Medley Management Inc. (NYSE:MDLY) today reported its financial
results for its fourth quarter and year ended December 31, 2017.
Highlights
- Fee earning assets under management were $3.2 billion as of
December 31, 2017
- Total assets under management were $5.2 billion as of December
31, 2017
- U.S. GAAP net income (loss) per share attributable to Medley
Management Inc. was $(0.11) for Q4 2017 and $0.07 for the year
ended December 31, 2017
- Core Net Income Per Share was $0.05 for Q4 2017 and $0.33 for
the year ended December 31, 2017
Results of Operations for the Three
Months Ended December 31, 2017
Total revenues were $18.5 million for the three
months ended December 31, 2017 compared to $18.3 million for the
same period in 2016.
Total expenses from operations were $13.6
million for the three months ended December 31, 2017 compared to
$9.2 million for the same period in 2016. The increase was due
primarily to an increase in compensation and benefits, professional
fees and expenses of our consolidated fund.
Total other expense, net was $1.8 million for
the three months ended December 31, 2017 compared to $1.6 million
for the same period in 2016. The increase was due primarily to a
decrease in equity income from our investments due to
unrealized losses, partly offset by an increase in dividend
income.
Net income attributable to Medley Management
Inc. and non-controlling interests in Medley LLC was $0.6 million
for the three months ended December 31, 2017 compared to $5.3
million for the same period in 2016. Medley Management Inc.’s net
loss per share was $0.11 for the three months ended December 31,
2017 compared to net income per share of $0.07 for the
same period in 2016.
Pre-Tax Core Net Income was $2.5 million for the
three months ended December 31, 2017 compared to $7.4 million for
the same period in 2016. Core Net Income Per Share was $0.05 for
the three months ended December 31, 2017, compared to $0.14 for the
same period in 2016. Core EBITDA was $5.5 million for the
three months ended December 31, 2017 compared to $9.8 million for
the same period in 2016.
Results of Operations for the Year Ended
December 31, 2017
Total revenues were $65.6 million for the year
ended December 31, 2017 compared to $76.0 million in 2016. The
decrease was due primarily to a decrease in performance and
incentive fees, partly offset by an increase in other revenue and
fees.
Total expenses from operations were $39.6
million for the year ended December 31, 2017 compared to $56.0
million in 2016. The decrease was due primarily to a reduction in
expenses associated with our expense support agreement with SIC and
a reduction in compensation and benefits expense, partly offset by
an increase in general and administrative expenses.
Total other expense, net was $6.7 million for
the year ended December 31, 2017 compared to $9.0 million 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 $10.6 million
for the year ended December 31, 2017 compared to $7.4 million in
2016. Medley Management Inc.’s net income per share was $0.07 for
the year ended December 31, 2017 compared to net income per share
of $0.02 in 2016.
Pre-Tax Core Net Income was $17.6 million for
the year ended December 31, 2017 compared to $29.0 million in 2016.
Core Net Income Per Share was $0.33 for the year ended December 31,
2017, compared to $0.54 in 2016. Core EBITDA was $29.2 million
for the year ended December 31, 2017 compared to $38.5 million in
2016.
Investor Contact:
Sam AndersonHead of Capital Markets & Risk
ManagementMedley Management Inc.212-759-0777
Media Contact:
Erin ClarkTeneo Strategy646-214-8355
Key Performance Indicators:
| |
For the Three Months EndedDecember
31,(unaudited) |
|
For the Years EndedDecember 31, |
| |
2017 |
|
2016 |
|
2017 |
|
2016 |
| |
(Amounts in thousands, except AUM, share and per share
amounts) |
| Consolidated
Financial Data: |
|
|
|
|
|
|
|
| Pre-Tax
Income |
$ |
3,077 |
|
|
$ |
7,472 |
|
|
$ |
19,265 |
|
|
$ |
11,015 |
|
| Net
income attributable to Medley Management Inc. and non-controlling
interests in Medley LLC |
$ |
605 |
|
|
$ |
5,257 |
|
|
$ |
10,591 |
|
|
$ |
7,403 |
|
| Net
income (loss) per Class A common stock |
$ |
(0.11 |
) |
|
$ |
0.07 |
|
|
$ |
0.07 |
|
|
$ |
0.02 |
|
| Net
Income Margin (1) |
3.3 |
% |
|
28.8 |
% |
|
16.2 |
% |
|
9.7 |
% |
| Weighted
average shares - Basic and Diluted |
5,478,910 |
|
|
5,809,130 |
|
|
5,553,026 |
|
|
5,804,042 |
|
| |
|
|
|
|
|
|
|
| Non-GAAP
Data: |
|
|
|
|
|
|
|
| Pre-Tax
Core Net Income (2) |
$ |
2,543 |
|
|
$ |
7,376 |
|
|
$ |
17,609 |
|
|
$ |
28,954 |
|
| Core Net
Income (2) |
$ |
1,918 |
|
|
$ |
6,451 |
|
|
$ |
15,090 |
|
|
$ |
25,531 |
|
| Core
EBITDA (3) |
$ |
5,488 |
|
|
$ |
9,843 |
|
|
$ |
29,226 |
|
|
$ |
38,481 |
|
| Core Net
Income Per Share (4) |
$ |
0.05 |
|
|
$ |
0.14 |
|
|
$ |
0.33 |
|
|
$ |
0.54 |
|
| Core Net
Income Margin (5) |
7.9 |
% |
|
23.0 |
% |
|
15.5 |
% |
|
21.7 |
% |
| Pro-Forma
Weighted Average Shares Outstanding (6) |
30,640,996 |
|
|
30,800,512 |
|
|
30,851,882 |
|
|
30,689,412 |
|
| |
|
|
|
|
|
|
|
| Other Data (at
period end, in millions): |
|
|
|
|
|
|
|
| AUM |
$ |
5,198 |
|
|
$ |
5,335 |
|
|
$ |
5,198 |
|
|
$ |
5,335 |
|
| Fee
Earning AUM |
$ |
3,158 |
|
|
$ |
3,190 |
|
|
$ |
3,158 |
|
|
$ |
3,190 |
|
(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 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, the conversion of 320,000 restricted LLC units
for an equal number of shares of Class A common stock.
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 PrivateFunds and SMAs |
|
Total |
|
Permanent Capital Vehicles |
|
Long-dated PrivateFunds and SMAs |
| |
|
(Dollars in millions) |
|
|
|
|
|
| Ending balance,
September 30, 2017 |
$ |
2,191 |
|
|
$ |
1,050 |
|
|
$ |
3,241 |
|
|
68% |
|
32% |
|
Commitments |
(39 |
) |
|
78 |
|
|
39 |
|
|
|
|
|
| Capital
reduction |
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
Distributions |
(24 |
) |
|
(30 |
) |
|
(54 |
) |
|
|
|
|
| Change in
fund value |
(38 |
) |
|
(30 |
) |
|
(68 |
) |
|
|
|
|
| Ending balance,
December 31, 2017 |
$ |
2,090 |
|
|
$ |
1,068 |
|
|
$ |
3,158 |
|
|
66% |
|
34% |
Total fee earning AUM decreased by $83 million,
or 3% as of December 31, 2017 compared to total fee earning AUM as
of September 30, 2017. The permanent capital vehicles’ share of fee
earning AUM decreased to 66% as of December 31, 2017 compared to
September 30, 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 PrivateFunds and SMAs |
|
Total |
|
Permanent Capital Vehicles |
|
Long-dated PrivateFunds and SMAs |
| |
|
(Dollars in millions) |
|
|
|
|
|
| Ending balance,
December 31, 2016 |
$ |
2,207 |
|
|
$ |
983 |
|
|
$ |
3,190 |
|
|
69% |
|
31% |
|
Commitments |
22 |
|
|
308 |
|
|
330 |
|
|
|
|
|
| Capital
reduction |
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
Distributions |
(100 |
) |
|
(178 |
) |
|
(278 |
) |
|
|
|
|
| Change in
fund value |
(39 |
) |
|
(45 |
) |
|
(84 |
) |
|
|
|
|
| Ending balance,
December 31, 2017 |
$ |
2,090 |
|
|
$ |
1,068 |
|
|
$ |
3,158 |
|
|
66% |
|
34% |
Total fee earning AUM decreased by $32 million,
or 1% as of December 31, 2017 compared to total fee earning AUM as
of December 31, 2016. The permanent capital vehicles’ share of fee
earning AUM decreased to 66% as of December 31, 2017 compared to
December 31, 2016.
Conference Call and Webcast
Information
We will host an earnings conference call and
audio webcast at 10:00 a.m. (Eastern Time) on Thursday, March 29,
2018 to discuss our fourth quarter and year end 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 8778928 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. 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 December 31, 2017.
Exhibit A. Consolidated Statements of
Operations of Medley Management Inc.
| |
For the Three Months EndedDecember
31,(unaudited) |
|
For the Years EndedDecember 31, |
| |
2017 |
|
2016 |
|
2017 |
|
2016 |
| |
(Amounts in thousands, except share and per
share data) |
|
Revenues |
|
|
|
|
|
|
|
|
Management fees (includes Part I incentive fees of $2,936, $2,262,
$4,874 and $14,209, respectively) |
$ |
16,170 |
|
|
$ |
15,276 |
|
|
$ |
58,104 |
|
|
$ |
65,496 |
|
|
Performance fees |
102 |
|
|
715 |
|
|
(1,744 |
) |
|
2,421 |
|
| Other
revenues and fees |
2,197 |
|
|
2,260 |
|
|
9,201 |
|
|
8,111 |
|
| Total
Revenues |
18,469 |
|
|
18,251 |
|
|
65,561 |
|
|
76,028 |
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
Compensation and benefits |
9,551 |
|
|
6,404 |
|
|
27,432 |
|
|
27,800 |
|
|
Performance fee compensation |
(29 |
) |
|
(81 |
) |
|
(874 |
) |
|
(319 |
) |
| General,
administrative and other expenses |
4,113 |
|
|
2,861 |
|
|
13,045 |
|
|
28,540 |
|
| Total
Expenses |
13,635 |
|
|
9,184 |
|
|
39,603 |
|
|
56,021 |
|
|
|
|
|
|
|
|
|
|
| Other Income
(Expense) |
|
|
|
|
|
|
|
| Dividend
income |
1,431 |
|
|
549 |
|
|
4,327 |
|
|
1,304 |
|
| Interest
expense |
(2,724 |
) |
|
(2,633 |
) |
|
(11,855 |
) |
|
(9,226 |
) |
| Other
income (expenses), net |
(464 |
) |
|
489 |
|
|
835 |
|
|
(1,070 |
) |
| Total
Other Expense, Net |
(1,757 |
) |
|
(1,595 |
) |
|
(6,693 |
) |
|
(8,992 |
) |
| Income
before income taxes |
3,077 |
|
|
7,472 |
|
|
19,265 |
|
|
11,015 |
|
| Provision
for income taxes |
463 |
|
|
772 |
|
|
1,956 |
|
|
1,063 |
|
| Net
Income |
2,614 |
|
|
6,700 |
|
|
17,309 |
|
|
9,952 |
|
| Net
income attributable to redeemable non-controllinginterests and
non-controlling interests in consolidatedsubsidiaries |
2,009 |
|
|
1,443 |
|
|
6,718 |
|
|
2,549 |
|
| Net
income attributable to non-controlling interests inMedley LLC |
1,107 |
|
|
4,632 |
|
|
9,664 |
|
|
6,406 |
|
| Net
Income (Loss) Attributable to MedleyManagement Inc. |
$ |
(502 |
) |
|
$ |
625 |
|
|
$ |
927 |
|
|
$ |
997 |
|
| |
|
|
|
|
|
|
|
| Net Income
(Loss) Per Share of Class A Common Stock: |
|
|
|
|
|
|
|
|
Basic |
$ |
(0.11 |
) |
|
$ |
0.07 |
|
|
$ |
0.07 |
|
|
$ |
0.02 |
|
|
Diluted |
$ |
(0.11 |
) |
|
$ |
0.07 |
|
|
$ |
0.07 |
|
|
$ |
0.02 |
|
| Weighted
average shares outstanding - Basic andDiluted |
5,478,910 |
|
|
5,809,130 |
|
|
5,553,026 |
|
|
5,804,042 |
|
| |
| |
Exhibit B. Consolidated Statements of Comprehensive
Income
| |
For the Three Months EndedDecember 31,
(unaudited) |
|
For the Years EndedDecember 31, |
| |
2017 |
|
2016 |
|
2017 |
|
2016 |
| |
(Amounts in thousands) |
| Net Income |
$ |
2,614 |
|
|
$ |
6,700 |
|
|
$ |
17,309 |
|
|
$ |
9,952 |
|
| Other Comprehensive
Income: |
|
|
|
|
|
|
|
| Change in
fair value of available-for-sale securities (netof income tax
benefit of $0.4 million and $0.9 millionfor Medley Management Inc.
for the three months andyear ended December 31, 2017, respectively,
and $0.2million and $0.3 million for Non-controlling interests
in Medley LLC for the three months and year endedDecember 31,
2017, respectively) |
(5,225 |
) |
|
(74 |
) |
|
(10,305 |
) |
|
194 |
|
| Total
Comprehensive Income (Loss) |
(2,611 |
) |
|
6,626 |
|
|
7,004 |
|
|
10,146 |
|
|
Comprehensive income attributable to redeemable non-controlling
interests and non-controlling interests inconsolidated
subsidiaries |
2,009 |
|
|
1,440 |
|
|
6,690 |
|
|
2,577 |
|
|
Comprehensive income (loss) attributable to non-controlling
interests in Medley LLC |
(3,441 |
) |
|
4,575 |
|
|
721 |
|
|
6,539 |
|
| Comprehensive (Loss)
Income Attributable to Medley Management Inc. |
$ |
(1,179 |
) |
|
$ |
611 |
|
|
$ |
(407 |
) |
|
$ |
1,030 |
|
|
|
|
|
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 EndedDecember 31,
(unaudited) |
|
For the Years EndedDecember 31, |
| |
2017 |
|
2016 |
|
2017 |
|
2016 |
| |
(Amounts in thousands) |
| Net income attributable
to Medley Management Inc. |
$ |
(502 |
) |
|
$ |
625 |
|
|
$ |
927 |
|
|
$ |
997 |
|
| Net
income attributable to non-controlling interests inMedley LLC |
1,107 |
|
|
4,632 |
|
|
9,664 |
|
|
6,406 |
|
| Net income attributable
to Medley Management Inc. andnon-controlling interests in Medley
LLC |
$ |
605 |
|
|
$ |
5,257 |
|
|
$ |
10,591 |
|
|
$ |
7,403 |
|
|
Reimbursable fund startup expenses |
664 |
|
|
(62 |
) |
|
1,510 |
|
|
16,329 |
|
| IPO date
award stock-based compensation |
272 |
|
|
793 |
|
|
461 |
|
|
2,811 |
|
| Other
non-core items: |
|
|
|
|
|
|
|
| Severance
expense |
— |
|
|
215 |
|
|
1,184 |
|
|
218 |
|
|
Acceleration of debt issuance costs (1) |
— |
|
|
401 |
|
|
1,150 |
|
|
612 |
|
| Other
(2) |
539 |
|
|
— |
|
|
757 |
|
|
518 |
|
| Income
tax expense on adjustments |
(162 |
) |
|
(153 |
) |
|
(563 |
) |
|
(2,360 |
) |
| Core Net Income |
$ |
1,918 |
|
|
$ |
6,451 |
|
|
$ |
15,090 |
|
|
$ |
25,531 |
|
| Interest
expense |
2,723 |
|
|
2,232 |
|
|
10,705 |
|
|
8,614 |
|
| Income
taxes |
625 |
|
|
925 |
|
|
2,519 |
|
|
3,423 |
|
|
Depreciation and amortization |
222 |
|
|
235 |
|
|
912 |
|
|
913 |
|
| Core EBITDA |
$ |
5,488 |
|
|
$ |
9,843 |
|
|
$ |
29,226 |
|
|
$ |
38,481 |
|
(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 December 31, 2017, other
non-core items consist of $0.5 million of expenses related to
non-core business development activities. For the year ended
December 31, 2017, other items consist of an additional $0.2
million of expenses related to non-core business development
activities and other expenses. For the year ended December 31,
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 EndedDecember
31,(unaudited) |
|
For the Years EndedDecember 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
(Amounts in thousands, except share and per share
amounts) |
|
Numerator |
|
|
|
|
|
|
|
| Core Net
Income |
$ |
1,918 |
|
|
$ |
6,451 |
|
|
$ |
15,090 |
|
|
$ |
25,531 |
|
| Add:
Income taxes |
625 |
|
|
925 |
|
|
2,519 |
|
|
3,423 |
|
| Pre-Tax
Core Net Income |
$ |
2,543 |
|
|
$ |
7,376 |
|
|
$ |
17,609 |
|
|
$ |
28,954 |
|
|
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
| Class A
common stock |
5,478,910 |
|
|
5,809,130 |
|
|
5,553,026 |
|
|
5,804,042 |
|
|
Conversion of LLC Units and restricted LLC Units to
Class A common stock |
23,653,333 |
|
|
23,333,333 |
|
|
23,607,744 |
|
|
23,333,333 |
|
|
Restricted Stock Units |
1,508,753 |
|
|
1,658,049 |
|
|
1,691,112 |
|
|
1,552,037 |
|
| Pro-Forma
Weighted Average Shares Outstanding (1) |
30,640,996 |
|
|
30,800,512 |
|
|
30,851,882 |
|
|
30,689,412 |
|
| Pre-Tax Core Net Income
Per Share |
$ |
0.08 |
|
|
$ |
0.24 |
|
|
$ |
0.57 |
|
|
$ |
0.94 |
|
| Less:
corporate income taxes per share (2) |
(0.03 |
) |
|
(0.10 |
) |
|
(0.25 |
) |
|
(0.40 |
) |
| Core Net Income Per
Share |
$ |
0.05 |
|
|
$ |
0.14 |
|
|
$ |
0.33 |
|
|
$ |
0.54 |
|
(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 EndedDecember 31,
(unaudited) |
|
For the Years EndedDecember 31, |
| |
2017 |
|
2016 |
|
2017 |
|
2016 |
| |
|
|
|
|
|
|
|
| Net Income Margin |
3.3% |
|
28.8% |
|
16.2% |
|
9.7% |
|
Reimbursable fund startup expenses (1) |
3.6% |
|
(0.3)% |
|
2.3% |
|
21.5% |
| IPO date
award stock-based compensation (1) |
1.5% |
|
4.3% |
|
0.7% |
|
3.7% |
| Other
non-core items:(1) |
|
|
|
|
|
|
|
| Severance
expense |
—% |
|
1.2% |
|
1.8% |
|
0.3% |
|
Acceleration of debt issuance costs |
—% |
|
2.2% |
|
1.8% |
|
0.8% |
| Other
|
2.9% |
|
—% |
|
1.2% |
|
0.7% |
| Provision
for income taxes (1) |
2.5% |
|
4.2% |
|
3.0% |
|
1.4% |
| Corporate
income taxes (2) |
(5.9)% |
|
(17.4)% |
|
(11.5)% |
|
(16.4)% |
| Core Net Income
Margin |
7.9% |
|
23.0% |
|
15.5% |
|
21.7% |
(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 43.0% and presented the
calculation as a percentage of total revenue.
Exhibit F. Consolidated Balance Sheets of Medley
Management Inc.
| |
As of December 31, |
| |
2017 |
|
2016 |
| |
(Amounts in thousands) |
|
Assets |
|
|
|
| Cash and
cash equivalents |
$ |
36,163 |
|
|
$ |
49,666 |
|
| Cash and
cash equivalents of consolidated fund |
164 |
|
|
— |
|
|
Restricted cash equivalents |
— |
|
|
4,897 |
|
|
Investments, at fair value |
56,399 |
|
|
31,904 |
|
|
Management fees receivable |
14,714 |
|
|
12,630 |
|
|
Performance fees receivable |
3,220 |
|
|
4,961 |
|
| Other
assets |
17,262 |
|
|
18,311 |
|
| Total
assets |
$ |
127,922 |
|
|
$ |
122,369 |
|
|
|
|
|
|
| Liabilities,
Redeemable Non-controlling Interests and Equity |
|
|
|
| Liabilities |
|
|
|
| Senior
unsecured debt |
$ |
116,892 |
|
|
$ |
49,793 |
|
| Loans
payable |
9,233 |
|
|
52,178 |
|
| Accounts
payable, accrued expenses and other liabilities |
25,130 |
|
|
37,255 |
|
| Total
Liabilities |
151,255 |
|
|
139,226 |
|
| |
|
|
|
| Redeemable
Non-controlling Interests |
53,741 |
|
|
30,805 |
|
| |
|
|
|
| Equity |
|
|
|
| Class A
common stock |
55 |
|
|
58 |
|
| Class B
common stock |
— |
|
|
— |
|
|
Additional paid in capital |
2,820 |
|
|
3,310 |
|
|
Accumulated other comprehensive income (loss) |
(1,301 |
) |
|
33 |
|
|
Accumulated deficit |
(9,545 |
) |
|
(5,254 |
) |
| Total
stockholders' deficit, Medley Management Inc. |
(7,971 |
) |
|
(1,853 |
) |
|
Non-controlling interests in consolidated subsidiaries |
(1,702 |
) |
|
(1,717 |
) |
|
Non-controlling interests in Medley LLC |
(67,401 |
) |
|
(44,092 |
) |
| Total
deficit |
(77,074 |
) |
|
(47,662 |
) |
| Total
Liabilities, Redeemable Non-controlling Interests and Equity |
$ |
127,922 |
|
|
$ |
122,369 |
|
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