CIFC LLC (NASDAQ:CIFC) (“CIFC” or the “Company”) today announced
its results for the fourth quarter and year ended December 31,
2015.
Highlights
- The Company successfully completed its reorganization to a
publicly traded limited liability company ("Reorganization
Transaction").
- Fee Earning Assets Under Management ("Fee Earning AUM" or
"AUM") was $14.1 billion as of December 31, 2015 as compared
to $14.2 billion as of September 30, 2015 and $13.7 billion as of
December 31, 2014.
- During the fourth quarter of 2015, the Company sponsored the
issuance of one new CLO, was appointed the sub-adviser to two new
loan funds (one each in Asia and Europe) and increased
subscriptions to existing funds for an aggregate of $0.6 billion of
new AUM.
- During 2015, the Company sponsored the issuance of five new
CLOs, launched four new funds and increased subscriptions to
existing funds for an aggregate of $3.0 billion of new
AUM.
- Management fees increased 10% quarter over quarter from $14.8
million to $16.3 million and 9% year over year from $57.3 million
to $62.5 million.
- Economic Net Income ("ENI," a non-GAAP measure) for the quarter
and full year was $4.3 million and $31.4 million, respectively, as
compared to $3.3 million and $36.1 million for the same periods in
the prior year.
- GAAP net income (loss) for the quarter and full year was $(7.7)
million and $0.3 million, respectively, as compared to $0.8 million
and $8.4 million for the same periods in the prior year.
- CIFC's board of directors declared an aggregate cash
distribution of $0.34 per share; composed of a quarterly cash
distribution of $0.10 per share and a special distribution of $0.24
per share issued in relation to the Reorganization Transaction. The
distribution will be paid on April 15, 2016 to shareholders of
record as of the close of business on April 1, 2016.
Executive Overview
The past year proved to be the most challenging for
the leveraged credit market since the end of the financial crisis.
Commodity prices came under pressure over the summer and risk
assets sold off starting in August. The U.S. High Yield Market was
down 5% and the U.S. Corporate Loan market recorded its first
negative total return since 2008.
Our balance sheet investments in CIFC-managed funds
outperformed their respective benchmarks. Both the Senior Secured
Corporate Loan Fund and the Tactical Income Fund produced positive
returns vis-à-vis losses in both the CS Loan Index and the LSTA
Loan Index. The pronounced weakness in the CLO market led to a
decline in mark-to-market valuation of our balance sheet CLO
investments. Consequently, net investment income dropped to $1.9
million compared with $14.1 million in 2014. Excluding investment
income, we increased ENI EBITDA by $7.2 million or 26%
year-over-year.
In 2015, we were successful in sponsoring 5 new
CLOs for a combined AUM of $2.6 billion. Strong equity sponsorship
allowed us to issue all 5 transactions on a non-risk retention
compliant basis. We are well capitalized to issue risk retention
compliant CLOs. We successfully completed a 10-year $40 million
senior unsecured bond offering in the fourth quarter to further
bolster our capacity to invest in risk retention compliant CLOs. We
have $210.4 million of cash and investments on our balance sheet,
most of which will be available for risk retention compliance over
the next 3 years.
Our total return corporate credit loan business has
outperformed the various leveraged loan indices (S&P LSTA, CS
LL & JPM LL) since inception, for three consecutive years. We
successfully launched three new funds; including our first
white-labeled loan funds in Korea and Switzerland. The AUM of our
credit fund platform now exceeds $1.0 billion. Our loan portfolios
continue to perform well and defaults continue to be substantially
lower compared to the loan indices. We have maintained our rigorous
underwriting process and actively managed risk across
well-diversified portfolios. We first started to cut our energy
exposure in late August and early September of 2014 and continue to
be defensively positioned. We remain underweight the sector with
current exposure below 3%.
CLO issuance has been slow during the course of the
first two months of 2016. Forecasts from various banks expect
market conditions to improve in the second half of the year. We are
well positioned to access the market once conditions become more
compelling. Loan prepayment rates have slowed significantly. We
expect loan prepayment rates to remain lower until CLO new issuance
volumes return, increasing the duration of our existing CLO AUM. We
are taking advantage of lower loan prices to build par in our 2.0
CLOs. We expect the current investment opportunity to drive
improved returns and with that, potentially higher incentive fees
on our existing CLOs in the future.
Selected Financial Metrics
(In thousands, except per share data)
(unaudited)
NON-GAAP FINANCIAL MEASURES (1) |
4Q'15 |
4Q'14 |
% Change vs. 4Q'14 |
FY'15 |
FY'14 |
% Change vs. YTD'15 |
Senior Fees from CLOs |
$ |
6,255 |
|
$ |
5,755 |
|
|
9 |
% |
$ |
24,224 |
|
$ |
21,709 |
|
|
|
12 |
% |
|
Subordinated Fees from CLOs |
8,983 |
|
8,356 |
|
|
8 |
% |
34,359 |
|
32,900 |
|
|
|
4 |
% |
|
Management Fees from Non-CLO products |
1,025 |
|
725 |
|
|
41 |
% |
3,933 |
|
2,705 |
|
|
|
45 |
% |
|
Total Management Fees |
16,263 |
|
14,836 |
|
|
10 |
% |
62,516 |
|
57,314 |
|
|
|
9 |
% |
|
Incentive Fees |
10,906 |
|
3,406 |
|
|
220 |
% |
22,073 |
|
17,358 |
|
|
|
27 |
% |
|
Net Investment Income |
(10,043 |
) |
(1,544 |
) |
|
550 |
% |
1,866 |
|
14,139 |
|
|
|
(87 |
)% |
|
Total ENI Revenues |
17,126 |
|
16,698 |
|
|
3 |
% |
86,455 |
|
88,811 |
|
|
|
(3 |
)% |
|
Employee compensation and benefits |
4,122 |
|
6,245 |
|
|
(34 |
)% |
26,902 |
|
27,308 |
|
|
|
(1 |
)% |
|
Share-based compensation (2) |
1,573 |
|
1,059 |
|
|
49 |
% |
5,348 |
|
2,579 |
|
|
|
107 |
% |
|
Other operating expenses |
5,598 |
|
5,566 |
|
|
1 |
% |
19,040 |
|
18,593 |
|
|
|
2 |
% |
|
Corporate interest expense |
1,552 |
|
569 |
|
|
173 |
% |
3,808 |
|
4,236 |
|
|
|
(10 |
)% |
|
Total ENI Expenses |
12,845 |
|
13,439 |
|
|
(4 |
)% |
55,098 |
|
52,716 |
|
|
|
5 |
% |
|
ENI (1) |
$ |
4,281 |
|
$ |
3,259 |
|
|
31 |
% |
$ |
31,357 |
|
$ |
36,095 |
|
|
|
(13 |
)% |
|
ENI per share - basic |
$ |
0.17 |
|
$ |
0.13 |
|
|
31 |
% |
$ |
1.24 |
|
$ |
1.58 |
|
|
|
(22 |
)% |
|
ENI per share - diluted (3) (4) |
$ |
0.16 |
|
$ |
0.12 |
|
|
33 |
% |
$ |
1.19 |
|
$ |
1.49 |
|
|
|
(20 |
)% |
|
NON-GAAP FINANCIAL MEASURES (1) |
4Q'15 |
4Q'14 |
% Change vs. 4Q'14 |
FY'15 |
FY'14 |
% Change vs. YTD'15 |
ENI EBITDA (5) |
$ |
6,191 |
|
$ |
4,130 |
|
|
50 |
% |
$ |
36,552 |
|
$ |
41,603 |
|
|
(12 |
)% |
ENI EBITDA Margin (6) |
36 |
% |
25 |
% |
|
11 |
% |
42 |
% |
47 |
% |
|
(5 |
)% |
ENI Margin (6) |
25 |
% |
20 |
% |
|
5 |
% |
36 |
% |
41 |
% |
|
(5 |
)% |
NON-GAAP FINANCIAL MEASURE - AUM |
12/31/2015 |
|
9/30/2015 |
|
% Change vs. 9/30/15 |
|
12/31/2014 |
|
% Change vs. 12/31/15 |
Fee Earning AUM from loan-based products (7)
|
$ |
14,055,487 |
|
|
$ |
14,216,216 |
|
|
|
(1 |
)% |
|
$ |
13,676,489 |
|
|
|
3 |
% |
SELECTED GAAP RESULTS |
4Q'15 |
4Q'14 |
% Change vs. 4Q'14 |
FY'15 |
FY'14 |
% Change vs. YTD'15 |
Total net revenues (8) |
$ |
48,935 |
|
$ |
141,037 |
|
n/m |
$ |
122,518 |
|
$ |
522,910 |
|
n/m |
Total expenses (8) |
$ |
27,041 |
|
$ |
73,036 |
|
n/m |
$ |
91,525 |
|
$ |
277,104 |
|
n/m |
Net income (loss) attributable to CIFC LLC |
$ |
(7,666 |
) |
$ |
768 |
|
|
(1,098 |
)% |
$ |
334 |
|
$ |
8,381 |
|
|
(96 |
)% |
Earnings (loss) per share - basic |
$ |
(0.30 |
) |
$ |
0.03 |
|
|
(1,100 |
)% |
$ |
0.01 |
|
$ |
0.37 |
|
|
(97 |
)% |
Earnings (loss) per share - diluted (3) |
$ |
(0.29 |
) |
$ |
0.03 |
|
|
(1,067 |
)% |
$ |
0.01 |
|
$ |
0.35 |
|
|
(97 |
)% |
Weighted average shares outstanding - basic |
25,308 |
|
25,150 |
|
|
1 |
% |
25,315 |
|
22,909 |
|
|
11 |
% |
Weighted average shares outstanding - diluted |
26,152 |
|
26,633 |
|
|
(2 |
)% |
26,414 |
|
24,168 |
|
|
9 |
% |
Explanatory Notes:
(1) See Appendix for a detailed description of these non-GAAP
measures and reconciliations from GAAP net income (loss)
attributable to the Company to non-GAAP measures.(2) Share-based
compensation includes equity award amortization expense for both
employees and directors of the Company.(3) Convertible Notes
outstanding were converted into the Company's common shares on July
12, 2014. For year ended December 31, 2014, the convertible notes
were anti-dilutive and excluded from the numerator in the dilution
calculation.(4) GAAP weighted average shares outstanding was used
as ENI weighted average shares outstanding.(5) ENI EBITDA is ENI
before corporate interest expense and depreciation of fixed assets.
See Appendix.(6) ENI EBITDA Margin is ENI EBITDA divided by Total
ENI Revenue. ENI Margin is ENI divided by Total ENI
Revenue. (7) Amount excludes Fee Earning AUM attributable to
non-core products of $592.8 million, $621.9 million and $687.6
million as of December 31, 2015, September 30, 2015 and
December 31, 2014, respectively. Fee Earning AUM attributable
to non-core products are expected to continue to decline as these
funds run-off per their contractual terms.(8) The Company early
adopted the amendments of Accounting Standard Update "ASU" 2015-02,
Consolidation (Topic 810) - Amendments to the Consolidation
Analysis ("ASU 2015-02"). The adoption was applied on a modified
retroactive basis, resulting in the deconsolidation of 30 CLOs and
1 credit fund as of January 1, 2015. As of December 31, 2015,
we consolidated 2 CLOs and 2 credit funds. As of December 31,
2014, we consolidated 31 CLOs, 1 warehouse, and 2 credit
funds. Year over year, our GAAP Consolidated Statements of
Operations will not be comparative for certain line items (e.g.
Total net revenues).
Fourth Quarter Overview
CIFC reported ENI of $4.3 million for the fourth quarter of
2015, as compared to $3.3 million for the same quarter in the prior
year. ENI increased quarter over quarter by $1.0 million or 31%.
Quarter over quarter, management fees increased from continued AUM
growth year over year and incentive fees increased as four CLOs
were called during the fourth quarter of 2015. In addition,
Employee Compensation and Benefits decreased as a result of
reductions in incentive-based compensation quarter over quarter.
Offsetting the increases in ENI were (i) decreases in net
investment income primarily related to an increase of $11.1 million
in unrealized losses as a result of significant declines in market
value of loans and CLO securities compared to the prior year, (ii)
increases in corporate interest related to the issuance of $40.0
million unsecured senior notes and (iii) increases in share based
compensation related to amortization of equity awards granted since
2014.
CIFC reported GAAP net loss attributable to the
Company of $7.7 million for the fourth quarter of 2015, as compared
to net income of $0.8 million in the same period of the prior year.
GAAP operating results decreased $8.4 million from the same period
of the prior year primarily due to (i) a $10.8 million increase in
income taxes primarily related to higher taxable income and the
Reorganization Transaction, (ii) a $4.2 million increase in
compensation expense related to incentive fee sharing
arrangements with former employees for acquired CLOs from Columbus
Nova Credit Investments Management, LLC ("CNCIM") and (iii) a $0.8
million increase in professional fees primarily related to the
Reorganization Transaction. These decreases were offset by (i) a
$1.0 million increase in ENI, as noted above (see Non-GAAP
Financial Measures section for a reconciliation between GAAP and
Non-GAAP ENI), (ii) a $5.5 million increase in incentive fees
earned on certain Legacy CLOs with fee sharing agreements (GAAP
represents fees gross of fee sharing) and (iii) decreases in
amortization and impairment of intangible assets of $0.4 million
related to impairments and write offs in previous years.
Fiscal Year Overview
CIFC reported ENI of $31.4 million for the year
ended December 31, 2015, as compared to $36.1 million for the
prior year. ENI decreased year over year by $4.7 million or 13%.
Year over year ENI decreased primarily because, (i) net investment
income decreased by $12.3 million to $1.9 million, primarily
related to an increase of $13.5 million in unrealized losses
resulting from significant declines in the market value of loans
and CLO securities compared to the prior year and (ii) share based
compensation increased due to amortization of equity awards granted
since 2013. Offsetting these decreases in ENI were increases in
management fees from continued AUM growth year over year in credit
funds and incentive fees from CLOs called during 2015.
CIFC reported GAAP net income attributable to the
Company of $0.3 million for year ended December 31, 2015, as
compared to $8.4 million in prior year. GAAP operating results
decreased by $8.0 million, or 96%, from the same period of the
prior year primarily due to (i) a $4.7 million decrease in ENI, as
noted above (see Non-GAAP Financial Measures section for a
reconciliation between GAAP and Non-GAAP ENI), (ii) a $3.7 million
increase in compensation expense related to incentive fee sharing
arrangements with former employees for acquired CLOs from CNCIM,
(iii) a $2.1 million increase in professional fees primarily
related to the Reorganization Transaction and (iv) a $3.1 million
increase in income taxes primarily related to higher taxable income
and the Reorganization Transaction. These decreases were offset by
(i) a $2.8 million increase in incentive fees earned on certain
Legacy CLOs with fee sharing agreements (GAAP presents fees gross
of fee sharing) and (ii) a $1.9 million reduction in
intangible asset amortization compared to the prior year as certain
CLO and CDO management contracts were written off in the prior
year.
Fee Earning AUM
Fee Earning AUM or AUM refers to the assets managed
by the Company on which we receive management fees and/or incentive
based fees. Generally, with respect to CLOs, management fees are
paid to the Company based on the aggregate collateral balance at
par plus principal cash, and with respect to Non-CLO funds, the
value of the assets in such funds.
The following table summarizes Fee Earning AUM
for the Company's loan-based products:
|
|
December 31, 2015 |
|
September 30, 2015 |
|
December 31, 2014 |
(in thousands, except # of Accounts) (1)(2) |
|
# of Accounts |
|
Fee Earning AUM |
|
# of Accounts |
|
Fee Earning AUM |
|
# of Accounts |
|
Fee Earning AUM |
Post 2011 CLOs |
|
18 |
|
|
$ |
9,860,519 |
|
|
17 |
|
|
$ |
9,388,022 |
|
|
13 |
|
|
$ |
7,402,986 |
|
Legacy CLOs (3) |
|
10 |
|
|
2,559,066 |
|
|
14 |
|
|
3,253,869 |
|
|
19 |
|
|
4,960,877 |
|
Total CLOs |
|
28 |
|
|
12,419,585 |
|
|
31 |
|
|
12,641,891 |
|
|
32 |
|
|
12,363,863 |
|
Credit Funds (4) |
|
12 |
|
|
1,062,712 |
|
|
10 |
|
|
941,035 |
|
|
8 |
|
|
593,456 |
|
Other Loan-Based
Products (4) |
|
2 |
|
|
573,190 |
|
|
2 |
|
|
633,290 |
|
|
2 |
|
|
719,170 |
|
Total Non-CLOs
(4) |
|
14 |
|
|
$ |
1,635,902 |
|
|
12 |
|
|
$ |
1,574,325 |
|
|
10 |
|
|
$ |
1,312,626 |
|
AUM from
loan-based products |
|
42 |
|
|
$ |
14,055,487 |
|
|
43 |
|
|
$ |
14,216,216 |
|
|
42 |
|
|
$ |
13,676,489 |
|
Explanatory Notes:
(1) Table excludes Fee Earning AUM attributable to non-core
products of $592.8 million, $621.9 million and $687.6 million as of
December 31, 2015, September 30, 2015 and December 31,
2014, respectively. Fee Earning AUM attributable to non-core
products is expected to continue to decline as these funds run-off
per their contractual terms.(2) Fee Earning AUM is based on the
latest available monthly report issued by the trustee or fund
administrator prior to the end of the period, and may not tie back
to the Consolidated GAAP financial statements.(3) Legacy CLOs
represent all managed CLOs issued prior to 2011, including CLOs
acquired since 2011 but issued prior to 2011.(4) Management fees
for Non-CLO products vary by fund and may not be similar to a
CLO.
Since 2012, CIFC has raised $11.4 billion of new
AUM through organic growth, which has more than offset the run-off
from Legacy CLOs (including acquired CLOs). Our Legacy CLO AUM of
$2.6 billion is less than a fifth of our total CLO AUM of $12.4
billion and we anticipate it will run off over the next three
years.
A chart accompanying this release is available
at http://resource.globenewswire.com/Resource/Download/2a9c8edf-04d9-4f4f-86b5-9966edc69437?size=o
Total loan-based Fee Earning AUM activity for the
three months and year ended December 31, 2015 are as follows
($ in thousands):
|
|
4Q'15 |
|
FY'15 |
Opening AUM
Balance |
|
$ |
14,216,216 |
|
|
$ |
13,676,489 |
|
CLO New
Issuances |
|
498,360 |
|
|
2,599,709 |
|
CLO
Paydowns |
|
(726,219 |
) |
|
(2,521,645 |
) |
Net
Subscriptions to Credit Funds |
|
126,814 |
|
|
450,070 |
|
Net Redemptions
from Other Loan-Based Products |
|
(60,100 |
) |
|
(145,980 |
) |
Other (1) |
|
416 |
|
|
(3,156 |
) |
Ending AUM
Balance |
|
$ |
14,055,487 |
|
|
$ |
14,055,487 |
|
Explanatory Note:
(1) Includes changes in collateral balances of CLOs between
periods and market value or portfolio value changes in certain
Non-CLO products.
Balance Sheet Highlights
During the year ended December 31, 2015, we
generated $32.6 million of adjusted cash flows from operations. We
raised $40.0 million through debt issuance and invested $60.5
million. As of December 31, 2015, we held total cash and
investments of $210.4 million comprised of total cash of $58.0
million and investments of $152.4 million with no debt maturing
until October 2025. See balance sheet highlights below:
($ in thousands) |
|
As of December 31, 2015 |
|
As of December 31, 2014 |
Cash and Cash
Equivalents |
|
|
|
$ |
57,968 |
|
|
|
|
$ |
59,290 |
|
|
|
|
|
|
|
|
|
|
Investments |
|
|
|
|
|
|
|
|
CIFC CLO
Equity |
|
$ |
53,912 |
|
|
|
|
$ |
20,485 |
|
|
|
Warehouses
(1) |
|
— |
|
|
|
|
21,134 |
|
|
|
Fund
Coinvestments |
|
41,401 |
|
|
|
|
42,338 |
|
|
|
CLO Debt |
|
32,140 |
|
|
|
|
9,713 |
|
|
|
Other (2) |
|
24,946 |
|
|
|
|
7,579 |
|
|
|
Total Investments |
|
|
|
$ |
152,399 |
|
|
|
|
$ |
101,249 |
|
Total Cash and
Investments |
|
|
|
210,367 |
|
|
|
|
160,539 |
|
|
|
|
|
|
|
|
|
|
Long Term
Debt |
|
|
|
|
|
|
|
|
Junior Subordinated
Notes due 2035 |
|
$ |
120,000 |
|
|
|
|
$ |
120,000 |
|
|
|
Senior Notes due
2025 |
|
40,000 |
|
|
|
|
— |
|
|
|
Total Long Term
Debt |
|
|
|
160,000 |
|
|
|
|
120,000 |
|
Net Cash and
Investments |
|
|
|
$ |
50,367 |
|
|
|
|
$ |
40,539 |
|
Explanatory Notes:
(1) From time to time, the Company establishes “warehouses,”
entities designed to accumulate assets in advance of sponsoring new
CLOs or other funds managed by the Company. To establish a
warehouse, the Company contributes equity capital to a newly formed
entity which is typically levered (three to five times) and begins
accumulating assets. When the related CLO or fund is
sponsored, typically three to nine months later, the warehouse is
“terminated,” with it concurrently repaying the related financing
and returning to the Company its equity contribution. Gains or
losses may be netted against the Company's equity contribution
depending on whether warehouse assets are transferred at market
value or cost. Starting in the fourth quarter of 2014, most
warehouse investments that we manage have been made though the
Warehouse Fund, a closed-end structured credit fund.(2) Primarily
includes investment in CIFC's Tactical Income Fund, which may be
redeemed with 60 days' notice on the last day of each calendar
quarter.
Appendix
Non-GAAP Financial Measures
The Company discloses financial measures that are
calculated and presented on a basis of methodology other than in
accordance with generally accepted accounting principles of the
United States of America (“Non-GAAP”) as follows:
ENI is a non-GAAP financial measure of
profitability which management uses in addition to GAAP Net income
(loss) attributable to CIFC LLC to measure the performance of our
core business (excluding non-core products). We believe ENI
reflects the nature and substance of the business, the economic
results driven by management fee revenues from the management of
client funds and earnings on our investments. ENI represents GAAP
Net income (loss) attributable to CIFC LLC excluding (i) income
taxes, (ii) merger and acquisition related items including
fee-sharing arrangements, amortization and impairments of
intangible assets and gain (loss) on contingent consideration for
earn-outs, (iii) non-cash compensation related to profits interests
granted by CIFC Parent Holdings LLC in June 2011, (iv) revenues
attributable to non-core investment products, (v) advances for fund
organizational expenses, and (vi) certain other items as
detailed.
The Deconsolidated Non-GAAP Statements represent
the Consolidated GAAP statements adjusted to eliminate the impact
of the Consolidated Entities. On the Statement of Operations, the
Company has reclassified the sum of Net results of Consolidated
Entities, Net (income) loss attributable to noncontrolling
interests in Consolidated Entities and Net gain (loss) on
investments to the Deconsolidated Non-GAAP line items that
represent its characteristics: management fees and incentive fees,
and interest income. Management uses these Non-GAAP statements in
addition to Consolidated GAAP Statements to measure the performance
of its core asset management business.
ENI EBITDA is also a non-GAAP financial measure
that management considers, in addition to GAAP Net income (loss)
attributable to CIFC Corp., to evaluate the Company's core
performance. ENI EBITDA represents ENI before corporate interest
expense and depreciation of fixed assets, a non-cash item.
ENI and ENI EBITDA may not be comparable to similar
measures presented by other companies, as they are non-GAAP
financial measures that are not based on a comprehensive set of
accounting rules or principles and therefore may be defined
differently by other companies. In addition, ENI and ENI EBITDA
should be considered as an addition to, not as a substitute for, or
superior to, financial measures determined in accordance with
GAAP.
A detailed calculation of ENI and ENI EBITDA and a
reconciliation to the most comparable GAAP financial measure is
included in the Appendix.
[Financial Tables to Follow in
Appendix]
About CIFC
Founded in 2005, CIFC is a private debt
manager specializing in secured U.S. corporate loan strategies.
Headquartered in New York, CIFC is a SEC registered investment
adviser and a publicly traded company (NASDAQ:CIFC). Serving
institutional investors globally, CIFC is one of the largest
managers of senior secured corporate credit. For more information,
please visit CIFC’s website at www.cifc.com.
Forward-Looking Statements
This release may contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 which reflect
CIFC's current views with respect to, among other things, CIFC's
operations and financial performance. You can identify these
forward-looking statements by the use of words such as “outlook,”
“believes,” “expects,” “potential,” “continues,” “may,” “will,”
“should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,”
“estimates,” “anticipates” or the negative version of these words
or other comparable words. Such forward-looking statements are
subject to various risks and uncertainties. Accordingly, there are
or will be important factors that could cause actual outcomes or
results to differ materially from those indicated in these
statements. CIFC believes these factors include but are not limited
to those described under the section entitled “Risk Factors” in its
Annual Report on Form 10-K for the fiscal year ended December 31,
2014, as such factors may be updated from time to time in its
periodic filings with the Securities and Exchange Commission, which
are accessible on the SEC's website at www.sec.gov. These factors
should not be construed as exhaustive and should be read in
conjunction with the other cautionary statements that are included
in this release and in the filings. CIFC undertakes no obligation
to publicly update or review any forward-looking statement, whether
as a result of new information, future developments or
otherwise.
Summary Reconciliation of GAAP Net
income (loss) attributable to CIFC Corp. to Non-GAAP Measures
(unaudited)
(In thousands) (unaudited) |
|
4Q'15 |
|
4Q'14 |
|
FY'15 |
|
FY'14 |
GAAP Net income
(loss) attributable to CIFC Corp. |
|
$ |
(7,666 |
) |
|
$ |
768 |
|
|
$ |
334 |
|
|
$ |
8,381 |
|
Income tax expense
(benefit) |
|
11,798 |
|
|
1,034 |
|
|
25,239 |
|
|
22,158 |
|
Amortization and
impairment of intangibles |
|
1,784 |
|
|
2,205 |
|
|
8,218 |
|
|
10,149 |
|
Management fee sharing
arrangements (1) |
|
(7,158 |
) |
|
(1,668 |
) |
|
(11,521 |
) |
|
(8,716 |
) |
Net (gain)/loss on
contingent liabilities and other |
|
418 |
|
|
757 |
|
|
2,210 |
|
|
2,932 |
|
Employee compensation
costs (2) |
|
4,501 |
|
|
318 |
|
|
5,327 |
|
|
1,610 |
|
Management fees
attributable to non-core funds |
|
(151 |
) |
|
(179 |
) |
|
(654 |
) |
|
(814 |
) |
Other (3) |
|
755 |
|
|
24 |
|
|
2,204 |
|
|
395 |
|
Total
reconciling items |
|
11,947 |
|
|
2,491 |
|
|
31,023 |
|
|
27,714 |
|
ENI |
|
$ |
4,281 |
|
|
$ |
3,259 |
|
|
$ |
31,357 |
|
|
$ |
36,095 |
|
Add: Corporate interest
expense |
|
1,552 |
|
|
569 |
|
|
3,808 |
|
|
4,236 |
|
Add: Depreciation of
fixed assets |
|
358 |
|
|
302 |
|
|
1,387 |
|
|
1,272 |
|
ENI
EBITDA |
|
$ |
6,191 |
|
|
$ |
4,130 |
|
|
$ |
36,552 |
|
|
$ |
41,603 |
|
Explanatory Notes:
(1) The Company shares management fees on certain of the
acquired CLOs it manages (shared with the party that sold the funds
to CIFC, or an affiliate thereof). Management fees are presented on
a gross basis for GAAP and on a net basis for ENI.(2) Employee
compensation and benefits has been adjusted for non-cash
compensation related to profits interests granted to CIFC employees
by CIFC Parent and sharing of incentive fees with certain former
employees established in connection with the Company's acquisition
of certain CLOs from CNCIM.(3) In 2015, Other predominately
includes professional fees related to the Reorganization
Transaction.
Reconciliation of GAAP to Non-GAAP Measures - Condensed
Consolidated Statements of Operations (1)
|
|
4Q'15 |
|
4Q'14 |
(In thousands) (unaudited) |
|
Consolidated GAAP |
|
Consolidation Adjustments |
|
Deconsolidated Non-GAAP |
|
Consolidated GAAP |
|
Consolidation Adjustments |
|
Deconsolidated Non-GAAP |
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Management and
incentive fees |
|
$ |
30,612 |
|
|
$ |
3,865 |
|
|
$ |
34,477 |
|
|
$ |
840 |
|
|
$ |
19,249 |
|
|
$ |
20,089 |
|
Interest income/Net
investment income |
|
388 |
|
|
$ |
(10,429 |
) |
|
(10,041 |
) |
|
488 |
|
|
(2,032 |
) |
|
(1,544 |
) |
Subtotal
revenues (2) |
|
31,000 |
|
|
(6,564 |
) |
|
24,436 |
|
|
1,328 |
|
|
17,217 |
|
|
18,545 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation
and benefits |
|
8,480 |
|
|
— |
|
|
8,480 |
|
|
6,581 |
|
|
— |
|
|
6,581 |
|
Share-based
compensation |
|
1,716 |
|
|
— |
|
|
1,716 |
|
|
1,041 |
|
|
— |
|
|
1,041 |
|
Corporate interest
expense |
|
1,552 |
|
|
— |
|
|
1,552 |
|
|
569 |
|
|
— |
|
|
569 |
|
Operating expenses |
|
8,137 |
|
|
— |
|
|
8,137 |
|
|
7,795 |
|
|
— |
|
|
7,795 |
|
Subtotal
expenses (2) |
|
19,885 |
|
|
— |
|
|
19,885 |
|
|
15,986 |
|
|
— |
|
|
15,986 |
|
Net other gain (loss)
(2) |
|
(5,648 |
) |
|
5,229 |
|
|
(419 |
) |
|
(1,225 |
) |
|
468 |
|
|
(757 |
) |
Net results of
Consolidated Entities (2) |
|
(1,336 |
) |
|
$ |
1,336 |
|
|
— |
|
|
100,955 |
|
|
(100,955 |
) |
|
— |
|
Income (loss)
before income taxes |
|
4,131 |
|
|
1 |
|
|
4,132 |
|
|
85,072 |
|
|
(83,270 |
) |
|
1,802 |
|
Income tax (expense)
benefit |
|
(11,798 |
) |
|
— |
|
|
(11,798 |
) |
|
(1,034 |
) |
|
— |
|
|
(1,034 |
) |
Net income
(loss) |
|
(7,667 |
) |
|
1 |
|
|
(7,666 |
) |
|
84,038 |
|
|
(83,270 |
) |
|
768 |
|
Net (income) loss
attributable to noncontrolling interests in Consolidated
Entities |
|
1 |
|
|
$ |
(1 |
) |
|
— |
|
|
(83,270 |
) |
|
83,270 |
|
|
— |
|
Net income
(loss) attributable to the Company (3) |
|
$ |
(7,666 |
) |
|
$ |
— |
|
|
$ |
(7,666 |
) |
|
$ |
768 |
|
|
$ |
— |
|
|
$ |
768 |
|
|
|
FY'15 |
|
FY'14 |
(In thousands) (unaudited) |
|
Consolidated GAAP |
|
Consolidation Adjustments |
|
Deconsolidated Non-GAAP |
|
Consolidated GAAP |
|
Consolidation Adjustments |
|
Deconsolidated Non-GAAP |
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Management and
incentive fees |
|
$ |
92,079 |
|
|
$ |
4,685 |
|
|
$ |
96,764 |
|
|
$ |
4,868 |
|
|
$ |
79,334 |
|
|
$ |
84,202 |
|
Interest income/Net
investment income |
|
5,333 |
|
|
(3,467 |
) |
|
1,866 |
|
|
790 |
|
|
13,349 |
|
|
14,139 |
|
Subtotal
revenues (2) |
|
97,412 |
|
|
1,218 |
|
|
98,630 |
|
|
5,658 |
|
|
92,683 |
|
|
98,341 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation
and benefits |
|
32,027 |
|
|
— |
|
|
32,027 |
|
|
28,805 |
|
|
— |
|
|
28,805 |
|
Share-based
compensation |
|
5,550 |
|
|
— |
|
|
5,550 |
|
|
2,692 |
|
|
— |
|
|
2,692 |
|
Corporate interest
expense |
|
3,808 |
|
|
— |
|
|
3,808 |
|
|
4,236 |
|
|
— |
|
|
4,236 |
|
Operating expenses |
|
29,462 |
|
|
— |
|
|
29,462 |
|
|
29,366 |
|
|
— |
|
|
29,366 |
|
Subtotal
expenses (2) |
|
70,847 |
|
|
— |
|
|
70,847 |
|
|
65,099 |
|
|
— |
|
|
65,099 |
|
Net other gain (loss)
(2) |
|
(6,391 |
) |
|
4,181 |
|
|
(2,210 |
) |
|
(229 |
) |
|
(2,474 |
) |
|
(2,703 |
) |
Net results of
Consolidated Entities (2) |
|
6,030 |
|
|
(6,030 |
) |
|
— |
|
|
69,505 |
|
|
(69,505 |
) |
|
— |
|
Income (loss)
before income taxes |
|
26,204 |
|
|
(631 |
) |
|
25,573 |
|
|
9,835 |
|
|
20,704 |
|
|
30,539 |
|
Income tax (expense)
benefit |
|
(25,239 |
) |
|
— |
|
|
(25,239 |
) |
|
(22,158 |
) |
|
— |
|
|
(22,158 |
) |
Net income
(loss) |
|
965 |
|
|
(631 |
) |
|
334 |
|
|
(12,323 |
) |
|
20,704 |
|
|
8,381 |
|
Net (income) loss
attributable to noncontrolling interests in Consolidated
Entities |
|
(631 |
) |
|
631 |
|
|
— |
|
|
20,704 |
|
|
(20,704 |
) |
|
— |
|
Net income
(loss) attributable to the Company (3) |
|
$ |
334 |
|
|
$ |
— |
|
|
$ |
334 |
|
|
$ |
8,381 |
|
|
$ |
— |
|
|
$ |
8,381 |
|
Explanatory Note:
(1) The Company early adopted ASU 2015-02 which was applied on a
modified retroactive basis (as of January 1, 2015). This resulted
in the deconsolidation of 30 CLOs and 1 credit fund as of January
1, 2015. As of December 31, 2015 we consolidated 2 CLOs and 2
credit funds. As of December 31, 2014 we consolidated 31 CLOs, 1
warehouse, and 2 credit funds. Year over year, our GAAP
Consolidated Statements of Operations will not be comparative for
certain line items.(2) Net Results of Consolidated Entities is
condensed herein and presented in detail in the GAAP Consolidated
Statements of Operations within revenues, expenses and other gain
(loss).(3) On December 31, 2015, the Company completed the
reorganization to become a publicly traded limited liability
company. For the year ended December 31, 2015, total Net
income (loss) was attributable to CIFC Corp. and effective
December 31, 2015, Net income (loss) is attributable to CIFC
LLC.
Investor Relations
Investor@CIFC.COM
(646) 367-6633
CIFC LLC (NASDAQ:CIFC)
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