NEW YORK, April 1, 2019 /PRNewswire/ -- Medley Management
Inc. (NYSE: MDLY) today reported its financial results for its
fourth quarter and year ended December 31,
2018 and will host an earnings conference call and audio
webcast Tuesday, April 2 at
10:00 a.m. (Eastern Time).
Highlights
- Fee earning assets under management were $2.8 billion as of December 31, 2018
- Total assets under management were $4.7
billion as of December 31,
2018
- Total revenues were $56.5
million for the year ended December
31, 2018
- U.S. GAAP net loss per share attributable to Medley Management
Inc. was $0.16 for Q4 2018 and
$0.65 for the year ended December 31, 2018
- Core Net (Loss) Income Per Share was $(0.03) for Q4 2018 and $0.12 for the year ended December 31, 2018
- Declared $0.03 per share dividend
for Q4 2018 payable on May 3,
2019
Results of Operations for the Three Months Ended
December 31, 2018
Total revenues were $12.6 million
for the three months ended December 31,
2018 compared to $18.0 million
for the same period in 2017. The decrease was due primarily to
lower base management fees and incentive 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 $14.1
million for the three months ended December 31, 2018 compared to $13.6 million for the same period in 2017. The
increase was due primarily to increased performance fee
compensation expense.
Total other expense, net was $10.9
million for the three months ended December 31, 2018 compared to $1.3 million for the same period in 2017. The
increase was due primarily to $9.0
million of unrealized losses relating to one of our
investments. The $9.0 million
of unrealized losses 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 $3.9 million for the three months ended
December 31, 2018 compared to net
income of $0.6 million for the same
period in 2017. Medley Management Inc.'s net loss per share was
$0.16 for the three months ended
December 31, 2018 compared to net
loss per share of $0.11 for the same period in 2017.
Pre-Tax Core Net Loss was $1.4
million for the three months ended December 31, 2018 compared to Pre-Tax Core Net
Income of $2.5 million for the same
period in 2017. Core Net Loss Per Share was $0.03 for the three months ended December 31, 2018, compared to Core Net Income
Per Share of $0.05 for the same
period in 2017. Core EBITDA was $1.5
million for the three months ended December 31, 2018 compared to $5.5 million for the same period in 2017.
Results of Operations for the Year Ended December 31, 2018
Total revenues were $56.5 million
for the year ended December 31, 2018
compared to $65.0 million for the
same period in 2017. The decrease was due primarily to lower base
management fees and incentive 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 $51.0
million for the year ended December
31, 2018 compared to $39.6
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 was related to strategic
initiatives, including our pending merger with Sierra. The increase
in compensation expense was primarily attributed to severance
expense as a result of the consolidation of our business activities
to our New York office and
increased compensation relating to existing and planned growth
initiatives.
Total other expense, net was $26.7
million for the year ended December
31, 2018 compared to $6.2
million for the same period in 2017. The increase was due
primarily to $19.9 million of
unrealized losses relating to one of our investments. Of the
$19.9 million of unrealized losses,
$16.3 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 $10.4 million for the year ended December 31, 2018 compared to net income of
$10.6 million for the same period in
2017. Medley Management Inc.'s net loss per share was $0.65 for the year ended December 31, 2018 compared to net income per
share of $0.07 for the same period in
2017.
Pre-Tax Core Net Income was $5.8
million for the year ended December
31, 2018 compared to $17.6
million for the same period in 2017. Core Net Income Per
Share was $0.12 for the year ended
December 31, 2018, compared to
$0.33 for the same period in
2017. Core EBITDA was $17.4
million for the year ended December
31, 2018 compared to $29.2
million for the same period in 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,
April 2, 2019 to discuss our fourth quarter and year-end 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:
Jonathan Gasthalter/Nathaniel Garnick
Gasthalter & Co. LP
212-257-4170
|
Key Performance
Indicators:
|
|
|
For the Three
Months Ended
December 31,
(unaudited)
|
|
For the Year
Ended
December 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
(Amounts in
thousands, except AUM, share and per share
amounts)
|
|
Consolidated
Financial Data:
|
|
|
|
|
|
|
|
|
Pre-Tax Income
(Loss)
|
$
|
(12,421)
|
|
|
$
|
3,077
|
|
|
$
|
(21,268)
|
|
|
$
|
19,265
|
|
|
Net (loss) income
attributable to Medley Management
Inc. and non-controlling interests in Medley LLC
|
$
|
(3,873)
|
|
|
$
|
605
|
|
|
$
|
(10,443)
|
|
|
$
|
10,591
|
|
|
Net (Loss) income per
Class A common stock
|
$
|
(0.16)
|
|
|
$
|
(0.11)
|
|
|
$
|
(0.65)
|
|
|
$
|
0.07
|
|
|
Net (Loss) Income
Margin (1)
|
(30.8)
|
%
|
|
3.4
|
%
|
|
(18.5)
|
%
|
|
16.3
|
%
|
|
Weighted average
shares - Basic and Diluted
|
5,697,802
|
|
|
5,478,910
|
|
|
5,579,628
|
|
|
5,553,026
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Data:
|
|
|
|
|
|
|
|
|
Pre-Tax Core Net
Income (2)
|
$
|
(1,397)
|
|
|
$
|
2,543
|
|
|
$
|
5,818
|
|
|
$
|
17,609
|
|
|
Core Net Income
(2)
|
$
|
(1,106)
|
|
|
$
|
1,918
|
|
|
$
|
4,058
|
|
|
$
|
15,090
|
|
|
Core EBITDA
(3)
|
$
|
1,478
|
|
|
$
|
5,488
|
|
|
$
|
17,420
|
|
|
$
|
29,226
|
|
|
Core Net Income Per
Share (4)
|
$
|
(0.03)
|
|
|
$
|
0.05
|
|
|
$
|
0.12
|
|
|
$
|
0.33
|
|
|
Core Net Income
Margin (5)
|
(7.4)
|
%
|
|
7.9
|
%
|
|
7.0
|
%
|
|
15.4
|
%
|
|
Pro-Forma Weighted
Average Shares Outstanding (6)
|
32,158,366
|
|
|
30,640,996
|
|
|
31,695,208
|
|
|
30,851,882
|
|
|
|
|
|
|
|
|
|
|
Other Data (at
period end, in millions):
|
|
|
|
|
|
|
|
|
AUM
|
$
|
4,712
|
|
|
$
|
5,198
|
|
|
$
|
4,712
|
|
|
$
|
5,198
|
|
|
Fee Earning
AUM
|
$
|
2,785
|
|
|
$
|
3,158
|
|
|
$
|
2,785
|
|
|
$
|
3,158
|
|
|
|
|
(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, non-recurring expenses associated with strategic initiatives,
such as our pending 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 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,
September 30, 2018
|
$
|
1,814
|
|
|
$
|
1,077
|
|
|
$
|
2,891
|
|
|
63
|
%
|
|
37
|
%
|
|
Commitments
|
(20)
|
|
|
23
|
|
|
3
|
|
|
|
|
|
|
Distributions
|
(41)
|
|
|
(58)
|
|
|
(99)
|
|
|
|
|
|
|
Change in fund
value
|
(10)
|
|
|
—
|
|
|
(10)
|
|
|
|
|
|
|
Ending Balance,
December 31, 2018
|
$
|
1,743
|
|
|
$
|
1,042
|
|
|
$
|
2,785
|
|
|
63
|
%
|
|
37
|
%
|
Total fee earning AUM decreased by $106.0
million, or 4% as of December 31,
2018 compared to total fee earning AUM as of September 30, 2018. The permanent capital
vehicles' share of fee earning AUM remained at 63% as of
December 31, 2018 compared to
September 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
Funds
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
|
(137)
|
|
|
237
|
|
|
100
|
|
|
|
|
|
|
Distributions
|
(107)
|
|
|
(159)
|
|
|
(266)
|
|
|
|
|
|
|
Change in fund
value
|
(103)
|
|
|
(104)
|
|
|
(207)
|
|
|
|
|
|
|
Ending Balance,
December 31, 2018
|
$
|
1,743
|
|
|
$
|
1,042
|
|
|
$
|
2,785
|
|
|
63
|
%
|
|
37
|
%
|
Total fee earning AUM decreased by $373
million, or 12% as of December 31,
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
December 31, 2018 compared to 66% as
of December 31, 2017.
Dividend Declaration
On March 27, 2019, the Company's
Board of Directors declared a dividend of $0.03 per share of Class A common stock for the
fourth quarter of 2018. The dividend will be paid on May 3, 2019 to stockholders of record as of
April 15, 2019.
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 $4.7 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 17 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, 2018. Except as required
by law, the Company undertakes no duty to update any
forward-looking statement made herein. All forward-looking
statements made herein speak only as of the date of this press
release.
Non-GAAP Financial Measures
We make reference to certain non-GAAP financial measures in this
press release. A reconciliation of these non-GAAP financial
measures to the most directly comparable financial measures
calculated and presented in accordance with U.S. GAAP is contained
in the tables attached hereto.
Non-GAAP measures used by management include Pre-Tax Core Net
Income, Core Net Income, Core EBITDA, Core Net Income Per Share and
Core Net Income Margin. Management believes that these measures
provide analysts, investors and management with helpful information
regarding our underlying operating performance and our business, as
they remove the impact of items management believes are not
reflective of underlying operating performance. These non-GAAP
measures are also used by management for planning purposes,
including the preparation of internal budgets; and for evaluating
the effectiveness of operational strategies. Additionally, we
believe these non-GAAP measures provide another tool for investors
to use in comparing our results with other companies in our
industry, many of whom use similar non-GAAP measures. There are
limitations associated with the use of non-GAAP financial measures
as compared to the use of the most directly comparable U.S. GAAP
financial measure and these measures supplement and should be
considered in addition to and not in lieu of the results of
operations discussed below. Furthermore, such measures may be
inconsistent with measures presented by other companies.
This press release does not constitute an offer for any Medley
fund.
Available Information
Medley Management Inc.'s filings with the Securities and
Exchange Commission, press releases, earnings releases and other
financial information are available at www.mdly.com.
(1) Medley Management Inc. is the parent company of
Medley LLC and several registered investment advisors
(collectively, "Medley"). Assets under management refers to
assets of our funds, which represents the sum of the net asset
value of such funds, the drawn and undrawn debt (at the fund level,
including amounts subject to restrictions) and uncalled
committed capital (including commitments to funds that have
yet to commence their investment periods). Assets under management
are as of December 31, 2018.
|
Exhibit A.
Consolidated Statements of Operations of Medley Management
Inc.
|
|
|
For the Three
Months Ended
December 31,
(unaudited)
|
|
For the Year
Ended
December 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
(in thousands,
except share and per share data)
|
|
Revenues
|
|
|
|
|
|
|
|
|
Management
fees
|
$
|
10,699
|
|
|
$
|
16,170
|
|
|
$
|
47,085
|
|
|
$
|
58,104
|
|
|
Performance
fees
|
—
|
|
|
10
|
|
|
—
|
|
|
(1,974)
|
|
|
Other revenues and
fees
|
2,367
|
|
|
2,197
|
|
|
10,503
|
|
|
9,201
|
|
|
Investment income
(loss):
|
|
|
|
|
|
|
|
|
Carried
interest
|
(129)
|
|
|
91
|
|
|
142
|
|
|
230
|
|
|
Other investment
loss
|
(372)
|
|
|
(427)
|
|
|
(1,221)
|
|
|
(528)
|
|
|
Total
Revenues
|
12,565
|
|
|
18,041
|
|
|
56,509
|
|
|
65,033
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
9,168
|
|
|
9,551
|
|
|
31,159
|
|
|
27,432
|
|
|
Performance fee
compensation
|
619
|
|
|
(29)
|
|
|
507
|
|
|
(874)
|
|
|
General,
administrative and other expenses
|
4,271
|
|
|
4,113
|
|
|
19,366
|
|
|
13,045
|
|
|
Total
Expenses
|
14,058
|
|
|
13,635
|
|
|
51,032
|
|
|
39,603
|
|
|
|
|
|
|
|
|
|
|
Other Income
(Expense)
|
|
|
|
|
|
|
|
|
Dividend
income
|
960
|
|
|
1,431
|
|
|
4,311
|
|
|
4,327
|
|
|
Interest
expense
|
(2,693)
|
|
|
(2,724)
|
|
|
(10,806)
|
|
|
(11,855)
|
|
|
Other income
(expenses), net
|
(9,195)
|
|
|
(36)
|
|
|
(20,250)
|
|
|
1,363
|
|
|
Total Other Expense,
Net
|
(10,928)
|
|
|
(1,329)
|
|
|
(26,745)
|
|
|
(6,165)
|
|
|
Income (loss) before
income taxes
|
(12,421)
|
|
|
3,077
|
|
|
(21,268)
|
|
|
19,265
|
|
|
Provision for
(benefit from) income taxes
|
(577)
|
|
|
463
|
|
|
258
|
|
|
1,956
|
|
|
Net Income
(Loss)
|
(11,844)
|
|
|
2,614
|
|
|
(21,526)
|
|
|
17,309
|
|
|
Net income (loss)
attributable to redeemable non-
controlling interests and non-controlling interests in
consolidated subsidiaries
|
(7,971)
|
|
|
2,009
|
|
|
(11,083)
|
|
|
6,718
|
|
|
Net (Loss) income
attributable to non-controlling
interests in Medley LLC
|
(3,282)
|
|
|
1,107
|
|
|
(8,011)
|
|
|
9,664
|
|
|
Net (Loss) Income
Attributable to Medley
Management Inc.
|
$
|
(591)
|
|
|
$
|
(502)
|
|
|
$
|
(2,432)
|
|
|
$
|
927
|
|
|
|
|
|
|
|
|
|
|
Net (Loss) Income
Per Share of Class A Common
Stock:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.16)
|
|
|
$
|
(0.11)
|
|
|
$
|
(0.65)
|
|
|
$
|
0.07
|
|
|
Diluted
|
$
|
(0.16)
|
|
|
$
|
(0.11)
|
|
|
$
|
(0.65)
|
|
|
$
|
0.07
|
|
|
Weighted average
shares outstanding - Basic and
Diluted
|
5,697,802
|
|
|
5,478,910
|
|
|
5,579,628
|
|
|
5,553,026
|
|
|
Exhibit B.
Consolidated Statements of Comprehensive Income
|
|
|
For the Three
Months Ended
December 31,
(unaudited)
|
|
For the Year
Ended
December 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
(in
thousands)
|
|
Net Income
(Loss)
|
$
|
(11,844)
|
|
|
$
|
2,614
|
|
|
$
|
(21,526)
|
|
|
$
|
17,309
|
|
|
Other Comprehensive
Income (Loss):
|
|
|
|
|
|
|
|
|
Change in fair value
of available-for-sale securities (net
of income tax benefit of $0.4 million and $0.9 million
for Medley Management Inc. for the three months and
year ended December 31, 2017, respectively, and $0.2
million and $0.3 million for Non-controlling interests in
Medley LLC for the three months and year ended
December 31, 2017, respectively)
|
—
|
|
|
(5,225)
|
|
|
—
|
|
|
(10,305)
|
|
|
Total Comprehensive
Income (Loss)
|
(11,844)
|
|
|
(2,611)
|
|
|
(21,526)
|
|
|
7,004
|
|
|
Comprehensive income
(Loss) attributable to
redeemable non-controlling interests and non-controlling
interests in consolidated subsidiaries
|
(7,971)
|
|
|
2,009
|
|
|
(11,083)
|
|
|
6,690
|
|
|
Comprehensive (loss)
income attributable to non-
controlling interests in Medley LLC
|
(3,282)
|
|
|
(3,441)
|
|
|
(8,011)
|
|
|
721
|
|
|
Comprehensive (Loss)
Income Attributable to Medley
Management Inc.
|
$
|
(591)
|
|
|
$
|
(1,179)
|
|
|
$
|
(2,432)
|
|
|
$
|
(407)
|
|
|
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
December 31,
(unaudited)
|
|
For the Year
Ended
December 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
(in
thousands)
|
|
Net (loss) income
attributable to Medley Management Inc.
|
$
|
(591)
|
|
|
$
|
(502)
|
|
|
$
|
(2,432)
|
|
|
$
|
927
|
|
|
Net (loss) income
attributable to non-controlling
interests in Medley LLC
|
(3,282)
|
|
|
1,107
|
|
|
(8,011)
|
|
|
9,664
|
|
|
Net (loss) income
attributable to Medley Management Inc.
and non-controlling interests in Medley LLC
|
$
|
(3,873)
|
|
|
$
|
605
|
|
|
$
|
(10,443)
|
|
|
$
|
10,591
|
|
|
Reimbursable fund
startup expenses
|
179
|
|
|
664
|
|
|
1,483
|
|
|
1,510
|
|
|
IPO date award
stock-based compensation
|
428
|
|
|
272
|
|
|
1,446
|
|
|
461
|
|
|
Expenses associated
with strategic initiatives
|
975
|
|
|
530
|
|
|
4,833
|
|
|
737
|
|
|
Other non-core
items:
|
|
|
|
|
|
|
|
|
Unrealized losses on
shares of MCC
|
—
|
|
|
—
|
|
|
3,543
|
|
|
—
|
|
|
Severance
expense
|
467
|
|
|
—
|
|
|
2,730
|
|
|
1,184
|
|
|
Acceleration of debt
issuance costs (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
1,150
|
|
|
Other
(2)
|
1,004
|
|
|
9
|
|
|
1,967
|
|
|
20
|
|
|
Income tax expense on
adjustments
|
(286)
|
|
|
(162)
|
|
|
(1,501)
|
|
|
(563)
|
|
|
Core Net
Income
|
$
|
(1,106)
|
|
|
$
|
1,918
|
|
|
$
|
4,058
|
|
|
$
|
15,090
|
|
|
Interest
expense
|
2,693
|
|
|
2,723
|
|
|
10,806
|
|
|
10,705
|
|
|
Income
taxes
|
(290)
|
|
|
625
|
|
|
1,760
|
|
|
2,519
|
|
|
Depreciation and
amortization
|
181
|
|
|
222
|
|
|
796
|
|
|
912
|
|
|
Core
EBITDA
|
$
|
1,478
|
|
|
$
|
5,488
|
|
|
$
|
17,420
|
|
|
$
|
29,226
|
|
|
|
|
(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 2018, consists
primarily of expenses related to the consolidation of our business
activities to our New York office.
|
|
Exhibit D.
Calculation of Core Net Income Per Share
|
|
|
For the Three
Months Ended December 31,
(unaudited)
|
|
For the Year
Ended
December 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
(in thousands, except
share and per share amounts)
|
|
Numerator
|
|
|
|
|
|
|
|
|
Core Net
Income
|
$
|
(1,106)
|
|
|
$
|
1,918
|
|
|
$
|
4,058
|
|
|
$
|
15,090
|
|
|
Add: Income
taxes
|
(291)
|
|
|
625
|
|
|
1,760
|
|
|
2,519
|
|
|
Pre-Tax Core Net
Income
|
$
|
(1,397)
|
|
|
$
|
2,543
|
|
|
$
|
5,818
|
|
|
$
|
17,609
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
Class A common
stock
|
5,697,802
|
|
|
5,478,910
|
|
|
5,579,628
|
|
|
5,553,026
|
|
|
Conversion of LLC
Units and restricted LLC Units to
Class A common stock
|
24,215,302
|
|
|
23,653,333
|
|
|
24,060,861
|
|
|
23,607,744
|
|
|
Restricted Stock
Units
|
2,245,262
|
|
|
1,508,753
|
|
|
2,054,719
|
|
|
1,691,112
|
|
|
Pro-Forma Weighted
Average Shares Outstanding (1)
|
32,158,366
|
|
|
30,640,996
|
|
|
31,695,208
|
|
|
30,851,882
|
|
|
Pre-Tax Core Net
Income Per Share
|
$
|
(0.04)
|
|
|
$
|
0.08
|
|
|
$
|
0.18
|
|
|
$
|
0.57
|
|
|
Less: corporate
income taxes per share (2)
|
0.01
|
|
|
(0.03)
|
|
|
(0.06)
|
|
|
(0.25)
|
|
|
Core Net Income Per
Share
|
$
|
(0.03)
|
|
|
$
|
0.05
|
|
|
$
|
0.12
|
|
|
$
|
0.33
|
|
|
|
|
(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, 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 corporate 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
December 31,
(unaudited)
|
|
For the Year
Ended
December 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
Net Income
Margin
|
(30.8)
|
%
|
|
3.4
|
%
|
|
(18.5)
|
%
|
|
16.3
|
%
|
|
Reimbursable fund
startup expenses (1)
|
1.4
|
%
|
|
3.7
|
%
|
|
2.6
|
%
|
|
2.2
|
%
|
|
IPO date award
stock-based compensation (1)
|
3.4
|
%
|
|
1.5
|
%
|
|
2.6
|
%
|
|
0.7
|
%
|
|
Expenses associated
with strategic initiatives (1)
|
7.8
|
%
|
|
2.9
|
%
|
|
8.6
|
%
|
|
1.1
|
%
|
|
|
|
|
|
|
|
|
|
Other non-core
items:(1)
|
|
|
|
|
|
|
|
|
Unrealized losses on
shares of MCC
|
—
|
%
|
|
—
|
%
|
|
6.3
|
%
|
|
—
|
%
|
|
Severance
expense
|
3.7
|
%
|
|
—
|
%
|
|
4.8
|
%
|
|
1.9
|
%
|
|
Acceleration of debt
issuance costs
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
1.8
|
%
|
|
Other
|
8.0
|
%
|
|
—
|
%
|
|
3.5
|
%
|
|
—
|
%
|
|
Provision for income
taxes (1)
|
(4.6)
|
%
|
|
2.6
|
%
|
|
0.5
|
%
|
|
3.0
|
%
|
|
Corporate income
taxes (2)
|
3.7
|
%
|
|
(6.1)
|
%
|
|
(3.4)
|
%
|
|
(11.6)
|
%
|
|
Core Net Income
Margin
|
(7.4)
|
%
|
|
7.9
|
%
|
|
7.0
|
%
|
|
15.4
|
%
|
|
|
|
(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 corporate 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 December
31,
|
|
2018
|
|
2017
|
|
(in
thousands)
|
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
17,219
|
|
|
$
|
36,327
|
|
|
Investments, at fair
value
|
36,425
|
|
|
56,632
|
|
|
Management fees
receivable
|
10,274
|
|
|
14,714
|
|
|
Performance fees
receivable
|
—
|
|
|
2,987
|
|
|
Other
assets
|
14,298
|
|
|
17,262
|
|
|
Total
Assets
|
$
|
78,216
|
|
|
$
|
127,922
|
|
|
|
|
|
|
Liabilities,
Redeemable Non-controlling Interests and Equity
|
|
|
|
|
Liabilities
|
|
|
|
|
Senior unsecured
debt, net
|
$
|
117,618
|
|
|
$
|
116,892
|
|
|
Loans payable,
net
|
9,892
|
|
|
9,233
|
|
|
Due to former
minority interest holder
|
11,402
|
|
|
—
|
|
|
Accounts payable,
accrued expenses and other liabilities
|
26,739
|
|
|
25,130
|
|
|
Total
Liabilities
|
165,651
|
|
|
151,255
|
|
|
|
|
|
|
Redeemable
Non-controlling Interests
|
23,186
|
|
|
53,741
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Class A common
stock
|
57
|
|
|
55
|
|
|
Class B common
stock
|
—
|
|
|
—
|
|
|
Additional paid in
capital
|
7,529
|
|
|
2,820
|
|
|
Accumulated other
comprehensive loss
|
—
|
|
|
(1,301)
|
|
|
Accumulated
deficit
|
(19,618)
|
|
|
(9,545)
|
|
|
Total stockholders'
deficit, Medley Management Inc.
|
(12,032)
|
|
|
(7,971)
|
|
|
Non-controlling
interests in consolidated subsidiaries
|
(747)
|
|
|
(1,702)
|
|
|
Non-controlling
interests in Medley LLC
|
(97,842)
|
|
|
(67,401)
|
|
|
Total
Deficit
|
(110,621)
|
|
|
(77,074)
|
|
|
Total Liabilities,
Redeemable Non-controlling Interests and Equity
|
$
|
78,216
|
|
|
$
|
127,922
|
|
View original
content:http://www.prnewswire.com/news-releases/medley-management-inc-declares-0-03-per-share-dividend-reports-fourth-quarter-and-full-year-2018-results-300822319.html
SOURCE Medley Management Inc.
