Medley Management Inc. Announces Third Quarter 2014 Results And Declares $0.20 Per Share Dividend

  • 79% increase in year over year Core Net Income per share to $0.25 for Q3 2014
  • For the period during Q3 2014 that the Company was public, Net Income attributable to Medley Management Inc. was $378,000
  • Declared $0.20 per share dividend for Q4 2014 payable on January 5, 2015
  • 66% increase in year over year fee earning AUM to $3.0 billion

 

NEW YORK, Nov. 13, 2014 /PRNewswire/ -- Medley Management Inc. (NYSE: MDLY) (the "Company" or "Medley") today reported its financial results for the quarter ended September 30, 2014. Although Medley was a public company for only a portion of the reporting period, the financial results herein reflect the full period results of the Company and our operating subsidiaries, Medley LLC and Medley GP Holdings LLC, and their consolidated subsidiaries.

On September 29, 2014, Medley completed its IPO pursuant to which 6,000,000 shares of Class A common stock were sold at a price of $18.00 per share. Total proceeds from the offering, net of underwriting discount, were $100.4 million.

"We are pleased to report a strong quarter for Medley Management Inc. Growth in assets under management, origination, and financial performance for our shareholders exceeded our expectations," commented Brook Taube, Chief Executive Officer of Medley.

"Our broad origination platform continues to produce high quality assets at attractive yields for investors.  Our diversified fundraising platform continues to demonstrate the ability to grow assets in both retail and institutional channels. Permanent capital increased to 65% of fee earning assets under management at Medley, underpinning our ability to drive steady and consistent cash earning for our investors.  We are pleased to report our first dividend of $0.20 per share payable on January 5, 2015," continued Mr. Taube.

Standalone Results of Operations

Total revenues increased by 57%, or $8.6 million, to $23.8 million for the three months ended September 30, 2014 as compared to $15.2 million for the same period in 2013. The growth in total revenues was driven by a 66% increase in year over year fee earning AUM, as well as a $3.4 million increase in performance fees.

Total expenses increased by 32%, or $2.5 million, to $10.1 million for the three months ended September 30, 2014 compared to $7.6 million for the same period in 2013. The increase is due primarily to increases in compensation expense, as well as general, administrative and other expenses as a result of the overall growth of our business.  In addition, interest expense increased by $1.7 million due to an increase in our debt outstanding.

Core Net Income increased by 76%, or $5.5 million, to $12.7 million during the three months ended September 30, 2014 as compared to $7.2 million for the same period in 2013. Core Net Income Per Share increased by 79% to $0.25 per share for the three months ended September 30, 2014 as compared to $0.14 per share in the comparable period in 2013. 

Key Performance Indicators:

 

Key Performance Indicators












































Three Months Ended
September 30,


Nine Months Ended
September 30,














(unaudited)


(unaudited)







2014


2013


2014


2013

Consolidated Financial Data:


(dollars in thousands, except per share amounts)



Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC



















$

12,513



$

7,316



$

28,482



$

13,361























Standalone Data




















Core Net Income(1)



$

12,713



$

7,237



$

29,858



$

13,009



Core EBITDA




15,416




7,827




34,594




14,758



Core Net Income Per Share(2)


$

0.25



$

0.14



$

0.58



$

0.25



Core Net Income Margin(3)



31.8%




27.9%




26.6%




18.9%



Pro-Forma Weighted Average Shares Outstanding(4)



30,484,637




30,484,722




30,484,693




30,484,722




































Other Data (at period end, in millions):


















Fee Earning AUM 


$

3,036



$

1,829



$

3,036



$

1,829



AUM



3,635




2,265




3,635




2,265


 

(1) Core Net Income reflects standalone net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC adjusted to exclude reimbursable expenses associated with the launch of funds, certain one-time severance costs and stock-based compensation associated with restricted stock units that were granted in connection with our initial public offering ("IPO"). In addition, Core Net Income includes the pro-forma adjustment to reflect guaranteed payments to Medley LLC members as compensation expense. Prior to our reorganization and IPO, these guaranteed payments were recorded as distributions from member's capital. Please refer to the reconciliation of net income attributed to controlling and non-controlling interests in Medley LLC to Core Net Income in Exhibit B for additional details.

(2) Core Net Income Per Share reflects an adjustment for federal, state and local corporate income taxes.  Please refer to the calculation of Core Net Income Per Share in Exhibit C for additional details.

(3) Core Net Income Margin equals Core Net Income Per Share divided by total standalone revenue per share.

(4) The calculation of Pro-Forma Weighted Average Shares Outstanding assumes that the following transactions had occurred at the beginning of each period presented:  (1) the issuance of 6,000,000 Class A common shares in connection with our IPO (2) conversion by the pre-IPO holders of 23,333,333 Medley LLC units for 23,333,333 Class A shares and (3) 1,151,389 restricted stock units granted on the consummation of the IPO, adjusted for actual forfeitures during the period.

Fee Earning AUM

The table below presents the quarterly roll forward of our total fee earning AUM:

 













% of AUM






Permanent Capital Vehicles


Long-dated Private Funds and SMAs


Total


Permanent Capital Vehicles


Long-dated Private Funds and SMAs







(dollars in millions)





Beginning balance, June 30, 2014


$

1,505


$

946


$

2,451


61%


39%


Commitments 



465



157



622






Capital reduction



-



-



-






Distributions



(29)



(26)



(55)






Change in fund value



26



(8)



18





Ending balance, September 30, 2014


$

1,967


$

1,069


$

3,036


65%


35%

 

Total fee earning AUM increased by 24%, or $585 million, to $3.0 billion at September 30, 2014 compared to June 30, 2014. The permanent capital vehicles' share of fee earning AUM increased to 65% at September 30, 2014 compared to 61% at June 30, 2014. During the three months ended September 30, 2014, fee earning AUM at MCC and SIC increased 21% and 58%, respectively.

Dividend Declaration

On November 10, 2014, the Company's board of directors declared a quarterly dividend of $0.20 per share, for the fourth quarter 2014, payable on January 5, 2015 to shareholders of record as of the close of business on December 17, 2014.

Conference Call and Webcast Information

We will host an earnings conference call and audio webcast at 10:00 a.m. (Eastern Time) on Friday, November 14, 2014 to discuss our third quarter 2014 financial results. 

All interested parties may participate in the conference call and audio webcast by dialing (866) 314-5232 approximately 5-10 minutes prior to the call, international callers should dial (617) 213-8052. Participants should reference Medley Management Inc. and the participant passcode of 86141972 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, www.mdly.com.  To listen to the live call, please go to the Company's website at least 15 minutes prior to the start of the call to register and download any necessary audio software. For those who are not able to listen to the live broadcast, a replay will be available shortly after the call on the Company's website.

About Medley Management Inc.

Medley Management Inc. is an asset management firm offering yield solutions to retail and institutional investors through Medley LLC and several registered investment advisors. Medley's national direct origination franchise, with over 75 people, is a premier provider of capital to the middle market in the U.S. As of September 30, 2014, Medley had in excess of $3.6 billion of investable capital in business development companies, Medley Capital Corporation (NYSE:MCC) and the Sierra Income Corporation, and private investment vehicles. Over the past 12 years, we have invested in excess of $5.1 billion to help over 285 companies grow across 35 industries. For additional information, please visit Medley Management Inc. at www.mdly.com.

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 under the section entitled, "Risk Factors" in our prospectus dated September 23, 2014 as filed with the Securities and Exchange Commission on September 25, 2014 pursuant to Rule 424(b) of the Securities Exchange Act of 1933, as amended, as such factors may be updated from time to time in our filing with the Securities and Exchange Commission, which are accessible on its website at www.sec.gov.   Except as required by law, the Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements in this press release speak only as of the date of this press release.

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.

 


Exhibit A. Standalone Statements of Operations for Medley Management Inc. (Prior to September 29, 2014, Medley LLC and Medley GP Holdings LLC)











Three Months Ended
September 30,
(unaudited)


Nine Months Ended
September 30,
(unaudited)




2014


2013


2014


2013




(in thousands)

Revenues

















Management fees

$

17,616



$

13,875



$

47,516



$

34,315



Performance fees


3,395




(37)




11,471




2,826



Other income and fees


2,787




1,328




7,183




3,347




Total revenues


23,798




15,166




66,170




40,488


Expenses

















Compensation and benefits


5,677




3,498




15,010




10,062



Performance fee compensation


(921)




928




2,237




6,199



General, administrative and other expenses


3,458




3,160




12,821




9,034




Total expenses


8,214




7,586




30,068




25,295


Other income (expense)

















Dividend income


222




222




665




665



Interest expense


(2,016)




(345)




(3,380)




(1,083)



Other income (expenses), net


(87)




77




(1,707)




(936)




Total other expense, net


(1,881)




(46)




(4,422)




(1,354)



Income before income taxes

$

13,703



$

7,534



$

31,680



$

13,839



Provision for income taxes


578




218




1,026




478




Net income


13,125




7,316




30,654




13,361



Net income attributable to non-controlling interests in consolidated subsidiaries


612




-




2,172




-


Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC

$

12,513


$


7,316



$

28,482



$

13,361




















 

Exhibit B. Reconciliation of net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC to Core Net Income and Core Net Income to Core EBITDA (Standalone)





Three Months Ended
September 30,
(unaudited)


Nine Months Ended
September 30,
(unaudited)




2014


2013


2014


2013




(in thousands)

Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC


$

12,513


$


7,316



$

28,482



$

13,361



Reimbursable fund startup expenses (1)



1,195




1,226




4,591




2,603



Severance expense(1)



-




6




(5)




725



IPO date award stock-based compensation (1)



74




-




74




-



Adjustment for pre-IP guaranteed payments to members (1) (2)



(1,069)




(1,311)




(3,284)




(3,680)




















Core Net Income


$

12,713



$

7,237



$

29,858



$

13,009



Interest expense



2,016




345




3,380




1,083



Income taxes



584




179




1,067




390



Depreciation and amortization



103




66




289




276


Core EBITDA


$

15,416



$

7,827



$

34,594



$

14,758




















(1) Amounts are presented net of income taxes.

(2) Represents a pro-forma adjustment to reflect guaranteed payments to Medley LLC members as compensation expense. Prior to our reorganization and IPO these payments were recorded as distributions from member's capital.

 

Exhibit C. Calculation of Core Net Income Per Share (Standalone)





Three Months Ended
September 30,
(unaudited)




Nine Months Ended
September 30,
(unaudited)














2014



2013



2014



2013



Core Net Income Per Share:


(in thousands, except per share data)


Numerator





















Core Net income 

$

12,713




$

7,237




$

29,858




$

13,009




Add: Income taxes


584





179





1,067





390




Pre-tax Core Net Income 


13,297





7,416





30,925





13,399




Denominator





















Class A shares issued in IPO


6,000,000





6,000,000





6,000,000





6,000,000




Conversion of LLC Units to Class A shares


23,333,333





23,333,333





23,333,333





23,333,333




Restricted stock units


1,151,304





1,151,389





1,151,360





1,151,389




Pro-Forma Weighted Average Shares Outstanding


30,484,637





30,484,722





30,484,693





30,484,722




Pre-tax Core Net Income Per Share

$

0.44




$

0.24




$

1.01




$

0.44




Less corporate income taxes per share (1)


(0.19)





(0.10)





(0.43)





(0.19)




Core Net Income Per Share

$

0.25




$

0.14




$

0.58




$

0.25

























 

(1) 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 annualized effective corporate tax rate of approximately 43.0% for all periods presented.

 

Exhibit D. Consolidated Statements of Operations for Medley Management Inc. (Prior to September 29, 2014, Medley LLC and Medley GP Holdings LLC)












Three Months Ended
September 30,


Nine Months Ended
September 30,










(unaudited)



(unaudited)






2014


2013


2014


2013

Revenues


(dollars in thousands, except per share data)


Management fees


$

17,013



$

9,271



$

43,466



$

24,129



Performance fees



965




830




3,337




1,081



Other income and fees



2,787




1,328




7,183




3,347




Total revenues



20,765




11,429




53,986




28,557


Expenses


















Compensation and benefits



5,677




3,498




15,010




10,062



Performance fee compensation



(921)




928




2,237




6,199



Consolidated Funds expenses



296




306




1,129




921



General, administrative and other expenses



3,458




3,160




12,821




9,034




Total expenses



8,510




7,892




31,197




26,216


Other income (expense)


















Dividend income



222




222




665




665



Interest expense



(2,016)




(345)




(3,380)




(1,083)



Other income (expenses), net



(268)




3




(1,586)




(175)



Interest and other income of Consolidated Funds



15,356




13,495




45,890




37,398



Net realized gain (loss) on investments of Consolidated Funds




















(499)




(5,486)




789




(18,065)



Net change in unrealized (depreciation) appreciation on investments of Consolidated Funds




















(1,069)




2,535




(9,437)




(751)




Total other income, net



11,726




10,424




32,941




17,989



Income before income taxes



23,981




13,961




55,730




20,330



Provision for income taxes



923




462




2,174




1,138




Net income



23,058




13,499




53,556




19,192



Net income attributable to non-controlling interests in Consolidated Funds




















9,933




6,183




22,902




5,831



Net income attributable to non-controlling interests in consolidated subsidiaries



612




-




2,172




-



Net income attributable to non-controlling interests in Medley LLC



12,135



$

7,316




28,104



$

13,361




Net income attributable to Medley Management Inc.


$

378







$

378


























Net income per share attributable to stockholders of 


















Class A common stock of Medley Management Inc:



















Basic


$

0.05


(1)




$

0.05


(1)




Diluted


$

0.05


(1)




$

0.05


(1)






















Weighted average shares - Basic and Diluted


7,151,304







7,151,304

























(1)  Based on net income attributable to Medley Management Inc. from September 29, 2014 through September 30, 2014





















 

Exhibit E. Consolidated Balance Sheets for Medley Management Inc. (Prior to September 29, 2014, Medley LLC and Medley GP Holdings LLC)












September 30,
2014
(unaudited)


December 31,
2013

Assets


(dollars in thousands)


Cash and cash equivalents

$

101,494



$

5,395



Investment, at fair value


10,226




10,173



Management fees receivable


13,599




8,921



Performance fees receivable


6,860




3,339



Other assets


7,770




5,308


Assets of Consolidated Funds:









Cash and cash equivalents


41,606




60,355



Investments, at fair value


553,836




412,218



Interest and dividends receivable


4,093




2,804



Other assets


3,334




436




Total assets

$

742,818



$

508,949


Liabilities and Equity









Loans payable

$

119,177



$

27,990



Accounts payable, accrued expenses and other liabilities


27,543




17,613



Performance fee compensation payable


17,022




16,225


Liabilities of Consolidated Funds:









Accounts payable, accrued expenses and other liabilities


4,310




1,160




Total liabilities


168,052




62,988













Equity










Class A Common Stock


60




-



Class B Common Stock


-




-



Additional paid-in-capital


(3,096)




-



Retained earnings


378




-




Total stockholders' deficit, Medley Management Inc.


(2,658)




-



Non-controlling interests in Consolidated Funds


585,007




464,475



Non-controlling interests in consolidated subsidiaries


3,140




40



Non-controlling interests in Medley LLC


(10,723)




-



Medley LLC members' capital prior to reorganization


-




(18,554)















Total equity


574,766




445,961


Total liabilities and equity

$

742,818



$

508,949













 


Exhibit F. Consolidating Statements of Operations for Medley Management Inc. (Prior to September 29, 2014, Medley LLC and Medley GP Holdings LLC)





Three Months Ended September 30, 2014
(unaudited)





Standalone


Consolidated Funds


Eliminations


Consolidated





(Dollars in thousands)

Revenues:


















Management fees


$

17,616



$

-



$

(603)



$

17,013



Performance fees



3,395




-




(2,430)




965



Other income and fees



2,787




-




-




2,787




Total revenues



23,798




-




(3,033)




20,765


Expenses:


















Compensation and benefits



5,677




-




-




5,677



Performance fee compensation



(921)




-




-




(921)



Consolidated Funds expenses



-




899




(603)




296



General, administrative and other expenses



3,458




-




-




3,458




Total operating expenses



8,214




899




(603)




8,510


Other income (expense):


















Dividend income



222




-




-




222



Interest expense



(2,016)




-




-




(2,016)



Other expense, net



(87)




-




(181)




(268)



Interest and other income of Consolidated







15,356








15,356




Funds


-

-


Net realized gain on investments of Consolidated Funds



-




(499)




-




(499)



Net change in unrealized depreciation on investments of Consolidated Funds



-




(1,069)




-




(1,069)


Total other income (expense)



(1,881)




13,788




(181)




11,726



Income before income taxes



13,703




12,889




(2,611)




23,981



Provision for income taxes



578




345




-




923


Net income



13,125




12,544




(2,611)




23,058



Net income attributable to non-controlling interests in Consolidated Funds



-




-




9,933




9,933



Net income attributable to non-controlling interests in subsidiaries



612




-




-




612



Net income attributable to non-controlling interests in Medley LLC



12,135




-




-




12,135




Net income attributable to Medley Management Inc.


$

378



$

12,544



$

(12,544)



$

378





















 




Nine Months Ended September 30, 2014
(unaudited)




Standalone


Consolidated Funds


Eliminations


Consolidated




(Dollars in thousands)

Revenues:

















Management fees

$

47,516



$

-



$

(4,050)



$

43,466



Performance fees


11,471




-




(8,134)




3,337



Other income and fees


7,183




-




-




7,183




Total revenues


66,170




-




(12,184)




53,986


Expenses:

















Compensation and benefits


15,010




-




-




15,010



Performance fee compensation


2,237




-




-




2,237



Consolidated Funds expenses


-




5,179




(4,050)




1,129



General, administrative and other expenses


12,821




-




-




12,821




Total operating expenses


30,068




5,179




(4,050)




31,197


Other income (expense):

















Dividend income


665




-




-




665



Interest expense


(3,380)




-




-




(3,380)



Other income (expense)


(1,707)




-




121




(1,586)



Interest and other income of Consolidated






45,890








45,890



Funds

-

-


Net realized gain on investments of Consolidated Funds


-




789




-




789



Net change in unrealized depreciation on investments of Consolidated Funds


-




(9,437)




-




(9,437)


Total other income (expense)

(4,422)




37,242




121




32,941



Income before income taxes


31,680




32,063




(8,013)




55,730



Provision for income taxes


1,026




1,148




-




2,174




Net income


30,654




30,915




(8,013)




53,556



Net income attributable to non-controlling interests in Consolidated Funds


-




-




22,902




22,902



Net income attributable to non-controlling interests in subsidiaries


2,172




-




-




2,172



Net income attributable to non-controlling interests in Medley LLC


28,104




-




-




28,104




Net income attributable to Medley Management Inc.

$

378



$

30,915



$

(30,915)



$

378




















 




Three Months Ended September 30, 2013
(unaudited)




Standalone


Consolidated Funds


Eliminations


Consolidated




(Dollars in thousands)

Revenues:

















Management fees

$

13,875



$

-



$

(4,604)



$

9,271



Performance fees


(37)




-




867




830



Other income and fees


1,328




-




-




1,328




Total revenues


15,166




-




(3,737)




11,429


Expenses:

















Compensation and benefits


3,498




-




-




3,498



Performance fee compensation


928




-




-




928



Consolidated Funds expenses


-




4,910




(4,604)




306



General, administrative and other expenses


3,160




-




-




3,160




Total operating expenses


7,586




4,910




(4,604)




7,892


Other income (expense):

















Dividend income


222




-




-




222



Interest expense


(345)




-




-




(345)



Other income (expense)


77




-




(74)




3



Interest and other income of Consolidated

















Funds

-

13,495

-

13,495


Net realized gain on investments of Consolidated Funds


-




(5,486)




-




(5,486)



Net change in unrealized depreciation on investments of Consolidated Funds


-




2,535




-




2,535




Total other income (expense)


(46)




10,544




(74)




10,424



Income before income taxes


7,534




5,634




793




13,961



Provision for income taxes


218




244




-




462




Net income


7,316




5,390




793




13,499



Less: Net income attributable to non-controlling interests in Consolidated Funds


-








6,183




6,183



Net income attributable to Medley LLC

$

7,316



$

5,390



$

(5,390)



$

7,316




















 




Nine Months Ended September 30, 2013
(unaudited)




Standalone


Consolidated Funds


Eliminations


Consolidated




(Dollars in thousands)

Revenues:

















Management fees

$

34,315



$

-



$

(10,186)



$

24,129



Performance fees


2,826




-




(1,745)




1,081



Other income and fees


3,347




-




-




3,347




Total revenues


40,488




-




(11,931)




28,557


Expenses:

















Compensation and benefits


10,062




-




-




10,062



Performance fee compensation


6,199




-




-




6,199



Consolidated Funds expenses


-




11,107




(10,186)




921



General, administrative and other expenses


9,034




-




-




9,034




Total operating expenses


25,295




11,107




(10,186)




26,216


Other income (expense):

















Dividend income


665




-




-




665



Interest expense


(1,083)




-




-




(1,083)



Other income (expense)


(936)




-




761




(175)



Interest and other income of Consolidated

















Funds

-

37,398

-

37,398


Net realized loss on investments of Consolidated Funds


-




(18,065)








(18,065)



Net change in unrealized depreciation on investments of Consolidated Funds


-




(751)




-




(751)




Total other income (expense)


(1,354)




18,582




761




17,989



Income before income taxes


13,839




7,475




(984)




20,330



Provision for income taxes


478




660




-




1,138




Net income


13,361




6,815




(984)




19,192



Net income attributable to non-controlling interests in Consolidated Funds


-




-




5,831




5,831



Net income attributable to Medley LLC

$

13,361



$

6,815



$

(6,815)



$

13,361




















 

SOURCE Medley Management Inc.

Sam Anderson, 212.759.0777