Medley Management Inc. Reports Third Quarter 2020 Results

NEW YORK, Nov. 16, 2020 /PRNewswire/ -- Medley Management Inc. (NYSE: MDLY) ("MDLY" or the "Company") today reported its financial results for its third quarter ended September 30, 2020. All share and per share results reflect the 1-for-10 reverse stock split which was effective on October 30, 2020.

Summary

• Fee earning assets under management were $1.7 billion as of September 30, 2020
• Total assets under management were $3.4 billion as of September 30, 2020
• Total revenues were $8.3 million for the three months ended September 30, 2020 and $24.8 million for the nine months ended September 30, 2020
• U.S. GAAP net loss per share attributable to Medley Management Inc. was $0.19 for Q3 2020
• Core Net Loss Per Share was $0.16 for Q3 2020

Results of Operations for the Three Months Ended September 30, 2020

Total revenues were $8.3 million for the three months ended September 30, 2020 compared to $11.5 million for the same period in 2019. Revenues consisted of $7.9 million of management fees and other revenue and $0.4 million of investment income. The decrease in total revenues 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 reduction in leverage and change in portfolio valuations.

Total expenses from operations were $7.6 million for the three months ended September 30, 2020 compared to $12.5 million for the same period in 2019. The variance was attributed to a $3.1 million decrease in compensation and benefits expense and a$1.8 million decrease in general, administrative and other expenses. The decrease in compensation and benefits expense was primarily attributed to a decline in average headcount and decline in stock compensation expense. The decrease in other expenses was due primarily to a decrease in professional fees, primarily driven by lower costs associated with our terminated merger with Sierra Income Corporation ("Sierra"). General and administrative expenses also declined as a result of headcount reduction, employees working remotely and restrictions on travel and other expenses due to the impact of the continuing COVID-19 pandemic.

Total other expenses, net were $2.7 million for the three months ended September 30, 2020 and consisted of $2.5 million of interest expense and $0.2 million of other expenses. Total other expenses, net were $0.9 million for the three months ended September 30, 2019 and consisted of $2.9 million of interest expense, $1.8 million of other income and $0.2 million of dividend income. Of the $1.8 million of other income, $2.0 million relates to an unrealized gain on shares held of MCC. During the three months ended September 30, 2020, we did not hold any shares of MCC, resulting in no unrealized gains or losses recorded in the period.

Net loss attributable to Medley Management Inc. and non-controlling interests in Medley LLC was $1.7 million for the three months ended September 30, 2020 compared to a net loss of $3.3 million for the same period in 2019. Medley Management Inc.'s net loss per share was $0.19 for the three months ended September 30, 2020 compared to a net loss per share of $0.86 for the same period in 2019.

Pre-Tax Core Net Loss was $1.0 million for the three months ended September 30, 2020 compared to $0.9 million for the same period in 2019. Core Net Loss Per Share was $0.16 for the three months ended September 30, 2020, compared to $0.18 for the same period in 2019. Core EBITDA was $1.7 million for the three months ended September 30, 2020 compared to $2.1 million for the same period in 2019.

Results of Operations for the Nine Months Ended September 30, 2020

Total revenues were $24.8 million for the nine months ended September 30, 2020 compared to $38.2 million for the same period in 2019. Revenues consisted of $26.1 million of management fees and other revenue and $1.3 million of investment loss. 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, a reduction in leverage, and a decline in investment income due to equity losses and reversal of previously recorded carried interest.

Total expenses from operations were $28.8 million for the nine months ended September 30, 2020 compared to $34.8 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 in part by an increase in professional fees. Included in total expenses are costs associated with our terminated merger of $3.5 million for each of the nine months ended September 30, 2020 and 2019.

Total other expenses, net were $13.4 million for the nine months ended September 30, 2020 and consisted of $8.0 million of interest expense and $5.6 million of other expenses, offset in part by $0.1 million of dividend income. Total other expenses, net were $8.3 million for the nine months ended September 30, 2019 and consisted of $8.6 million of interest expense, $0.6 million of other expenses, offset by $0.9 million of dividend income. The increase of $5.6 million in other expenses was due primarily to the revaluation of our revenue share payable.

Net loss attributable to Medley Management Inc. and non-controlling interests in Medley LLC was $15.9 million for the nine months ended September 30, 2020 compared to $4.8 million for the same period in 2019. Medley Management Inc.'s net loss per share was $3.39 for the nine months ended September 30, 2020 compared to $1.32 for the same period in 2019.

Pre-Tax Core Net Income (Loss) was $(11.7) million for the nine months ended September 30, 2020 compared to $0.7 million for the same period in 2019. Core Net Loss Per Share was $1.88 for the nine months ended September 30, 2020, compared to Core Net Income Per Share of $0.13 for the same period in 2019. Core EBITDA was $(3.3) million for the nine months ended September 30, 2020 compared to $9.8 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

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 $3.4 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 September 30, 2020.