Medley Management Inc. (NYSE:MDLY) today reported its financial
results for its third quarter ended September 30, 2017.
Highlights
- Fee earning assets under management were $3.2 billion as of
September 30, 2017
- Total assets under management were $5.3 billion as of September
30, 2017
- Declared $0.20 per share dividend for Q3 2017 payable on
December 6, 2017
- U.S. GAAP net income attributable to Medley Management Inc. was
$0.03 per share for Q3 2017
- Core Net Income Per Share was $0.09 for Q3 2017
"The third quarter of 2017 was another
consistent quarter for Medley where we saw increased investment
activity across our platform. We continue to grow our investment
capabilities and our team and I am pleased to announce the filing
for our first public real estate fund, Sierra Real Estate Fund,"
said Brook Taube, CEO of Medley.
Results of Operations for the Three
Months Ended September 30, 2017
Total revenues were $16.7 million for the three
months ended September 30, 2017 compared to $18.9 million for the
same period in 2016. The decrease was due primarily to a decrease
in performance and incentive fees.
Total expenses from operations were $9.9 million
for the three months ended September 30, 2017 compared to $15.6
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") as well as a
reduction in compensation and benefits expense, partly offset by an
increase in general, administrative and other expenses.
Total other expense, net was $1.6 million for
the three months ended September 30, 2017 compared to $2.0 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 from our permanent capital vehicles,
partly offset by an increase in interest expense.
Net income attributable to Medley Management
Inc. and non-controlling interests in Medley LLC was $2.6 million
for the three months ended September 30, 2017 compared to $0.8
million for the same period in 2016. Medley Management Inc.’s net
income per share was $0.03 for the three months ended September 30,
2017 compared to $0.00 for the same period in 2016.
Pre-Tax Core Net Income was $4.7 million for the
three months ended September 30, 2017 compared to $7.4 million for
the same period in 2016. Core Net Income Per Share was $0.09 for
the three months ended September 30, 2017, compared to $0.14 for
the same period in 2016. Core EBITDA was $7.6 million for the
three months ended September 30, 2017 compared to $9.8 million for
the same period in 2016.
Results of Operations for the Nine Months
Ended September 30, 2017
Total revenues were $47.1 million for the nine
months ended September 30, 2017 compared to $57.8 million for the
same period 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 $26.0
million for the nine months ended September 30, 2017 compared to
$46.8 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 $4.9 million for
the nine months ended September 30, 2017 compared to $7.4 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 $10.0 million
for the nine months ended September 30, 2017 compared to $2.1
million for the same period in 2016. Medley Management Inc.’s net
income per share was $0.18 for the nine months ended September 30,
2017 compared to a net loss per share of $0.05 for the same period
in 2016.
Pre-Tax Core Net Income was $15.1 million for
the nine months ended September 30, 2017 compared to $21.6 million
for the same period in 2016. Core Net Income Per Share was $0.28
for the nine months ended September 30, 2017, compared to $0.40 for
the same period in 2016. Core EBITDA was $23.7 million for the
nine months ended September 30, 2017 compared to $28.6 million for
the same period 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 EndedSeptember 30,
(unaudited) |
|
For the Nine Months EndedSeptember 30,
(unaudited) |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
(Amounts in thousands, except AUM, share and per share
amounts) |
Consolidated
Financial Data: |
|
|
|
|
|
|
|
Pre-Tax
Income |
$ |
5,202 |
|
|
$ |
1,291 |
|
|
$ |
16,188 |
|
|
$ |
3,543 |
|
Net
income attributable to Medley Management Inc. and non-controlling
interests in Medley LLC |
$ |
2,633 |
|
|
$ |
776 |
|
|
$ |
9,986 |
|
|
$ |
2,146 |
|
Net
income (loss) per Class A common stock |
$ |
0.03 |
|
|
$ |
— |
|
|
$ |
0.18 |
|
|
$ |
(0.05 |
) |
Net
Income Margin (1) |
15.8 |
% |
|
4.1 |
% |
|
21.2 |
% |
|
3.7 |
% |
Weighted
average shares - Basic and Diluted |
5,342,939 |
|
|
5,778,409 |
|
|
5,578,003 |
|
|
5,802,334 |
|
|
|
|
|
|
|
|
|
Non-GAAP
Data: |
|
|
|
|
|
|
|
Pre-Tax
Core Net Income (2) |
$ |
4,651 |
|
|
$ |
7,383 |
|
|
$ |
15,065 |
|
|
$ |
21,578 |
|
Core Net
Income (2) |
$ |
3,851 |
|
|
$ |
6,552 |
|
|
$ |
13,171 |
|
|
$ |
19,080 |
|
Core
EBITDA (3) |
$ |
7,592 |
|
|
$ |
9,818 |
|
|
$ |
23,737 |
|
|
$ |
28,638 |
|
Core Net
Income Per Share (4) |
$ |
0.09 |
|
|
$ |
0.14 |
|
|
$ |
0.28 |
|
|
$ |
0.40 |
|
Core Net
Income Margin (5) |
15.9 |
% |
|
22.3 |
% |
|
18.2 |
% |
|
21.3 |
% |
Pro-Forma
Weighted Average Shares Outstanding (6) |
30,777,252 |
|
|
30,779,206 |
|
|
30,922,950 |
|
|
30,652,109 |
|
|
|
|
|
|
|
|
|
Other Data (at
period end, in millions): |
|
|
|
|
|
|
|
AUM |
$ |
5,296 |
|
|
$ |
5,011 |
|
|
$ |
5,296 |
|
|
$ |
5,011 |
|
Fee
Earning AUM |
$ |
3,241 |
|
|
$ |
3,111 |
|
|
$ |
3,241 |
|
|
$ |
3,111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 PrivateFunds and SMAs |
|
Total |
|
Permanent Capital Vehicles |
|
Long-dated PrivateFunds and SMAs |
|
(Dollars in millions) |
|
|
|
|
Ending balance, June
30, 2017 |
$ |
2,259 |
|
|
$ |
1,020 |
|
|
$ |
3,279 |
|
|
69% |
|
|
31% |
|
Commitments |
(37 |
) |
|
74 |
|
|
37 |
|
|
|
|
|
Capital
reduction |
— |
|
|
— |
|
|
— |
|
|
|
|
|
Distributions |
(23 |
) |
|
(36 |
) |
|
(59 |
) |
|
|
|
|
Change in
fund value |
(8 |
) |
|
(8 |
) |
|
(16 |
) |
|
|
|
|
Ending balance,
September 30, 2017 |
$ |
2,191 |
|
|
$ |
1,050 |
|
|
$ |
3,241 |
|
|
68% |
|
|
32% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fee earning AUM decreased by $38 million,
or 1% as of September 30, 2017 compared to total fee earning AUM as
of June 30, 2017. The permanent capital vehicles’ share of fee
earning AUM decreased to 68% as of September 30, 2017 compared to
June 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 |
60 |
|
|
231 |
|
|
291 |
|
|
|
|
|
Capital
reduction |
— |
|
|
— |
|
|
— |
|
|
|
|
|
Distributions |
(74 |
) |
|
(147 |
) |
|
(221 |
) |
|
|
|
|
Change in
fund value |
(2 |
) |
|
(17 |
) |
|
(19 |
) |
|
|
|
|
Ending balance,
September 30, 2017 |
$ |
2,191 |
|
|
$ |
1,050 |
|
|
$ |
3,241 |
|
|
68% |
|
|
32% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fee earning AUM increased by $51 million,
or 2% as of September 30, 2017 compared to total fee earning AUM as
of December 31, 2016. The permanent capital vehicles’ share of fee
earning AUM decreased to 68% as of September 30, 2017 compared to
December 31, 2016.
Dividend Declaration
On November 8, 2017, the Company’s Board of
Directors declared a quarterly dividend of $0.20 per share of Class
A common stock for the third quarter of 2017. The dividend will be
paid on December 6, 2017 to stockholders of record as of November
24, 2017.
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 14,
2017 to discuss our third 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 97423481 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 September 30, 2017, Medley has 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 400 companies
across 35 industries in North America¹.
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.
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 September 30, 2017.
Exhibit A. Consolidated Statements of
Operations of Medley Management Inc.
|
For the Three Months EndedSeptember 30,
(unaudited) |
|
For the Nine Months EndedSeptember 30,
(unaudited) |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
(Amounts in thousands, except share and per share
data) |
Revenues |
|
|
|
|
|
|
|
Management fees (includes Part I incentive fees of $1,393, $2,372,
$1,937 and $11,947, respectively) |
$ |
14,838 |
|
|
$ |
15,262 |
|
|
$ |
41,934 |
|
|
$ |
50,220 |
|
Performance fees |
(202 |
) |
|
1,446 |
|
|
(1,846 |
) |
|
1,706 |
|
Other
revenues and fees |
2,016 |
|
|
2,172 |
|
|
7,004 |
|
|
5,851 |
|
Total
Revenues |
16,652 |
|
|
18,880 |
|
|
47,092 |
|
|
57,777 |
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
Compensation and benefits |
6,382 |
|
|
6,964 |
|
|
17,881 |
|
|
21,396 |
|
Performance fee compensation |
(14 |
) |
|
(212 |
) |
|
(845 |
) |
|
(238 |
) |
General,
administrative and other expenses |
3,510 |
|
|
8,801 |
|
|
8,932 |
|
|
25,679 |
|
Total
Expenses |
9,878 |
|
|
15,553 |
|
|
25,968 |
|
|
46,837 |
|
|
|
|
|
|
|
|
|
Other Income
(Expense) |
|
|
|
|
|
|
|
Dividend
income |
1,428 |
|
|
312 |
|
|
2,896 |
|
|
755 |
|
Interest
expense |
(2,718 |
) |
|
(2,403 |
) |
|
(9,131 |
) |
|
(6,593 |
) |
Other
income (expenses), net |
(282 |
) |
|
55 |
|
|
1,299 |
|
|
(1,559 |
) |
Total
Other Expense, Net |
(1,572 |
) |
|
(2,036 |
) |
|
(4,936 |
) |
|
(7,397 |
) |
Income
before income taxes |
5,202 |
|
|
1,291 |
|
|
16,188 |
|
|
3,543 |
|
Provision
for income taxes |
652 |
|
|
77 |
|
|
1,493 |
|
|
291 |
|
Net
Income |
4,550 |
|
|
1,214 |
|
|
14,695 |
|
|
3,252 |
|
Net
income attributable to redeemable non-controlling interests and
non-controlling interests in consolidated subsidiaries |
1,917 |
|
|
438 |
|
|
4,709 |
|
|
1,106 |
|
Net
income attributable to non-controlling interests in Medley LLC |
2,172 |
|
|
556 |
|
|
8,557 |
|
|
1,774 |
|
Net
Income Attributable to Medley Management Inc. |
$ |
461 |
|
|
$ |
220 |
|
|
$ |
1,429 |
|
|
$ |
372 |
|
|
|
|
|
|
|
|
|
Net Income
(Loss) Per Share of Class A Common Stock: |
|
|
|
|
|
|
|
Basic |
$ |
0.03 |
|
|
$ |
— |
|
|
$ |
0.18 |
|
|
$ |
(0.05 |
) |
Diluted |
$ |
0.03 |
|
|
$ |
— |
|
|
$ |
0.18 |
|
|
$ |
(0.05 |
) |
Weighted
average shares outstanding - Basic and Diluted |
5,342,939 |
|
|
5,778,409 |
|
|
5,578,003 |
|
|
5,802,334 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit B. Consolidated Statements of Comprehensive
Income
|
For the Three Months EndedSeptember 30,
(unaudited) |
|
For the Nine Months EndedSeptember 30,
(unaudited) |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
(Amounts in thousands) |
Net Income |
$ |
4,550 |
|
|
$ |
1,214 |
|
|
$ |
14,695 |
|
|
$ |
3,252 |
|
Other Comprehensive
Income: |
|
|
|
|
|
|
|
Change in
fair value of available-for-sale securities (net of taxes of $0.3
million and $0.4 million for Medley Management Inc. for the three
and nine months ended September, 2017, respectively, and $0.1
million and $0.2 million for Non-controlling interests in Medley
LLC for the three and nine months ended September 30, 2016,
respectively) |
(2,915 |
) |
|
268 |
|
|
(5,081 |
) |
|
268 |
|
Total
Comprehensive Income |
1,635 |
|
|
1,482 |
|
|
9,614 |
|
|
3,520 |
|
Comprehensive income attributable to redeemable non-controlling
interests and non-controlling interests in consolidated
subsidiaries |
1,917 |
|
|
469 |
|
|
4,680 |
|
|
1,137 |
|
Comprehensive income (loss) attributable to non-controlling
interests in Medley LLC |
(381 |
) |
|
746 |
|
|
4,164 |
|
|
1,964 |
|
Comprehensive Income
Attributable to Medley Management Inc. |
$ |
99 |
|
|
$ |
267 |
|
|
$ |
770 |
|
|
$ |
419 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 EndedSeptember 30,
(unaudited) |
|
For the Nine Months EndedSeptember 30,
(unaudited) |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
(Amounts in thousands) |
Net income attributable
to Medley Management Inc. |
$ |
461 |
|
|
$ |
220 |
|
|
$ |
1,429 |
|
|
$ |
372 |
|
Net
income attributable to non-controlling interests in Medley LLC |
2,172 |
|
|
556 |
|
|
8,557 |
|
|
1,774 |
|
Net income attributable
to Medley Management Inc. and non-controlling interests in Medley
LLC |
$ |
2,633 |
|
|
$ |
776 |
|
|
$ |
9,986 |
|
|
$ |
2,146 |
|
Reimbursable fund startup expenses |
596 |
|
|
5,647 |
|
|
847 |
|
|
16,391 |
|
IPO date
award stock-based compensation |
532 |
|
|
672 |
|
|
189 |
|
|
2,018 |
|
Other
non-core items (1) |
238 |
|
|
211 |
|
|
2,550 |
|
|
732 |
|
Income
tax expense on adjustments |
(148 |
) |
|
(754 |
) |
|
(401 |
) |
|
(2,207 |
) |
Core Net Income |
$ |
3,851 |
|
|
$ |
6,552 |
|
|
$ |
13,171 |
|
|
$ |
19,080 |
|
Interest
expense |
2,718 |
|
|
2,192 |
|
|
7,982 |
|
|
6,382 |
|
Income
taxes |
800 |
|
|
831 |
|
|
1,894 |
|
|
2,498 |
|
Depreciation and amortization |
223 |
|
|
243 |
|
|
690 |
|
|
678 |
|
Core EBITDA |
$ |
7,592 |
|
|
$ |
9,818 |
|
|
$ |
23,737 |
|
|
$ |
28,638 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
For the
three months ended September 30, 2017, other non-core items consist
of severance costs to former employees as well as other
nonrecurring items. For the nine months ended September 30, 2017,
other non-core items also consists 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
nine months ended September 30, 2016, other non-core items consists
of a $0.2 million acceleration of debt issuance costs relating to
prepayments made on our Term Loan Facility as a result of
refinancing of our indebtedness from the issuance of Senior
Unsecured Debt. For the nine months ended September 30, 2016, other
non-core items also includes 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 EndedSeptember 30,
(unaudited) |
|
For the Nine Months EndedSeptember 30,
(unaudited) |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
(Amounts in thousands, except share and per share
amounts) |
Numerator |
|
|
|
|
|
|
|
Core Net
Income |
$ |
3,851 |
|
|
$ |
6,552 |
|
|
$ |
13,171 |
|
|
$ |
19,080 |
|
Add:
Income taxes |
800 |
|
|
831 |
|
|
1,894 |
|
|
2,498 |
|
Pre-Tax
Core Net Income |
$ |
4,651 |
|
|
$ |
7,383 |
|
|
$ |
15,065 |
|
|
$ |
21,578 |
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
Class A
common stock |
5,342,939 |
|
|
5,778,409 |
|
|
5,578,003 |
|
|
5,802,334 |
|
Conversion of LLC Units and restricted LLC Units to Class A common
stock |
23,653,333 |
|
|
23,333,333 |
|
|
23,592,381 |
|
|
23,333,333 |
|
Restricted Stock Units |
1,780,980 |
|
|
1,667,464 |
|
|
1,752,566 |
|
|
1,516,442 |
|
Pro-Forma
Weighted Average Shares Outstanding (1) |
30,777,252 |
|
|
30,779,206 |
|
|
30,922,950 |
|
|
30,652,109 |
|
Pre-Tax Core Net Income
Per Share |
$ |
0.15 |
|
|
$ |
0.24 |
|
|
$ |
0.49 |
|
|
$ |
0.70 |
|
Less:
corporate income taxes per share (2) |
(0.06 |
) |
|
(0.10 |
) |
|
(0.21 |
) |
|
(0.30 |
) |
Core Net Income Per
Share |
$ |
0.09 |
|
|
$ |
0.14 |
|
|
$ |
0.28 |
|
|
$ |
0.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 EndedSeptember 30,
(unaudited) |
|
For the Nine Months EndedSeptember 30,
(unaudited) |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
Net Income Margin |
15.8% |
|
|
4.1% |
|
|
21.2% |
|
|
3.7% |
|
Reimbursable fund startup expenses (1) |
3.6% |
|
|
29.9% |
|
|
1.8% |
|
|
28.4% |
|
IPO date
award stock-based compensation (1) |
3.2% |
|
|
3.6% |
|
|
0.4% |
|
|
3.5% |
|
Other
non-core items (1)(2) |
1.4% |
|
|
1.1% |
|
|
5.4% |
|
|
1.3% |
|
Provision
for income taxes (1) |
3.9% |
|
|
0.4% |
|
|
3.2% |
|
|
0.5% |
|
Corporate
income taxes (3) |
(12.0)% |
|
|
(16.8)% |
|
|
(13.8)% |
|
|
(16.1)% |
|
Core Net Income
Margin |
15.9% |
|
|
22.3% |
|
|
18.2% |
|
|
21.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2017, other non-core items consist
of severance costs to former employees as well as other
nonrecurring items. For the nine months ended September 30, 2017,
other non-core items also consists 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
nine months ended September 30, 2016, other non-core items consists
of a $0.2 million acceleration of debt issuance costs relating to
prepayments made on our Term Loan Facility as a result of
refinancing of our indebtedness from the issuance of Senior
Unsecured Debt. For the nine months ended September 30, 2016, other
non-core items also includes 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 ofSeptember 30,
2017(unaudited) |
|
As ofDecember 31,
2016 |
|
(Amounts in thousands) |
Assets |
|
|
|
Cash and
cash equivalents |
$ |
40,135 |
|
|
$ |
49,666 |
|
Cash and
cash equivalents of consolidated fund |
346 |
|
|
— |
|
Restricted cash equivalents |
— |
|
|
4,897 |
|
Investments, at fair value |
62,866 |
|
|
31,904 |
|
Management fees receivable |
13,415 |
|
|
12,630 |
|
Performance fees receivable |
3,119 |
|
|
4,961 |
|
Other
assets |
15,605 |
|
|
18,311 |
|
Total
assets |
$ |
135,486 |
|
|
$ |
122,369 |
|
|
|
|
|
Liabilities,
Redeemable Non-controlling Interests and Equity |
|
|
|
Liabilities |
|
|
|
Senior
unsecured debt |
$ |
116,698 |
|
|
$ |
49,793 |
|
Loans
payable |
9,066 |
|
|
52,178 |
|
Accounts
payable, accrued expenses and other liabilities |
21,286 |
|
|
37,255 |
|
Total
Liabilities |
147,050 |
|
|
139,226 |
|
|
|
|
|
Redeemable
Non-controlling Interests |
53,936 |
|
|
30,805 |
|
|
|
|
|
Equity |
|
|
|
Class A
common stock |
55 |
|
|
58 |
|
Class B
common stock |
— |
|
|
— |
|
Additional paid in capital |
2,107 |
|
|
3,310 |
|
Accumulated other comprehensive income (loss) |
(625 |
) |
|
33 |
|
Accumulated deficit |
(7,847 |
) |
|
(5,254 |
) |
Total
stockholders' deficit, Medley Management Inc. |
(6,310 |
) |
|
(1,853 |
) |
Non-controlling interests in consolidated subsidiaries |
(1,708 |
) |
|
(1,717 |
) |
Non-controlling interests in Medley LLC |
(57,482 |
) |
|
(44,092 |
) |
Total
deficit |
(65,500 |
) |
|
(47,662 |
) |
Total
Liabilities, Redeemable Non-controlling Interests and Equity |
$ |
135,486 |
|
|
$ |
122,369 |
|
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