NEW YORK, Nov. 14, 2018 /PRNewswire/ -- Medley
Management Inc. (NYSE: MDLY) today reported its financial results
for its third quarter ended September 30,
2018 and will host an earnings conference call and audio
webcast this morning at 11:00 a.m. (Eastern
Time).
Highlights
- Fee earning assets under management were $2.9 billion as of September 30, 2018
- Total assets under management were $4.8
billion as of September 30,
2018
- U.S. GAAP net loss per share attributable to Medley Management
Inc. was $0.15 for Q3 2018
- Core Net Income Per Share was $0.06 for Q3 2018
- Declared $0.20 per share dividend
for Q3 2018 payable on December 12,
2018
Results of Operations for the Three Months Ended
September 30, 2018
Total revenues were $14.4 million
for the three months ended September 30,
2018 compared to $16.6 million
for the same period in 2017. The decrease was due primarily to
lower base management fees from our permanent capital vehicles as a
result of a decrease in fee earning assets under management, partly
offset by an increase in other revenue and fees.
Total expenses from operations were $12.5
million for the three months ended September 30, 2018 compared to $9.9 million for the same period in 2017. The
increase was due primarily to an increase in professional
fees. The increase in professional fees was attributed
to fees incurred in connection with our pending merger with Sierra
Income Corporation ("Sierra").
Total other income (expense), net was $1.0 million for the three months ended
September 30, 2018 compared to
$(1.5) million for the same period in
2017. The increase was due primarily to $2.7
million of unrealized gains relating to one of our
investments. The $2.7 million
of unrealized gains were allocated to non-controlling interests in
consolidated subsidiaries which did not have any impact on the
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 $1.4 million for the three months ended
September 30, 2018 compared to net
income of $2.6 million for the same
period in 2017. Medley Management Inc.'s net loss per share was
$0.15 for the three months ended
September 30, 2018 compared to net
income per share of $0.03 for the same period in
2017.
Pre-Tax Core Net Income was $2.7
million for the three months ended September 30, 2018 compared to $4.7 million for the same period in 2017. Core
Net Income Per Share was $0.06 for
the three months ended September 30,
2018, compared to $0.09 for
the same period in 2017. Core EBITDA was $5.6 million for the three months ended
September 30, 2018 compared to
$7.6 million for the same period in
2017.
Results of Operations for the Nine Months Ended
September 30, 2018
Total revenues were $43.9 million
for the nine months ended September 30,
2018 compared to $47.0 million
for the same period in 2017. The decrease was due primarily to
lower base management fees from our permanent capital vehicles as a
result of a decrease in fee earning assets under management, partly
offset by an increase in other revenue and fees.
Total expenses from operations were $37.0
million for the nine months ended September 30, 2018 compared to $26.0 million for the same period in 2017. The
increase was due primarily to an increase in professional fees and
compensation expense. The increase in professional fees related to
strategic initiatives including our pending merger with Sierra. The
increase in compensation was primarily attributed severance expense
as a result of the consolidation of our business activities to our
New York office and stock-based
compensation associated with award grants in 2018.
Total other expense, net was $15.8
million for the nine months ended September 30, 2018 compared to $4.8 million for the same period in 2017. The
increase was due primarily to $10.9
million of unrealized losses relating to one of our
investments, partly offset by an increase of $0.5 million in dividend income. Of the
$10.9 million of unrealized losses,
$7.3 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 $6.6 million for the nine months ended
September 30, 2018 compared to net
income of $10.0 million for the same
period in 2017. Medley Management Inc.'s net loss per share was
$0.49 for the nine months ended
September 30, 2018 compared to net
income per share of $0.18 for the
same period in 2017.
Pre-Tax Core Net Income was $7.2
million for the nine months ended September 30, 2018 compared to $15.1 million for the same period in 2017. Core
Net Income Per Share was $0.16 for
the nine months ended September 30,
2018, compared to $0.28 for
the same period in 2017. Core EBITDA was $15.9 million for the nine months ended
September 30, 2018 compared to
$23.7 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
Wednesday, November 14, 2018 to discuss our third quarter
financial results.
All interested parties may participate in the conference call by
dialing (877) 870-4263 approximately 5-10 minutes prior to the
call. International callers should dial (412) 317-0790.
Participants should request to be joined into the Medley Management
Inc. call 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 Anderson
Head of Capital Markets & Risk Management
Medley Management Inc.
212-759-0777
Media Contact:
Erin Clark
Teneo Strategy
646-214-8355
|
Key Performance
Indicators:
|
|
|
For the Three
Months Ended
September 30,
(unaudited)
|
|
For the Nine
Months Ended
September 30,
(unaudited)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
(Amounts in
thousands, except AUM, share and per share amounts)
|
|
Consolidated
Financial Data:
|
|
|
|
|
|
|
|
|
Pre-Tax Income
(Loss)
|
$
|
2,868
|
|
|
$
|
5,202
|
|
|
$
|
(8,847)
|
|
|
$
|
16,188
|
|
|
Net (loss) income
attributable to Medley Management
Inc. and non-controlling interests in Medley LLC
|
$
|
(1,448)
|
|
|
$
|
2,633
|
|
|
$
|
(6,570)
|
|
|
$
|
9,986
|
|
|
Net (loss) income per
Class A common stock
|
$
|
(0.15)
|
|
|
$
|
0.03
|
|
|
$
|
(0.49)
|
|
|
$
|
0.18
|
|
|
Net (Loss) Income
Margin (1)
|
(10.1)
|
%
|
|
15.9
|
%
|
|
(15.0)
|
%
|
|
21.2
|
%
|
|
Weighted average
shares - Basic and Diluted
|
5,591,123
|
|
|
5,342,939
|
|
|
5,539,804
|
|
|
5,578,003
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Data:
|
|
|
|
|
|
|
|
|
Pre-Tax Core Net
Income (2)
|
$
|
2,684
|
|
|
$
|
4,651
|
|
|
$
|
7,212
|
|
|
$
|
15,065
|
|
|
Core Net Income
(2)
|
$
|
1,889
|
|
|
$
|
3,851
|
|
|
$
|
5,163
|
|
|
$
|
13,171
|
|
|
Core EBITDA
(3)
|
$
|
5,582
|
|
|
$
|
7,592
|
|
|
$
|
15,941
|
|
|
$
|
23,737
|
|
|
Core Net Income Per
Share (4)
|
$
|
0.06
|
|
|
$
|
0.09
|
|
|
$
|
0.16
|
|
|
$
|
0.28
|
|
|
Core Net Income
Margin (5)
|
12.5
|
%
|
|
15.9
|
%
|
|
11.0
|
%
|
|
18.2
|
%
|
|
Pro-Forma Weighted
Average Shares Outstanding (6)
|
32,174,946
|
|
|
30,777,252
|
|
|
31,539,125
|
|
|
30,922,950
|
|
|
|
|
|
|
|
|
|
|
Other Data (at
period end, in millions):
|
|
|
|
|
|
|
|
|
AUM
|
$
|
4,796
|
|
|
$
|
5,296
|
|
|
$
|
4,796
|
|
|
$
|
5,296
|
|
|
Fee Earning
AUM
|
$
|
2,891
|
|
|
$
|
3,241
|
|
|
$
|
2,891
|
|
|
$
|
3,241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Net (Loss) Income
Margin equals Net (loss) 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 (loss) 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, as well as the vesting of
the weighted average number of restricted stock units granted to
employees and directors during each of the periods
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
Private
Funds
and SMAs
|
|
Total
|
|
Permanent
Capital
Vehicles
|
|
Long-dated
Private
Funds
and SMAs
|
|
(Dollars in
millions)
|
|
|
|
|
|
Ending Balance, June
30, 2018
|
$
|
1,896
|
|
|
$
|
1,064
|
|
|
$
|
2,960
|
|
|
64
|
%
|
|
36
|
%
|
|
Commitments
|
(27)
|
|
|
60
|
|
|
33
|
|
|
|
|
|
|
Distributions
|
(21)
|
|
|
(12)
|
|
|
(33)
|
|
|
|
|
|
|
Change in fund
value
|
(34)
|
|
|
(35)
|
|
|
(69)
|
|
|
|
|
|
|
Ending Balance,
September 30, 2018
|
$
|
1,814
|
|
|
$
|
1,077
|
|
|
$
|
2,891
|
|
|
63
|
%
|
|
37
|
%
|
Total fee earning AUM decreased by $69.0
million, or 2% as of September 30,
2018 compared to total fee earning AUM as of June 30, 2018. The permanent capital vehicles'
share of fee earning AUM decreased to 63% as of September 30, 2018 compared to 64% as of
June 30, 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
Private F
unds
and SMAs
|
|
Total
|
|
Permanent
Capital
Vehicles
|
|
Long-dated
Private
Funds
and SMAs
|
|
(Dollars in
millions)
|
|
|
|
|
|
Ending balance,
December 31, 2017
|
$
|
2,090
|
|
|
$
|
1,068
|
|
|
$
|
3,158
|
|
|
66
|
%
|
|
34
|
%
|
|
Commitments
|
(116)
|
|
|
214
|
|
|
98
|
|
|
|
|
|
|
Distributions
|
(66)
|
|
|
(100)
|
|
|
(166)
|
|
|
|
|
|
|
Change in fund
value
|
(94)
|
|
|
(105)
|
|
|
(199)
|
|
|
|
|
|
|
Ending Balance,
September 30, 2018
|
$
|
1,814
|
|
|
$
|
1,077
|
|
|
$
|
2,891
|
|
|
63
|
%
|
|
37
|
%
|
Total fee earning AUM decreased by $267
million, or 8% as of September 30,
2018 compared to total fee earning AUM as of December 31, 2017. The permanent capital
vehicles' share of fee earning AUM decreased to 63% as of
September 30, 2018 compared to 66% as
of December 31, 2017.
Dividend Declaration
On November 7, 2018, the Company's
Board of Directors declared a dividend of $0.20 per share of Class A common stock for the
third quarter of 2018. The dividend will be paid on December 12, 2018 to stockholders of record as of
November 28, 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 $4.8 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 September 30, 2018.
|
Exhibit A.
Consolidated Statements of Operations of Medley Management
Inc.
|
|
|
For the Three
Months Ended
September 30,
(unaudited)
|
|
For the Nine
Months Ended
September 30,
(unaudited)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
(Amounts in
thousands, except share and per share data)
|
|
Revenues
|
|
|
|
|
|
|
|
|
Management fees
(includes Part I incentive fees of $447,
$1,393, $447 and $1,937, respectively)
|
$
|
12,336
|
|
|
$
|
14,838
|
|
|
$
|
36,386
|
|
|
$
|
41,934
|
|
|
Performance
fees
|
—
|
|
|
(167)
|
|
|
—
|
|
|
(1,984)
|
|
|
Other revenues and
fees
|
2,769
|
|
|
2,016
|
|
|
8,136
|
|
|
7,004
|
|
|
Investment income
(loss):
|
|
|
|
|
|
|
|
|
Carried
interest
|
(326)
|
|
|
(34)
|
|
|
271
|
|
|
139
|
|
|
Other investment
loss
|
(382)
|
|
|
(91)
|
|
|
(849)
|
|
|
(101)
|
|
|
Total
Revenues
|
14,397
|
|
|
16,562
|
|
|
43,944
|
|
|
46,992
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
6,320
|
|
|
6,382
|
|
|
21,991
|
|
|
17,881
|
|
|
Performance fee
compensation
|
(79)
|
|
|
(14)
|
|
|
(112)
|
|
|
(845)
|
|
|
General,
administrative and other expenses
|
6,244
|
|
|
3,510
|
|
|
15,095
|
|
|
8,932
|
|
|
Total
Expenses
|
12,485
|
|
|
9,878
|
|
|
36,974
|
|
|
25,968
|
|
|
|
|
|
|
|
|
|
|
Other Income
(Expense)
|
|
|
|
|
|
|
|
|
Dividend
income
|
962
|
|
|
1,428
|
|
|
3,351
|
|
|
2,896
|
|
|
Interest
expense
|
(2,717)
|
|
|
(2,718)
|
|
|
(8,113)
|
|
|
(9,131)
|
|
|
Other income
(expenses), net
|
2,711
|
|
|
(192)
|
|
|
(11,055)
|
|
|
1,399
|
|
|
Total Other Expense,
Net
|
956
|
|
|
(1,482)
|
|
|
(15,817)
|
|
|
(4,836)
|
|
|
Income (loss) before
income taxes
|
2,868
|
|
|
5,202
|
|
|
(8,847)
|
|
|
16,188
|
|
|
Provision for income
taxes
|
450
|
|
|
652
|
|
|
835
|
|
|
1,493
|
|
|
Net Income
(Loss)
|
2,418
|
|
|
4,550
|
|
|
(9,682)
|
|
|
14,695
|
|
|
Net income (loss)
attributable to redeemable non-
controlling interests and non-controlling interests in
consolidated subsidiaries
|
3,866
|
|
|
1,917
|
|
|
(3,112)
|
|
|
4,709
|
|
|
Net (loss) income
attributable to non-controlling
interests in Medley LLC
|
(963)
|
|
|
2,172
|
|
|
(4,729)
|
|
|
8,557
|
|
|
Net (Loss) Income
Attributable to Medley
Management Inc.
|
$
|
(485)
|
|
|
$
|
461
|
|
|
$
|
(1,841)
|
|
|
$
|
1,429
|
|
|
|
|
|
|
|
|
|
|
Net (Loss) Income
Per Share of Class A Common
Stock:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.15)
|
|
|
$
|
0.03
|
|
|
$
|
(0.49)
|
|
|
$
|
0.18
|
|
|
Diluted
|
$
|
(0.15)
|
|
|
$
|
0.03
|
|
|
$
|
(0.49)
|
|
|
$
|
0.18
|
|
|
Weighted average
shares outstanding - Basic and
Diluted
|
5,591,123
|
|
|
5,342,939
|
|
|
5,539,804
|
|
|
5,578,003
|
|
|
Exhibit B.
Consolidated Statements of Comprehensive Income
|
|
|
For the Three
Months Ended
September 30,
(unaudited)
|
|
For the Nine
Months Ended
September 30,
(unaudited)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
(Amounts in
thousands)
|
|
Net Income
(Loss)
|
$
|
2,418
|
|
|
$
|
4,550
|
|
|
$
|
(9,682)
|
|
|
$
|
14,695
|
|
|
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)
|
—
|
|
|
(2,915)
|
|
|
—
|
|
|
(5,081)
|
|
|
Total Comprehensive
Income (Loss)
|
2,418
|
|
|
1,635
|
|
|
(9,682)
|
|
|
9,614
|
|
|
Comprehensive income
(loss) attributable to redeemable
non-controlling interests and non-controlling interests in
consolidated subsidiaries
|
3,866
|
|
|
1,917
|
|
|
(3,112)
|
|
|
4,680
|
|
|
Comprehensive (loss)
income attributable to non-
controlling interests in Medley LLC
|
(963)
|
|
|
(381)
|
|
|
(4,729)
|
|
|
4,164
|
|
|
Comprehensive (Loss)
Income Attributable to Medley
Management Inc.
|
$
|
(485)
|
|
|
$
|
99
|
|
|
$
|
(1,841)
|
|
|
$
|
770
|
|
|
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
September 30,
(unaudited)
|
|
For the Nine
Months Ended
September 30,
(unaudited)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
(Amounts in
thousands)
|
|
Net (loss) income
attributable to Medley Management Inc.
|
$
|
(485)
|
|
|
$
|
461
|
|
|
$
|
(1,841)
|
|
|
$
|
1,429
|
|
|
Net (loss) income
attributable to non-controlling
interests in Medley LLC
|
(963)
|
|
|
2,172
|
|
|
(4,729)
|
|
|
8,557
|
|
|
Net (loss) income
attributable to Medley Management Inc.
and non-controlling interests in Medley LLC
|
$
|
(1,448)
|
|
|
$
|
2,633
|
|
|
$
|
(6,570)
|
|
|
$
|
9,986
|
|
|
Reimbursable fund
startup expenses
|
240
|
|
|
596
|
|
|
1,304
|
|
|
847
|
|
|
IPO date award
stock-based compensation
|
444
|
|
|
532
|
|
|
1,018
|
|
|
189
|
|
|
Other non-core
items:
|
|
|
|
|
|
|
|
|
Unrealized losses on
shares of MCC
|
—
|
|
|
—
|
|
|
3,543
|
|
|
—
|
|
|
Severance
expense
|
39
|
|
|
20
|
|
|
2,263
|
|
|
1,184
|
|
|
Acceleration of debt
issuance costs (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
1,148
|
|
|
Other (2)
|
2,959
|
|
|
218
|
|
|
4,819
|
|
|
218
|
|
|
Income tax expense on
adjustments
|
(345)
|
|
|
(148)
|
|
|
(1,214)
|
|
|
(401)
|
|
|
Core Net
Income
|
$
|
1,889
|
|
|
$
|
3,851
|
|
|
$
|
5,163
|
|
|
$
|
13,171
|
|
|
Interest
expense
|
2,717
|
|
|
2,718
|
|
|
8,113
|
|
|
7,982
|
|
|
Income
taxes
|
795
|
|
|
800
|
|
|
2,049
|
|
|
1,894
|
|
|
Depreciation and
amortization
|
181
|
|
|
223
|
|
|
616
|
|
|
690
|
|
|
Core
EBITDA
|
$
|
5,582
|
|
|
$
|
7,592
|
|
|
$
|
15,941
|
|
|
$
|
23,737
|
|
|
|
(1)
|
For the nine months
ended September 30, 2017, this amount relates 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
nine months ended September 30, 2018, other items consists
primarily of fees related to strategic initiatives including our
pending merger with Sierra.
|
|
Exhibit D.
Calculation of Core Net Income Per Share
|
|
|
For the Three
Months Ended
September 30,
(unaudited)
|
|
For the Nine
Months Ended
September 30,
(unaudited)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
(Amounts in
thousands, except share and per share amounts)
|
|
Numerator
|
|
|
|
|
|
|
|
|
Core Net
Income
|
$
|
1,889
|
|
|
$
|
3,851
|
|
|
$
|
5,163
|
|
|
$
|
13,171
|
|
|
Add: Income
taxes
|
795
|
|
|
800
|
|
|
2,049
|
|
|
1,894
|
|
|
Pre-Tax Core Net
Income
|
$
|
2,684
|
|
|
$
|
4,651
|
|
|
$
|
7,212
|
|
|
$
|
15,065
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
Class A common
stock
|
5,591,123
|
|
|
5,342,939
|
|
|
5,539,804
|
|
|
5,578,003
|
|
|
Conversion of LLC
Units and restricted LLC Units to
Class A common stock
|
24,215,302
|
|
|
23,653,333
|
|
|
24,008,815
|
|
|
23,592,381
|
|
|
Restricted Stock
Units
|
2,368,521
|
|
|
1,780,980
|
|
|
1,990,506
|
|
|
1,752,566
|
|
|
Pro-Forma Weighted
Average Shares Outstanding (1)
|
32,174,946
|
|
|
30,777,252
|
|
|
31,539,125
|
|
|
30,922,950
|
|
|
Pre-Tax Core Net
Income Per Share
|
$
|
0.08
|
|
|
$
|
0.15
|
|
|
$
|
0.23
|
|
|
$
|
0.49
|
|
|
Less: corporate
income taxes per share (2)
|
(0.02)
|
|
|
(0.06)
|
|
|
(0.07)
|
|
|
(0.21)
|
|
|
Core Net Income Per
Share
|
$
|
0.06
|
|
|
$
|
0.09
|
|
|
$
|
0.16
|
|
|
$
|
0.28
|
|
|
|
(1)
|
The calculation of
Pro-Forma Weighted Average Shares Outstanding assumes the
conversion by the pre-IPO holders of up to 24,839,302 vested and
unvested LLC Units for 24,839,302 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 granted to
employees and directors 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 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
September 30,
(unaudited)
|
|
For the Nine
Months Ended
September 30,
(unaudited)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
Net Income
Margin
|
(10.1)
|
%
|
|
15.9
|
%
|
|
(15.0)
|
%
|
|
21.2
|
%
|
|
Reimbursable fund
startup expenses (1)
|
1.7
|
%
|
|
3.6
|
%
|
|
3.0
|
%
|
|
1.7
|
%
|
|
IPO date award
stock-based compensation (1)
|
3.1
|
%
|
|
3.2
|
%
|
|
2.3
|
%
|
|
0.4
|
%
|
|
Other non-core
items:(1)
|
|
|
|
|
|
|
|
|
Unrealized losses on
shares of MCC
|
—
|
%
|
|
—
|
%
|
|
8.1
|
%
|
|
—
|
%
|
|
Severance
expense
|
0.3
|
%
|
|
0.1
|
%
|
|
5.1
|
%
|
|
2.6
|
%
|
|
Acceleration of debt
issuance costs
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
2.4
|
%
|
|
Other
|
20.6
|
%
|
|
1.3
|
%
|
|
11.0
|
%
|
|
0.5
|
%
|
|
Provision for income
taxes (1)
|
3.1
|
%
|
|
3.9
|
%
|
|
1.9
|
%
|
|
3.2
|
%
|
|
Corporate income
taxes (2)
|
(6.2)
|
%
|
|
(12.1)
|
%
|
|
(5.4)
|
%
|
|
(13.8)
|
%
|
|
Core Net Income
Margin
|
12.5
|
%
|
|
15.9
|
%
|
|
11.0
|
%
|
|
18.2
|
%
|
|
|
(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)
|
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
|
|
September 30,
2018
(unaudited)
|
|
December 31,
2017
|
|
(Amounts in
thousands)
|
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
21,515
|
|
|
$
|
36,327
|
|
|
Investments, at fair
value
|
46,285
|
|
|
56,632
|
|
|
Management fees
receivable
|
10,884
|
|
|
14,714
|
|
|
Performance fees
receivable
|
—
|
|
|
2,987
|
|
|
Other
assets
|
15,421
|
|
|
17,262
|
|
|
Total
Assets
|
$
|
94,105
|
|
|
$
|
127,922
|
|
|
|
|
|
|
Liabilities,
Redeemable Non-controlling Interests and Equity
|
|
|
|
|
Liabilities
|
|
|
|
|
Senior unsecured
debt, net
|
$
|
117,428
|
|
|
$
|
116,892
|
|
|
Loans payable,
net
|
9,726
|
|
|
9,233
|
|
|
Accounts payable,
accrued expenses and other liabilities
|
37,068
|
|
|
25,130
|
|
|
Total
Liabilities
|
164,222
|
|
|
151,255
|
|
|
|
|
|
|
Redeemable
Non-controlling Interests
|
32,226
|
|
|
53,741
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Class A common
stock
|
57
|
|
|
55
|
|
|
Class B common
stock
|
—
|
|
|
—
|
|
|
Additional paid in
capital
|
6,260
|
|
|
2,820
|
|
|
Accumulated other
comprehensive loss
|
—
|
|
|
(1,301)
|
|
|
Accumulated
deficit
|
(17,591)
|
|
|
(9,545)
|
|
|
Total stockholders'
deficit, Medley Management Inc.
|
(11,274)
|
|
|
(7,971)
|
|
|
Non-controlling
interests in consolidated subsidiaries
|
(1,638)
|
|
|
(1,702)
|
|
|
Non-controlling
interests in Medley LLC
|
(89,431)
|
|
|
(67,401)
|
|
|
Total
Deficit
|
(102,343)
|
|
|
(77,074)
|
|
|
Total Liabilities,
Redeemable Non-controlling Interests and Equity
|
$
|
94,105
|
|
|
$
|
127,922
|
|
View original
content:http://www.prnewswire.com/news-releases/medley-management-inc-declares-0-20-per-share-dividend-reports-third-quarter-2018-results-300749819.html
SOURCE Medley Management Inc.
