☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
California
|
68-0176227
|
|
(State or other jurisdiction of incorporation
or organization)
|
(I.R.S. Employer
Identification No.)
|
|
7250 Redwood Boulevard, Suite 200
Novato, California
|
94945
|
|
(Address of principal executive office)
|
(Zip code)
|
Title of each class
|
Trading symbol
|
Name of each exchange
on which registered
|
||
Common stock, no par value
|
HNNA
|
The NASDAQ
Stock M
a
rket LLC
|
Large accelerated filer | ☐ |
Accelerated filer
|
☐ | |||
Non-accelerated filer | ☒ |
|
Smaller reporting company
|
☒ | ||
Emerging growth company
|
☐ |
PART I
|
Financial Information
|
|||||
Item 1
|
1 | |||||
1 | ||||||
2 | ||||||
3 | ||||||
5 | ||||||
6 | ||||||
Item 2
|
16 | |||||
Item 4
|
27 | |||||
PART II
|
Other Information
|
|||||
Item 6
|
28 | |||||
29 |
June 30,
2021
|
September 30,
2020 |
|||||||
(Unaudited)
|
||||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 14,038 | $ | 9,955 | ||||
Investments in marketable securities, at fair value
|
10 | 9 | ||||||
Investment fee income receivable
|
2,821 | 2,403 | ||||||
Prepaid expenses
|
328 | 637 | ||||||
Other accounts receivable
|
360 | 378 | ||||||
|
|
|
|
|||||
Total current assets
|
17,557 | 13,382 | ||||||
|
|
|
|
|||||
Property and equipment, net of accumulated depreciation of $1,799 and $1,618, respectively
|
295 | 294 | ||||||
Operating lease
right-of-use
|
1,100 | 276 | ||||||
Management contracts
|
80,643 | 80,643 | ||||||
Other assets
|
208 | 191 | ||||||
|
|
|
|
|||||
Total assets
|
$ | 99,803 | $ | 94,786 | ||||
|
|
|
|
|||||
Liabilities and Stockholders’ Equity
|
||||||||
Current liabilities
|
||||||||
Accrued liabilities and accounts payable
|
$ | 3,378 | $ | 3,813 | ||||
Operating lease liability
|
357 | 330 | ||||||
Income taxes payable
|
747 | 949 | ||||||
|
|
|
|
|||||
Total current liabilities
|
4,482 | 5,092 | ||||||
|
|
|
|
|||||
Long-term operating lease liability
|
737 | — | ||||||
Net deferred income tax liability
|
12,398 | 11,516 | ||||||
|
|
|
|
|||||
Total liabilities
|
17,617 | 16,608 | ||||||
|
|
|
|
|||||
Commitments and contingencies (Note 8)
|
||||||||
Stockholders’ equity
|
||||||||
Common stock, no par value, 22,500,000 shares authorized; 7,366,649 shares issued and outstanding as
of
June 30, 2021, and 7,356,822 as of September 30, 2020
|
19,846
|
18,705 | ||||||
Retained earnings
|
62,340 | 59,473 | ||||||
|
|
|
|
|||||
Total stockholders’ equity
|
82,186 | 78,178 | ||||||
|
|
|
|
|||||
Total liabilities and stockholders’ equity
|
$ | 99,803 | $ | 94,786 | ||||
|
|
|
|
Three Months Ended June 30,
|
Nine Months Ended June 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Revenue
|
||||||||||||||||
Investment advisory fees
|
$ | 7,903 | $ | 6,366 | $ | 22,458 | $ | 24,016 | ||||||||
Shareholder service fees
|
624 | 529 | 1,792 | 2,002 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenue
|
8,527 | 6,895 | 24,250 | 26,018 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating expenses
|
||||||||||||||||
Compensation and benefits
|
2,330 | 1,797 | 6,686 | 6,724 | ||||||||||||
General and administrative
|
1,124 | 1,074 | 3,564 | 3,854 | ||||||||||||
Mutual fund distribution
|
118 | 109 | 359 | 363 | ||||||||||||
Sub-advisory
fees
|
1,863 | 1,569 | 5,452 | 5,893 | ||||||||||||
Depreciation
|
56 | 63 | 181 | 177 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses
|
5,491 | 4,612 | 16,242 | 17,011 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net operating income
|
3,036 | 2,283 | 8,008 | 9,007 | ||||||||||||
Interest expense
|
— | — | — | 447 | ||||||||||||
Other income
|
(1 | ) | (1 | ) | (2 | ) | (89 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Income before income tax expense
|
3,037 | 2,284 | 8,010 | 8,649 | ||||||||||||
Income tax expense
|
793 | 509 | 2,107 | 2,276 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income
|
$ | 2,244 | $ | 1,775 | $ | 5,903 | $ | 6,373 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Earnings per share
|
||||||||||||||||
Basic
|
$ | 0.30 | $ | 0.24 | $ | 0.80 | $ | 0.86 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted
|
$ | 0.30 | $ | 0.24 | $ | 0.80 | $ | 0.86 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted average shares outstanding
|
||||||||||||||||
Basic
|
7,364,716 | 7,262,042 | 7,361,165 | 7,376,167 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted
|
7,431,925 | 7,279,294 | 7,387,356 | 7,404,578 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cash dividends declared per share
|
$ | 0.14 | $ | 0.14 | $ | 0.41 | $ | 0.41 | ||||||||
|
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30, 2021
|
|
|||||||||||||
|
|
Common Stock
|
|
|
Retained
Earnings
|
|
|
Total
Stockholders’
Equity
|
|
|||||||
|
|
Shares
|
|
|
Amount
|
|
||||||||||
Balance at September 30, 2020
|
7,356,822 | $ | 18,705 | $ | 59,473 | $ | 78,178 | |||||||||
Net income
|
— | — | 1,773 | 1,773 | ||||||||||||
Dividends declared
|
— | — | (1,011 | ) | (1,011 | ) | ||||||||||
Shares issued for auto-investments pursuant to the 2018 Dividend Reinvestment and Stock Purchase Plan
|
652 | 6 | — | 6 | ||||||||||||
Shares issued for dividend reinvestment pursuant to the 2018 Dividend Reinvestment and Stock Purchase Plan
|
2,165 | 19 | — | 19 | ||||||||||||
Stock-based compensation
|
— | 352 | — | 352 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at December 31, 2020
|
7,359,639 | $ | 19,082 | $ | 60,235 | $ | 79,317 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income
|
— | — | 1,886 | 1,886 | ||||||||||||
Dividends declared
|
— | — | (1,012 | ) | (1,012 | ) | ||||||||||
Shares issued for auto-investments pursuant to the 2018 Dividend Reinvestment and Stock Purchase Plan
|
306 | 3 | — | 3 | ||||||||||||
Shares issued for auto-investments pursuant to the 2021 Dividend Reinvestment and Stock Purchase Plan
|
838 | 7 | — | 7 | ||||||||||||
Shares issued for dividend reinvestment pursuant to the 2021 Dividend Reinvestment and Stock Purchase Plan
|
2,298 | 19 | — | 19 | ||||||||||||
Stock-based compensation
|
— | 351 | — | 351 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at March 31, 2021
|
7,363,081 | $ | 19,462 | $ | 61,109 | $ | 80,571 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income
|
— | — | 2,244 | 2,244 | ||||||||||||
Dividends declared
|
— | — | (1,013 | ) | (1,013 | ) | ||||||||||
Shares issued for auto-investments pursuant to the 2021 Dividend Reinvestment and Stock Purchase Plan
|
1,424 | 13 | — | 13 | ||||||||||||
Shares issued for dividend reinvestment pursuant to the 2021 Dividend Reinvestment and Stock Purchase Plan
|
2,144 | 20 | — | 20 | ||||||||||||
Stock-based compensation
|
— | 351 | — | 351 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at June 30, 2021
|
7,366,649 | $ | 19,846 | $ | 62,340 | $ | 82,186 | |||||||||
|
|
|
|
|
|
|
|
|
|
Nine Months Ended June 30, 2020
|
|
|||||||||||||
|
|
Common Stock
|
|
|
Retained
Earnings
|
|
|
Total
Stockholders’
Equity
|
|
|||||||
|
|
Shares
|
|
|
Amount
|
|
||||||||||
Balance at September 30, 2019
|
7,527,040 | $ | 17,673 | $ | 57,855 | $ | 75,528 | |||||||||
Net income
|
— | — | 2,628 | 2,628 | ||||||||||||
Dividends declared
|
— | — | (1,032 | ) | (1,032 | ) | ||||||||||
Shares issued for auto-investments pursuant to the 2018 Dividend Reinvestment and Stock
Purchase Plan
|
1,702 | 20 | — | 20 | ||||||||||||
Shares issued for dividend reinvestment pursuant to the 2018 Dividend Reinvestment and Stock
Purchase Plan
|
1,596 | 18 | — | 18 | ||||||||||||
Stock-based compensation
|
— | 447 | — | 447 | ||||||||||||
Shares repurchased pursuant to stock buyback program
|
(64,787 | ) | (128 | ) | (557 | ) | (685 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at December 31, 2019
|
7,465,551 | $ | 18,030 | $ | 58,894 | $ | 76,924 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income
|
— | — | 1,970 | 1,970 | ||||||||||||
Dividends declared
|
— | — | (1,011 | ) | (1,011 | ) | ||||||||||
Shares issued for auto-investments pursuant to the 2018 Dividend Reinvestment and Stock
Purchase Plan
|
46 | — | — | — | ||||||||||||
Shares issued for dividend reinvestment pursuant to the 2018 Dividend Reinvestment and Stock
Purchase Plan
|
1,835 | 18 | — | 18 | ||||||||||||
Stock-based compensation
|
— | 447 | — | 447 | ||||||||||||
Shares repurchased pursuant to stock buyback program
|
(206,109 | ) | (406 | ) | (1,622 | ) | (2,028 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at March 31, 2020
|
7,261,323 | $ | 18,089 | $ | 58,231 | $ | 76,320 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income
|
— | — | 1,775 | 1,775 | ||||||||||||
Dividends declared
|
— | — | (998 | ) | (998 | ) | ||||||||||
Shares issued for auto-investments pursuant to the 2018 Dividend Reinvestment and Stock
Purchase Plan
|
187 | 2 | — | 2 | ||||||||||||
Shares issued for dividend reinvestment pursuant to the 2018 Dividend Reinvestment and Stock
Purchase Plan
|
2,271 | 19 | — | 19 | ||||||||||||
Stock-based compensation
|
— | 447 |
|
—
|
|
447 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at June 30, 2020
|
7,263,781 | $ | 18,557 | $ | 59,008 | $ | 77,565 | |||||||||
|
|
|
|
|
|
|
|
Nine Months Ended June 30,
|
||||||||
2021
|
2020
|
|||||||
Cash flows from operating activities
|
||||||||
Net income
|
$ | 5,903 | $ | 6,373 | ||||
Adjustments to reconcile net income to net cash provided by operating activities
|
||||||||
Depreciation
|
181 | 177 | ||||||
Unrealized gain on marketable securities
|
(1 | ) | — | |||||
Change in
right-of-use
|
(60 | ) | (44 | ) | ||||
Deferred income taxes
|
882 | 1,007 | ||||||
Deferred offering costs
|
(7 | ) | — | |||||
Stock-based compensation
|
1,054 | 1,341 | ||||||
Interest expense associated with debt issuance cost
|
— | 125 | ||||||
Change in operating assets and liabilities:
|
||||||||
Investment fee income receivable
|
(418 | ) | 897 | |||||
Prepaid expenses
|
309 | 212 | ||||||
Other accounts receivable
|
18 | 106 | ||||||
Other assets
|
(10 | ) | — | |||||
Accrued liabilities and accounts payable
|
(435 | ) | (2,325 | ) | ||||
Income taxes payable
|
(202 | ) | 143 | |||||
|
|
|
|
|||||
Net cash provided by operating activities
|
7,214 | 8,012 | ||||||
|
|
|
|
|||||
Cash flows from investing activities
|
||||||||
Purchases of property and equipment
|
(182 | ) | (104 | ) | ||||
Payments related to management contracts
|
— | (710 | ) | |||||
|
|
|
|
|||||
Net cash used in investing activities
|
(182 | ) | (814 | ) | ||||
|
|
|
|
|||||
Cash flows from financing activities
|
||||||||
Principal payments on bank loan
|
— | (17,500 | ) | |||||
Shares repurchased pursuant to stock buyback program
|
— | (2,713 | ) | |||||
Proceeds from shares issued pursuant to the 2018 Dividend Reinvestment and Stock Repurchase Plan
|
9 | 22 | ||||||
Proceeds from shares issued pursuant to the 2021 Dividend Reinvestment and Stock Repurchase Plan
|
20 | — | ||||||
Dividend payments
|
(2,978 | ) | (2,986 | ) | ||||
|
|
|
|
|||||
Net cash used in financing activities
|
(2,949 | ) | (23,177 | ) | ||||
|
|
|
|
|||||
Net increase (decrease) in cash and cash equivalents
|
4,083 | (15,979 | ) | |||||
Cash and cash equivalents at the beginning of the period
|
9,955 | 24,687 | ||||||
|
|
|
|
|||||
Cash and cash equivalents at the end of the period
|
$ | 14,038 | $ | 8,708 | ||||
|
|
|
|
|||||
Supplemental disclosures of cash flow information
|
||||||||
Cash paid for income taxes
|
$ | 1,427 | $ | 1,152 | ||||
Cash paid for interest
|
$ | — | $ | 381 |
(1)
|
Basis of Financial Statement Presentation
|
• |
acting as portfolio manager for the fund or overseeing the
sub-advisor
acting as portfolio manager for the fund, which includes managing the composition of the fund’s portfolio (including the purchase, retention, and disposition of portfolio securities in accordance with the fund’s investment objectives, policies, and restrictions), seeking best execution for the fund’s portfolio, managing the use of soft dollars for the fund, and managing proxy voting for the fund;
|
• |
performing a daily reconciliation of portfolio positions and cash for the fund;
|
• |
monitoring the liquidity of the fund;
|
• |
monitoring the fund’s compliance with its investment objectives and restrictions and federal securities laws;
|
• |
maintaining a compliance program (including a code of ethics), conducting ongoing reviews of the compliance programs of the fund’s service providers (including any
sub-advisor),
including their codes of ethics, as appropriate, conducting onsite visits to the fund’s service providers (including any
sub-advisor)
as feasible, monitoring incidents of abusive trading practices, reviewing fund expense accruals, payments, and fixed expense ratios, evaluating insurance providers for fidelity bond, directors and officers and errors and omissions insurance, and cybersecurity insurance coverage, managing regulatory examination compliance and responses, conducting employee compliance training, reviewing reports provided by service providers, and maintaining books and records;
|
• |
if applicable, overseeing the selection and continued employment of the fund’s
sub-advisor,
reviewing the fund’s investment performance, and monitoring the
sub-advisor’s
adherence to the fund’s investment objectives, policies, and restrictions;
|
• |
overseeing service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information technology, and legal services to the fund;
|
• |
maintaining
in-house
marketing and distribution departments on behalf of the fund;
|
• |
preparing or directing the preparation of all regulatory filings for the fund, including writing and annually updating the fund’s prospectus and related documents;
|
• |
for each annual report of the fund, preparing or reviewing a written summary of the fund’s performance during the most recent
12-month
period;
|
• |
monitoring and overseeing the accessibility of the fund on
third-party
platforms;
|
• |
paying the incentive compensation of the fund’s compliance officers and employing other staff such as legal, marketing, national accounts, distribution, sales, administrative, and trading oversight personnel, as well as management executives;
|
• |
providing a quarterly compliance certification to the Board of Trustees of Hennessy Funds Trust (the “Funds’ Board of Trustees”); and
|
• |
preparing or reviewing materials for the Funds’ Board of Trustees, presenting to or leading discussions with the Funds’ Board of Trustees, preparing or reviewing all meeting minutes, and arranging for training and education of the Funds’ Board of Trustees.
|
(2)
|
Management Contracts Purchased
|
(3)
|
Investment Advisory Agreements
|
(4)
|
Fair Value Measurements
|
• |
Level 1 – Unadjusted, quoted prices in active markets for identical assets or liabilities that an entity has the ability to access at the measurement date;
|
• |
Level 2 – Other significant observable inputs (including, but not limited to, quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, and
model-derived
valuations in which all significant inputs and significant value drivers are observable in active markets); and
|
• |
Level 3 – Significant unobservable inputs (including the entity’s own assumptions about what market participants would use to price the asset or liability based on the best available information) when observable inputs are not available.
|
|
|
June 30, 2021
|
|
|||||||||||||
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
||||
|
|
(In thousands)
|
|
|||||||||||||
Money market fund deposits
|
$ | 10,054 | $ | — | $ | — | $ | 10,054 | ||||||||
Mutual fund investments
|
10 | — | — | 10 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total
|
$ | 10,064 | $ | — | $ | — | $ | 10,064 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Amounts included in:
|
||||||||||||||||
Cash and cash equivalents
|
$ | 10,054 | $ | — | $ | — | $ | 10,054 | ||||||||
Investments in marketable securities
|
10 | — | — | 10 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total
|
$ | 10,064 | $ | — | $ | — | $ | 10,064 | ||||||||
|
|
|
|
|
|
|
|
|
|
September 30, 2020
|
|
|||||||||||||
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
||||
|
|
(In thousands)
|
|
|||||||||||||
Money market fund deposits
|
$
|
6,053 | $ | — | $ | — |
$
|
6,053 | ||||||||
Mutual fund investments
|
9 | — | — | 9 | ||||||||||||
Total
|
$ | 6,062 | $ | — | $ | — | $ | 6,062 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Amounts included in:
|
||||||||||||||||
Cash and cash equivalents
|
$ | 6,053 | $ | — | $ | — | $ | 6,053 | ||||||||
Investments in marketable securities
|
9 | — | — | 9 | ||||||||||||
Total
|
$ | 6,062 | $ | — | $ | — | $ | 6,062 | ||||||||
|
|
|
|
|
|
|
|
(5)
|
Leases
|
June 30, 2021
|
||||
(In thousands,
except years and percentages) |
||||
Operating lease
right-of-use
|
$ | 1,100 | ||
Current operating lease liability
|
$ | 357 | ||
Long-term operating lease liability
|
$ | 737 | ||
Weighted average remaining lease term
|
3.1 | |||
Weighted average discount rate
|
0.90 | % |
June 30, 2021
|
||||
(In thousands)
|
||||
Remainder of fiscal year 2021
|
$ | 90 | ||
Fiscal year 2022
|
363 | |||
Fiscal year 2023
|
374 | |||
Fiscal year 2024
|
286 | |||
|
|
|||
Total undiscounted cash flows
|
1,113 | |||
|
|
|||
Present value discount
|
(19 | ) | ||
|
|
|||
Total operating lease liabilities
|
$ | 1,094 | ||
|
|
(6)
|
Accrued Liabilities and Accounts Payable
|
|
|
June 30, 2021
|
|
|
September 30, 2020
|
|
||
|
|
(In thousands)
|
|
|||||
Accrued bonus liabilities
|
$ | 2,132 | $ | 2,571 | ||||
Accrued
sub-advisor
fees
|
609 | 552 | ||||||
Other accrued expenses
|
637 | 690 | ||||||
|
|
|
|
|||||
Total accrued liabilities and accounts payable
|
$ | 3,378 | $ | 3,813 | ||||
|
|
|
|
(7)
|
Income Taxes
|
(8)
|
Commitments and Contingencies
|
(9)
|
Equity
|
Nine Months Ended June 30, 2021
|
||||||||
Shares
|
Weighted Average Grant
Date Fair Value per Share |
|||||||
Non-vested
balance at beginning of period
|
322,181 | $ | 9.76 | |||||
Granted
|
— | — | ||||||
Vested
(1)
|
(96,802 | ) | (10.89 | ) | ||||
Forfeited
|
— | — | ||||||
|
|
|
|
|||||
Non-vested
balance at end of period
|
225,379 | $ | 9.28 | |||||
|
|
|
|
(1)
|
Represents partially vested RSUs for which the Company already has recognized the associated compensation expense but has not yet issued to employees the related shares of common stock.
|
June 30, 2021
|
||||
(In thousands, except years)
|
||||
Total expected compensation expense related to RSUs
|
$ | 16,056 | ||
Recognized compensation expense related to RSUs
|
(13,965 | ) | ||
|
|
|||
Unrecognized compensation expense related to RSUs
|
$ | 2,091 | ||
|
|
|||
Weighted average remaining years to expense for RSUs
|
2.5 | |||
|
|
(10)
|
Earnings per Share and Dividends per Share
|
(11)
|
Recently Issued and Adopted Accounting Standards
|
(12)
|
Subsequent Events
|
Item
2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Fiscal Quarter Ended
|
||||||||||||||||||||
June 30,
2021 |
March 31,
2021 |
December 31,
2020 |
September 30,
2020 |
June 30,
2020 |
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Beginning assets under management
|
$ | 4,023,364 | $ | 3,832,551 | $ | 3,564,597 | $ | 3,491,768 | $ | 3,319,932 | ||||||||||
Acquisition inflows
|
— | — | — | — | — | |||||||||||||||
Organic inflows
|
301,731 | 208,253 | 213,502 | 118,027 | 104,742 | |||||||||||||||
Redemptions
|
(351,897 | ) | (369,846 | ) | (401,160 | ) | (280,273 | ) | (471,129 | ) | ||||||||||
Market appreciation
|
144,362 | 352,406 | 455,612 | 235,075 | 538,223 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ending assets under management
|
$ | 4,117,560 | $ | 4,023,364 | $ | 3,832,551 | $ | 3,564,597 | $ | 3,491,768 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Fiscal Quarter Ended
|
||||||||||||||||||||
June 30,
2021 |
March 31,
2021 |
December 31,
2020 |
September 30,
2020 |
June 30,
2020 |
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Investor Class
|
$ | 2,505,402 | $ | 2,378,675 | $ | 2,308,369 | $ | 2,209,305 | $ | 2,130,287 | ||||||||||
Institutional Class
|
1,646,013 | 1,539,714 | 1,477,001 | 1,405,683 | 1,318,522 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total
|
$ | 4,151,415 | $ | 3,918,389 | $ | 3,785,370 | $ | 3,614,988 | $ | 3,448,809 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
||||||||||||||||
2021
|
2020
|
|||||||||||||||
Amount
|
Percent of
Total Revenue |
Amount
|
Percent of
Total Revenue |
|||||||||||||
(In thousands, except percentages)
|
||||||||||||||||
Revenue
|
||||||||||||||||
Investment advisory fees
|
$ | 7,903 | 92.7 | % | $ | 6,366 | 92.3 | % | ||||||||
Shareholder service fees
|
624 | 7.3 | 529 | 7.7 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenue
|
8,527 | 100.0 | 6,895 | 100.0 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating expenses
|
||||||||||||||||
Compensation and benefits
|
2,330 | 27.3 | 1,797 | 26.1 | ||||||||||||
General and administrative
|
1,124 | 13.2 | 1,074 | 15.6 | ||||||||||||
Mutual fund distribution
|
118 | 1.4 | 109 | 1.6 | ||||||||||||
Sub-advisory
fees
|
1,863 | 21.8 | 1,569 | 22.8 | ||||||||||||
Depreciation
|
56 | 0.7 | 63 | 0.8 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses
|
5,491 | 64.4 | 4,612 | 66.9 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net operating income
|
3,036 | 35.6 | 2,283 | 33.1 | ||||||||||||
Interest expense
|
— | — | — | — | ||||||||||||
Other income
|
(1 | ) | (0.0 | ) | (1 | ) | (0.0 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Income before income tax expense
|
3,037 | 35.6 | 2,284 | 33.1 | ||||||||||||
Income tax expense
|
793 | 9.3 | 509 | 7.4 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income
|
$ | 2,244 | 26.3 | % | $ | 1,775 | 25.7 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Nine Months Ended June 30,
|
||||||||||||||||
2021
|
2020
|
|||||||||||||||
Amount
|
Percent of
Total Revenue |
Amount
|
Percent of
Total Revenue |
|||||||||||||
(In thousands, except percentages)
|
||||||||||||||||
Revenue
|
||||||||||||||||
Investment advisory fees
|
$ | 22,458 | 92.6 | % | $ | 24,016 | 92.3 | % | ||||||||
Shareholder service fees
|
1,792 | 7.4 | 2,002 | 7.7 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenue
|
24,250 | 100.0 | 26,018 | 100.0 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating expenses
|
||||||||||||||||
Compensation and benefits
|
6,686 | 27.6 | 6,724 | 25.8 | ||||||||||||
General and administrative
|
3,564 | 14.7 | 3,854 | 14.8 | ||||||||||||
Mutual fund distribution
|
359 | 1.5 | 363 | 1.4 | ||||||||||||
Sub-advisory
fees
|
5,452 | 22.5 | 5,893 | 22.6 | ||||||||||||
Depreciation
|
181 | 0.7 | 177 | 0.8 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses
|
16,242 | 67.0 | 17,011 | 65.4 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net operating income
|
8,008 | 33.0 | 9,007 | 34.6 | ||||||||||||
Interest expense
|
— | — | 447 | 1.7 | ||||||||||||
Other income
|
(2 | ) | (0.0 | ) | (89 | ) | (0.3 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Income before income tax expense
|
8,010 | 33.0 | 8,649 | 33.2 | ||||||||||||
Income tax expense
|
2,107 | 8.7 | 2,276 | 8.7 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income
|
$ | 5,903 | 24.3 | % | $ | 6,373 | 24.5 | % | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2021
|
Nine Months Ended June 30, 2021
|
|||||||||
Fund Name
|
Amount
|
Fund Name
|
Amount
|
|||||||
Hennessy Small Cap Financial Fund
|
$ | 29 million | Hennessy Japan Fund | $ | 70 million | |||||
Hennessy Japan Small Cap Fund
|
$ | 9 million | Hennessy Small Cap Financial Fund | $ | 48 million | |||||
Hennessy Large Cap Financial Fund
|
$ | 4 million | Hennessy Japan Small Cap Fund | $ | 12 million |
Three Months Ended June 30, 2021
|
Nine Months Ended June 30, 2021
|
|||||||||
Fund Name
|
Amount
|
Fund Name
|
Amount
|
|||||||
Hennessy Japan Fund
|
$ | (52) million | Hennessy Focus Fund | $ | (301) million | |||||
Hennessy Gas Utility Fund
|
$ | (18) million | Hennessy Gas Utility Fund | $ | (117) million | |||||
Hennessy Focus Fund
|
$ | (9) million | Hennessy Cornerstone Mid Cap 30 Fund | $ | (61) million |
• |
average daily net assets held by financial institutions;
|
• |
the split of average daily net assets held by financial institutions in Institutional Class shares of the Hennessy Funds versus Investor Class shares of the Hennessy Funds; and
|
• |
fee minimums at various financial institutions.
|
For the Nine Months
Ended June 30, |
||||||||
2021
|
2020
|
|||||||
(In thousands)
|
||||||||
Net cash provided by operating activities
|
$ | 7,214 | $ | 8,012 | ||||
Net cash used in investing activities
|
(182 | ) | (814 | ) | ||||
Net cash used in financing activities
|
(2,949 | ) | (23,177 | ) | ||||
|
|
|
|
|||||
Net increase (decrease) in cash and cash equivalents
|
$ | 4,083 | $ | (15,979 | ) | |||
|
|
|
|
Item
4.
|
Controls and Procedures
|
Item
6.
|
Exhibits
|
31.1 | Rule 13a-14a Certification of the Principal Executive Officer. | |
31.2 | Rule 13a-14a Certification of the Principal Financial Officer. | |
32.1 | Written Statement of the Principal Executive Officer, Pursuant to 18 U.S.C. § 1350. | |
32.2 | Written Statement of the Principal Financial Officer, Pursuant to 18 U.S.C. § 1350. | |
101 |
Financial statements from the Quarterly Report on Form
10-Q
of Hennessy Advisors, Inc. for the quarter ended June 30, 2021, filed on August 4, 2021, formatted in XBRL: (i) the Condensed Balance Sheets; (ii) the Condensed Statements of Income; (iii) the Condensed Statements of Changes in Stockholders’ Equity; (iv) the Condensed Statements of Cash Flows; and (v) the Notes to Unaudited Condensed Financial Statements.
|
|
104 | The cover page for the Company’s Quarterly Report on Form 10-Q has been formatted in Inline XBRL and contained in Exhibit 101. |
HENNESSY ADVISORS, INC. | ||||||
Date: August 4, 2021 | By: |
/s/ Teresa M. Nilsen
|
||||
Teresa M. Nilsen | ||||||
President |
Exhibit 31.1
Rule 13a 14a Certification of the Principal Executive Officer
I, Teresa M. Nilsen, certify that:
1. |
I have reviewed this Quarterly Report on Form 10-Q of Hennessy Advisors, Inc.; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Teresa M. Nilsen |
Teresa M. Nilsen, President |
Hennessy Advisors, Inc. |
Date: August 4, 2021
Exhibit 31.2
Rule 13a 14a Certification of the Principal Financial Officer
I, Kathryn R. Fahy, certify that:
1. |
I have reviewed this Quarterly Report on Form 10-Q of Hennessy Advisors, Inc.; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Kathryn R. Fahy |
Kathryn R. Fahy, Chief Financial Officer |
Hennessy Advisors, Inc. |
Date: August 4, 2021
Exhibit 32.1
Written Statement of the Principal Executive Officer
Pursuant to 18 U.S.C. § 1350
Solely for the purposes of complying with 18 U.S.C. § 1350, I, the undersigned President of Hennessy Advisors, Inc. (the Company), hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2021 (the Report), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Teresa M. Nilsen |
Teresa M. Nilsen, President |
Hennessy Advisors, Inc. |
Date: August 4, 2021
Exhibit 32.2
Written Statement of the Principal Financial Officer
Pursuant to 18 U.S.C. § 1350
Solely for the purposes of complying with 18 U.S.C. § 1350, I, the undersigned Chief Financial Officer of Hennessy Advisors, Inc. (the Company), hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2021 (the Report), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Kathryn R. Fahy |
Kathryn R. Fahy, Chief Financial Officer |
Hennessy Advisors, Inc. |
Date: August 4, 2021