			$	191,796
Operating margin before
management fee					51.9	%			48.0	%			32.1	%			44.3	%			44.0	%			56.5	%			57.0	%			56.1	%			55.2	%			56.2	%
Operating margin after
management fee					49.4	%			45.3	%			26.5	%			40.1	%			40.2	%			55.2	%			55.7	%			54.8	%			52.1	%			54.3	%

Notes on Non-GAAP Financial Measures:

Operating income before management fee is used by management to evaluate its business operations. We believe this measure is useful in illustrating the operating results of GAMCO Investors, Inc. (the "Company") as management fee expense is based on pre-tax income before management fee expense, which includes non-operating items including investment gains and losses from the Company's proprietary investment portfolio and interest expense.

Table VI
GAMCO INVESTORS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
				December 31,				December 31,
				2017				2016
ASSETS
Cash and cash equivalents				$	17,821			$	39,812
Investments					36,790				37,285
Receivable from brokers					1,578				453
Other receivables					45,621				50,756
Income tax receivable and deferred tax asset					15,615				9,349
Other assets					10,861				11,574
Total assets				$	128,286			$	149,229
LIABILITIES AND EQUITY
Payable to brokers				$	14,926			$	66
Income taxes payable and deferred tax liabilities					3,128				3,815
Compensation payable (a)					82,907				42,384
Accrued expenses and other liabilities					34,454				35,656
Sub-total					135,415				81,921
5.875% Senior notes (due June 1, 2021)					24,144				24,120
4.5% Convertible note (due August 15, 2021)					-				109,835
4% PIK note (due November 30, 2020)					50,000				100,000
1.6% AC Note (due February 28, 2018)					15,000				-
Total debt					89,144				233,955
Total liabilities					224,559				315,876
GAMCO Investors, Inc.'s stockholders' deficit					(96,273	)			(166,647	)
Total liabilities and equity				$	128,286			$	149,229

(a)		Excludes $59.0 million of DCCA expense that is not yet recorded under GAAP.

Non-GAAP information and reconciliation:

GAMCO’s non-GAAP measures include adjusted income before taxes, adjusted effective tax rate, adjusted net income and adjusted net income per fully diluted share. GAMCO’s calculation of these non-GAAP measures may not be comparable to similarly titled measures of other companies due to potential differences between companies in the method of calculation. As a result, the use of these non-GAAP measures has limitations and should not be considered superior to, in isolation from, or a substitute for, related U.S. GAAP measures.

These non-GAAP measures allow management and investors to view operating trends, perform analytical comparisons and benchmark performance between periods to understand operating performance without regard to items that we do not consider to be a component of our core operating performance. Management uses these measures in its financial, investment and operational decision-making processes, for internal reporting and as part of its forecasting and budgeting processes. For these reasons we believe these non-GAAP measures are useful for our investors.

Adjusted income before taxes, adjusted effective tax rate, adjusted net income and adjusted net income per fully diluted share can be used by investors to review our results on a consistent basis. Examples of adjustments to these measures include the GAAP impact of the 2016 Deferred Cash Compensation Agreement (“DCCA”), First Half 2017 DCCA, and the Fourth Quarter 2017 DCCA that were put in place to enable the Company to more quickly pay down its debt, the acceleration of outstanding RSAs, charitable contributions, closed-end fund launch expenses, extinguishment of debt, and the recently enacted Tax Cuts and Jobs Act.

The following tables reconcile adjusted income before taxes, adjusted effective tax rate, adjusted net income and adjusted net income per share to their closest GAAP equivalent:

				For the three months ended December 31, 2017
				Reported				Fourth Quarter				First Half								RSA
				GAAP				2017 DCCA				2017 DCCA				2016 DCCA				Acceleration				Other				Adjusted
Total revenues				$	98,666			$	-			$	-			$	-			$	-			$	-			$	98,666
Compensation costs					36,536				10,318				(4,771	)			(3,148	)			(1,331	)			-				37,604
Distribution costs					11,074				-				-				-				-								11,074
Other operating expenses					7,321				-				-				-				-				-				7,321
Total expenses					54,931				10,318				(4,771	)			(3,148	)			(1,331	)			-				55,999
Operating income before management fee					43,735				(10,318	)			4,771				3,148				1,331				-				42,667
Other expense, net					(4,638	)			-				-				-				-				3,300				(1,338	)
Income before management fee and income taxes					39,097				(10,318	)			4,771				3,148				1,331				3,300				41,329
Management fee expense					4,211				1,064				(891	)			(715	)			133				330				4,132
Income before income taxes					34,886				(11,382	)			5,662				3,863				1,198				2,970				37,197
Income tax expense					21,391				(4,325	)			2,152				1,468				455				(7,091	)			14,050
Net income attributable to GAMCO Investors, Inc.				$	13,495			$	(7,057	)		$	3,510			$	2,395			$	743			$	10,061			$	23,147
Net income per share attributable to GAMCO Investors, Inc.:
Basic				$	0.46			$	(0.24	)		$	0.12			$	0.08			$	0.03			$	0.35			$	0.80
Diluted				$	0.46			$	(0.23	)		$	0.12			$	0.08			$	0.02			$	0.33			$	0.78

				For the three months ended December 31, 2016
				Reported
				GAAP				2016 DCCA				Adjusted
Total revenues				$	99,950			$	-			$	99,950
Compensation costs					24,442				13,718				38,160
Distribution costs					11,403				-				11,403
Other operating expenses					8,932				-				8,932
Total expenses					44,777				13,718				58,495
Operating income before management fee					55,173				(13,718	)			41,455
Other expense, net					(1,462	)			-				(1,462	)
Income before management fee and income taxes					53,711				(13,718	)			39,993
Management fee expense					3,142				856				3,998
Income before income taxes					50,569				(14,574	)			35,995
Income tax expense					17,877				(5,465	)			12,412
Net income attributable to GAMCO Investors, Inc.				$	32,692			$	(9,109	)		$	23,583
Net income per share attributable to GAMCO Investors, Inc.:
Basic				$	1.12			$	(0.31	)		$	0.81
Diluted				$	1.07			$	(0.27	)		$	0.78

				For the year ended December 31, 2017
				Reported				Fourth Quarter				First Half								RSA
				GAAP				2017 DCCA				2017 DCCA				2016 DCCA				Acceleration				Other				Adjusted
Total revenues				$	360,524			$	-			$	-			$	-			$	-			$	-			$	360,524
Compensation costs					134,170				10,318				9,619				(12,322	)			(6,810	)			-				134,975
Distribution costs					44,447				-				-				-				-				(1,068	)			43,379
Other operating expenses					23,221				-				-				-				-				-				23,221
Total expenses					201,838				10,318				9,619				(12,322	)			(6,810	)			(1,068	)			201,575
Operating income before management fee					158,686				(10,318	)			(9,619	)			12,322				6,810				1,068				158,949
Other expense, net					(12,132	)			-				-				-				-				4,336				(7,796	)
Income before management fee and income taxes					146,554				(10,318	)			(9,619	)			12,322				6,810				5,404				151,153
Management fee expense					13,666				1,064				1,775				(2,887	)			681				540				14,839
Income before income taxes					132,888				(11,382	)			(11,394	)			15,209				6,129				4,864				136,314
Income tax expense					55,079				(4,325	)			(4,442	)			5,818				1,376				(2,003	)			51,503
Net income attributable to GAMCO Investors, Inc.				$	77,809			$	(7,057	)		$	(6,952	)		$	9,391			$	4,753			$	6,867			$	84,811
Net income per share attributable to GAMCO Investors, Inc.:
Basic				$	2.68			$	(0.24	)		$	(0.24	)		$	0.32			$	0.16			$	0.24			$	2.93
Diluted				$	2.60			$	(0.23	)		$	(0.22	)		$	0.30			$	0.15			$	0.22			$	2.82

				For the year ended December 31, 2016
				Reported
				GAAP				2016 DCCA				Other				Adjusted
Total revenues				$	353,000			$	-			$	-			$	353,000
Compensation costs					86,572				45,734				-				132,306
Distribution costs					44,189				-				(638	)			43,551
Other operating expenses					23,925				-				-				23,925
Total expenses					154,686				45,734				(638	)			199,782
Operating income before management fee					198,314				(45,734	)			638				153,218
Other expense, net					(9,569	)			-				-				(9,569	)
Income before management fee and income taxes					188,745				(45,734	)			638				143,649
Management fee expense					6,518				7,782				64				14,364
Income before income taxes					182,227				(53,516	)			574				129,285
Income tax expense					65,106				(20,069	)			2,849				47,886
Net income attributable to GAMCO Investors, Inc.				$	117,121			$	(33,447	)		$	(2,275	)		$	81,399
Net income per share attributable to GAMCO Investors, Inc.:
Basic				$	4.01			$	(1.15	)		$	(0.08	)		$	2.79
Diluted				$	3.92			$	(1.07	)		$	(0.08	)		$	2.74

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

The financial results set forth in this press release are preliminary. Our disclosure and analysis in this press release, which do not present historical information, contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements convey our current expectations or forecasts of future events. You can identify these statements because they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning. They also appear in any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance of our products, expenses, the outcome of any legal proceedings, and financial results. Although we believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know about our business and operations, the economy, the effects of the Tax Cuts and Jobs Act, and other conditions, there can be no assurance that our actual results will not differ materially from what we expect or believe. Therefore, you should proceed with caution in relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance.

Forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors, some of which are listed below, that are difficult to predict and could cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements. Some of the factors that could cause our actual results to differ from our expectations or beliefs include a decline in the securities markets that adversely affect our assets under management, negative performance of our products, the failure to perform as required under our investment management agreements, a general downturn in the economy that negatively impacts our operations, and the ongoing impacts of the Tax Cuts and Jobs Act with respect to tax rates and the non-deductibility of certain portions of NEO compensation. We also direct your attention to the more specific discussions of these and other risks, uncertainties and other important factors contained in our Form 10-K and other public filings. Other factors that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We do not undertake to update publicly any forward-looking statements if we subsequently learn that we are unlikely to achieve our expectations whether as a result of new information, future developments or otherwise, except as may be required by law.

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