Medley Management Inc. (NYSE:MDLY) today reported its financial
results for its third quarter ended September 30, 2016.
Highlights
- Total assets under management were over $5.0 billion as of
September 30, 2016
- Fee earning assets under management were $3.1 billion as of
September 30, 2016
- Declared $0.20 per share dividend for Q3 2016 payable on
December 5, 2016
- U.S. GAAP net income attributable to Medley Management Inc. was
$0.00 per share for Q3 2016
- Core Net Income Per Share was $0.14 for Q3 2016
“Our third quarter was another consistent quarter
of earnings for Medley. Since June 30th, we have continued to
diversify our alternative asset management platform, adding two new
products and senior investment professionals. In July, we launched
our CLO opportunity fund and last week, we were declared effective
on Sierra Total Return Fund, our first interval fund,” said Brook
Taube, CEO of Medley.
Results of Operations for the Three
Months Ended September 30, 2016
Total revenues increased by $13.4 million to $18.9
million for the three months ended September 30, 2016 compared to
the same period in 2015. The increase was due primarily to an
accrual of performance fee revenue of $1.4 million for the three
months ended September 30, 2016 compared to a reversal of
performance fee revenue of $14.6 million for the same period in
2015. The increase was partly offset by a decrease in management
fees due primarily to lower incentive fees from our permanent
capital vehicles.
Total expenses from operations increased by $11.7
million to $15.6 million for the three months ended September 30,
2016 compared to the same period in 2015. The increase was due
primarily to increases in performance compensation and expenses
under our expense support agreement with Sierra Income Corporation
(“SIC”).
Total other expense, net decreased by $0.7 million
to $2.0 million for the three months ended September 30, 2016
compared to the same period in 2015. The decrease was due
primarily to an unrealized gain associated with our shares held in
SIC.
Net income attributable to Medley Management Inc.
and non-controlling interests in Medley LLC decreased by $0.3
million to $0.8 million for the three months ended September 30,
2016 compared to the same period in 2015. Medley Management Inc.'s
net income per share was $0.00 for the three months ended September
30, 2016 compared to $0.04 for the same period in 2015.
Pre-Tax Core Net Income increased by $6.8 million
to $7.4 million for the three months ended September 30, 2016
compared to the same period in 2015. Core Net Income Per
Share was $0.14 for the three months ended September 30, 2016,
compared to $0.01 for the same period in 2015. Core EBITDA
increased by $7.0 million to $9.8 million for the three months
ended September 30, 2016 compared to the same period in 2015.
Results of Operations for the Nine Months
Ended September 30, 2016
Total revenues increased by $6.3 million, to $57.8
million for the nine months ended September 30, 2016 compared to
the same period in 2015. The increase was due to an accrual of
performance fee revenue of $1.7 million for the nine months ended
September 30, 2016 compared to a reversal of performance fees of
$10.6 million for the nine months ended September 30, 2015.
Total expenses from operations increased by $21.1
million to $46.8 million for the nine months ended September 30,
2016 compared to the same period in 2015. The increase was due
primarily to increases in performance compensation and expenses
under our expense support agreement with SIC.
Total other expense, net increased by $0.6 million
to $7.4 million for the nine months ended September 30, 2016
compared to the same period in 2015. The increase was due
primarily to an increase in expense associated with our revenue
share payable.
Net income attributable to Medley Management Inc.
and non-controlling interests in Medley LLC decreased by $16.0
million to $2.1 million for the nine months ended September 30,
2016 compared to the same period in 2015. Medley Management Inc.'s
net income (loss) per share was ($0.05) for the nine months ended
September 30, 2016 compared to $0.38 for the same period in
2015.
Pre-Tax Core Net Income decreased by $3.9 million
to $21.6 million for the nine months ended September 30, 2016
compared to the same period in 2015. Core Net Income per
Share was $0.40 for the nine months ended September 30, 2016
compared to $0.48 for the same period in 2015. Core EBITDA
decreased by $3.5 million to $28.6 million for the nine months
ended September 30, 2016 compared to the same period in 2015.
Investor Contact:Sam AndersonHead of Capital
Markets & Risk ManagementMedley Management Inc.212.759.0777
Media Contact:Liz BruceFitzroy
Communications212.498.9197
Key Performance Indicators:
| |
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|
|
|
|
|
|
|
|
|
|
|
| |
|
For the Three Months Ended |
|
For the Nine Months Ended |
| |
|
September 30, |
|
September 30, |
| |
|
(unaudited) |
|
(unaudited) |
| |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
| |
|
(Amounts in thousands, except AUM, share and per share
amounts) |
| Consolidated
Financial Data: |
|
|
|
|
|
|
|
|
|
|
|
|
| Pre-Tax Income (loss) |
|
$ |
|
1,291 |
|
|
$ |
|
(1,206 |
) |
|
$ |
|
3,543 |
|
|
$ |
|
18,980 |
|
| Net income (loss) attributable to
Medley Management Inc. and non-controlling interests in Medley
LLC |
|
|
|
776 |
|
|
|
|
1,057 |
|
|
|
|
2,146 |
|
|
|
|
18,161 |
|
| Net income (loss) per Class A
common stock |
|
$ |
|
- |
|
|
$ |
|
0.04 |
|
|
$ |
|
(0.05 |
) |
|
$ |
|
0.38 |
|
| Net Income Margin (1) |
|
|
|
4.1 |
% |
|
|
|
19.5 |
% |
|
|
|
3.7 |
% |
|
|
|
35.3 |
% |
| Weighted Average Shares - Basic and
Diluted |
|
|
|
5,778,409 |
|
|
|
|
6,000,211 |
|
|
|
|
5,802,334 |
|
|
|
|
6,000,071 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Non-GAAP
Data: |
|
|
|
|
|
|
|
|
|
|
|
|
| Pre-Tax Core Net Income (2) |
|
$ |
|
7,383 |
|
|
$ |
|
540 |
|
|
$ |
|
21,578 |
|
|
$ |
|
25,434 |
|
| Core Net Income (2) |
|
|
|
6,552 |
|
|
|
|
701 |
|
|
|
|
19,080 |
|
|
|
|
22,877 |
|
| Core EBITDA (3) |
|
|
|
9,818 |
|
|
|
|
2,790 |
|
|
|
|
28,638 |
|
|
|
|
32,110 |
|
| Core Net Income Per Share (4) |
|
$ |
|
0.14 |
|
|
$ |
|
0.01 |
|
|
$ |
|
0.40 |
|
|
$ |
|
0.48 |
|
| Core Net Income Margin (5) |
|
|
|
22.3 |
% |
|
|
|
5.7 |
% |
|
|
|
21.3 |
% |
|
|
|
28.2 |
% |
| Pro-Forma Weighted Average Shares
Outstanding (6) |
|
|
|
30,779,206 |
|
|
|
|
30,455,796 |
|
|
|
|
30,652,109 |
|
|
|
|
30,456,326 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Other Data (at
period end, in millions): |
|
|
|
|
|
|
|
|
|
|
|
|
| AUM |
|
$ |
|
5,011 |
|
|
$ |
|
4,002 |
|
|
$ |
|
5,011 |
|
|
$ |
|
4,002 |
|
| Fee Earning AUM |
|
|
|
3,111 |
|
|
|
|
3,401 |
|
|
|
|
3,111 |
|
|
|
|
3,401 |
|
(1) Net Income Margin equals Net income attributable to
Medley Management Inc. and non-controlling interests in Medley LLC
divided by total revenue. Please refer to the reconciliation of Net
Income Margin to Core Net Income Margin in Exhibit E for additional
details.
(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 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. 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:
| |
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|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
% of AUM |
| |
Permanent |
|
Long-dated |
|
|
|
Permanent |
|
Long-dated |
| |
Capital |
|
Private Funds |
|
|
|
Capital |
|
Private Funds |
| |
Vehicles |
|
and SMAs |
|
Total |
|
Vehicles |
|
and SMAs |
| |
(Dollars in millions) |
|
|
|
|
| Beginning balance, June 30, 2016
|
$ |
|
2,199 |
|
|
$ |
|
959 |
|
|
$ |
|
3,158 |
|
|
|
70 |
% |
|
|
30 |
% |
| Commitments |
|
|
- |
|
|
|
|
44 |
|
|
|
|
44 |
|
|
|
|
|
| Capital reduction |
|
|
(2 |
) |
|
|
|
- |
|
|
|
|
(2 |
) |
|
|
|
|
| Distributions |
|
|
(31 |
) |
|
|
|
(79 |
) |
|
|
|
(110 |
) |
|
|
|
|
| Change in fund value |
|
|
17 |
|
|
|
|
4 |
|
|
|
|
21 |
|
|
|
|
|
| Ending balance, September 30, 2016 |
$ |
|
2,183 |
|
|
$ |
|
928 |
|
|
$ |
|
3,111 |
|
|
|
70 |
% |
|
|
30 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fee earning AUM decreased by $47 million, or
1%, as of September 30, 2016 compared to total fee earning AUM as
of June 30, 2016. The permanent capital vehicles’ share of fee
earning AUM remained consistent at 70% as of September 30, 2016
compared to June 30, 2016.
The table below presents the year-to-date roll
forward of our total fee earning AUM:
| |
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|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
% of AUM |
| |
Permanent |
|
Long-dated |
|
|
|
Permanent |
|
Long-dated |
| |
Capital |
|
Private Funds |
|
|
|
Capital |
|
Private Funds |
| |
Vehicles |
|
and SMAs |
|
Total |
|
Vehicles |
|
and SMAs |
| |
(Dollars in millions) |
|
|
|
|
| Beginning balance,
December 31, 2015 |
$ |
|
2,238 |
|
|
$ |
|
1,064 |
|
|
$ |
|
3,302 |
|
|
|
68 |
% |
|
|
32 |
% |
| Commitments |
|
|
(7 |
) |
|
|
|
78 |
|
|
|
|
71 |
|
|
|
|
|
| Capital reduction |
|
|
(12 |
) |
|
|
|
- |
|
|
|
|
(12 |
) |
|
|
|
|
| Distributions |
|
|
(99 |
) |
|
|
|
(206 |
) |
|
|
|
(305 |
) |
|
|
|
|
| Change in fund value |
|
|
63 |
|
|
|
|
(8 |
) |
|
|
|
55 |
|
|
|
|
|
| Ending balance,
September 30, 2016 |
$ |
|
2,183 |
|
|
$ |
|
928 |
|
|
$ |
|
3,111 |
|
|
|
70 |
% |
|
|
30 |
% |
Total fee earning AUM decreased by $191 million, or
6%, to $3.1 billion as of September 30, 2016 compared to total fee
earning AUM as of December 31, 2015. The permanent capital
vehicles’ share of fee earning AUM increased to 70% as of September
30, 2016 compared to 68% as of December 31, 2015.
Dividend Declaration
On November 10, 2016, the Board of Directors of
Medley Management Inc. declared a quarterly dividend of $0.20 per
share of Class A common stock, for the third quarter of 2016. The
dividend is payable on December 5, 2016 to stockholders of record
as of November 22, 2016.
Conference Call and Webcast
Information
We will host an earnings conference call and audio
webcast at 10:00 a.m. (Eastern Time) on Tuesday, November 15, 2016
to discuss our third quarter 2016 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 98693674 when prompted. Following the call you
may access a replay of the event via audio webcast. This conference
call will also 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 a credit-focused 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. Medley has over $5 billion of assets under management in
two business development companies, Medley Capital Corporation
(NYSE:MCC) and Sierra Income Corporation, as well as private
investment vehicles. Over the past 14 years, we have provided in
excess of $6 billion of capital to over 350 companies across 35
industries in North America. For additional information, please
visit Medley Management Inc. at www.mdly.com.
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, 2015. 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 uses
these non-GAAP measures to assess the performance of our business
and believes that these non-GAAP measures also provide investors
with useful information to evaluate our performance. These
non-GAAP measures supplement and should be considered in addition
to and not in lieu of our consolidated results of operations
calculated and presented in accordance with U.S. GAAP.
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. Condensed Consolidated
Statements of Operations of Medley Management Inc.
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
| |
For the Three Months Ended |
|
For the Nine Months Ended |
| |
September 30, |
|
September 30, |
| |
(unaudited) |
|
(unaudited) |
| |
2016 |
|
2015 |
|
2016 |
|
2015 |
| |
(Amounts in thousands, except share and per share
data) |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
| Management fees |
$ |
|
15,262 |
|
|
$ |
|
18,135 |
|
|
$ |
|
50,220 |
|
|
$ |
|
56,578 |
|
| Performance fees |
|
|
1,446 |
|
|
|
|
(14,595 |
) |
|
|
|
1,706 |
|
|
|
|
(10,627 |
) |
| Other revenues and fees |
|
|
2,172 |
|
|
|
|
1,891 |
|
|
|
|
5,851 |
|
|
|
|
5,496 |
|
| Total revenues |
|
|
18,880 |
|
|
|
|
5,431 |
|
|
|
|
57,777 |
|
|
|
|
51,447 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
| Compensation and benefits |
|
|
6,964 |
|
|
|
|
5,914 |
|
|
|
|
21,396 |
|
|
|
|
19,532 |
|
| Performance fee compensation |
|
|
(212 |
) |
|
|
|
(3,660 |
) |
|
|
|
(238 |
) |
|
|
|
(4,578 |
) |
| General, administrative and other
expenses |
|
|
8,801 |
|
|
|
|
1,626 |
|
|
|
|
25,679 |
|
|
|
|
10,756 |
|
| Total expenses |
|
|
15,553 |
|
|
|
|
3,880 |
|
|
|
|
46,837 |
|
|
|
|
25,710 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Other income
(expense) |
|
|
|
|
|
|
|
|
|
|
|
| Dividend income |
|
|
312 |
|
|
|
|
222 |
|
|
|
|
755 |
|
|
|
|
665 |
|
| Interest expense |
|
|
(2,403 |
) |
|
|
|
(2,141 |
) |
|
|
|
(6,593 |
) |
|
|
|
(6,335 |
) |
| Other income (expenses), net |
|
|
55 |
|
|
|
|
(838 |
) |
|
|
|
(1,559 |
) |
|
|
|
(1,087 |
) |
| Total other expense,
net |
|
|
(2,036 |
) |
|
|
|
(2,757 |
) |
|
|
|
(7,397 |
) |
|
|
|
(6,757 |
) |
| Income (loss) before income
taxes |
|
|
1,291 |
|
|
|
|
(1,206 |
) |
|
|
|
3,543 |
|
|
|
|
18,980 |
|
| Provision for (benefit from) income
taxes |
|
|
77 |
|
|
|
|
(113 |
) |
|
|
|
291 |
|
|
|
|
1,953 |
|
| Net income
(loss) |
|
|
1,214 |
|
|
|
|
(1,093 |
) |
|
|
|
3,252 |
|
|
|
|
17,027 |
|
| Net income (loss) attributable to
redeemable non-controlling interests and non-controlling interests
in consolidated subsidiaries |
|
|
438 |
|
|
|
|
(2,150 |
) |
|
|
|
1,106 |
|
|
|
|
(1,134 |
) |
| Net income attributable to
non-controlling interests in Medley LLC |
|
|
556 |
|
|
|
|
785 |
|
|
|
|
1,774 |
|
|
|
|
15,576 |
|
| Net income attributable to
Medley Management Inc. |
$ |
|
220 |
|
|
$ |
|
272 |
|
|
$ |
|
372 |
|
|
$ |
|
2,585 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) per
Class A common stock: |
|
|
|
|
|
|
|
|
|
|
|
| Basic |
$ |
|
- |
|
|
$ |
|
0.04 |
|
|
$ |
|
(0.05 |
) |
|
$ |
|
0.38 |
|
| Diluted |
$ |
|
- |
|
|
$ |
|
0.04 |
|
|
$ |
|
(0.05 |
) |
|
$ |
|
0.38 |
|
| Weighted average shares
outstanding - Basic and Diluted |
|
|
5,778,409 |
|
|
|
|
6,000,211 |
|
|
|
|
5,802,334 |
|
|
|
|
6,000,071 |
|
| |
|
|
|
|
|
|
|
Exhibit B. Condensed Consolidated Statements of
Comprehensive Income
| |
|
|
|
|
|
|
|
|
|
|
|
| |
For the Three Months Ended |
|
For the Nine Months Ended |
| |
September 30, |
|
September 30, |
| |
(unaudited) |
|
(unaudited) |
| |
2016 |
|
2015 |
|
2016 |
|
2015 |
| |
|
(Amounts in thousands) |
| Net income
(loss) |
$ |
1,214 |
|
$ |
(1,093 |
) |
|
$ |
3,252 |
|
$ |
17,027 |
|
| Other comprehensive income
(loss): |
|
|
|
|
|
|
|
|
|
|
|
| Change in fair value on
available-for-sale securities |
|
268 |
|
|
- |
|
|
|
268 |
|
|
- |
|
| Total
comprehensive income (loss) |
|
1,482 |
|
|
(1,093 |
) |
|
|
3,520 |
|
|
17,027 |
|
| Comprehensive income (loss)
attributable to redeemable non-controlling interests and
non-controlling interests in consolidated subsidiaries |
|
469 |
|
|
(2,150 |
) |
|
|
1,137 |
|
|
(1,134 |
) |
| Comprehensive income (loss)
attributable to Medley LLC |
|
746 |
|
|
785 |
|
|
|
1,964 |
|
|
15,576 |
|
| Comprehensive
income attributable to Medley Management Inc. |
$ |
267 |
|
$ |
272 |
|
|
$ |
419 |
|
$ |
2,585 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
For the Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
(unaudited) |
|
(unaudited) |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
(Amounts in thousands) |
| Net income
attributable to Medley Management Inc. |
$ |
|
220 |
|
|
$ |
|
272 |
|
|
$ |
|
372 |
|
|
$ |
|
2,585 |
|
| Net income attributable to
non-controlling interests in Medley LLC |
|
|
556 |
|
|
|
|
785 |
|
|
|
|
1,774 |
|
|
|
|
15,576 |
|
| Net income
attributable to Medley Management Inc. and non-controlling
interests in Medley LLC |
$ |
|
776 |
|
|
$ |
|
1,057 |
|
|
$ |
|
2,146 |
|
|
$ |
|
18,161 |
|
| Reimbursable fund startup
expenses |
|
|
5,647 |
|
|
|
|
(1,066 |
) |
|
|
|
16,391 |
|
|
|
|
3,103 |
|
| IPO date award stock-based
compensation |
|
|
672 |
|
|
|
|
662 |
|
|
|
|
2,018 |
|
|
|
|
2,080 |
|
| Other non-core items (1) |
|
|
211 |
|
|
|
|
- |
|
|
|
|
732 |
|
|
|
|
137 |
|
| Income tax benefit (expense) on
adjustments |
|
|
(754 |
) |
|
|
|
48 |
|
|
|
|
(2,207 |
) |
|
|
|
(604 |
) |
| Core Net
Income |
$ |
|
6,552 |
|
|
$ |
|
701 |
|
|
$ |
|
19,080 |
|
|
$ |
|
22,877 |
|
| Interest expense |
|
|
2,192 |
|
|
|
|
2,141 |
|
|
|
|
6,382 |
|
|
|
|
6,335 |
|
| Income taxes |
|
|
831 |
|
|
|
|
(161 |
) |
|
|
|
2,498 |
|
|
|
|
2,557 |
|
| Depreciation and amortization |
|
|
243 |
|
|
|
|
109 |
|
|
|
|
678 |
|
|
|
|
341 |
|
| Core
EBITDA |
$ |
|
9,818 |
|
|
$ |
|
2,790 |
|
|
$ |
|
28,638 |
|
|
$ |
|
32,110 |
|
(1) For the three months ended September 30,
2016, other non-core items consists of a $0.2 million 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. For the nine months ended September 30, 2016, other
non-core items also include a $0.5 million impairment loss on our
investment in CK Pearl Fund. For the nine months ended September
30, 2015, other non-core items consists of a one-time $0.1 million
severance cost to former employees.
Exhibit D. Calculation of Core Net Income
Per Share
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
For the Three Months Ended |
|
For the Nine Months Ended |
| |
September 30, |
|
September 30, |
| |
(unaudited) |
|
(unaudited) |
| |
2016 |
|
2015 |
|
2016 |
|
2015 |
| |
(Amounts in thousands, except share and per share
amounts) |
|
Numerator |
|
|
|
|
|
|
|
|
|
|
|
| Core Net Income |
$ |
|
6,552 |
|
|
$ |
|
701 |
|
|
$ |
|
19,080 |
|
|
$ |
|
22,877 |
|
| Add: Income taxes |
|
|
831 |
|
|
|
|
(161 |
) |
|
|
|
2,498 |
|
|
|
|
2,557 |
|
| Pre-Tax Core Net
Income |
|
|
7,383 |
|
|
|
|
540 |
|
|
|
|
21,578 |
|
|
|
|
25,434 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
|
|
|
|
| Class A common
stock |
|
|
5,778,409 |
|
|
|
|
6,000,211 |
|
|
|
|
5,802,334 |
|
|
|
|
6,000,071 |
|
| Conversion of LLC Units
to Class A common stock |
|
|
23,333,333 |
|
|
|
|
23,333,333 |
|
|
|
|
23,333,333 |
|
|
|
|
23,333,333 |
|
| Restricted stock
units |
|
|
1,667,464 |
|
|
|
|
1,122,252 |
|
|
|
|
1,516,442 |
|
|
|
|
1,122,922 |
|
| Pro-Forma Weighted
Average Shares Outstanding (1) |
|
|
30,779,206 |
|
|
|
|
30,455,796 |
|
|
|
|
30,652,109 |
|
|
|
|
30,456,326 |
|
| Pre-Tax Core
Net Income Per Share |
$ |
|
0.24 |
|
|
$ |
|
0.02 |
|
|
$ |
|
0.70 |
|
|
$ |
|
0.84 |
|
| Less: corporate income
taxes per share (2) |
|
|
(0.10 |
) |
|
|
|
(0.01 |
) |
|
|
|
(0.30 |
) |
|
|
|
(0.36 |
) |
| Core Net Income
Per Share |
$ |
|
0.14 |
|
|
$ |
|
0.01 |
|
|
$ |
|
0.40 |
|
|
$ |
|
0.48 |
|
(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 during each of the periods presented.
(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 |
|
For the Nine Months Ended |
| |
September 30, |
|
September 30, |
| |
(unaudited) |
|
(unaudited) |
| |
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Income
Margin |
|
|
4.1 |
% |
|
|
|
19.5 |
% |
|
|
|
3.7 |
% |
|
|
|
35.3 |
% |
| Reimbursable fund startup expenses
(1) |
|
|
29.9 |
% |
|
|
|
(19.6 |
%) |
|
|
|
28.4 |
% |
|
|
|
6.1 |
% |
| IPO date award stock-based
compensation (1) |
|
|
3.6 |
% |
|
|
|
12.2 |
% |
|
|
|
3.5 |
% |
|
|
|
4.0 |
% |
| Other non-core items (1)(2) |
|
|
1.1 |
% |
|
|
|
- |
|
|
|
|
1.3 |
% |
|
|
|
0.3 |
% |
| Provision for income taxes (3) |
|
|
0.4 |
% |
|
|
|
(2.1 |
%) |
|
|
|
0.5 |
% |
|
|
|
3.8 |
% |
| Corporate income taxes (4) |
|
|
(16.8 |
%) |
|
|
|
(4.3 |
%) |
|
|
|
(16.1 |
%) |
|
|
|
(21.3 |
%) |
| Core Net Income
Margin |
|
|
22.3 |
% |
|
|
|
5.7 |
% |
|
|
|
21.3 |
% |
|
|
|
28.2 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
(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 months ended September 30,
2016, other non-core items consist of a $0.2 million 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. For the nine months ended September 30, 2016, other
non-core items also include a $0.5 million impairment loss on our
investment in CK Pearl Fund. For the three and nine months ended
September 30, 2015, other non-core items consists of a one-time
$0.1 million severance cost to former employees.
(3) Provision for income taxes is presented
as a percentage of total revenue.
(4) 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.
Condensed Consolidated Balance Sheets of Medley Management
Inc.
| |
|
|
|
|
|
| |
As of |
|
|
|
| |
September 30, |
|
As of |
| |
2016 |
|
December 31, |
| |
(unaudited) |
|
2015 |
| |
(Amounts in thousands) |
|
Assets |
|
|
|
|
|
| Cash and cash equivalents |
$ |
|
57,331 |
|
|
$ |
|
71,688 |
|
| Investments, at fair value |
|
|
24,273 |
|
|
|
|
16,360 |
|
| Management fees receivable |
|
|
12,613 |
|
|
|
|
16,172 |
|
| Performance fees receivable |
|
|
4,245 |
|
|
|
|
2,518 |
|
| Other assets |
|
|
18,185 |
|
|
|
|
13,015 |
|
| Total assets |
$ |
|
116,647 |
|
|
$ |
|
119,753 |
|
|
|
|
|
|
|
|
| Liabilities and
Equity |
|
|
|
|
|
| Loans payable |
$ |
|
78,197 |
|
|
$ |
|
100,871 |
|
| Senior unsecured debt |
|
|
23,394 |
|
|
|
|
- |
|
| Accounts payable, accrued expenses
and other liabilities |
|
|
37,403 |
|
|
|
|
34,746 |
|
| Performance fee compensation
payable |
|
|
1,066 |
|
|
|
|
1,823 |
|
| Total
liabilities |
|
|
140,060 |
|
|
|
|
137,440 |
|
|
|
|
|
|
|
|
| Redeemable
Non-controlling Interests |
|
|
24,668 |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
| Class A common stock |
|
|
58 |
|
|
|
|
60 |
|
| Class B common stock |
|
|
- |
|
|
|
|
- |
|
| Additional paid in capital (capital
deficit) |
|
|
2,170 |
|
|
|
|
631 |
|
| Accumulated other comprehensive
income (loss) |
|
|
47 |
|
|
|
|
- |
|
| Retained earnings (accumulated
deficit) |
|
|
(4,473 |
) |
|
|
|
(730 |
) |
| Total stockholders' equity
(deficit), Medley Management Inc. |
|
|
(2,198 |
) |
|
|
|
(39 |
) |
| Non-controlling
interests in consolidated subsidiaries |
|
|
(1,863 |
) |
|
|
|
(459 |
) |
| Non-controlling
interests in Medley LLC |
|
|
(44,020 |
) |
|
|
|
(17,189 |
) |
| Total equity (deficit) |
|
|
(48,081 |
) |
|
|
|
(17,687 |
) |
| Total liabilities,
redeemable non-controlling interests and equity |
$ |
|
116,647 |
|
|
$ |
|
119,753 |
|
| |
|
|
|
|
|
|
|
|
|
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