TICC Announces Results of Operations for the Quarter Ended September 30, 2012 and Quarterly Distribution of $0.29 per share
by Marketwire
GREENWICH, CT -- (Marketwire) -- 11/07/12 -- TICC Capital Corp. (NASDAQ: TICC) announced today its financial results for the quarter ended September 30, 2012 and a distribution of $0.29 per share for the fourth quarter of 2012.
HIGHLIGHTS
- Total investment income for the third quarter of 2012 amounted to approximately $15.6 million, down approximately 23.8% from the second quarter of 2012 due largely to the non-recurrence of a one-time fee of $3.4 million earned during the second quarter of 2012 as well as lower interest income in the third quarter.
- For the quarter ended September 30, 2012, we recorded net investment income of approximately $4.6 million, or approximately $0.12 per share on a GAAP basis. Excluding the impact of a capital gains incentive fee accrual, our core net investment income(1) was approximately $9.3 million, or approximately $0.24 per share. We also recorded net unrealized appreciation of approximately $21.5 million and net realized capital gains of approximately $1.8 million. In total, we had a net increase in net assets resulting from operations of approximately $27.9 million or $0.71 per share for the third quarter.
- As of the end of the third quarter of 2012 we held one loan with a fair value of approximately $1.1 million on non-accrual status.
- Our weighted average credit rating on a fair value basis was 2.2 at the end of the third quarter of 2012 (compared to 2.1 at the end of the second quarter of 2012).
- Operating expenses before the capital gains incentive fee for the quarter ended September 30, 2012 were approximately $6.3 million, which was down from the second quarter of 2012 by approximately $200,000.
- The reported capital gains incentive fee expense was approximately $4.6 million for the quarter ended September 30, 2012. The capital gains incentive fee expense, as reported under generally accepted accounting principles, is calculated on the basis of net realized and unrealized gains and losses at the end of each period. The expense related to the hypothetical liquidation of the portfolio (and assuming no other changes in realized or unrealized gains and losses) would only become payable to our investment adviser in the event of a complete liquidation of our portfolio as of period end and the termination of the Investment Advisory Agreement (the "Agreement") on such date. The $5.7 million capital gains incentive fee accrual as of September 30, 2012 relates entirely to this hypothetical liquidation calculation.
The amount of the capital gains incentive fee which will actually be payable is determined in accordance with the terms of the Agreement and is calculated as of the end of each calendar year (or upon termination of the Agreement). The terms of the Agreement state that the capital gains incentive fee calculation is based on net realized gains, if any, offset by gross unrealized depreciation for the calendar year. No effect is given to gross unrealized appreciation in this calculation. - Our Board of Directors has declared a distribution of $0.29 per share for the fourth quarter of 2012.
- Payable Date: December 31, 2012
- Record Date: December 17, 2012
- During the third quarter of 2012, we deployed approximately $128 million in additional investments. For the same period, we received proceeds of approximately $54.3 million from repayments, sales and amortization payments on our debt investments.
- At September 30, 2012, the weighted average yield of our debt investments was approximately 10.3%, compared with 11.2% at June 30, 2012.
- At September 30, 2012, net asset value per share was $9.85 compared with the net asset value per share at June 30, 2012 of $9.47.
- On August 23, 2012, we closed a $160 million debt securitization transaction, consisting of $120 million of secured notes and $40 million in subordinated notes. The secured notes were issued in four classes. The class A-1 notes have an initial face amount of $88 million, are rated AAA(sf)/Aaa(sf) by Standard & Poor's Ratings Services (S&P) and Moody's Investors Service, Inc. (Moody's), respectively, and bear interest at three-month LIBOR plus 1.75%. The class B-1 notes have an initial face amount of $10 million, are rated AA(sf)/Aa2(sf) by S&P and Moody's, respectively, and bear interest at three-month LIBOR plus 3.50%. The class C-1 notes have an initial face amount of $11.5 million, are rated A(sf)/A2(sf) by S&P and Moody's, respectively, and bear interest at three-month LIBOR plus 4.75%. The class D-1 notes have an initial face amount of $10.5 million, are rated BBB(sf)/Baa2(sf) by S&P and Moody's, respectively, and bear interest at three-month LIBOR plus 5.75%. TICC presently owns all of the subordinated notes and $3.0 million of the class D-1 notes issued in the CLO transaction. The secured notes have a stated maturity date of August 25, 2023 and are subject to a two year non-call period. The CLO has a four year reinvestment period.
- On September 26, 2012, we closed a private placement of 5-year unsecured 7.50% Senior Convertible Notes Due 2017 (the "Notes"). A total of $105 million aggregate principal amount of the Notes were issued at the closing.
- The Notes are convertible into shares of our common stock based on an initial conversion rate of 87.2448 shares of our common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $11.46 per share of common stock, representing an approximately 10.0% conversion premium over the last reported sale price of our common stock at the time of issuance on September 20, 2012, which was $10.42 per share. The conversion price for the Notes will be reduced for quarterly cash dividends paid to common shares to the extent that the quarterly dividend exceeds $0.29 per share, subject to adjustment.
- The Notes bear interest at an annual rate of 7.50%, payable semiannually in arrears on May 1 and November 1 of each year, beginning May 1, 2013. The Notes will mature on November 1, 2017, unless previously converted in accordance with their terms. The Notes are general unsecured obligations of TICC, rank equally in right of payment with TICC's future senior unsecured debt, and will rank senior in right of payment to any potential subordinated debt, should any be issued in the future.
- The Notes are convertible into shares of our common stock based on an initial conversion rate of 87.2448 shares of our common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $11.46 per share of common stock, representing an approximately 10.0% conversion premium over the last reported sale price of our common stock at the time of issuance on September 20, 2012, which was $10.42 per share. The conversion price for the Notes will be reduced for quarterly cash dividends paid to common shares to the extent that the quarterly dividend exceeds $0.29 per share, subject to adjustment.
- On October 22, 2012, we announced that we issued an additional $10 million aggregate principal amount of the Notes pursuant to the exercise of the initial purchasers' option.
(1)Supplemental Information Regarding Core Net Investment Income and Core Net Increase in Net Assets Resulting from Operations
On a supplemental basis, we provide information relating to core net investment income and core net increase in net assets resulting from operations, non-GAAP measures. These measures are provided in addition to, but not a substitute for, net investment income and net increase in net assets resulting from operations. Core net investment income represents net investment income excluding our capital gains incentive fee. Core net increase in net assets resulting from operations represents net increase in net assets resulting from operations excluding the capital gains incentive fee. As the capital gains incentive fee is based on a hypothetical event that did not occur, we believe that core net investment income and core net increase in net assets resulting from operations are useful indicators of non- hypothetical transactions during this period.
The following table provides a reconciliation of net investment income to core net investment income (for the three and nine months ended September 30, 2012):
Three Months Ended Nine Months Ended
September 30, 2012 September 30, 2012
----------------------- -----------------------
Per Share Per Share
Amount Amounts Amount Amounts
----------- ----------- ----------- -----------
Net investment income $ 4,607,574 $ 0.117 $27,799,570 $ 0.754
Capital gains incentive fee 4,649,814 $ 0.118 4,559,957 $ 0.124
----------- ----------- ----------- -----------
Core net investment income $ 9,257,388 $ 0.235 $32,359,527 $ 0.878
=========== =========== =========== ===========
We will host a conference call to discuss our third quarter results on Wednesday, November 7 at 10:00 AM ET. Please call 1-877-317-6789 to participate. A replay of the conference call will be available for approximately 30 days. The replay number is 1-877-344-7529, and the replay passcode is 10020948.
The following financial statements are unaudited and without footnotes. Readers who would like additional information should obtain our Form 10-K for the period ended December 31, 2011, and subsequent reports on Form 10-Q as they are filed.
TICC CAPITAL CORP.
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
September 30, December 31,
2012 2011
-------------- --------------
ASSETS
Non-affiliated/non-control investments
(cost: $495,670,473 @ 9/30/12;
$372,091,255 @ 12/31/11) $ 521,247,939 $ 375,793,839
Control investments (cost: $17,239,639 @
9/30/12; $17,434,371 @ 12/31/11) 16,450,000 15,675,000
-------------- --------------
Total investments at fair value 537,697,939 391,468,839
-------------- --------------
Cash and cash equivalents 122,905,470 4,494,793
Restricted cash 96,729,990 23,183,698
Deferred debt issuance costs 8,182,726 2,895,873
Interest and distributions receivable 4,497,012 1,837,882
Securities sold not settled 503,750 -
Other assets 102,138 238,485
-------------- --------------
Total assets $ 770,619,025 $ 424,119,570
============== ==============
LIABILITIES
Notes payable - TICC CLO LLC, net of
discount $ 99,842,691 $ 99,710,826
Notes payable - TICC CLO 2012-1 LLC, net
of discount 112,600,474 -
Convertible senior notes payable 105,000,000 -
Accrued interest payable 1,027,631 1,076,113
Investment advisory fee payable to
affiliate 3,800,311 2,895,799
Accrued capital gains incentive fee to
affiliate 5,668,706 1,108,749
Securities purchased not settled 34,561,217 13,352,500
Accrued expenses 1,220,546 873,592
-------------- --------------
Total liabilities 363,721,576 119,017,579
-------------- --------------
NET ASSETS
Common stock, $0.01 par value, 100,000,000
shares authorized, and 41,312,780 and
32,818,428 issued and outstanding,
respectively 413,128 328,184
Capital in excess of par value 452,280,904 376,991,540
Net unrealized appreciation on investments 24,787,827 1,943,213
Accumulated net realized losses on
investments (66,752,406) (70,308,108)
Distributions in excess of investment
income (3,832,004) (3,852,838)
-------------- --------------
Total net assets 406,897,449 305,101,991
-------------- --------------
Total liabilities and net assets $ 770,619,025 $ 424,119,570
============== ==============
Net asset value per common share $ 9.85 $ 9.30
TICC CAPITAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September September September September
30, 2012 30, 2011 30, 2012 30, 2011
------------ ------------ ------------ ------------
INVESTMENT INCOME
From non-
affiliated/non-
control investments:
Interest income -
debt investments $ 8,908,966 $ 7,435,546 $ 27,159,248 $ 21,198,270
Distributions from
securitization
vehicles and equity
investments 6,025,634 3,196,002 17,919,415 9,079,259
Commitment,
amendment fee
income and other
income 278,613 60,953 4,524,825 506,972
------------ ------------ ------------ ------------
Total investment
income from non-
affiliated/non-
control
investments 15,213,213 10,692,501 49,603,488 30,784,501
------------ ------------ ------------ ------------
From control
investments:
Interest income -
debt investments 377,401 392,449 1,136,010 1,194,871
Distributions from
equity investments - - 62,041 -
------------ ------------ ------------ ------------
Total investment
income from control
investments 377,401 392,449 1,198,051 1,194,871
------------ ------------ ------------ ------------
Total investment
income 15,590,614 11,084,950 50,801,539 31,979,372
------------ ------------ ------------ ------------
EXPENSES
Compensation expense 289,361 217,639 839,049 713,491
Investment advisory
fees 2,796,873 1,942,657 7,390,894 5,218,773
Professional fees 420,696 386,087 1,647,733 847,301
Interest expense and
other debt
financing expenses 1,398,975 434,283 3,052,056 434,283
General and
administrative 423,884 185,833 1,151,363 760,576
------------ ------------ ------------ ------------
Total expenses
before incentive
fees 5,329,789 3,166,499 14,081,095 7,974,424
------------ ------------ ------------ ------------
Net investment
income incentive
fees 1,003,437 455,864 4,360,917 1,444,415
Capital gains
incentive fees 4,649,814 (4,153,198) 4,559,957 873,288
------------ ------------ ------------ ------------
Total incentive
fees 5,653,251 (3,697,334) 8,920,874 2,317,703
------------ ------------ ------------ ------------
Total expenses 10,983,040 (530,835) 23,001,969 10,292,127
------------ ------------ ------------ ------------
Net investment income 4,607,574 11,615,785 27,799,570 21,687,245
------------ ------------ ------------ ------------
Net change in
unrealized
(depreciation)
appreciation on
investments 21,471,506 (20,114,242) 22,844,614 (17,051,762)
------------ ------------ ------------ ------------
Net realized gains on
investments 1,777,564 83,178 3,555,702 2,713,526
------------ ------------ ------------ ------------
Net increase in net
assets resulting from
operations $ 27,856,644 $ (8,415,279) $ 54,199,886 $ 7,349,009
============ ============ ============ ============
Net increase in net
assets resulting from
net investment income
per common share:
Basic $ 0.12 $ 0.36 $ 0.75 $ 0.67
Diluted $ 0.12 $ 0.36 $ 0.75 $ 0.67
Net increase in net
assets resulting from
operations per common
share:
Basic $ 0.71 $ (0.26) $ 1.47 $ 0.23
Diluted $ 0.69 $ (0.26) $ 1.45 $ 0.23
Weighted average
shares of common
stock outstanding:
Basic 39,383,076 32,672,294 36,859,005 32,327,163
Diluted 40,777,815 32,672,294 37,327,312 32,327,163
TICC CAPITAL CORP.
FINANCIAL HIGHLIGHTS (UNAUDITED)
Three Three
Months Months Nine Months Nine Months
Ended Ended Ended Ended
September September September September
30, 2012 30, 2011 30, 2012 30, 2011
(unaudited) (unaudited) (unaudited) (unaudited)
----------- ----------- ----------- -----------
Per Share Data
----------------------
Net asset value at
beginning of period $ 9.47 $ 9.85 $ 9.30 $ 9.85
----------- ----------- ----------- -----------
Net investment
income(1) 0.12 0.36 0.75 0.67
Net realized and
unrealized capital
gains 0.59 (0.62) 0.72 (0.44)
----------- ----------- ----------- -----------
Total from net
investment operations 0.71 (0.26) 1.47 0.23
----------- ----------- ----------- -----------
Distributions per
share from net
investment income (0.29) (0.25) (0.83) (0.74)
Distributions based on
weighted average
share impact (0.03) - (0.08) -
Distributions from net
realized capital
gains - - - -
Tax return of capital
distributions - - - -
----------- ----------- ----------- -----------
Total distributions(2) (0.32) (0.25) (0.91) (0.74)
----------- ----------- ----------- -----------
Effect of shares
issued, net of
offering expenses (0.01) - (0.01) -
----------- ----------- ----------- -----------
Net asset value at end
of period $ 9.85 $ 9.34 $ 9.85 $ 9.34
=========== =========== =========== ===========
Per share market value
at beginning of
period $ 9.69 $ 9.60 $ 8.65 $ 11.21
Per share market value
at end of period $ 10.40 $ 8.17 $ 10.40 $ 8.17
Total return(3) 10.32% (12.29%) 30.55% (21.23%)
Shares outstanding at
end of period 41,312,780 32,745,881 41,312,780 32,745,881
Ratios/Supplemental
Data
----------------------
Net assets at end of
period (000's) 406,897 305,801 406,897 305,801
Average net assets
(000's) 374,696 326,988 349,297 321,174
Ratio of expenses to
average net assets:
Expenses before
incentive fees(4) 5.69% 3.87% 5.37% 3.31%
Net investment
income incentive
fees(4) 1.07% 0.56% 1.67% 0.60%
Capital gains
incentive fees(4) 4.96% (5.08)% 1.74% 0.36%
----------- ----------- ----------- -----------
Total ratio of
expenses to average
net assets(4) 11.72% (0.65%) 8.78% 4.27%
=========== =========== =========== ===========
Ratio of expenses,
excluding interest
expense, to average
net assets(4) 10.23% (1.18)% 7.62% 4.09%
Ratio of net
investment income to
average net assets(4) 4.92% 14.21% 10.61% 9.00%
(1) Represents per share net investment income for the period, based upon average shares outstanding.
(2) Management monitors available taxable earnings, including net investment income and realized capital gains, to determine if a tax return of capital may occur for the year. To the extent the Company's taxable earnings fall below the total amount of the Company's distributions for that fiscal year, a portion of those distributions may be deemed a tax return of capital to the Company's stockholders. The tax character of distributions will be determined at the end of the fiscal year. However, if the character of such distributions were determined as of September 30, 2012, none of the distributions for 2012 would have been characterized as a tax return of capital to the Company's stockholders; this tax return of capital may differ from the return of capital calculated with reference to net investment income for financial reporting purposes.
(3) Total return equals the increase or decrease of ending market value over beginning market value, plus distributions, divided by the beginning market value, assuming dividend reinvestment prices obtained under the Company's dividend reinvestment plan. Total return is not annualized.
(4) Annualized.
About TICC Capital Corp.
TICC Capital Corp. is a publicly-traded business development company principally engaged in providing capital to established small and mid-size companies, investing in syndicated bank loans and purchasing debt and equity tranches of collateralized loan obligations. Companies interested in learning more about financing opportunities should contact Debdeep Maji at (203) 983-5285.
Forward-Looking Statements
This press release contains forward-looking statements subject to the inherent uncertainties in predicting future results and conditions. Any statements that are not statements of historical fact (including statements containing the words "believes," "plans," "anticipates," "expects," "estimates" and similar expressions) should also be considered to be forward-looking statements. Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements. These factors are identified from time to time in our filings with the Securities and Exchange Commission. We undertake no obligation to update such statements to reflect subsequent events.
Contacts:
Bruce Rubin
203-983-5280
Patrick Conroy
203-983-5282