MDLY - Earnings call transcript Q3 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome and thank you for joining Medley Management Incorporated Third Quarter 2017 Earnings Conference Call. Today’s call is being recorded. Please note that this call is the property of Medley Management, Incorporated and that any unauthorized broadcast of this call in any form is strictly prohibited. Audio replay of the call will be available by using the telephone numbers and PIN provided in the Company’s earnings press release. At this time, all participants are in a listen-only mode, but will be prompted for a question-and-answer session following the prepared remarks.

is CEO; today Allorto, call the Brook Rick Taube, CFO. On

differ Company’s materially constitute would call such Company’s its a Safe could fact Company may update call the the forward-looking forward-looking to forward-looking actual forward-looking statements forward-looking filings any begins, subject The may the note statement. as recent than not which the risks with conference law. in like And Harbor reason release today’s information. those the that the in from and statements customary Before statements other include a the Please disclosed and historical Company Company’s any unless by to most undertake by uncertainties. does statement call statement SEC. expressed results regarding of attention to for disclosure are projections, those press to required your Any

refer fee core Accepted in of non-GAAP with and Company During Company certain performance, or a per share. measure considered as financial this uses pre-tax management, to prepared as under for a in The these measures including will Principles. measures, Accounting net net as These measure assets of income measures not the operating call, core conference income isolation should Generally not from the liquidity. substitute earning be accordance

I Investor Company’s Mr. investor in Company call to definitions Form for companies. by In to third addition, XX-K XXXX these which the presentation, measures is website reconciliations Medley would Relations release posted may Taube. most turn to like measures of the to similarly its the Please section to refer other and comparable The measures. Incorporated now not over measures the has at used of be titled directly www.mdly.com. GAAP available comparable quarter Management, these earnings and

Brook Taube

operator, we quarter This welcome results everyone XX. Thank ending September XXXX our much you announced Medley’s the third morning, quarter very to financial and call. for

On December million paid per November AUM dividend billion, November $XXX was income up of per be Directors on shareholders for ended X, our to the $X.XX share of X% $X.XX. quarter on approved a X, quarter was over year-over-year. Total Board which the will or at $X.X of core Our XX. record net that share

under to and $X.X of billion and institutional that’s at across building retail separately solutions investors. Our and the accounts assets remain investing Overall, around capital, combination fee see focused management for managed demand we earning long-dated disciplines. from quarter-end. significant yield was business funds private the our do both a permanent continue We five coming on

commitments managed over XX the we’ve received today, of institutional from pipeline last Over million accounts. and demand $XXX we months, for a of institutional have investors, strong

the expect also private We part launch of loans senior early next fund targeting to our in XXXX.

Sierra to to branded product, Real our Sierra Our we the retail product leader a report remains brand continue we channel, Sierra yesterday, our Estate offerings. filed expand I’m that pleased and in fourth Sierra Fund.

forward and will retail private continue structure vehicle Return generally. corporate Sierra the Fund interval the in and expect fund to a do growth the interval very structure to perspective. quarters make this an distribution Sierra channel, inroads in ahead. is interval public our the on investments. continues to the provide XXXX. provide launch of focused on and the real investors to It structured We fund fund through estate Total fund, Real interval Fund Total with investors reporting will diversified Estate and feedback broker-dealer credit- Return liquidity Fund, Sierra favorable we exposure We as benefits into look will from in receive

I’d business capital of in active The and in capabilities important our products raise like on that expand the the the platform. team diversify to to continue finance now call give we an to Rick over as continue discussions for steps to grow expansion quarter. performance and for investment to retail our update asset turn are management financial structured further We institutional are and alternative you both and on channels. our

Rick Allorto

Brook. you, Thank

to favorable period dividend compared in Core compared increase was Other Brook. XX, share was interest turn due $X.XX the the by $X.X $X.X results revenues $XX.X December XXXX. other million million were concludes the net ended variance XXXX. to fees consisted was $X.X XXXX million were $X three as $X.X expenses Core million million income in XX The compared primarily $X.XX Our XX, was revenues of an decrease review. for $X three to my income compared to expenses. quarter during a same in months the to decrease increase which XXXX. follows. other third the were same quarter $X.X versus for to $X.X million and to of the a expenses That primarily period in decrease $X.X income, million due to Total for Pretax offset net partially million the by increase due million per I’ll was million third The months offset primarily operations fees. of months in million in fees, $XX.X of ended ESA in for million in in financial EBITDA revenues $X million negative to Part of million expenses incentive million for fees $X.X fees. call a million the period million Total $X.X performance to expense. I $XX.X of million was over $X.X three September net in XXXX. ended decrease and management from This XXXX. decrease compared in was partially September fees, for performance Revenues $XX.X the $X core by decreased now net same and management a base of XXXX.

Brook Taube

support. Thank Rick. we operator, all can continued you joining open for the all you Thank call for for the Thanks, questions. now today. And

Operator

Siegenthaler Craig the [Operator from of first question Credit our line Suisse. Instructions] And from comes

is Your open. line now

Jordan Friedlander

Jordan Good for Friedlander this is morning, filling Craig. in

provide the more you on Can on for investor fund bit color products? the new demand up product a environment? shaping launches. for raising been these the little How’s thanks First, color

Brook Taube

Brook. is This Jordan. Thanks,

What early agreements. penetrating the that is this broker-dealer the channel. talking to of in signing we’re And time. phases We’re takes process selling just broker-dealer, means

If just look ramp the on our Sierra that’s launch phase. of a Corporation, prior back Income you

and of and we structure fund on expect this up, an that As ends for the the in trend more to feedback Fund, XXXX yield we’ll interval but the from in upon the course continued quarters seeing, have Sierra year Return picks for ahead. increase and that interest demand we’re the typical would sales Total color ticketing the over the channel, on get based actual have the

Jordan Friedlander

just to quick up. And real follow Brook. Thanks

elevated opportunities relatively finding to refinance the good the work? you where capital Given guys are activity, most put attractive to

Brook Taube

That’s question. a good

year, total this up that’s have XX%, the prepay on and, and origination in a side. offset both about We on pickup number prepays. the seen I’d but say, – year-over-year, were obviously, been in in in origination side has the volume our volume pickup volumes by

been has lien continues are sponsor concentration These also in be loans. floating largely and and senior first backed. rate to Our

We’re able that to segment sense, find covenants. opportunities make in our including Structures are market attractive.

to in markets. and not everyone more tightened we’ve permissive that be broadly We credit seem as happening both liquid seen, have as seen the of pricing more in terms much but lower like structures pricing

Jordan Friedlander

Thanks Brook.

Brook Taube

Jordan. Thanks

Operator

of comes question KBW. next from line Dai from our the And Ann

Your line is now open.

Ann Dai

high-yield I weeks. question. broader selloff just if my can Thanks first Hey, that thoughts your over are good on market the wondering on guess one I market the My any? is in past on middle are morning. taking and the then across private what’s the there and it. few what in driving area, was any credit – that And you read comment for conditions

Brook Taube

Ann. – Thanks we don’t I short-term into liquid have any the of particular markets. volatility don’t insight

of in. outflows we guess will there’s My in market. not high-yield pouring just that a We’re lot a that. demand high drive the active some level, is At saw

The in market, In capital competition to terms deal terms way be basis. and a increase in and an is of that of the up pricing continues private competition deal-by- on shows formation. there

pricing volume Our looking markets tightening origination we’ve view see and in private the stabilization. we we’re don’t from the substantially to today That seeing that is are here seen that say here. sitting pipeline at

also sensible which include seeing structures, We’re covenants.

has to haven’t past had we the structure favor much as the on flowing months. over XX in that been borrower’s So XX the pressure through

optimistic we’re to offset where in ahead. prepay that the goes quarters see and we’ll market current balance, the the on So dynamic, about

Ann Dai

thanks. good Okay, color

Obviously, Second was those hoping have that or small I financial still proposed I you but question for a they proposals. get financing they an there, of impact about just behavior deductibility been think channels. or to loans for the demand could funds demand might impact out limits from for how is, I how current on there’s how and lot the businesses the to uncertainty on and reform interest have proposals, curious your the on you’re thinking the was based tax thoughts guess,

Brook Taube

question. Good

view a for likely our in is high We’re the market that in of others. like loans watching our independent it form to At demand changes. the persist potential capital of level, is the

margin, the will of is piece is the capital likely to we most it structure in impact. of treated? it impact in continue large. any how state. But sheet balance and behavior be and have will It have an a both part remains the will answer it On our terms financing source, attractive an under I big think capital the America, of future expect and it’s important some corporate both small

Ann Dai

Nick – sorry, numbers Rick. Okay. Great. Thank quick you. for for Last questions

in Total a I than about is rate On for about bit quarter’s the quarter. they last Or wondering to number. fund a came the this higher there’s was reimbursement just from if good anything run onetime Fund? expenses, think Return guidance this

Rick Allorto

current quarter. was the nothing in There unique

use forward QX forward, the Looking would rate. number a I yes, as run

Ann Dai

Okay. Great. Thanks. from it That’s me.

Operator

of next Compass line from the question comes our from Alexander And Point. Casey

now line open. Your is

Casey Alexander

increase to I’m fees may There performance is comp weren’t this a fees, associated the that just was really expense, performance sequential last with question. any normally some sorry, related which missed operating in have but I there in quarter.

have you increase sequential in do some expense? on operating the So color

Rick Allorto

you question, could please? clarify your Casey,

Casey Alexander

went the I $X.X $XX mean, expense million. from altogether from – almost the to million operating Yes. quarter-to-quarter,

increase what And as related in so sequential expenses have to to. operating might I’m curious the

Rick Allorto

about which expense From ESA then operating in fees. a is related incremental view, of core the Return numbers in $XXX,XXX to Sure. add-back, component $XXX,XXX those professional of an of Fund, is point increase Total and about Sierra included variance are

Casey Alexander

the ESA a you better Fund that Total me, Return Can please? explain little from for

Rick Allorto

Sure.

which cap, just to expense we of net have provide We Sierra Return ratio structure where a subject high fixed place Total level. a the assets. is That’s support expense an Fund’s in

Casey Alexander

decrease this Okay. going Would forward? we expect number to

Rick Allorto

Yes, would. we

Casey Alexander

the As what increase. pace? At assets

Rick Allorto

similar we Total to which structure, this expect greater to we and want provision increase, expense decrease Return in sharply assets that, the cost that do reimbursement as I again, Casey, Fund already fund variable in the have place And structure achieves the there’s should highlight, and scale. It cost Sierra get limited. the back pretty is a case support current relatively fixed as given is for structure

Casey Alexander

Okay.

So future back that, hopefully, come some of will in quarters.

Rick Allorto

Correct.

Casey Alexander

And to where vehicles incentive the resuming sort paid that terms would are manager? the you in public say of of fees

Rick Allorto

of this incentive Corporation, are catch-up we received in from During fees Sierra $X.X and phase quarter, we million of formula. that the Income

generates continue Corp. room income. substantial to there’s as additional for So Income net Sierra investment increase that to

For at the year. beginning being MCC, are incentive fee cap quarter, we – incentive based put the the and of there limited last the was place that during was upon still no in

Casey Alexander

Okay. my Great. Thank for you questions. taking

Rick Allorto

welcome. You’re

Operator

And showing further time, at this questions. I’m no

Brook Taube

thanks, everybody, the appreciate time. for We Well, support. Great. your

All forward to XXXX. early season happy in look very of Thanks a us again much. you and wish holiday speaking

Operator

have gentlemen, a participation Everyone, conclude does all This the in great and you may thank program, and for you today’s your day. disconnect. conference. Ladies

Medley Management (MDLM) 14 Nov 172017 Q3 Earnings call transcript