• Medley Management Inc. Declares $0.20 Per Share Dividend and Reports Second Quarter 2017 Results

    Источник: Nasdaq GlobeNewswire / 10 авг 2017 06:00:18   America/New_York

    NEW YORK, Aug. 10, 2017 (GLOBE NEWSWIRE) -- Medley Management Inc. (NYSE:MDLY) today reported its financial results for its second quarter ended June 30, 2017.

    Highlights

    • Fee earning assets under management increased to $3.3 billion as of June 30, 2017
    • Total assets under management were $5.4 billion as of June 30, 2017
    • U.S. GAAP net income attributable to Medley Management Inc. was $0.06 per share for Q2 2017
    • Core Net Income Per Share was $0.10 for Q2 2017
    • Declared $0.20 per share dividend for Q2 2017 payable on September 6, 2017

    “At Medley, we continue to expand our alternative asset management platform by increasing our product offerings, hiring seasoned professionals and investing capital across our different investment disciplines. During the quarter we increased Fee Earning AUM to $3.3B and have additional dry-powder to deploy in the quarters ahead,” said Brook Taube, CEO of Medley.

    Results of Operations for the Three Months Ended June 30, 2017

    Total revenues were $16.4 million for the three months ended June 30, 2017 compared to $21.3 million for the same period in 2016. The decrease was due primarily to a decrease in Part I incentive fees from our permanent capital vehicles as well as a decrease in performance fees from our separately managed accounts, partly offset by an increase in other revenue and fees.

    Total expenses from operations were $8.5 million for the three months ended June 30, 2017 compared to $17.5 million for the same period in 2016. The decrease was due primarily to a decrease in expenses associated with our expense support agreement with Sierra Income Corporation ("SIC"), a reduction in compensation and benefits expense as well as lower general, administrative and other expenses.  

    Total other expense, net was $2.0 million for the three months ended June 30, 2017 compared to $2.7 million for the same period in 2016. The decrease was due primarily to a decrease in expense associated with our revenue share payable and an increase in dividend income, partly offset by an increase in interest expense.

    Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC was $4.2 million for the three months ended June 30, 2017 compared to $0.6 million for the same period in 2016. Medley Management Inc.’s net income per share was $0.06 for the three months ended June 30, 2017 compared to a net loss per share of $0.03 for the same period in 2016.

    Pre-Tax Core Net Income was $5.2 million for the three months ended June 30, 2017 compared to $7.4 million for the same period in 2016. Core Net Income Per Share was $0.10 for the three months ended June 30, 2017, compared to $0.14 for the same period in 2016. Core EBITDA was $8.2 million for the three months ended June 30, 2017 compared to $9.8 million for the same period in 2016.

    Results of Operations for the Six Months Ended June 30, 2017

    Total revenues were $30.4 million for the six months ended June 30, 2017 compared to $38.9 million for the same period in 2016. The decrease was due primarily to a decrease in Part I incentive fees from our permanent capital vehicles and a reversal of performance fees from our separately managed accounts, partly offset by an increase in other revenue and fees.

    Total expenses from operations were $16.1 million for the six months ended June 30, 2017 compared to $31.3 million for the same period in 2016. The decrease was due primarily to a reduction in expenses associated with our expense support agreement with SIC, a reduction in compensation and benefits expense, a decrease in performance compensation and lower general and administrative expenses. 

    Total other expense, net was $3.4 million for the six months ended June 30, 2017 compared to $5.4 million for the same period in 2016. The decrease was due primarily to a decrease in expense associated with our revenue share payable and an increase in dividend income, partly offset by an increase in interest expense.

    Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC was $7.4 million for the six months ended June 30, 2017 compared to $1.4 million for the same period in 2016. Medley Management Inc.’s net income per share was $0.14 for the six months ended June 30, 2017 compared to a net loss per share of $0.04 for the same period in 2016.

    Pre-Tax Core Net Income was $10.4 million for the six months ended June 30, 2017 compared to $14.2 million for the same period in 2016. Core Net Income Per Share was $0.19 for the six months ended June 30, 2017, compared to $0.26 for the same period in 2016. Core EBITDA was $16.1 million for the six months ended June 30, 2017 compared $18.8 million for the same period in 2016.

    Investor Relations 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
    June 30,
    (unaudited)
     For the Six
    Months Ended
    June 30,
    (unaudited)
      2017 2016 2017 2016
      (Amounts in thousands, except AUM, share and per share amounts)
    Consolidated Financial Data:        
    Pre-Tax Income $5,923  $1,104  $10,986  $2,252 
    Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC 4,191  597  7,353  1,370 
    Net income (loss) per Class A common stock $0.06  $(0.03) $0.14  $(0.04)
    Net Income Margin (1) 25.5% 2.8% 24.1% 3.5%
    Weighted average shares - Basic and Diluted 5,588,978  5,777,726  5,697,483  5,814,428 
             
    Non-GAAP Data:        
    Pre-Tax Core Net Income (2) $5,228  $7,434  $10,415  $14,195 
    Core Net Income  (2) 4,733  6,563  9,321  12,528 
    Core EBITDA  (3) 8,226  9,753  16,146  18,820 
    Core Net Income Per Share (4) $0.10  $0.14  $0.19  $0.26 
    Core Net Income Margin (5) 18.1% 19.9% 19.5% 20.8%
    Pro-Forma Weighted Average Shares Outstanding (6) 31,028,903  30,771,830  30,997,006  30,587,862 
             
    Other Data (at period end, in millions):        
    AUM $5,438  $5,025  $5,438  $5,025 
    Fee Earning AUM 3,279  3,158  3,279  3,158 

    (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 43.0% for all periods presented. 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 vesting of restricted stock units and conversion by the pre-IPO holders of 23,333,333 LLC Units for 23,333,333 shares of Class A common stock at the beginning of each period presented, respectively. Please refer to Exhibit D for additional details.

    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, March 31, 2017 $2,214  $1,000  $3,214  69% 31%
    Commitments 59  68  127     
    Capital reduction          
    Distributions (24) (53) (77)    
    Change in fund value 10  5  15     
    Ending balance, June 30, 2017 $2,259  $1,020  $3,279  69% 31%


    Total fee earning AUM increased by $65 million, or 2% as of June 30, 2017 compared to total fee earning AUM as of March 31, 2017. The permanent capital vehicles’ share of fee earning AUM remained at 69% as of June 30, 2017 compared to March 31, 2017.


    The table below presents the year-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, 2016$2,207  $983  $3,190  69% 31%
    Commitments97  157  254     
    Capital reduction         
    Distributions(51) (111) (162)    
    Change in fund value6  (9) (3)    
    Ending balance, June 30, 2017$2,259  $1,020  $3,279  69% 31%
                      

    Total fee earning AUM increased by $89 million, or 3% as of June 30, 2017 compared to total fee earning AUM as of December 31, 2016. The permanent capital vehicles’ share of fee earning AUM remained at 69% as of June 30, 2017 compared to December 31, 2016.

    Dividend Declaration

    On August 8, 2017, the Company’s Board of Directors declared a quarterly dividend of $0.20 per share of Class A common stock for the second quarter of 2017. The dividend will be paid on September 6, 2017 to stockholders of record as of August 23, 2017.

    Conference Call and Webcast Information

    We will host an earnings conference call and audio webcast at 10:00 a.m. (Eastern Time) on Thursday, August 10, 2017 to discuss our second 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 51870178 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 85 people, is a premier provider of capital to the middle market in the U.S. As of June 30, 2017, Medley had over $5 billion of assets under management in two business development companies, Medley Capital Corporation (NYSE: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 380 companies across 35 industries in North America. For additional information, please visit Medley Management Inc. at www.mdly.com.

    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 (NYSE:MCC) has outstanding bonds which trade on the NYSE under the symbols (NYSE:MCV), and (NYSE:MCX).

    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, 2016. 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.


    Exhibit A. Consolidated Statements of Operations of Medley Management Inc.

     For the Three Months Ended
    June 30,
    (unaudited)
     For the Six
    Months Ended
    June 30,
    (unaudited)
     2017 2016 2017 2016
     (Amounts in thousands, except share and per share data)
    Revenues       
    Management fees$13,201  $18,695  $27,096  $34,958 
    Performance fees575  851  (1,644) 260 
    Other revenues and fees2,668  1,780  4,988  3,679 
    Total revenues16,444  21,326  30,440  38,897 
            
    Expenses       
    Compensation and benefits5,705  8,564  11,499  14,432 
    Performance fee compensation50  45  (831) (26)
    General, administrative and other expenses2,754  8,899  5,422  16,878 
    Total expenses8,509  17,508  16,090  31,284 
            
    Other income (expense)       
    Dividend income733  221  1,468  443 
    Interest expense(2,766) (2,072) (6,413) (4,190)
    Other income (expenses), net21  (863) 1,581  (1,614)
    Total other expense, net(2,012) (2,714) (3,364) (5,361)
    Income before income taxes5,923  1,104  10,986  2,252 
    Provision for income taxes428  102  841  214 
    Net income5,495  1,002  10,145  2,038 
    Net income attributable to redeemable non-controlling interests and non-controlling interests in consolidated subsidiaries1,304  405  2,792  668 
    Net income attributable to non-controlling interests in Medley LLC3,617  539  6,386  1,218 
    Net income attributable to Medley Management Inc.$574  $58  $967  $152 
            
    Net income (loss) per share of Class A common stock:       
    Basic$0.06  $(0.03) $0.14  $(0.04)
    Diluted$0.06  $(0.03) $0.14  $(0.04)
    Weighted average shares outstanding - Basic and Diluted5,588,978  5,777,726  5,697,483  5,814,428 


    Exhibit B. Consolidated Statements of Comprehensive Income 

     For the Three
    Months Ended
    June 30,
    (unaudited)
     For the Six
    Months Ended
    June 30,
    (unaudited)
     2017 2016 2017 2016
     (Amounts in thousands)
    Net income$5,495  $1,002  $10,145  $2,038 
    Other comprehensive income:       
    Change in fair value of available-for-sale securities (net of taxes of $0.2 million for Medley Management Inc. for each of the three and six months ended June 30, 2017 and $0.1 million for Non-controlling interests in Medley LLC for each of the three and six months ended June 30, 2017)(2,651)   (2,166)  
    Total comprehensive income2,844  1,002  7,979  2,038 
    Comprehensive income attributable to redeemable non-controlling interests and non-controlling interests in consolidated subsidiaries952  405  2,763  668 
    Comprehensive income attributable to Medley LLC1,646  539  4,545  1,218 
    Comprehensive income attributable to Medley Management Inc.$246  $58  $671  $152 


    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
    June 30,
    (unaudited)
     For the Six
    Months Ended
    June 30,
    (unaudited)
     2017 2016 2017 2016
     (Amounts in thousands)
    Net income attributable to Medley Management Inc.$574  $58  $967  $152 
    Net income attributable to non-controlling interests in Medley LLC3,617  539  6,386  1,218 
    Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC$4,191  $597  $7,353  $1,370 
    Reimbursable fund startup expenses226  5,541  226  10,744 
    IPO date award stock-based compensation318  673  (343) 1,346 
    Other non-core items (1)65  521  2,338  521 
    Income tax expense on adjustments(67) (769) (253) (1,453)
    Core Net Income$4,733  $6,563  $9,321  $12,528 
    Interest expense2,766  2,072  5,264  4,190 
    Income taxes495  871  1,094  1,667 
    Depreciation and amortization232  247  467  435 
    Core EBITDA$8,226  $9,753  $16,146  $18,820 

    (1) For the three months ended June 30, 2017, other non-core items consist of $0.1 million of severance costs to former employees. For the six months ended June 30, 2017, other non-core items consist of $1.2 million in 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 and $1.2 million in severance costs to former employees.  For the three and six months ended June 30, 2016, other non-core items consists of a $0.5 million impairment loss on our investment in CK Pearl Fund.


    Exhibit D. Calculation of Core Net Income Per Share

     For the Three
    Months Ended
    June 30,
    (unaudited)
     For the Six
    Months Ended
    June 30,
    (unaudited)
     2017 2016 2017 2016
     (Amounts in thousands, except share and per share amounts)
    Numerator       
    Core Net Income$4,733  $6,563  $9,321  $12,528 
    Add: Income taxes495  871  1,094  1,667 
    Pre-Tax Core Net Income$5,228  $7,434  $10,415  $14,195 
            
    Denominator       
    Class A common stock5,588,978  5,777,726  5,697,483  5,814,428 
    Conversion of LLC Units and restricted LLC Units to Class A common stock23,653,333  23,333,333  23,561,400  23,333,333 
    Restricted Stock Units1,786,592  1,660,771  1,738,123  1,440,101 
    Pro-Forma Weighted Average Shares Outstanding (1)31,028,903  30,771,830  30,997,006  30,587,862 
    Pre-Tax Core Net Income Per Share$0.17  $0.24  $0.34  $0.46 
    Less: corporate income taxes per share (2)(0.07) (0.10) (0.15) (0.20)
    Core Net Income Per Share$0.10  $0.14  $0.19  $0.26 

    (1) The calculation of Pro-Forma Weighted Average Shares Outstanding assumes the conversion by the pre-IPO holders of  23,333,333 Medley LLC units for 23,333,333 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 and, in 2017, 320,000 restricted LLC units during each of the periods presented and conversion of such restricted LLC units for an equal number of shares of Class A common stock.

    (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 43.0% for all periods presented.


    Exhibit E. Reconciliation of Net Income Margin to Core Net Income Margin

     For the Three
    Months Ended
    June 30,
    (unaudited)
     For the Six
    Months Ended
    June 30,
    (unaudited)
     2017 2016 2017 2016
            
    Net Income Margin25.5% 2.8% 24.1% 3.5%
    Reimbursable fund startup expenses (1)1.4% 26.0% 0.7% 27.6%
    IPO date award stock-based compensation (1)1.9% 3.2% (1.1)% 3.5%
    Other non-core items (1)(2)0.4% 2.4% 7.7% 1.3%
    Provision for income taxes (1)2.6% 0.5% 2.8% 0.6%
    Corporate income taxes (3)(13.7)% (15.0)% (14.7)% (15.7)%
    Core Net Income Margin18.1% 19.9% 19.5% 20.8%

    (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) For the three and six months ended June 30, 2017, other non-core items consist of $0 and $1.2 million, respectively, in 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 and $0.1 million and $1.1 million, respectively, in severance costs to former employees. For the three and six months ended June 30, 2016, other non-core items consists of a $0.5 million impairment loss on our investment in CK Pearl Fund.

    (3) 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 43.0% and presented the calculation as a percentage of total revenue.


    Exhibit F. Consolidated Balance Sheets of Medley Management Inc.

     As of
    June 30, 2017
    (unaudited)
     As of
    December 31,
    2016
     (Amounts in thousands)
    Assets   
    Cash and cash equivalents$45,789  $49,666 
    Cash and cash equivalents of consolidated fund1,509   
    Restricted cash equivalents2,657  4,897 
    Investments, at fair value63,045  31,904 
    Management fees receivable11,289  12,630 
    Performance fees receivable3,319  4,961 
    Other assets16,851  18,311 
    Total assets$144,459  $122,369 
        
    Liabilities and Equity   
    Senior unsecured debt$116,503  $49,793 
    Loans payable8,900  52,178 
    Accounts payable, accrued expenses and other liabilities23,595  37,255 
    Total liabilities148,998  139,226 
        
    Redeemable Non-controlling Interests53,506  30,805 
        
    Equity   
    Class A common stock54  58 
    Class B common stock   
    Additional paid in capital (capital deficit)2,239  3,310 
    Accumulated other comprehensive income (loss)(263) 33 
    Retained earnings (accumulated deficit)(6,952) (5,254)
    Total stockholders' equity (deficit), Medley Management Inc.(4,922) (1,853)
    Non-controlling interests in consolidated subsidiaries(1,712) (1,717)
    Non-controlling interests in Medley LLC(51,411) (44,092)
    Total equity (deficit)(58,045) (47,662)
    Total liabilities, redeemable non-controlling interests and equity$144,459  $122,369 
            

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