Phenixfin Corporation · NASDAQ:PFX
Phenixfin — Medley Capital — Q4 2015 Earnings Presentation
27 slides from Phenixfin's earnings presentation, February 2016
Slide 1: Medley Capital Corporation Investor Presentation, Quarter Ended December 31, 2015
Medley Capital Corporation (NYSE: MCC) Investor Presentation Quarter Ended December 31, 2015
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. Executing a $50.0M 10b5-1 program with authorization to repurchase shares up to the most recently published NAV per share 2. Raised $74.0M1 of unsecured senior notes from institutional and retail market 3. Reduced fees and implemented netting with
Slide 5: Strong Relative Dividend On Current Share Price
Strong Relative Dividend On Current Share Price • MCC’s dividend provides an attractive current yield for investors compared to our BDC peers Current Annualized Dividend Yield On Current Share Price 1 25.0% 20.6% 20.0% 18.1% 16.7% 15.6% 14.9% 15.0% 12.3% 11.7% 10.8% 11.2% 10.8% 9.9% 10.0% 8.3% 5.0%
Slide 6: Strong Relative Dividend On NAV Per Share
Strong Relative Dividend On NAV Per Share • MCC’s dividend provides an attractive return on NAV for investors Current Annualized Dividend Yield On NAV Per Share 1 14.0% 12.4% 12.0% 12.0% 10.4% 10.2% 10.0% 9.9% 9.8% 10.0% 9.5% 9.2% 9.1% 8.1% 8.0% 8.0% 6.0% 4.0% 2.0% 0.0% PNNT MCC TCRD AINV TSLX NMFC
Slide 7: 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 0.66x 18.1% 0.78x 11.0% BDCs 4 0.81x 11.7% 0.70x 10.3% REITs 5 2.71x 3.0% 1.07x 10.9% MLPs 6 1.54x 12.1% 1.
Slide 8: Highly Diversified Senior Secured Floating Rate Portfolio
Highly Diversified Senior Secured Floating Rate Portfolio • MCC has a diversified portfolio of 68 companies with a 12.2% weighted average yield1 Industry Geography 2 1% 1% 1% Construction & Building Services: Business 1% 2% 2% 2% 13% Automotive Banking, Finance, Insurance & Real Estate 7% 2% Healthc
Slide 9: Portfolio by Issuer
Portfolio by Issuer Top 20 Investments: 50% Harrison Gypsum LLC 5% 4% DHISCO Electronic Distribution, Inc. 3% Nation Safe Drivers Holdings, Inc. Response Team Holdings LLC 3% Merchant Cash and Capital LLC 3% Accupac, Inc. 3% RCS Management Corp 3% Seotowncenter, Inc. 50% United Road Towing Inc 2% Om
Slide 10: Oil & Gas Exposure
Oil & Gas Exposure • MCC’s energy/oil & gas exposure is 5.1% of the portfolio representing 4 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, mi
Slide 11: Selective Investment Process
Selective Investment Process Pipeline – LTM 12/31/2015 Portfolio Construction Senior Secured • UCC (lien) filings / Cash control / Covenants Deals Originated 1,085 Broadly diversified • Sector / Collateral / Position size / Geography Thorough diligence • Deep underwriting by internal team Early Read
Slide 12: 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 12/31/2015 • 79% of the portfolio is floating rate • 55% of liabilities are fixed rate Floating Fixed • Favorable asset & liability mix 34% 21% The weighted average matur
Slide 13: Debt Maturity Profile
Debt Maturity Profile • On 12/17/2015 MCC closed $74.0M of 6.5% unsecured senior notes due 2021 • The balance on the notes reflects $3.2M additional issuance exercised by underwriters under greenshoe provision after quarter end used to repay revolver borrowings. $300.0 $250.0 ING Term Loan $174.0 $2
Slide 14: 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 1 100.0% 11.0% 10.9% 10.3% 9.7% 90.0% 10.0% 74.7% 8.6% 80.0% 70.0% 60.0% 5.0% 58.6% 50.0
Slide 15: 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 2.4 2.5 2.3 2.0 2.0 1.5 1.1 1.1 1.0 0.9 0.7 0.5 0.5 0.0 TCPC MCC TCRD TSLX FSC ARCC PSEC Investment Profe
Slide 16: Attractive Industry Dynamics
Attractive Industry Dynamics
Slide 17: The Opportunity – Middle-Market is Substantial
The Opportunity – Middle-Market is Substantial Top GDPs 1 $16.8 Middle-Market • Accounts for 40% of GDP2 2 • Standalone would be the world’s 3rd largest economy • Companies tend to be private with less access to traditional credit $9.2 $6.7 $4.9 $3.6 $2.7 $2.5 $2.2 United States China US Middle Mark
Slide 18: 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 18
Slide 19: 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 20: 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 21: 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 $227 $50 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 9/30/2015 Illustrative 2007 9/
Slide 22: MCC Financial Results
MCC Financial Results
Slide 23: Performance Overview
Performance Overview • Quarterly dividend of $0.30 per share for quarter ending 12/31/2015 • Net investment income of $0.28 per share for quarter ending 12/31/2015 • 12.2% portfolio yield as of 12/31/20151 • Total debt/credit facility commitments of $927.5 million • Since initiation of the share buy
Slide 24: Financial & Portfolio Highlights
Financial & Portfolio Highlights Financial Highlights 12/31/15 9/30/15 6/30/15 3/31/15 12/31/14 Net investment income per share $ 0.28 $ 0.31 $ 0.30 $ 0.30 $ 0.35 Net realized gains (losses) $ 0.10 $ (0.74) $ (0.16) $ (0.16) $ - Net unrealized gains (losses) $ (1.07) $ 0.13 $ 0.01 $ 0.07 $ (0.66) Pr
Slide 25: Select Financial & Portfolio Information
Select Financial & Portfolio Information As of and for the Three Months Ended (dollars in millions, except per share data) 12/31/15 9/30/15 6/30/15 3/31/15 12/31/14 Net investment income per share - basic & diluted $ 0.28 $ 0.31 $ 0.30 $ 0.30 $ 0.35 Net realized and unrealized gains per share - basi
Slide 26: Balance Sheet
Balance Sheet As of (dollars in thousands, except per share data) 12/31/15 9/30/15 6/30/15 3/31/15 12/31/14 ASSETS (Unaudited) (Audited) (Unaudited) (Unaudited) (Unaudited) Investments at fair value Non-control/non-affiliate investments $1,012,559 $1,131,894 $1,156,184 $ 1,164,170 $ 1,162,864 Contro
Slide 27: Corporate Information
Corporate Information Board of Directors Corporate Officers Research Coverage Corporate Headquarters BROOK TAUBE BROOK TAUBE BARCLAYS 375 Park Avenue, 33rd Floor Chairman & Chief Executive Officer Chairman & Chief Executive Officer Mark C. DeVries – (212)-526-9484 New York, NY 10152 (212)-759-0777 S