Medley Management Inc. (NYSE:MDLY) today reported its financial
results for its second quarter ended June 30, 2018 and will host an
earnings conference call and audio webcast at 11:00 a.m. (Eastern
Time) on Friday, August 10, 2018.
Highlights
- Fee earning assets under management were $3.0 billion as of
June 30, 2018
- Total assets under management were $5.0 billion as of June 30,
2018
- U.S. GAAP net loss per share attributable to Medley Management
Inc. was $0.08 for Q2 2018
- Core Net Income Per Share was $0.05 for Q2 2018
- Declared $0.20 per share dividend for Q2 2018 payable on
September 6, 2018
Results of Operations for the Three
Months Ended June 30, 2018
Total revenues were $15.2 million for the three
months ended June 30, 2018 compared to $16.4 million for the same
period in 2017. The decrease was due primarily to lower base
management fees from our permanent capital vehicles, partly offset
by an increase in other revenue and fees.
Total expenses from operations were $11.6
million for the three months ended June 30, 2018 compared to $8.5
million for the same period in 2017. The increase was due primarily
to an increase in compensation expense and professional fees.
Total other expense, net was $5.8 million for
the three months ended June 30, 2018 compared to $2.0 million for
the same period in 2017. The increase was due primarily to $4.0
million of unrealized losses relating to one of our investments,
partly offset by an increase of $0.2 million in dividend
income. The $4.0 million of unrealized losses were allocated
to non-controlling interests in consolidated subsidiaries which did
not have any impact on the net income attributed to Medley
Management Inc. and non-controlling interests in Medley LLC.
Net income attributable to Medley Management
Inc. and non-controlling interests in Medley LLC was less than $0.1
million for the three months ended June 30, 2018 compared to $4.2
million for the same period in 2017. Medley Management Inc.’s net
loss per share was $0.08 for the three months ended June 30, 2018
compared to net income per share of $0.06 for the same
period in 2017.
Pre-Tax Core Net Income was $2.4 million for the
three months ended June 30, 2018 compared to $5.2 million for the
same period in 2017. Core Net Income Per Share was $0.05 for the
three months ended June 30, 2018, compared to $0.10 for the same
period in 2017. Core EBITDA was $5.4 million for the three
months ended June 30, 2018 compared to $8.2 million for the same
period in 2017.
Results of Operations for the Six Months
Ended June 30, 2018
Total revenues were $29.5 million for the six
months ended June 30, 2018 compared to $30.4 million for the same
period in 2017. The decrease was due primarily to lower base
management fees from our permanent capital vehicles, partly offset
by an increase in other revenue and fees.
Total expenses from operations were $24.5
million for the six months ended June 30, 2018 compared to $16.1
million for the same period in 2017. The increase was due primarily
to an increase in compensation expense, professional fees and
operating expenses of our consolidated fund.
Total other expense, net was $16.8 million for
the six months ended June 30, 2018 compared to $3.4 million for the
same period in 2017. The increase was due primarily to $13.6
million of unrealized losses relating to one of our investments,
partly offset by an increase of $0.9 million in dividend income. Of
the $13.6 million of unrealized losses, $10.1 million was allocated
to non-controlling interests in consolidated subsidiaries which did
not have any impact on the net income attributed to Medley
Management Inc. and non-controlling interests in Medley LLC.
Net loss attributable to Medley Management Inc.
and non-controlling interests in Medley LLC was $5.1 million for
the six months ended June 30, 2018 compared to net income of $7.4
million for the same period in 2017. Medley Management Inc.’s net
loss per share was $0.34 for the six months ended June 30, 2018
compared to net income per share of $0.14 for the same period in
2017.
Pre-Tax Core Net Income was $4.5 million for the
six months ended June 30, 2018 compared to $10.4 million for the
same period in 2017. Core Net Income Per Share was $0.10 for the
six months ended June 30, 2018, compared to $0.19 for the same
period in 2017. Core EBITDA was $10.4 million for the six
months ended June 30, 2018 compared to $16.1 million for the same
period in 2017.
Conference Call and Webcast
Information
We will host an earnings conference call and
audio webcast at 11:00 a.m. (Eastern Time) on Friday, August 10,
2018 to discuss our second quarter financial results.
All interested parties may participate in the
conference call by dialing (877) 524-5743 approximately 10-15
minutes prior to the call. International callers should dial
(615) 247-0088. Participants should reference Medley
Management Inc. and the conference ID of 4978749 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.
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 Ended June 30,
(unaudited) |
|
For the Six Months Ended June
30(unaudited) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in thousands, except AUM, share and per share
amounts) |
Consolidated
Financial Data: |
|
|
|
|
|
|
|
Pre-Tax
Income |
$ |
(2,264 |
) |
|
$ |
5,923 |
|
|
$ |
(11,715 |
) |
|
$ |
10,986 |
|
Net
income attributable to Medley Management Inc. and non-controlling
interests in Medley LLC |
$ |
5 |
|
|
$ |
4,191 |
|
|
$ |
(5,122 |
) |
|
$ |
7,353 |
|
Net
income (loss) per Class A common stock |
$ |
(0.08 |
) |
|
$ |
0.06 |
|
|
$ |
(0.34 |
) |
|
$ |
0.14 |
|
Net
Income Margin (1) |
— |
% |
|
25.5 |
% |
|
(17.3 |
)% |
|
24.1 |
% |
Weighted
average shares - Basic and Diluted |
5,543,802 |
|
|
5,588,978 |
|
|
5,513,719 |
|
|
5,697,483 |
|
|
|
|
|
|
|
|
|
Non-GAAP
Data: |
|
|
|
|
|
|
|
Pre-Tax
Core Net Income (2) |
$ |
2,421 |
|
|
$ |
5,228 |
|
|
$ |
4,529 |
|
|
$ |
10,415 |
|
Core Net
Income (2) |
$ |
2,018 |
|
|
$ |
4,733 |
|
|
$ |
3,275 |
|
|
$ |
9,321 |
|
Core
EBITDA (3) |
$ |
5,351 |
|
|
$ |
8,226 |
|
|
$ |
10,359 |
|
|
$ |
16,146 |
|
Core Net
Income Per Share (4) |
$ |
0.05 |
|
|
$ |
0.10 |
|
|
$ |
0.10 |
|
|
$ |
0.19 |
|
Core Net
Income Margin (5) |
10.7 |
% |
|
18.1 |
% |
|
10.2 |
% |
|
19.5 |
% |
Pro-Forma
Weighted Average Shares Outstanding (6) |
31,790,112 |
|
|
31,028,903 |
|
|
31,215,945 |
|
|
30,997,006 |
|
|
|
|
|
|
|
|
|
Other Data (at
period end, in millions): |
|
|
|
|
|
|
|
AUM |
$ |
5,036 |
|
|
$ |
5,438 |
|
|
$ |
5,036 |
|
|
$ |
5,438 |
|
Fee
Earning AUM |
$ |
2,960 |
|
|
$ |
3,279 |
|
|
$ |
2,960 |
|
|
$ |
3,279 |
|
(1) |
Net Income Margin equals
Net income attributable to Medley Management Inc. and
non-controlling interests in Medley LLC divided by total
revenue. |
(2) |
Pre-Tax Core Net Income is
calculated as Core Net Income before income taxes. Core Net Income
reflects net income attributable to Medley Management Inc. and net
income attributable to non-controlling interests in Medley LLC
adjusted to exclude reimbursable expenses associated with the
launch of funds, stock-based compensation associated with
restricted stock units that were granted in connection with our
IPO, other non-core items and the income tax expense associated
with the foregoing adjustments. Please refer to the reconciliation
of Core Net Income to Net income attributable to Medley Management
Inc. and non-controlling interests in Medley LLC in Exhibit C for
additional details. |
(3) |
Core EBITDA is calculated
as Core Net Income before interest expense, income taxes,
depreciation and amortization. Please refer to the
reconciliation of Core EBITDA to Net income attributable to Medley
Management Inc. and non-controlling interests in Medley LLC in
Exhibit C for additional details. |
(4) |
Core Net Income Per Share
is calculated as Core Net Income, adjusted for the income tax
effect of assuming that all of our pre-tax earnings were subject to
federal, state and local corporate income taxes, divided by
Pro-Forma Weighted Average Shares Outstanding (as defined below).
We assumed an effective corporate tax rate of 33.0% for 2018 and
43.0% for 2017. Please refer to the calculation of Core Net Income
Per Share in Exhibit D for additional details. |
(5) |
Core Net Income Margin
equals Core Net Income Per Share divided by total revenue per
share. |
(6) |
The calculation of
Pro-Forma Weighted Average Shares Outstanding assumes the
conversion by the pre-IPO holders of up to 24,639,302 vested and
unvested LLC Units for 24,639,302 shares of Class A common stock at
the beginning of each period presented. |
|
|
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, March
31, 2018 |
$ |
1,972 |
|
|
$ |
1,068 |
|
|
$ |
3,040 |
|
|
65 |
% |
|
35 |
% |
Commitments |
(29 |
) |
|
72 |
|
|
43 |
|
|
|
|
|
Distributions |
(21 |
) |
|
(55 |
) |
|
(76 |
) |
|
|
|
|
Change in
fund value |
(26 |
) |
|
(21 |
) |
|
(47 |
) |
|
|
|
|
Ending balance, June
30, 2018 |
$ |
1,896 |
|
|
$ |
1,064 |
|
|
$ |
2,960 |
|
|
64 |
% |
|
36 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fee earning AUM decreased by $80 million,
or 3% as of June 30, 2018 compared to total fee earning AUM as of
March 31, 2018. The permanent capital vehicles’ share of fee
earning AUM decreased to 64% as of June 30, 2018 compared to 65% as
of March 31, 2018.
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, 2017 |
$ |
2,090 |
|
|
$ |
1,068 |
|
|
$ |
3,158 |
|
|
66 |
% |
|
34 |
% |
Commitments |
(90 |
) |
|
154 |
|
|
64 |
|
|
|
|
|
Distributions |
(45 |
) |
|
(88 |
) |
|
(133 |
) |
|
|
|
|
Change in
fund value |
(59 |
) |
|
(70 |
) |
|
(129 |
) |
|
|
|
|
Ending balance, June
30, 2018 |
$ |
1,896 |
|
|
$ |
1,064 |
|
|
$ |
2,960 |
|
|
64 |
% |
|
36 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fee earning AUM decreased by $198 million,
or 6% as of June 30, 2018 compared to total fee earning AUM as of
December 31, 2017. The permanent capital vehicles’ share of fee
earning AUM decreased to 64% as of June 30, 2018 compared to 66% as
of December 31, 2017.
Dividend Declaration
On August 7, 2018, the Company’s Board of
Directors declared a quarterly cash dividend of $0.20 per share of
Class A common stock for the second quarter of 2018. The dividend
will be paid on September 6, 2018 to stockholders of record as of
August 23, 2018.
About Medley
Medley is an alternative asset management firm
offering yield solutions to retail and institutional investors.
Medley’s national direct origination franchise 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 June 30, 2018.
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) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in thousands, except share and per
share data) |
Revenues |
|
|
|
|
|
|
|
Management fees (includes Part I incentive fees of $544 for the six
months ending June 30, 2017) |
$ |
11,965 |
|
|
$ |
13,201 |
|
|
$ |
24,050 |
|
|
$ |
27,096 |
|
Performance fees |
— |
|
|
546 |
|
|
— |
|
|
(1,817 |
) |
Other
revenues and fees |
3,038 |
|
|
2,668 |
|
|
5,367 |
|
|
4,988 |
|
Investment income (loss): |
|
|
|
|
|
|
|
Carried
interest |
432 |
|
|
28 |
|
|
597 |
|
|
173 |
|
Other
investment loss |
(284 |
) |
|
(9 |
) |
|
(467 |
) |
|
(10 |
) |
Total
Revenues |
15,151 |
|
|
16,434 |
|
|
29,547 |
|
|
30,430 |
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
Compensation and benefits |
7,333 |
|
|
5,705 |
|
|
15,671 |
|
|
11,499 |
|
Performance fee compensation |
(26 |
) |
|
50 |
|
|
(33 |
) |
|
(831 |
) |
General,
administrative and other expenses |
4,342 |
|
|
2,754 |
|
|
8,851 |
|
|
5,422 |
|
Total
Expenses |
11,649 |
|
|
8,509 |
|
|
24,489 |
|
|
16,090 |
|
|
|
|
|
|
|
|
|
Other Income
(Expense) |
|
|
|
|
|
|
|
Dividend
income |
960 |
|
|
733 |
|
|
2,389 |
|
|
1,468 |
|
Interest
expense |
(2,715 |
) |
|
(2,766 |
) |
|
(5,396 |
) |
|
(6,413 |
) |
Other
income (expenses), net |
(4,011 |
) |
|
31 |
|
|
(13,766 |
) |
|
1,591 |
|
Total
Other Expense, Net |
(5,766 |
) |
|
(2,002 |
) |
|
(16,773 |
) |
|
(3,354 |
) |
Income
(loss) before income taxes |
(2,264 |
) |
|
5,923 |
|
|
(11,715 |
) |
|
10,986 |
|
Provision
for income taxes |
195 |
|
|
428 |
|
|
385 |
|
|
841 |
|
Net
Income (Loss) |
(2,459 |
) |
|
5,495 |
|
|
(12,100 |
) |
|
10,145 |
|
Net
income (loss) attributable to redeemable non-controlling interests
and non-controlling interests in consolidated subsidiaries |
(2,464 |
) |
|
1,304 |
|
|
(6,978 |
) |
|
2,792 |
|
Net
income (loss) attributable to non-controlling interests in Medley
LLC |
133 |
|
|
3,617 |
|
|
(3,766 |
) |
|
6,386 |
|
Net
Income (Loss) Attributable to Medley Management Inc. |
$ |
(128 |
) |
|
$ |
574 |
|
|
$ |
(1,356 |
) |
|
$ |
967 |
|
|
|
|
|
|
|
|
|
Net Income
(Loss) Per Share of Class A Common Stock: |
|
|
|
|
|
|
|
Basic |
$ |
(0.08 |
) |
|
$ |
0.06 |
|
|
$ |
(0.34 |
) |
|
$ |
0.14 |
|
Diluted |
$ |
(0.08 |
) |
|
$ |
0.06 |
|
|
$ |
(0.34 |
) |
|
$ |
0.14 |
|
Weighted
average shares outstanding - Basic and Diluted |
5,543,802 |
|
|
5,588,978 |
|
|
5,513,719 |
|
|
5,697,483 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit B. Consolidated Statements of
Comprehensive Income
|
For the Three Months Ended June 30,
(unaudited) |
|
For the Six Months Ended June 30,
(unaudited) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
Net Income (Loss) |
$ |
(2,459 |
) |
|
$ |
5,495 |
|
|
$ |
(12,100 |
) |
|
$ |
10,145 |
|
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 Income (Loss) |
(2,459 |
) |
|
2,844 |
|
|
(12,100 |
) |
|
7,979 |
|
Comprehensive income (loss) attributable to redeemable
non-controlling interests and non-controlling interests in
consolidated subsidiaries |
(2,464 |
) |
|
952 |
|
|
(6,978 |
) |
|
2,763 |
|
Comprehensive income (loss) attributable to non-controlling
interests in Medley LLC |
133 |
|
|
1,646 |
|
|
(3,766 |
) |
|
4,545 |
|
Comprehensive Income
(Loss) Attributable to Medley Management Inc. |
$ |
(128 |
) |
|
$ |
246 |
|
|
$ |
(1,356 |
) |
|
$ |
671 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
Net income (loss)
attributable to Medley Management Inc. |
$ |
(128 |
) |
|
$ |
574 |
|
|
$ |
(1,356 |
) |
|
$ |
967 |
|
Net
income (loss) attributable to non-controlling interests in Medley
LLC |
133 |
|
|
3,617 |
|
|
(3,766 |
) |
|
6,386 |
|
Net income attributable
to Medley Management Inc. and non-controlling interests in Medley
LLC |
$ |
5 |
|
|
$ |
4,191 |
|
|
$ |
(5,122 |
) |
|
$ |
7,353 |
|
Reimbursable fund startup expenses |
442 |
|
|
226 |
|
|
1,065 |
|
|
251 |
|
IPO date
award stock-based compensation |
433 |
|
|
318 |
|
|
574 |
|
|
(343 |
) |
Other
non-core items: |
|
|
|
|
|
|
|
Unrealized losses on shares of MCC |
— |
|
|
— |
|
|
3,543 |
|
|
— |
|
Severance
expense |
338 |
|
|
65 |
|
|
2,224 |
|
|
1,164 |
|
Acceleration of debt issuance costs (1) |
— |
|
|
— |
|
|
— |
|
|
1,149 |
|
Other
(2) |
1,008 |
|
|
— |
|
|
1,860 |
|
|
— |
|
Income
tax expense on adjustments |
(208 |
) |
|
(67 |
) |
|
(869 |
) |
|
(253 |
) |
Core Net Income |
$ |
2,018 |
|
|
$ |
4,733 |
|
|
$ |
3,275 |
|
|
$ |
9,321 |
|
Interest
expense |
2,715 |
|
|
2,766 |
|
|
5,396 |
|
|
5,264 |
|
Income
taxes |
403 |
|
|
495 |
|
|
1,254 |
|
|
1,094 |
|
Depreciation and amortization |
215 |
|
|
232 |
|
|
434 |
|
|
467 |
|
Core EBITDA |
$ |
5,351 |
|
|
$ |
8,226 |
|
|
$ |
10,359 |
|
|
$ |
16,146 |
|
(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 and six
months ended June 30, 2018, other items consists of expenses
related to non-core business development activities and other
expenses. |
|
|
Exhibit D. Calculation of Core Net
Income Per Share
|
|
|
|
|
For the Three Months Ended June 30,
(unaudited) |
|
For the Six Months Ended June 30,
(unaudited) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in thousands, except share and per share
amounts) |
Numerator |
|
Core Net
Income |
$ |
2,018 |
|
|
$ |
4,733 |
|
|
$ |
3,275 |
|
|
$ |
9,321 |
|
Add:
Income taxes |
403 |
|
|
495 |
|
|
1,254 |
|
|
1,094 |
|
Pre-Tax
Core Net Income |
$ |
2,421 |
|
|
$ |
5,228 |
|
|
$ |
4,529 |
|
|
$ |
10,415 |
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
Class A
common stock |
5,543,802 |
|
|
5,588,978 |
|
|
5,513,719 |
|
|
5,697,483 |
|
Conversion of LLC Units and restricted LLC Units to Class A common
stock |
24,372,591 |
|
|
23,653,333 |
|
|
24,023,329 |
|
|
23,561,400 |
|
Restricted Stock Units |
1,873,719 |
|
|
1,786,592 |
|
|
1,678,897 |
|
|
1,738,123 |
|
Pro-Forma
Weighted Average Shares Outstanding (1) |
31,790,112 |
|
|
31,028,903 |
|
|
31,215,945 |
|
|
30,997,006 |
|
Pre-Tax Core Net Income
Per Share |
$ |
0.08 |
|
|
$ |
0.17 |
|
|
$ |
0.15 |
|
|
$ |
0.34 |
|
Less:
corporate income taxes per share (2) |
(0.03 |
) |
|
(0.07 |
) |
|
(0.05 |
) |
|
(0.15 |
) |
Core Net Income Per
Share |
$ |
0.05 |
|
|
$ |
0.10 |
|
|
$ |
0.10 |
|
|
$ |
0.19 |
|
(1) |
The calculation of
Pro-Forma Weighted Average Shares Outstanding assumes the
conversion by the pre-IPO holders of up to 24,639,302 vested and
unvested LLC Units for 24,639,302 shares of Class A common stock at
the beginning of each period 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 33.0% for 2018 and 43.0%
for 2017. The lower effective corporate tax rate was primarily the
result of the enactment of the Tax Cuts and Jobs Act which reduced
the federal corporate tax rate from 34.0% to 21.0% effective
January 1, 2018. |
|
|
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) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
Net Income Margin |
— |
% |
|
25.5 |
% |
|
(17.3 |
)% |
|
24.1 |
% |
Reimbursable fund startup expenses (1) |
2.9 |
% |
|
1.4 |
% |
|
3.6 |
% |
|
0.7 |
% |
IPO date
award stock-based compensation (1) |
2.9 |
% |
|
1.9 |
% |
|
1.9 |
% |
|
(1.1 |
)% |
Other
non-core items:(1) |
|
|
|
|
|
|
|
Unrealized losses on shares of MCC |
— |
% |
|
— |
% |
|
12.0 |
% |
|
— |
% |
Severance
expense |
2.2 |
% |
|
0.4 |
% |
|
7.5 |
% |
|
3.9 |
% |
Acceleration of debt issuance costs |
— |
% |
|
— |
% |
|
0.0 |
% |
|
3.8 |
% |
Other
|
6.7 |
% |
|
— |
% |
|
6.3 |
% |
|
— |
% |
Provision
for income taxes (1) |
1.3 |
% |
|
2.6 |
% |
|
1.3 |
% |
|
2.8 |
% |
Corporate
income taxes (2) |
(5.3 |
)% |
|
(13.7 |
)% |
|
(5.1 |
)% |
|
(14.7 |
)% |
Core Net Income
Margin |
10.7 |
% |
|
18.1 |
% |
|
10.2 |
% |
|
19.5 |
% |
(1) |
Adjustments to Net income
attributable to Medley Management Inc. and non-controlling
interests in Medley LLC to calculate Core Net Income are presented
as a percentage of total revenue. |
(2) |
Assumes that all of our
pre-tax earnings, including adjustments above, are subject to
federal, state and local income taxes. In determining corporate
income taxes, we used a combined effective corporate tax rate of
33.0% for 2018 and 43.0% for 2017 and presented the calculation as
a percentage of total revenue. |
|
|
Exhibit F. Consolidated Balance Sheets
of Medley Management Inc.
|
As of |
|
June 30,
2018(unaudited) |
|
December 31, 2017 |
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
Assets |
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
24,862 |
|
|
$ |
36,327 |
|
Investments, at fair value |
44,359 |
|
|
56,632 |
|
Management fees receivable |
10,325 |
|
|
14,714 |
|
Performance fees receivable |
— |
|
|
2,987 |
|
Other
assets |
14,635 |
|
|
17,262 |
|
Total
Assets |
$ |
94,181 |
|
|
$ |
127,922 |
|
|
|
|
|
Liabilities,
Redeemable Non-controlling Interests and Equity |
|
|
|
Liabilities |
|
|
|
Senior
unsecured debt, net |
$ |
117,239 |
|
|
$ |
116,892 |
|
Loans
payable, net |
9,559 |
|
|
9,233 |
|
Accounts
payable, accrued expenses and other liabilities |
21,461 |
|
|
25,130 |
|
Total
Liabilities |
148,259 |
|
|
151,255 |
|
|
|
|
|
Redeemable
Non-controlling Interests |
42,395 |
|
|
53,741 |
|
|
|
|
|
Equity |
|
|
|
Class A
common stock |
56 |
|
|
55 |
|
Class B
common stock |
— |
|
|
— |
|
Additional paid in capital |
5,155 |
|
|
2,820 |
|
Accumulated other comprehensive loss |
— |
|
|
(1,301 |
) |
Accumulated deficit |
(15,637 |
) |
|
(9,545 |
) |
Total
stockholders' deficit, Medley Management Inc. |
(10,426 |
) |
|
(7,971 |
) |
Non-controlling interests in consolidated subsidiaries |
(1,644 |
) |
|
(1,702 |
) |
Non-controlling interests in Medley LLC |
(84,403 |
) |
|
(67,401 |
) |
Total
Deficit |
(96,473 |
) |
|
(77,074 |
) |
Total
Liabilities, Redeemable Non-controlling Interests and Equity |
$ |
94,181 |
|
|
$ |
127,922 |
|
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