Market Overview

CIFC LLC Announces Third Quarter 2016 Results

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NEW YORK, Nov. 03, 2016 (GLOBE NEWSWIRE) -- CIFC LLC (NASDAQ: CIFC) ("CIFC" or the "Company") today announced its results for the third quarter ended September 30, 2016.

Highlights

  • On August 19, 2016, CIFC entered into a definitive Agreement and Plan of Merger (the "Merger Agreement") with F.A.B. Holdings I LP, a limited partnership organized and existing under the laws of Delaware ("Parent") and CIFC Acquisition, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of Parent ("Merger Sub") (referred to as the "Strategic Transaction"). If the transactions contemplated by the Merger Agreement are completed, CIFC shareholders will be entitled to receive $11.36 in cash, without interest and subject to any withholding of taxes required by applicable law, for each common share, par value $0.001 (unless the shareholder has properly exercised their appraisal rights with respect to such shares). Under the Merger Agreement, Merger Sub will merge with and into CIFC with CIFC surviving as a direct wholly owned subsidiary of Parent.
  • GAAP net income (loss) for the nine months was $39.8 million as compared to $8.0 million for the same period in the prior year. GAAP net income (loss) for the quarter was $17.7 million as compared to $1.5 million for the same period in the prior year.
  • Economic Net Income "ENI," a non-GAAP measure, for the nine months was $47.5 million as compared to $27.1 million for the same period in the prior year. ENI for the quarter was $19.8 million as compared to $4.5 million for the same period in the prior year.
  • Fee Earning Assets Under Management ("AUM") was $13.2 billion as of September 30, 2016, as compared to $14.1 billion as of December 31, 2015.
  • On August 19, 2016, CIFC's board of directors declared a cash distribution of $0.10 per share which was paid on September 12, 2016 to shareholders of record as of the close of business on August 31, 2016.

Executive Overview

Strong performance in credit assets continued in the third quarter driven by an increased appetite for risk from investors. The U.S. leveraged loan market posted a 3.08% return over the quarter for a 7.72% return year-to-date (source: S&P/LSTA Leveraged Loan Index). Net investment income was $22.1 million and $42.3 million for the third quarter and year to date, respectively. Our Credit Funds continued to see inflows, pushing Credit Fund AUM to $1.5 billion. Fee income related to Credit Funds increased by 53% to $4.4 million for the year. As expected, the new issue Collateralized Loan Obligation ("CLO") market improved during the third quarter with $19.9 billion of new issuance. We are managing two warehouses and expect to issue two CLOs in the near future. We continue to be well capitalized to issue risk retention compliant CLOs in the future.

Selected Financial Metrics 
(In thousands, except per share data)

SELECTED GAAP RESULTS3Q'163Q'15% Change
vs. 3Q'15
YTD'16YTD'15% Change
vs. YTD'15
Total net revenues (1)$40,707 $24,512  66%$127,693 $77,349  65%
Total expenses (1)$35,098 $27,348  28%$94,901 $64,481  47%
Income tax expense (benefit) - Current$(1,448)$655  (321)%$(142)$6,145  (102)%
Income tax expense (benefit) - Deferred$181 $(129) (240)%$3,021 $7,296  (59)%
Net income (loss) attributable to CIFC LLC$17,671 $1,469  1,103%$39,760 $8,000  397%
Earnings (loss) per share - basic$0.75 $0.06  1,150%$1.63 $0.32  409%
Earnings (loss) per share - diluted$0.67 $0.06  1,017%$1.52 $0.30  407%
Distributions declared per share$0.10 $0.10        — %$0.69 $0.30  130%
Weighted average shares outstanding - basic23,620 25,368  (7)%24,354 25,317  (4)%
Weighted average shares outstanding - diluted          26,201 26,465  (1)%26,088 26,494  (2)%


NON-GAAP FINANCIAL MEASURES (2)3Q'163Q'15% Change
vs. 3Q'15
YTD'16YTD'15% Change
vs. YTD'15
Management Fees from CLOs13,033 14,407  (10)%       40,711 43,347      (6)%
Management Fees from Non-CLO products                1,770 1,069  66%4,440 2,907  53%
Total Management Fees14,803 15,476  (4)%45,151 46,254  (2)%
Incentive Fees1,964 3,101  (37)%14,108 11,167  26%
Net Investment Income22,074 58  37,959%42,258 11,908  255%
  Total ENI Revenues38,841 18,635  108%101,517 69,329  46%
Employee compensation and benefits10,472 7,309  43%27,965 22,780  23
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