NEW YORK, May 15, 2018 (GLOBE NEWSWIRE) -- Medley Management Inc. (NYSE:MDLY) today reported its financial results
for its first quarter ended March 31, 2018.
Highlights
- Fee earning assets under management were $3.0 billion as of March 31, 2018
- Total assets under management were $5.1 billion as of March 31, 2018
- Declared $0.20 per share dividend for Q1 2018 payable on June 1, 2018
- U.S. GAAP net loss per share attributable to Medley Management Inc. was $(0.26) for Q1 2018
- Core Net Income Per Share was $0.05 for Q1 2018
Results of Operations for the Three Months Ended March 31, 2018
Total revenues increased to $14.4 million for the three months ended March 31, 2018 compared to $14.0 million
for the same period in 2017.
Total expenses from operations were $12.8 million for the three months ended March 31, 2018 compared to $7.6
million for the same period in 2017. The increase was due primarily to an increase in severance related compensation, professional
fees and expenses of our consolidated fund.
Total other expense, net was $11.0 million for the three months ended March 31, 2018 compared to $1.4 million
for the same period in 2017. The increase was due primarily to unrealized losses from our investment in shares of MCC.
Net loss attributable to Medley Management Inc. and non-controlling interests in Medley LLC was $5.1 million for
the three months ended March 31, 2018 compared to net income of $3.2 million for the same period in 2017. Medley Management Inc.’s
net loss per share was $0.26 for the three months ended March 31, 2018 compared to net income per share of $0.06 for the
same period in 2017.
Pre-Tax Core Net Income was $2.1 million for the three months ended March 31, 2018 compared to $5.2 million for
the same period in 2017. Core Net Income Per Share was $0.05 for the three months ended March 31, 2018, compared to $0.10 for the
same period in 2017. Core EBITDA was $5.0 million for the three months ended March 31, 2018 compared to $7.9 million for the
same period in 2017.
Investor Contact:
Sam Anderson
Head of Capital Markets & Risk Management
Medley Management Inc.
212-759-0777
Media Contact:
Erin Clark
Teneo Strategy
646-214-8355
Key Performance Indicators:
|
For the Three Months Ended March 31,
(unaudited) |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
(Amounts in thousands, except AUM, share
and per share amounts) |
Consolidated Financial Data: |
|
|
|
Pre-Tax (Loss) Income |
$ |
(9,451 |
) |
|
$ |
5,063 |
|
Net (loss) income attributable to Medley Management Inc. and
non-controlling interests in Medley LLC |
$ |
(5,127 |
) |
|
$ |
3,162 |
|
Net (loss) income per Class A common stock |
$ |
(0.26 |
) |
|
$ |
0.06 |
|
Net (Loss) Income Margin (1) |
(35.6 |
)% |
|
22.6 |
% |
Weighted average shares - Basic and Diluted |
5,483,303 |
|
|
5,808,626 |
|
|
|
|
|
|
|
|
|
Non-GAAP Data: |
|
|
|
|
|
|
|
Pre-Tax Core Net Income (2) |
$ |
2,108 |
|
|
$ |
5,187 |
|
Core Net Income (2) |
$ |
1,257 |
|
|
$ |
4,588 |
|
Core EBITDA (3) |
$ |
5,008 |
|
|
$ |
7,920 |
|
Core Net Income Per Share (4) |
$ |
0.05 |
|
|
$ |
0.10 |
|
Core Net Income Margin (5) |
9.8 |
% |
|
21.1 |
% |
Pro-Forma Weighted Average Shares Outstanding (6) |
30,635,399 |
|
|
30,965,646 |
|
|
|
|
|
|
|
|
|
Other Data (at period end, in millions): |
|
|
|
|
|
|
|
AUM |
$ |
5,076 |
|
|
$ |
5,452 |
|
Fee Earning AUM |
$ |
3,040 |
|
|
$ |
3,214 |
|
(1) Net Income Margin equals Net income attributable to Medley Management Inc. and
non-controlling interests in Medley LLC divided by total revenue.
(2) Pre-Tax Core Net Income is calculated as Core Net Income before income taxes. Core Net Income reflects net
income attributable to Medley Management Inc. and net income attributable to non-controlling interests in Medley LLC adjusted to
exclude reimbursable expenses associated with the launch of funds, stock-based compensation associated with restricted stock units
that were granted in connection with our IPO, other non-core items and the income tax expense associated with the foregoing
adjustments. Please refer to the reconciliation of Core Net Income to Net income attributable to Medley Management Inc. and
non-controlling interests in Medley LLC in Exhibit C for additional details.
(3) Core EBITDA is calculated as Core Net Income before interest expense, income taxes, depreciation and
amortization. Please refer to the reconciliation of Core EBITDA to Net income attributable to Medley Management Inc. and
non-controlling interests in Medley LLC in Exhibit C for additional details.
(4) Core Net Income Per Share is calculated as Core Net Income, adjusted for the income tax effect of assuming that
all of our pre-tax earnings were subject to federal, state and local corporate income taxes, divided by Pro-Forma Weighted Average
Shares Outstanding (as defined below). We assumed an effective corporate tax rate of 33.0% for 2018 and 43.0% for 2017. Please
refer to the calculation of Core Net Income Per Share in Exhibit D for additional details.
(5) Core Net Income Margin equals Core Net Income Per Share divided by total revenue per share.
(6) The calculation of Pro-Forma Weighted Average Shares Outstanding assumes the conversion by the pre-IPO holders
of up to 24,032,533 Medley LLC units for 24,032,533 shares of Class A common stock at the beginning of each period presented, as
well as the vesting of the weighted average number of restricted stock units.
Fee Earning AUM
The table below presents the quarter-to-date roll forward of our total fee earning AUM:
|
|
|
|
|
|
|
% of Fee Earning AUM |
|
Permanent
Capital
Vehicles |
|
Long-dated
Private Funds
and SMAs |
|
Total |
|
Permanent
Capital
Vehicles |
|
Long-dated
Private Funds
and SMAs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions) |
|
|
|
|
Ending balance, December 31, 2017 |
$ |
2,090 |
|
|
$ |
1,068 |
|
|
$ |
3,158 |
|
|
66 |
% |
|
34 |
% |
Commitments |
(60 |
) |
|
83 |
|
|
23 |
|
|
|
|
|
|
|
Distributions |
(24 |
) |
|
(34 |
) |
|
(58 |
) |
|
|
|
|
|
|
Change in fund value |
(34 |
) |
|
(49 |
) |
|
(83 |
) |
|
|
|
|
|
|
Ending balance, March 31, 2018 |
$ |
1,972 |
|
|
$ |
1,068 |
|
|
$ |
3,040 |
|
|
65 |
% |
|
35 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fee earning AUM decreased by $118 million, or 4% as of March 31, 2018 compared to total fee earning AUM as
of December 31, 2017. The permanent capital vehicles’ share of fee earning AUM was 65% as of March 31, 2018 compared to 66% at
December 31, 2017.
Conference Call and Webcast Information
We will host an earnings conference call and audio webcast at 10:00 a.m. (Eastern Time) on Wednesday, May 16,
2018 to discuss our first quarter financial results.
All interested parties may participate in the conference call by dialing (877) 524-5743 approximately 5-10
minutes prior to the call. International callers should dial (615) 247-0088. Participants should reference Medley
Management Inc. and the conference ID of 4399459 when prompted. Following the call you may access a replay of the event via
audio webcast. This conference call will be broadcast live over the Internet and can be accessed by all interested parties through
the Company's website, http://www.mdly.com. To listen to the live call, please go to the Company's website at least 15
minutes prior to the start of the call to register and download any necessary audio software. For those who are not able to listen
to the live broadcast, a replay will be available shortly after the call on the Company’s website.
About Medley
Medley is an alternative asset management firm offering yield solutions to retail and institutional investors.
Medley’s national direct origination franchise, with over 75 people, is a premier provider of capital to the middle market in the
U.S. Medley has over $5 billion of assets under management in two business development companies, Medley Capital Corporation
(NYSE:MCC) (TASE:MCC) and Sierra Income Corporation, a credit interval fund, Sierra Total Return Fund (NASDAQ:SRNTX) and several
private investment vehicles. Over the past 15 years, Medley has provided capital to over 400 companies across 35 industries in
North America.(1)
Medley LLC, the operating company of Medley Management Inc., has outstanding bonds which trade on the NYSE under
the symbols (NYSE:MDLX) and (NYSE:MDLQ). Medley Capital Corporation is dual-listed on the New York Stock Exchange (NYSE:MCC) and
the Tel Aviv Stock Exchange (TASE: MCC) and has outstanding bonds which trade on both the New York Stock Exchange under the symbols
(NYSE:MCV), (NYSE:MCX) and the Tel Aviv Stock Exchange under the symbol (TASE: MCC.B1).
Forward-Looking Statements
Statements included herein may contain "forward-looking statements." Statements other than statements of
historical facts included in this press release may constitute forward-looking statements and are not guarantees of future
performance or results and involve a number of assumptions, risks and uncertainties, which change over time. Actual results may
differ materially from those anticipated in any forward-looking statements as a result of a number of factors, including those
described from time to time in filings by the Company with the Securities and Exchange Commission, including those described in the
section “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017. Except as required
by law, the Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements made
herein speak only as of the date of this press release.
Non-GAAP Financial Measures
We make reference to certain non-GAAP financial measures in this press release. A reconciliation of these
non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with U.S.
GAAP is contained in the tables attached hereto.
Non-GAAP measures used by management include Pre-Tax Core Net Income, Core Net Income, Core EBITDA, Core Net
Income Per Share and Core Net Income Margin. Management believes that these measures provide analysts, investors and management
with helpful information regarding our underlying operating performance and our business, as they remove the impact of items
management believes are not reflective of underlying operating performance. These non-GAAP measures are also used by management for
planning purposes, including the preparation of internal budgets; and for evaluating the effectiveness of operational strategies.
Additionally, we believe these non-GAAP measures provide another tool for investors to use in comparing our results with other
companies in our industry, many of whom use similar non-GAAP measures. There are limitations associated with the use of non-GAAP
financial measures as compared to the use of the most directly comparable U.S. GAAP financial measure and these measures supplement
and should be considered in addition to and not in lieu of the results of operations discussed below. Furthermore, such measures
may be inconsistent with measures presented by other companies.
This press release does not constitute an offer for any Medley fund.
Available Information
Medley Management Inc.’s filings with the Securities and Exchange Commission, press releases, earnings releases
and other financial information are available at www.mdly.com.
(1) Medley Management Inc. is the parent company of Medley LLC and several registered investment
advisors (collectively, "Medley”). Assets under management refers to assets of our funds, which represents the sum of the net
asset value of such funds, the drawn and undrawn debt (at the fund level, including amounts subject to restrictions) and uncalled
committed capital (including commitments to funds that have yet to commence their investment periods). Assets under
management are as of March 31, 2018.
Exhibit A. Consolidated Statements of Operations of Medley Management Inc.
|
For the Three Months Ended March 31,
(unaudited) |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
(Amounts in thousands, except share and per
share data) |
Revenues |
|
|
|
Management fees (includes Part I incentive fees of $0 and $544 for
three months ending March 31, 2018 and 2017, respectively) |
$ |
12,085 |
|
|
$ |
13,895 |
|
Performance fees |
— |
|
|
(2,363 |
) |
Other revenues and fees |
2,329 |
|
|
2,320 |
|
Investment Income: |
|
|
|
Carried interest |
165 |
|
|
145 |
|
Other investment income |
(183 |
) |
|
(1 |
) |
Total Revenues |
14,396 |
|
|
13,996 |
|
|
|
|
|
Expenses |
|
|
|
Compensation and benefits |
8,338 |
|
|
5,794 |
|
Performance fee compensation |
(7 |
) |
|
(881 |
) |
General, administrative and other expenses |
4,509 |
|
|
2,668 |
|
Total Expenses |
12,840 |
|
|
7,581 |
|
|
|
|
|
Other Income (Expense) |
|
|
|
Dividend income |
1,429 |
|
|
735 |
|
Interest expense |
(2,681 |
) |
|
(3,647 |
) |
Other income (expenses), net |
(9,755 |
) |
|
1,560 |
|
Total Other Expense, Net |
(11,007 |
) |
|
(1,352 |
) |
(Loss) Income before income taxes |
(9,451 |
) |
|
5,063 |
|
Provision for income taxes |
190 |
|
|
413 |
|
Net (Loss) Income |
(9,641 |
) |
|
4,650 |
|
Net (loss) income attributable to redeemable non-controlling
interests and non-controlling interests in consolidated subsidiaries |
(4,514 |
) |
|
1,488 |
|
Net (loss) income attributable to non-controlling interests in Medley
LLC |
(3,899 |
) |
|
2,768 |
|
Net (Loss) Income Attributable to Medley Management Inc. |
$ |
(1,228 |
) |
|
$ |
394 |
|
|
|
|
|
Net (Loss) Income Per Share of Class A Common Stock: |
|
|
|
Basic |
$ |
(0.26 |
) |
|
$ |
0.06 |
|
Diluted |
$ |
(0.26 |
) |
|
$ |
0.06 |
|
Weighted average shares outstanding - Basic and Diluted |
5,483,303 |
|
|
5,808,626 |
|
|
|
|
|
|
|
Exhibit B. Consolidated Statements of Comprehensive Income (Loss)
|
For the Three Months Ended March 31,
(unaudited) |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
Net (Loss) Income |
$ |
(9,641 |
) |
|
$ |
4,650 |
|
Other Comprehensive Income: |
|
|
|
Change in fair value of available-for-sale securities |
— |
|
|
485 |
|
Total Comprehensive (Loss) Income |
(9,641 |
) |
|
5,135 |
|
Comprehensive (loss) income attributable to redeemable
non-controlling interests and non-controlling interests in consolidated subsidiaries |
(4,514 |
) |
|
1,812 |
|
Comprehensive (loss) income attributable to non-controlling interests
in Medley LLC |
(3,899 |
) |
|
2,897 |
|
Comprehensive (Loss) Income Attributable to Medley Management Inc. |
$ |
(1,228 |
) |
|
$ |
426 |
|
|
|
|
|
|
|
|
|
Exhibit C. Reconciliation of Core Net Income and Core EBITDA to Net income attributable to Medley Management Inc. and
non-controlling interests in Medley LLC
|
For the Three Months Ended March 31,
(unaudited) |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
Net (loss) income attributable to Medley Management Inc. |
$ |
(1,228 |
) |
|
$ |
394 |
|
Net (loss) income attributable to non-controlling interests in Medley
LLC |
(3,899 |
) |
|
2,768 |
|
Net (loss) income attributable to Medley Management Inc. and non-controlling
interests in Medley LLC |
$ |
(5,127 |
) |
|
$ |
3,162 |
|
Reimbursable fund startup expenses |
623 |
|
|
24 |
|
IPO date award stock-based compensation |
141 |
|
|
(661 |
) |
Other non-core items: |
|
|
|
Unrealized losses on shares of MCC |
3,543 |
|
|
— |
|
Severance expense |
1,886 |
|
|
1,099 |
|
Acceleration of debt issuance costs (1) |
— |
|
|
1,150 |
|
Other (2)
|
852 |
|
|
— |
|
Income tax expense on adjustments |
(661 |
) |
|
(186 |
) |
Core Net Income |
$ |
1,257 |
|
|
$ |
4,588 |
|
Interest expense |
2,681 |
|
|
2,498 |
|
Income taxes |
851 |
|
|
599 |
|
Depreciation and amortization |
219 |
|
|
235 |
|
Core EBITDA |
$ |
5,008 |
|
|
$ |
7,920 |
|
|
|
|
|
|
|
|
|
(1) Amounts relate to additional interest expense associated with the acceleration of amortization of
debt issuance costs and discount relating to prepayments made on our Term Loan Facility as a result of the refinancing of our
indebtedness from the issuance of Senior Unsecured Debt.
(2) For the three months ended March 31, 2018, other items consists of expenses related to non-core business
development activities and other expenses.
Exhibit D. Calculation of Core Net Income Per Share
|
For the Three Months Ended March 31,
(unaudited) |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
(Amounts in thousands, except share and
per
share amounts) |
Numerator |
|
|
|
Core Net Income |
$ |
1,257 |
|
|
$ |
4,588 |
|
Add: Income taxes |
851 |
|
|
599 |
|
Pre-Tax Core Net Income |
$ |
2,108 |
|
|
$ |
5,187 |
|
|
|
|
|
Denominator |
|
|
|
Class A common stock |
5,483,303 |
|
|
5,808,626 |
|
Conversion of LLC Units and restricted LLC Units to Class A common
stock |
23,670,187 |
|
|
23,333,333 |
|
Restricted Stock Units |
1,481,909 |
|
|
1,823,687 |
|
Pro-Forma Weighted Average Shares Outstanding (1) |
30,635,399 |
|
|
30,965,646 |
|
Pre-Tax Core Net Income Per Share |
$ |
0.07 |
|
|
$ |
0.17 |
|
Less: corporate income taxes per share (2) |
(0.02 |
) |
|
(0.07 |
) |
Core Net Income Per Share |
$ |
0.05 |
|
|
$ |
0.10 |
|
|
|
|
|
|
|
|
|
(1) The calculation of Pro-Forma Weighted Average Shares Outstanding assumes the conversion by the
pre-IPO holders of up to 24,032,533 Medley LLC units for 24,032,533 shares of Class A common stock at the beginning of each period
presented, as well as the vesting of the weighted average number of restricted stock units.
(2) Represents a per share adjustment for income taxes assuming that all of our pre-tax earnings were subject to
federal, state and local income taxes. We assumed an effective corporate tax rate of 33.0% for 2018 and 43.0% for 2017.
Exhibit E. Reconciliation of Net Income Margin to Core Net Income Margin
|
For the Three Months Ended March 31,
(unaudited) |
|
2018 |
|
2017 |
|
|
|
|
Net Income Margin |
(35.6 |
)% |
|
22.6 |
% |
Reimbursable fund startup expenses (1) |
4.3 |
% |
|
0.2 |
% |
IPO date award stock-based compensation (1) |
1.0 |
% |
|
(4.7 |
)% |
Other non-core items:(1) |
|
|
|
|
|
Unrealized losses on shares of MCC |
24.6 |
% |
|
— |
% |
Severance expense |
13.1 |
% |
|
7.9 |
% |
Acceleration of debt issuance costs |
— |
% |
|
8.1 |
% |
Other |
5.9 |
% |
|
— |
% |
Provision for income taxes (1) |
1.3 |
% |
|
2.9 |
% |
Corporate income taxes (2) |
(4.8 |
)% |
|
(15.9 |
)% |
Core Net Income Margin |
9.8 |
% |
|
21.1 |
% |
(1) Adjustments to Net income attributable to Medley Management Inc. and non-controlling
interests in Medley LLC to calculate Core Net Income are presented as a percentage of total revenue.
(2) Assumes that all of our pre-tax earnings, including adjustments above, are subject to federal, state and local
income taxes. In determining corporate income taxes, we used a combined effective corporate tax rate of 33.0% for 2018 and 43.0%
for 2017 and presented the calculation as a percentage of total revenue.
Exhibit F. Consolidated Balance Sheets of Medley Management Inc.
|
As of |
|
March 31, 2018
(unaudited) |
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
Assets |
|
|
|
Cash and cash equivalents |
$ |
30,069 |
|
|
$ |
36,163 |
|
Cash and cash equivalents of consolidated fund |
377 |
|
|
164 |
|
Investments, at fair value |
46,755 |
|
|
56,632 |
|
Management fees receivable |
10,119 |
|
|
14,714 |
|
Performance fees receivable |
— |
|
|
2,987 |
|
Other assets |
15,955 |
|
|
17,262 |
|
Total assets |
$ |
103,275 |
|
|
$ |
127,922 |
|
|
|
|
|
Liabilities, Redeemable Non-controlling Interests and Equity |
|
|
|
Liabilities |
|
|
|
Senior unsecured debt |
$ |
117,049 |
|
|
$ |
116,892 |
|
Loans payable |
9,395 |
|
|
9,233 |
|
Accounts payable, accrued expenses and other liabilities |
20,884 |
|
|
25,130 |
|
Total Liabilities |
147,328 |
|
|
151,255 |
|
|
|
|
|
Redeemable Non-controlling Interests |
46,787 |
|
|
53,741 |
|
|
|
|
|
Equity |
|
|
|
Class A common stock |
55 |
|
|
55 |
|
Class B common stock |
— |
|
|
— |
|
Additional paid in capital |
3,805 |
|
|
2,820 |
|
Accumulated other comprehensive loss |
— |
|
|
(1,301 |
) |
Accumulated deficit |
(14,080 |
) |
|
(9,545 |
) |
Total stockholders' deficit, Medley Management Inc. |
(10,220 |
) |
|
(7,971 |
) |
Non-controlling interests in consolidated subsidiaries |
(1,644 |
) |
|
(1,702 |
) |
Non-controlling interests in Medley LLC |
(78,976 |
) |
|
(67,401 |
) |
Total deficit |
(90,840 |
) |
|
(77,074 |
) |
Total Liabilities, Redeemable Non-controlling Interests and
Equity |
$ |
103,275 |
|
|
$ |
127,922 |
|
|
|
|
|
|
|
|
|