CIFC LLC CIFC LLC Announces Fourth Quarter and Full Year of 2015 Results and a $0.34 Distribution
NEW YORK, March 21, 2016 - 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% | ||||||||
CIFC LLC issued this content on 21 March 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 21 March 2016 21:45:01 UTC
Original Document: http://www.cifc.com/cifc-llc-announces-fourth-quarter-and-full-year-of-2015-results-and-a-quarterly-dividend/
