Phenixfin Corporation · NASDAQ:PFX
Phenixfin — Medley Capital — Q1 2016 Earnings Presentation
25 slides from Phenixfin's earnings presentation, May 2016
Slide 1: Medley Capital Corporation Investor Presentation
Medley Capital Corporation (NYSE: MCC) Investor Presentation Quarter Ended March 31, 2016
Slide 2: Important Notice
Important Notice This presentation contains “forward looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to risks and uncertainties. Actual outcomes and results could differ materially from those suggested by this presentation du
Slide 3: Medley's Platform
Medley's Platform • Medley is a CREDIT-FOCUSED direct lender to the middle market MEDLEY (NYSE: MDLY) Public Vehicles Private Vehicles Medley Capital Sierra Income Separately Corporation Corporation Private Funds (NYSE: MCC) (Public non-traded BDC) Managed Accounts Middle Medley Senior Senior Senior
Slide 4: Key Initiatives to Drive Shareholder Value at MCC
Key Initiatives to Drive Shareholder Value at MCC 1. Utilizing a $50.0M 10b5-1 program with authorization to repurchase shares up to the most recently published NAV per share 2. Reduced fees and implemented netting with a three year look-back 3. Maintained investment grade ratings from Kroll and Ega
Slide 5: MCC Presents an Attractive Investment Opportunity
MCC Presents an Attractive Investment Opportunity • Attractive ROE with lower leverage levels vs. other yield oriented asset classes Operating Price / NAV Dividend Yield 1 Leverage 2 ROE 3 MCC 0.67x 18.2% 0.68x 10.8% BDCs 4 0.92x 11.0% 0.74x 10.6% REITs 5 2.67x 3.0% 1.12x 8.4% MLPs 6 1.47x 12.1% 1.4
Slide 6: Highly Diversified Senior Secured Floating Rate Portfolio
Highly Diversified Senior Secured Floating Rate Portfolio • MCC has a diversified portfolio of 65 companies with a 12.1% weighted average yield1 Industry Geography 2 1% 1% 1% Services: Business Automotive 2% 1% 2% 13% Construction & Building 6% 2% Banking, Finance, Insurance & Real Estate 2% 2% Heal
Slide 7: Portfolio by Issuer
Portfolio by Issuer Top 20 Investments: 52% Harrison Gypsum LLC 5% DHISCO Electronic Distribution, Inc. 4% Nation Safe Drivers Holdings, Inc. 3% Omnivere LLC 3% RCS Management Corp. Merchant Cash and Capital LLC 3% Accupac, Inc. 3% Seotowncenter, Inc. 48% NCM Group Holdings LLC 3% Nielsen & Bainbrid
Slide 8: Oil & Gas Exposure
Oil & Gas Exposure • MCC’s energy/oil & gas exposure is 5% of the portfolio representing four positions in total, and is in line with BDC peers • 100% of MCC’s exposure is in the form of 1st lien senior secured loans • The companies are service businesses with revenues diversified across upstream, m
Slide 9: Selective Investment Process
Selective Investment Process Pipeline – LTM 3/31/2016 Portfolio Construction Senior Secured • UCC (lien) filings / Cash control / Covenants Deals Originated 1,110 Broadly diversified • Sector / Collateral / Position size / Geography Thorough diligence • Deep underwriting by internal team Early Read
Slide 10: Well Positioned for a Rising Rate Environment
Well Positioned for a Rising Rate Environment • MCC is well positioned for a rising interest Assets rate environment 12/31/2011 3/31/2016 • 78% of the portfolio is floating rate • 62% of liabilities are fixed rate Floating Fixed • Favorable asset & liability mix 34% 22% The weighted average maturi
Slide 11: Debt Maturity Profile
Debt Maturity Profile • Leverage decreased from 0.78x in the prior quarter to 0.68x in the current quarter $250.0 $200.0 ING Term Loan $174.0 $150.0 USD in Millions $100.0 SBA Debenture Notes $5.02 SBA Debenture Notes ING 2023 $50.0 2021 $95.02 Revolver Notes Notes (MCV) $25.3 SBA 2019 (MCX) $63.51
Slide 12: Comparable Operating ROE & Expense Margins across Asset Classes
Comparable Operating ROE & Expense Margins across Asset Classes • BDCs offer high operating ROE with lower expense ratios compared to other asset classes Operating ROE and Expense Margins as a % of Total Revenue 1 15.0% 100.0% 12.4% 90.0% 10.8% 10.6% 10.3% 80.0% 10.0% 8.4% 70.0% 70.7% 60.0% 56.7% 50
Slide 13: Comparable Headcount to AUM
Comparable Headcount to AUM • Medley has made a significant investment to build out the team to support origination and asset management Number of Investment Professionals Per $100M in AUM 1 3.0 2.5 2.4 2.5 2.0 1.9 1.5 1.2 1.2 0.9 1.0 0.7 0.5 0.5 0.0 TCPC MCC TCRD TSLX FSC ARCC PSEC Investment Profe
Slide 14: Attractive Industry Dynamics
Attractive Industry Dynamics
Slide 15: Middle Market Opportunity – Large Target Market
Middle Market Opportunity – Large Target Market • Standalone US middle market would rank as the 3rd largest global economy • Private equity dry powder continues to be elevated at all-time highs Top GDPs 1 $16.8 Revenue: $500M - $1B $9.2 $6.7 $4.9 $3.6 $2.7 $2.5 $2.2 United States China US Middle Mar
Slide 16: The Opportunity – Large Number of Borrowers
The Opportunity – Large Number of Borrowers Number of Businesses by Market 1 39,000 Revenue: 2,000 $500M - $1B Revenue: $50M - $500M Target Market: 37,000 2,600 Revenue: $1B+ Large Market Middle Market 1. U.S. Census Bureau, 2007 Economic Census. Page 16
Slide 17: Powerful Secular Trends
Powerful Secular Trends • Banks continue to shift toward large borrowers • Regulatory environment is a headwind for banks in the middle-market 11,000 U.S. FDIC Insured Commercial Banks¹ 80% Bank Participation in Levered Loan Market (%)² 70% 10,000 60% 9,000 50% 8,000 40% 30% 7,000 20% 6,000 10% 5,00
Slide 18: Alternatives Represent a Growing Segment within Investments
Alternatives Represent a Growing Segment within Investments • By 2020: – $102 trillion global AUM – $13 trillion invested in alternatives (over 100% growth from 2012 levels) • Retail Growing as a % of Alternative Investments: – By 2020, retail expected to account for 31% ($4 trillion) of alternative
Slide 19: Regulatory Pressure Continues for Banks
Regulatory Pressure Continues for Banks Level 3 Assets for Financial Firms 1 Total Assets of Publicly Traded BDCs 2 $250 $681 $200 $150 BDC Opportunity as Banks Continue to Exit Level 3 Assets $100 $215 $50 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Illustrative Potential fo
Slide 20: MCC Financial Results
MCC Financial Results
Slide 21: Performance Overview
Performance Overview • Quarterly dividend of $0.30 per share for quarter ending 3/31/2016 • Net investment income of $0.26 per share for quarter ending 3/31/2016 • 12.1% portfolio yield as of 3/31/20161 • Total debt/credit facility commitments of $845.0 million • Since initiation of the share buybac
Slide 22: Financial & Portfolio Highlights
Financial & Portfolio Highlights Financial Highlights 3/31/16 12/31/15 9/30/15 6/30/15 3/31/15 Net investment income per share $ 0.26 $ 0.28 $ 0.31 $ 0.30 $ 0.30 Net realized gains (losses) $ - $ 0.10 $ (0.74) $ (0.16) $ (0.16) Net unrealized gains (losses) $ (0.25) $ (1.07) $ 0.13 $ 0.01 $ 0.07 Pro
Slide 23: Select Financial & Portfolio Information
Select Financial & Portfolio Information As of and for the Three Months Ended (dollars in millions, except per share data) 3/31/16 12/31/15 9/30/15 6/30/15 3/31/15 Net investment income per share - basic & diluted $ 0.26 $ 0.28 $ 0.31 $ 0.30 $ 0.30 Net realized and unrealized gains per share - basic
Slide 24: Balance Sheet
Balance Sheet As of (dollars in thousands, except per share data) 3/31/16 12/31/15 9/30/15 6/30/15 3/31/15 ASSETS (Unaudited) (Unaudited) (Audited) (Unaudited) (Unaudited) Investments at fair value Non-control/non-affiliate investments $932,054 $1,012,559 $1,131,894 $1,156,184 $ 1,164,170 Control in
Slide 25: Corporate Information
Corporate Information Board of Directors Corporate Officers Research Coverage Corporate Headquarters BROOK TAUBE BROOK TAUBE BARCLAYS 280 Park Avenue, 6th Floor Chairman & Chief Executive Officer Chairman & Chief Executive Officer Mark C. DeVries – (212)-526-9484 New York, NY 10017 (212)-759-0777 SE