NEW YORK, May 15, 2020 /PRNewswire/ -- Medley
Management Inc. (NYSE: MDLY) ("MDLY" or the "Company") today
reported its financial results for its first quarter ended
March 31, 2020.
Summary
- Fee earning assets under management were $1.7 billion as of March
31, 2020
- Total assets under management were $3.8
billion as of March 31,
2020
- Total revenues were $7.9 million
for the three months ended March 31,
2020
- U.S. GAAP net loss per share attributable to Medley Management
Inc. was $0.20 for Q1 2020
- Core Net Loss Per Share was $0.07
for Q1 2020
- As previously announced, on May 1,
2020, the Company received a notice of termination from
Sierra Income Corporation of its agreement to merge with the
Company
Results of Operations for the Three Months Ended
March 31, 2020
Total revenues were $7.9 million
for the three months ended March 31,
2020 compared to $13.8 million
for the same period in 2019. Revenues consisted of $10.0 million of management fees and other
revenues and an investment loss of $2.1
million. The decrease was due primarily to lower base
management fees as a result of a decrease in fee earning assets
under management, which was mainly driven by a decline in portfolio
valuations, as well as a decline in investment income due to equity
losses and reversal of previously recorded carried interest.
Total expenses from operations were $11.1
million for the three months ended March 31, 2020 compared to $11.3 million for the same period in 2019. The
decrease was due primarily to a decline in compensation and
benefits as a result of lower average headcount and discretionary
bonuses, offset by an increase in professional fees. Included in
total expenses are costs associated with our terminated merger of
$1.9 million and $0.3 million for the three months ended
March 31, 2020 and 2019,
respectively.
Total other income (expenses), net were $(2.5) million for the three months ended
March 31, 2020 and consisted of
$2.8 million of interest expense and
$0.3 million of dividend and other
income. Total other income (expenses), net were $1.2 million for the three months ended
March 31, 2019 and consisted of
$2.9 million of interest expense,
$0.6 million of dividend income and
$3.5 million of unrealized gain on
shares held of MCC. During the three months ended March 31, 2020, we did not hold any shares of
MCC, and as a result there were no unrealized gains or losses
recorded in the period. During the three months ended March 31, 2019, all of the unrealized gain on
shares held of MCC were allocated to redeemable non-controlling
interests in consolidated subsidiaries, which did not have any
impact on the net income (loss) 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 $5.7 million for the three months ended
March 31, 2020 compared to a net loss
of $0.4 million for the same period
in 2019. Medley Management Inc.'s net loss per share was
$0.20 for the three months ended
March 31, 2020 compared to a net loss
per share of $0.02 for the same period in 2019.
Pre-Tax Core Net Income (Loss) was $(3.6)
million for the three months ended March 31, 2020 compared to $0.8 million for the same period in 2019. Core
Net Income (Loss) Per Share was $(0.07) for the three months ended March 31, 2020, compared to $0.02 for the same period in 2019. Core
EBITDA was $(0.6) million for the
three months ended March 31, 2020
compared to $3.9 million for the same
period in 2019.
Investor Contact:
Sam Anderson
Head of Capital Markets & Risk Management
Medley Management Inc.
212-759-0777
Media Contact:
Jonathan Gasthalter/Nathaniel Garnick
Gasthalter & Co. LP
212-257-4170
|
Key Performance
Indicators:
|
|
|
For the Three
Months Ended March,
(unaudited)
|
|
2020
|
|
2019
|
|
|
|
|
|
(dollars in
thousands, except AUM, share and
per share amounts)
|
|
Consolidated
Financial Data:
|
|
|
|
|
Pre-Tax (Loss)
Income
|
$
|
(5,800)
|
|
|
$
|
3,739
|
|
|
Net loss attributable
to Medley Management Inc. and non-controlling
interests in Medley LLC
|
$
|
(5,687)
|
|
|
$
|
(433)
|
|
|
Net loss per Class A
common stock
|
$
|
(0.20)
|
|
|
$
|
(0.02)
|
|
|
Net Income Margin
(1)
|
(72.2)
|
%
|
|
(3.1)
|
%
|
|
Weighted average
shares - Basic and Diluted
|
6,235,428
|
|
|
5,754,665
|
|
|
|
|
|
|
Non-GAAP
Data:
|
|
|
|
|
Pre-Tax Core Net
Income (Loss) (2)
|
$
|
(3,576)
|
|
|
$
|
804
|
|
|
Core Net Income
(Loss) (2)
|
$
|
(3,816)
|
|
|
$
|
705
|
|
|
Core EBITDA
(3)
|
$
|
(605)
|
|
|
$
|
3,880
|
|
|
Core Net Income
(Loss) Per Share (4)
|
$
|
(0.07)
|
|
|
$
|
0.02
|
|
|
Core Net Income
Margin (5)
|
(30.4)
|
%
|
|
5.1
|
%
|
|
Pro-Forma Weighted
Average Shares Outstanding (6)
|
34,240,249
|
|
|
32,117,893
|
|
|
|
|
|
|
Other Data (at
period end, in millions):
|
|
|
|
|
AUM
|
$
|
3,824
|
|
|
$
|
4,668
|
|
|
Fee Earning
AUM
|
$
|
1,736
|
|
|
$
|
2,711
|
|
|
|
|
(1)
|
Net Income Margin
equals Net income (loss) 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 (loss) attributable to
Medley Management Inc. and 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, non-recurring expenses associated with strategic initiatives,
such as our terminated merger with Sierra, 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 B 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 (loss) attributable to
Medley Management Inc. and non-controlling interests in Medley LLC
in Exhibit B 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 assume that all of our pre-tax earnings are subject to federal,
state and local corporate income taxes. In determining corporate
income taxes, we used a combined effective corporate tax rate of
33.0% for all of the periods presented above. Please refer to the
calculation of Core Net Income Per Share in Exhibit C 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 26,449,973 vested and
unvested LLC Units for 26,449,973 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,
December 31, 2019
|
$
|
1,361
|
|
|
$
|
777
|
|
|
$
|
2,138
|
|
|
64
|
%
|
|
36
|
%
|
|
Commitments
|
(91)
|
|
|
14
|
|
|
(77)
|
|
|
|
|
|
|
Distributions
|
(11)
|
|
|
(52)
|
|
|
(63)
|
|
|
|
|
|
|
Change in fund
value
|
(198)
|
|
|
(64)
|
|
|
(262)
|
|
|
|
|
|
|
Ending balance, March
31, 2020
|
$
|
1,061
|
|
|
$
|
675
|
|
|
$
|
1,736
|
|
|
61
|
%
|
|
39
|
%
|
Total fee earning AUM decreased by $402.0
million, or 19%, to $1.7
billion as of March 31, 2020
compared to December 31, 2019, due
primarily to changes in fund value, distributions and debt
repayments representing capital reductions.
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 $3.8 billion of assets under management in two
business development companies, Medley Capital Corporation
(NYSE:MCC) (TASE:MCC) and Sierra Income Corporation, and several
private investment vehicles. Over the past 18 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).
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, 2019. 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 exhibits attached hereto.
Non-GAAP measures used by management include Pre-Tax Core Net
Income (Loss), Core Net Income (Loss), Core EBITDA, Core Net Income
(Loss) 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 March 31, 2020.
|
|
Exhibit A.
Consolidated Statements of Operations of Medley Management
Inc.
|
|
|
For the Three
Months Ended March,
(unaudited)
|
|
2020
|
|
2019
|
|
|
|
|
|
(in thousands,
except share and per share
data)
|
|
Revenues
|
|
|
|
|
Management
fees
|
$
|
7,302
|
|
|
$
|
10,913
|
|
|
Other revenues and
fees
|
2,727
|
|
|
2,441
|
|
|
Investment income
(loss):
|
|
|
|
|
Carried
interest
|
(214)
|
|
|
352
|
|
|
Other investment
(loss) income, net
|
(1,943)
|
|
|
63
|
|
|
Total
Revenues
|
7,872
|
|
|
13,769
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
Compensation and
benefits
|
6,202
|
|
|
8,021
|
|
|
General,
administrative and other expenses
|
4,937
|
|
|
3,254
|
|
|
Total
Expenses
|
11,139
|
|
|
11,275
|
|
|
|
|
|
|
Other Income
(Expense)
|
|
|
|
|
Dividend
income
|
137
|
|
|
572
|
|
|
Interest
expense
|
(2,793)
|
|
|
(2,898)
|
|
|
Other income,
net
|
123
|
|
|
3,571
|
|
|
Total other
(expenses) income, net
|
(2,533)
|
|
|
1,245
|
|
|
(Loss) Income before
income taxes
|
(5,800)
|
|
|
3,739
|
|
|
Provision for
(benefit from) income taxes
|
39
|
|
|
(23)
|
|
|
Net (Loss)
Income
|
(5,839)
|
|
|
3,762
|
|
|
Net (loss) income
attributable to redeemable non-controlling interests and
non-controlling interests in consolidated subsidiaries
|
(152)
|
|
|
4,195
|
|
|
Net loss attributable
to non-controlling interests in Medley LLC
|
(4,557)
|
|
|
(361)
|
|
|
Net Loss Attributable
to Medley Management Inc.
|
$
|
(1,130)
|
|
|
$
|
(72)
|
|
|
|
|
|
|
Net Loss Per Share
of Class A Common Stock:
|
|
|
|
|
Basic
|
$
|
(0.20)
|
|
|
$
|
(0.02)
|
|
|
Diluted
|
$
|
(0.20)
|
|
|
$
|
(0.02)
|
|
|
Weighted average
shares outstanding - Basic and Diluted
|
6,235,428
|
|
|
5,754,665
|
|
|
Exhibit B.
Reconciliation of Core Net Income (Loss) and Core EBITDA to Net
Income (Loss) Attributable to Medley
Management Inc. and Non-controlling Interests in Medley
LLC
|
|
|
For the Three
Months Ended March,
(unaudited)
|
|
2020
|
|
2019
|
|
|
|
|
|
(in
thousands)
|
|
Net loss attributable
to Medley Management Inc.
|
$
|
(1,130)
|
|
|
$
|
(72)
|
|
|
Net loss attributable
to non-controlling interests in Medley LLC
|
(4,557)
|
|
|
(361)
|
|
|
Net loss attributable
to Medley Management Inc. and non-controlling
interests in Medley LLC
|
$
|
(5,687)
|
|
|
$
|
(433)
|
|
|
Reimbursable fund
startup expenses
|
—
|
|
|
167
|
|
|
IPO date award
stock-based compensation
|
—
|
|
|
42
|
|
|
Expenses associated
with strategic initiatives
|
1,927
|
|
|
311
|
|
|
Severance
expense
|
145
|
|
|
740
|
|
|
Income tax expense on
adjustments
|
(201)
|
|
|
(122)
|
|
|
Core Net Income
(Loss)
|
$
|
(3,816)
|
|
|
$
|
705
|
|
|
Interest
expense
|
2,793
|
|
|
2,898
|
|
|
Income
taxes
|
240
|
|
|
99
|
|
|
Depreciation and
amortization
|
178
|
|
|
178
|
|
|
Core
EBITDA
|
$
|
(605)
|
|
|
$
|
3,880
|
|
|
Exhibit C.
Calculation of Core Net Income (Loss) Per Share
|
|
|
For the Three
Months Ended March,
(unaudited)
|
|
2020
|
|
2019
|
|
|
|
|
|
(in thousands, except
share and per share
amounts)
|
|
Numerator
|
|
|
|
|
Core Net Income
(Loss)
|
$
|
(3,816)
|
|
|
$
|
705
|
|
|
Add: Income
taxes
|
240
|
|
|
99
|
|
|
Pre-Tax Core Net
Income (loss)
|
$
|
(3,576)
|
|
|
$
|
804
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
Class A common
stock
|
6,235,428
|
|
|
5,754,665
|
|
|
Conversion of LLC
Units and restricted LLC Units to Class A common
stock
|
26,316,641
|
|
|
24,650,414
|
|
|
Restricted Stock
Units
|
1,688,180
|
|
|
1,712,814
|
|
|
Pro-Forma Weighted
Average Shares Outstanding (1)
|
34,240,249
|
|
|
32,117,893
|
|
|
Pre-Tax Core Net
Income (Loss) Per Share
|
$
|
(0.10)
|
|
|
$
|
0.03
|
|
|
Less: corporate
income taxes per share (2)
|
0.03
|
|
|
(0.01)
|
|
|
Core Net Income
(Loss) Per Share
|
$
|
(0.07)
|
|
|
$
|
0.02
|
|
|
|
|
(1)
|
The calculation of
Pro-Forma Weighted Average Shares Outstanding assumes the
conversion by the pre-IPO holders of up to 26,449,973 vested and
unvested LLC Units for 26,449,973 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)
|
Assumes that all of
our pre-tax earnings are subject to federal, state and local
corporate income taxes. In determining corporate income taxes, we
used a combined effective corporate tax rate of 33.0%.
|
|
Exhibit D.
Reconciliation of Net Income Margin to Core Net Income
Margin
|
|
|
For the Three
Months Ended March,
(unaudited)
|
|
2020
|
|
2019
|
|
|
|
|
|
Net Income
Margin
|
(72.2)
|
%
|
|
(3.1)
|
%
|
|
Reimbursable fund
startup expenses (1)
|
—
|
%
|
|
1.3
|
%
|
|
IPO date award
stock-based compensation (1)
|
—
|
%
|
|
0.3
|
%
|
|
Expenses associated
with strategic initiatives (1)
|
24.5
|
%
|
|
2.3
|
%
|
|
Severance
expense
|
1.8
|
%
|
|
5.4
|
%
|
|
Provision for income
taxes (1)
|
0.5
|
%
|
|
(0.2)
|
%
|
|
Corporate income
taxes (2)
|
15.0
|
%
|
|
(0.9)
|
%
|
|
Core Net Income
Margin
|
(30.4)
|
%
|
|
5.1
|
%
|
|
|
|
(1)
|
Adjustments to Net
income (loss) 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 are subject to federal, state and local
corporate income taxes. In determining corporate income taxes, we
used a combined effective corporate tax rate of 33.0% for all of
the periods presented above.
|
|
Exhibit E.
Consolidated Balance Sheets of Medley Management
Inc.
|
|
|
As
of
|
|
March 31, 2020
(unaudited)
|
|
December 31,
2019
|
|
|
|
|
|
(in
thousands)
|
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
6,599
|
|
|
$
|
10,558
|
|
|
Investments, at fair
value
|
10,605
|
|
|
13,287
|
|
|
Management fees
receivable
|
7,608
|
|
|
8,104
|
|
|
Right-of-use assets
under operating leases
|
6,122
|
|
|
6,564
|
|
|
Other
assets
|
10,217
|
|
|
10,283
|
|
|
Total
Assets
|
$
|
41,151
|
|
|
$
|
48,796
|
|
|
|
|
|
|
Liabilities,
Redeemable Non-controlling Interests and Equity
|
|
|
|
|
Liabilities
|
|
|
|
|
Senior unsecured
debt, net
|
$
|
118,573
|
|
|
$
|
118,382
|
|
|
Loans payable,
net
|
10,000
|
|
|
10,000
|
|
|
Due to former
minority interest holder, net
|
7,529
|
|
|
8,145
|
|
|
Operating lease
liabilities
|
7,751
|
|
|
8,267
|
|
|
Accounts payable,
accrued expenses and other liabilities
|
21,012
|
|
|
22,835
|
|
|
Total
Liabilities
|
164,865
|
|
|
167,629
|
|
|
|
|
|
|
Redeemable
Non-controlling Interests
|
—
|
|
|
(748)
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Class A common
stock
|
63
|
|
|
62
|
|
|
Class B common
stock
|
—
|
|
|
—
|
|
|
Additional paid in
capital
|
15,137
|
|
|
13,779
|
|
|
Accumulated
deficit
|
(24,235)
|
|
|
(22,960)
|
|
|
Total stockholders'
deficit, Medley Management Inc.
|
(9,035)
|
|
|
(9,119)
|
|
|
Non-controlling
interests in consolidated subsidiaries
|
(539)
|
|
|
(391)
|
|
|
Non-controlling
interests in Medley LLC
|
(114,140)
|
|
|
(108,575)
|
|
|
Total
Deficit
|
(123,714)
|
|
|
(118,085)
|
|
|
Total Liabilities,
Redeemable Non-controlling Interests and Equity
|
$
|
41,151
|
|
|
$
|
48,796
|
|
View original
content:http://www.prnewswire.com/news-releases/medley-management-inc-reports-first-quarter-2020-results-301060165.html
SOURCE Medley Management Inc.
