MDLY - Earnings call transcript Q3 2018

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Operator

Welcome, and thank you for joining Medley Management Inc's Third Quarter Conference Call. Today's call is being recorded. Please note that this call is the property of Medley Management Inc. 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. participants for a the a all will mode, prepared time, prompted be question-and-answer this are listen-only in but remarks. At session following

Allorto, Head call and the today Brook CEO; On is Sam Capital of Rick Anderson, Markets. Taube, CFO;

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

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

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

Brook Taube

Directors conference On at that and to quarter I'd approved to everyone Medley. core record our announced be the $X.X on call. quarter shareholders welcome, and $X.XX. quarterly in first update share at dividend our Board $X.XX to net per of I will review assets December Medley's later and an XXXX per of like billion paid on our the November at a briefly billion will ended November Medley AUM third was company's was $X.X Total provide quarter XX income quarter the but share for merger X, on operator, fee earning you, The activity Thank of at call, the end. XX.

we rate and environment market investments that current in the Given provide continue environment. this income durable rising protection to seek generate downside

expect that core our structures focused For the XXXX this continue we well business capitalized, for into back deal sensible that sponsor terms are attractive and combined primarily on beyond will balance larger trend and post-merger credit positioned then we're we borrowers growth. and have as sheet

private pleased opportunity Looking strong now have an for provide is that corporate large funds couple institutional retail and that do managed for initiatives. new that we clients business demand our at and from to I'm a pipeline of report accounts across of our we On and clients. institutional our lending credit our insurance direct solutions we and capabilities tactical structure credit, the side, to expand continue strategies. a

high from a it's end $XXX a new quality As for company. insurance a a received commitment client, quarter account, result subsequent new to a is million we this

and close the of begin will this first expect We quarter in XXXX. investing

capital million closed opportunities mentioned transaction here support at and $X.X quarter, success We for provide that billion to with and vertical we our the and with that instrumental relationship in investment to tactical last ninth the of years. tactical As I a were and to transaction part this participated $XXX large based over July. significant demonstrate in team three in the and upon our achievement institutional opportunities a we represents the last continue over

mention file the develop further over to built our product the great this the we're the I few and last in Like I retail for distribution engaged to vertical investment structure past years strategy in vertical We in in quarter on product that expect and a quarters. institutional look the on we're this further credit coming foundation forward actively and the channel the rate we've with opportunities providing capital discipline. did tactical with dedicated partner XXXX. progress

With merger, of lines the to our new the balance business ability and further in and pro the existing anchoring company announced grow ahead. the sheet the expand enhance initiatives combined forma scale will years

on comment Rick financials. I'd to quarterly to the review call I turn to the like the merger Before over

Rick Allorto

Brook. you Thank

for to per for XXXX. in same million of EBITDA The Our my expenses XXXX. were period due the I'll million was core now call income results same the period the professional in expenses was net the $X.X non-controlling net XXXX same it an XXXX. back million XXXX fees. not to Pre-tax were have as was in of compared other months compared to compared ended subsidiaries period in of financial the $X concludes million and to to attributed including million the in expense Revenues primarily of million $X.X turn gains $X.X unrealized increase $XX.X $X.XX Other operations $X.XX million $XX.X were $X.X stock. to follows. the for and related was to share The million million consolidated impact net income were in the Core review. million $X.X other fees primarily unrealized $X.X of period That same increase gains interest period primarily an related to Medley same allocated September revenues on Total income to $X.X $X.X of net Total increase did income $X.X from to management. and compared XXXX. due MCC the core The in was to management was million in announced for of for over merger. for three the to period the million fees XXXX. our consisted million revenues for same $XX.X compared XX, to compared in $XX.X investment million million $X.X Brook.

Brook Taube

Thank Income you that proxy proposed information important investors was the on Corporation on filed proposed announcement update MDLY filed SEC of merger. includes X connection the To with of in was a our November Sierra the statement transaction. Rick. with that on that behalf

with market to expected And the transaction we've as the that traded Sierra entity simultaneous Stock expected and BDC largest Sierra As listed the is first after Exchange be closing. the in would the of internally quarter the close Sierra be the be Corporation. seventh managed combined ticker XXXX. largest to second known publicly expect will will be we the The said close on to under York in be SRA. New Income

as subsidiary Importantly overtime. to management to whose growth continued growth wholly combined and Sierra will NII add owned existing continue and is NAV to business a asset entity operate Medley's expected the of

and expectation overtime. combination scale will growth trade that, management diversification group portfolio Our internally asset with BDC business in continued the pier enable is managed its the of to in line Sierra

by open was continued line the Thanks I'd proxy of on statement For complete the filed and Sierra. the encourage proposed for operator, that was everybody questions. it review to was mergers again filed November that the for can a X now support and description you more we

Operator

come go Suisse. will the Craig first Credit ahead. from Instructions] question Siegenthaler Please [Operator of

Craig Siegenthaler

the what the and question fees and just pickup help quarter first we're wondering with these So merger fourth little a but professional will detail pretty if thinking, factors sort the can here, of quarter guidance first sizable. too? driver, be than and any that into around larger on you helpful I'm us drove fees was

Rick Allorto

Craig, QX, Rick. XXXX fees at we to related to we fees and a effort proxy for into statement into The merger this driver and preparing would was expect is as QX decline, good professional in the went look the those filing.

as decline to look those we expect would we in QX. So

Craig Siegenthaler

delinquencies? terms pick there stage credit Can on front follow-up we and separate you're a and know up will across Has credit. private one. entire is public be your look that commentary If MCC I Thanks a in the been just data have any comment too? of seeing early a and quality credit on you for of that on you business call here helpful quality, what

Brook Taube

Thanks Craig.

in As MCC call on particular. we the mentioned

work did borrowers have we messaged through expect final we'd that XXXX define substantial to We issue in we asset and and continue a walk largely of that through to legacy and XXXX. we as smaller, sort parts to made those of the loans pre-dating

I'd and So closing looking we the continue would most to relates rate say be resolved that exclude and and beyond assets XXXX with as in stable I would XXXX should then be to better that the merger in XXX pretty bucket beyond, stable or had non-accruals. and performance. respect component. With to post relevant entity much to legacy We've that combined that will more be largely aggregate. inline default expect and in it XXXX the message which

We seen pickup have economy. performance to a would that overall in relate the not

I very looking investors think are we carefully. most like

positions, there So the no in that size. borrower that senior stay larger migration signs portfolio large the that platform that with is is continuing there more we're And suggest for no would issues rate, seeing group. early floating were larger at

I cycle. later the these of as largely part would defensive think All overall consider enter we be of this measures

merger with So and that group that haven't beyond continue XXXX that and to and we trend. signs in XXXX we seen forward process continue, the look after to

Craig Siegenthaler

Brook. thanks Great,

Operator

Casey Alexander Point. [Operator of Instructions] will the from Please Compass next come ahead. question go

Casey Alexander

in $XXX misreading that under questions. that Couple it am I guys carried structure I fit different or being earning get itself tactical opportunity you management. that? has earning of the because or assets a the don't the fee under fee it different has sense just of Is exhibited doesn't a million The management way reporting it that naturally compensation provided. in assets into

Rick Allorto

Casey, this is Rick.

million balance of smaller going in the come your earning around $XX $XXX and fees the other in management revenue correct AUM base to is amount latter million, million, just the that form thinking, and than not fee fees. $XX in it's You're is

Casey Alexander

management it Will so fees? rest comes statement in it when differently. in million $XX income assets Okay management for under still come and in would up of million only earning fee comes shows the look the it under as we in? it Where $XX to

Rick Allorto

in will other under come It revenues.

Casey Alexander

other It will come in under revenues.

Okay.

should So look almost be a [ph] rate out that for unforecastable guidance be the without some future. run it I reasonable into we guess a as to us of what, to there operating is will we extent model with to sort figure certain

Rick Allorto

Yes, a $X year. million

Casey Alexander

Okay.

transactions at this Secondly, that as How from pretty the club the That in cycle. some to look well other offer together platforms and have to competitors? do you with platforms. large solutions of whole would against some you sides entire deals you or I [ph] sponsor those do focusing about compete does commentary larger time in competition space economic is a the well certainly appreciate healed on point backed have those platforms those

Brook Taube

would as That's a I you for to and priority middle the market, the get certainty close larger good question, borrowers, Casey. the sponsors that say relationship. of is of a part

done this many, this for So of years our business decade. probably is over been part a and going we've back many

want don't suggest anyway to new. I this So is that an

to we've borrower years larger in known the we've the for broadened to deepened has XX, grow relationships some cases. sponsors middle the the As and platform been our have XX that our relevance able and market increased with in XX,

relationship So hold, and up. business we larger partnered When gets fair can be it we're share. and than easily getting can the our is frequently we size

space it, So that have is seeing in are powder question. no quality however competition. deal. not platforms There's in and there dry clearly aggressive high way there capabilities, that The so the our large through we're overly terms is solution, is the formidable

per covenants that's our and and quality bit broadly in structures, is we're syndicated large sponsorship. used has still five today. that large unlike the contributions seeing deals equity seeing higher high more up [indiscernible] [indiscernible] and times which still leverage Leverage we're but We or a have market sensitive

last I is, reflection that's overall partially continued quarter that stabilized to [indiscernible] by also LIBOR determined. a the driven yields or borrower. the seeing is spreads balance has larger has go helped when so more a all are think are which not for volatility returns, stability but risk that's of here the what think in Whether we're lower compressing. or sponsor us Clearly rising to although be I op you

we're So are invest yields still and but higher opportunities desirable competitions lower, to leverage sensible, are are finding structures still a in. interesting higher, little bit

Casey Alexander

Thank other These One are greatly you. appreciated. question. comments

see merger dividend remain that it and based through policy that, closing it MDLY would announced in likely appreciate that, the was was another did that merger would into when dividend the the If $X.XX of anticipation the should was go and stated third take upon a announced ex-dividend couple of months. quarter late We of the your in of the be QX, fourth extends would place deal close dividend the we also quarter.

Brook Taube

That's to publicly the closing. was I dividends. press disclosing the intention gun in release a all of, a to would and between keep jump it proxy I place forward and policies Casey. good on the don't dividend that in of want we've But said question, reiterate the and parties announcing their

Casey Alexander

I certainly you're Well much very my and questions appreciate taking thanks

Operator

conference turn for closing And this concludes I'd Taube any session. now back our the Brook to remarks. like question-and-answer to over

Brook Taube

you about quarter at on ahead that to that exciting the Thank you importantly today. more us. at everybody initiatives opportunity and new talk telling deal again to merger work the existing you then opportunities look the and fourth focusing for hard growing completing proxy been report verticals, joining at on Thanks of on to We'll our time. have We've soon. filing new and and forward we'll attractive, looking

Operator

The you presentation. conference Thank for concluded. now attending today's is

great You Have may disconnect your a day. lines.

Medley Management (MDLM) 14 Nov 182018 Q3 Earnings call transcript