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American Capital Senior Floating Reports Net Investment Income of $0.29 Per Share

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May 2, 2016 4:34 PM EDT

BETHESDA, Md., May 2, 2016 /PRNewswire/ -- American Capital Senior Floating, Ltd. ("ACSF" or the "Company") (Nasdaq: ACSF) today reported net investment income of $2.9 million, or $0.29 per share, for the quarter ended March 31, 2016 and net asset value ("NAV") of $117.2 million, or $11.72 per share, as of March 31, 2016. 

FIRST QUARTER 2016 FINANCIAL HIGHLIGHTS

  • Actively managed portfolio through periods of volatility
    • Invested $9.0 million into 9 new loan obligors and 2 new CLO equity positions
    • Sold $8.4 million of investments and received $14.6 million of repayments, including distributions received from our CLO Portfolio
  • $0.29 per share net investment income, or $2.9 million
    • Decreased $0.02 per share from Q4 2015 net investment income of $0.31 per share
  • $0.22 per share net earnings from operations, or $2.2 million
    • $1.66 per share improvement from Q4 2015 net loss from operations of $(1.44) per share, primarily driven by $0.2 million net unrealized appreciation on the Investment Portfolio for the quarter ended March 31, 2016 as compared to $16.8 million net unrealized depreciation for the quarter ended December 31, 2015
  • $11.72 NAV per share as of March 31, 2016, or $117.2 million
    • $0.07 per share decrease from December 31, 2015 NAV of $11.79 per share
  • $0.097 per share monthly cash distributions to stockholders, which equates to $0.291 per quarter
    • 9.9% annualized yield on the March 31, 2016 NAV per share
    • 11.6% annualized yield on the March 31, 2016 closing market price of $10.03 per share
  • $216.0 million Investment Portfolio at fair value as of March 31, 2016
    • $164.2 million, or 76%, in first lien floating rate loans
    • $17.9 million, or 8%, in second lien floating rate loans
    • $33.8 million, or 16%, of equity in collateralized loan obligations ("CLOs")
    • $0.1 million of common equity
  • 6.40% Investment Portfolio yield at cost as of March 31, 2016
    • 3 basis point increase from 6.37% yield at cost as of December 31, 2015
  • 2.60% cost of funds as of March 31, 2016
    • 28 basis point increase from 2.32% cost of funds as of December 31, 2015 due to an increase in LIBOR and unused facility fees
    • Includes 2.21% interest expense, 0.30% for unused facility fees and 0.09% for amortization of debt financing costs
  • 0.84x debt to equity ratio as of March 31, 2016
    • Decreased 0.09x from 0.93x as of December 31, 2015

"This was an interesting quarter for the loan market," said Mark Pelletier, President and Chief Investment Officer.  "Continuing the trajectory from the fourth quarter, loan prices remained weak at the beginning of the quarter; however, gains in March more than offset the losses in the beginning of the quarter, ultimately closing out the quarter with the first monthly gain since May 2015. While prices in the CLO market continued to experience weakness, issuances began to rebound in March, indicating an improvement in overall market sentiment."

John Erickson, Chief Financial Officer and Executive Vice President commented, "we were pleased to announce our monthly distributions for May, June, and July 2016 of $0.097 per share. Since our IPO, we have paid $2.58 per share in distributions to our stockholders.  Our current annualized distribution to shareholders represents a 9.9% yield on our March 31, 2016 NAV per share and an 11.6% yield on our March 31, 2016 closing share price."

PORTFOLIO AND INVESTMENT ACTIVITY

As of March 31, 2016, the fair market value of ACSF's portfolio totaled $216.0 million and was comprised of $164.2 million (or 76%) of first lien floating rate loans, $17.9 million (or 8%) of second lien floating rate loans (collectively, the "Loan Portfolio") and $33.8 million (or 16%) of CLO equity (the "CLO Portfolio" and, together with the Loan Portfolio, the "Investment Portfolio").  The Investment Portfolio had a yield at cost of 6.4% as of March 31, 2016.

As a result of a decrease in projected future cash flows on the CLO Portfolio, ACSF recorded $1.1 million in credit loss write downs on three CLO equity investments as of March 31, 2016.  The credit loss write downs do not affect the GAAP cost basis on our balance sheet, but do impact the amount of GAAP cost basis that is amortized as cash flows are received on these investments.  ACSF continues to accrete income on these three CLO investments but will amortize $1.1 million less GAAP cost basis over the life of these investments and will record a $1.1 million realized loss upon the sale or redemption of these investments.   ACSF has recorded life-to-date credit loss write downs on the CLO Portfolio of $5.1 million as of March 31, 2016.

As of March 31, 2016, ACSF's Loan Portfolio was diversified across 128 issuers and its CLO Portfolio was invested in 22 issuers and 16 collateral managers.  The Investment Portfolio was actively managed during the quarter with $9.0 million of purchases and $23.0 million of sales and repayments.  The following table depicts the Investment Portfolio activity by investment type for the quarter ended March 31, 2016:

First Lien

Second Lien

CLO Equity

Common Equity

Total

$ in millions

Amount

Yield

(at cost)

Amount

Yield(at cost)

Amount

Yield(at cost)

Amount

Yield(at cost)

Amount

Yield(at cost)

December 31, 2015 - FV

$

169.6

5.0

%

$

22.6

7.9

%

$

36.9

10.0

%

$

—

n/a

$

229.1

6.4

%

Purchases

7.1

6.1

%

0.4

7.6

%

1.5

37.8

%

—

n/a

9.0

9.7

%

Sales

(6.9)

(4.7)

%

(1.5)

(9.0)

%

—

n/a

—

n/a

(8.4)

(5.0)

%

Repayments (1)

(7.7)

(4.7)

%

(3.3)

(7.4)

%

(3.6)

(13.8)

%

—

n/a

(14.6)

(7.6)

%

Net realized and unrealized gain (loss)

2.1

n/a

(0.3)

n/a

(2.6)

n/a

0.1

n/a

(0.7)

n/a

Other (2)

—

n/a

—

n/a

1.6

n/a

—

n/a

1.6

n/a

March 31, 2016 - FV

$

164.2

5.1

%

$

17.9

8.0

%

$

33.8

9.9

%

$

0.1

n/a

$

216.0

6.4

%

 

(1)

CLO equity repayments reflect the amount of cash distributions received during the three months ended March 31, 2016.

(2)

Other includes amortization of discount/premium on the Loan Portfolio and income recognized on CLO equity using the effective interest method during the three months ended March 31, 2016. 

 

RESULTS OF OPERATIONS

Net Investment Income

Net investment income totaled $2.9 million, or $0.29 per share, for the three months ended March 31, 2016.  Gross investment income was $4.3 million for the quarter, with $2.7 million, or 62%, generated from the Loan Portfolio and $1.6 million, or 38%, generated from the CLO Portfolio.  Net expenses totaled $1.4 million for the three months ended March 31, 2016, with interest and other debt related costs of $0.6 million, management fees of $0.5 million and $0.3 million of other operating expenses, net.

Net Realized and Unrealized Gain / (Loss) From Investments

Net loss on investments for the three months ended March 31, 2016 totaled $(0.7) million and was comprised of $(0.9) million of net realized losses on sales of investments and $0.2 million of net unrealized appreciation on the portfolio.  The $0.2 million of net unrealized appreciation on the portfolio was driven by $2.8 million of net unrealized appreciation in the Loan Portfolio partially offset by $(2.6) million of net unrealized depreciation in the CLO Portfolio.  The decline in fair value of the CLO Portfolio was a result of a number of factors, including a widening of spreads, credit and downgrade concerns and low trades in CLO equity.  The primary driver for the increase in fair value of the Loan Portfolio was higher prices in the broadly syndicated U.S. loan market.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2016, ACSF's wholly-owned consolidated financing subsidiary, ACSF Funding I, LLC ("ACSF Funding"), had $98.8 million outstanding on its $135.0 million revolving credit facility, resulting in a debt to equity ratio of 0.84x.  As of March 31, 2016, ACSF had $38.8 million of available liquidity consisting of $2.6 million of cash and cash equivalents and $36.2 million of available capacity on the ACSF Funding revolving credit facility.

DISTRIBUTIONS TO STOCKHOLDERS

On May 2, 2016, the Company announced the declaration of monthly cash distributions to stockholders of $0.097 per share for each of May, June and July 2016.  This cash distribution rate represents a 9.9% annualized yield on the March 31, 2016 NAV per share of $11.72 and an 11.6% annualized yield on the March 31, 2016 closing market price per share of $10.03.  The monthly cash distributions will be paid to common stockholders of record as set forth in the table below:

Distributions to Stockholders

per Share

Record Date

Ex-Dividend Date

Payment Date

May 2016

$0.097

May 23, 2016

May 19, 2016

June 2, 2016

June 2016

$0.097

June 23, 2016

June 21, 2016

July 5, 2016

July 2016

$0.097

July 21, 2016

July 19, 2016

August 2, 2016

 

Since its January 2014 IPO, the Company has declared a total of $28.7 million in cash distributions to stockholders, or $2.87 per share.

ACSF's Board of Directors considers estimated taxable income, GAAP income and economic performance when determining distributions to stockholders.  Actual taxable income may differ from GAAP income due to temporary and permanent differences in income and expense recognition and changes in unrealized appreciation and depreciation on investments.   The Company currently expects distributions to stockholders for 2016 to be from ordinary taxable income.  The specific tax characteristics will be reported to stockholders on Form 1099 after the end of the calendar year.  For additional detail, please visit the Company's website at www.ACSF.com.

 

 

AMERICAN CAPITAL SENIOR FLOATING, LTD.

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

($ in thousands, except per share data)

As of

March 31, 2016(unaudited)

December 31, 2015

September 30, 2015

(unaudited)

June 30, 2015

(unaudited)

March 31, 2015

(unaudited)

Assets

Investments, fair value

$

216,018

$

229,056

$

257,732

$

272,191

$

272,560

Cash and cash equivalents

2,607

2,474

2,247

2,458

2,161

Receivable for investments sold

—

3,096

2,007

3,812

13,932

Other assets

1,420

1,179

1,227

1,215

1,442

Total assets

$

220,045

$

235,805

$

263,213

$

279,676

$

290,095

Liabilities

Credit facility payable

$

98,800

$

110,200

$

124,800

$

123,800

$

127,800

Payable for investments purchased

2,150

5,437

995

8,400

13,138

Distributions to stockholders payable

970

970

970

970

2,900

Management fee payable

497

536

558

563

578

Other liabilities

441

733

634

580

553

Total liabilities

102,858

117,876

127,957

134,313

144,969

Net Assets

Common stock, par value $0.01 per

     share, 10,000,100 issued and

     outstanding, 300,000,000

     authorized

100

100

100

100

100

Paid-in capital in excess of par

150,903

150,903

151,131

151,131

151,131

Undistributed net investment income

1,528

1,560

1,037

602

293

Accumulated net realized loss from

     investments

(2,705)

(1,815)

(986)

(981)

(1,059)

Net unrealized depreciation on

     investments

(32,639)

(32,819)

(16,026)

(5,489)

(5,339)

Total net assets

117,187

117,929

135,256

145,363

145,126

Total liabilities and net assets

$

220,045

$

235,805

$

263,213

$

279,676

$

290,095

Net asset value per share

$

11.72

$

11.79

$

13.53

$

14.54

$

14.51

 

 

AMERICAN CAPITAL SENIOR FLOATING, LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

($ in thousands, except per share data)

Three Months Ended

March 31,2016 (unaudited)

December 31, 2015(unaudited)

September 30,2015 (unaudited)

June 30,2015 (unaudited)

March 31,2015 (unaudited)

Investment income:

Interest

$

4,345

$

4,636

$

4,987

$

4,880

$

4,741

Total investment income

4,345

4,636

4,987

4,880

4,741

Expenses:

Interest and other debt related costs

664

690

766

758

755

Management fee

497

536

558

563

578

Other operating expenses

517

510

479

510

523

Total expenses

1,678

1,736

1,803

1,831

1,856

Expense waiver

(238)

(234)

(193)

(227)

(245)

Net expenses

1,440

1,502

1,610

1,604

1,611

Net investment income before    taxes

2,905

3,134

3,377

3,276

3,130

Income tax provision

(27)

(68)

(33)

(57)

(70)

Net investment income

2,878

3,066

3,344

3,219

3,060

Net realized and unrealized (loss) /    gain on investments:

Net realized (loss) / gain on investments

(890)

(690)

(5)

78

307

Net unrealized (depreciation) /   appreciation on investments

180

(16,793)

(10,537)

(150)

424

Income tax benefit

—

—

—

11

—

Net realized and unrealized (loss) /    gain on investments

(710)

(17,483)

(10,542)

(61)

731

Net increase / (decrease) in net assets

   resulting from operations

   ("Net earnings  (loss)")

$

2,168

$

(14,417)

$

(7,198)

$

3,158

$

3,791

Net investment income per share

$

0.29

$

0.31

$

0.33

$

0.32

$

0.31

Net earnings (loss) per share

$

0.22

$

(1.44)

$

(0.72)

$

0.32

$

0.38

Distributions to stockholders per   share

$

0.29

$

0.29

$

0.29

$

0.29

$

0.29

Weighted average shares   outstanding (in thousands)

10,000

10,000

10,000

10,000

10,000

 

 

As of

March 31,2016 (unaudited)

December 31,2015 (unaudited)

September 30, 2015(unaudited)

June 30,2015 (unaudited)

March 31,2015 (unaudited)

Investment Portfolio at FV

First Lien Floating Rate Loans

$

164,186

$

169,580

$

186,950

$

190,427

$

192,728

Second Lien Floating Rate Loans

17,868

22,575

25,510

27,914

29,079

Total Loan Portfolio

182,054

192,155

212,460

218,341

221,807

CLO Equity

33,817

36,854

45,272

53,850

50,753

Common Equity

147

47

n/a

n/a

n/a

Total Investment Portfolio at FV

$

216,018

$

229,056

$

257,732

$

272,191

$

272,560

Investment Portfolio at Cost

First Lien Floating Rate Loans

$

172,965

$

181,367

$

191,863

$

192,480

$

194,099

Second Lien Floating Rate Loans

20,543

24,910

26,821

28,681

30,089

Total Loan Portfolio

193,508

206,277

218,684

221,161

224,188

CLO Equity

55,149

55,599

55,074

56,519

53,711

Common Equity

—

—

n/a

n/a

n/a

Total Investment Portfolio at Cost

$

248,657

$

261,876

$

273,758

$

277,680

$

277,899

Asset Yield at Cost

First Lien Floating Rate Loans

5.11

%

5.03

%

4.90

%

4.90

%

5.02

%

Second Lien Floating Rate Loans

8.02

%

7.90

%

7.85

%

7.79

%

7.81

%

Total Loan Portfolio

5.42

%

5.38

%

5.26

%

5.27

%

5.39

%

CLO Equity

9.85

%

10.04

%

12.95

%

14.69

%

14.02

%

Total Investment Portfolio

6.40

%

6.37

%

6.81

%

7.19

%

7.06

%

Quarterly Investment Activity

Investment Purchases

$

8,995

$

17,984

$

13,913

$

38,904

$

36,180

Investment Sales

$

(8,415)

$

(11,641)

$

(7,954)

$

(19,725)

$

(36,663)

Investment Repayments (1)

$

(14,624)

$

(19,330)

$

(11,889)

$

(21,363)

$

(5,777)

Loan Portfolio Statistics

Number of Obligors

128

128

127

127

121

Number of Industries

46

46

46

43

41

Largest Exposure as a % of Total Portfolio at FV

1.6

%

1.5

%

1.4

%

1.3

%

1.5

%

Average Exposure as a % of Total Portfolio at FV

0.7

%

0.7

%

0.6

%

0.6

%

0.7

%

% with LIBOR Floor

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Weighted-average LIBOR Floor

1.0

%

1.0

%

1.0

%

1.0

%

1.0

%

CLO Portfolio Statistics

Number of Issuers

22

20

19

19

17

CLO Managers

16

15

14

14

13

Largest Exposure as a % of Total Portfolio at FV

1.4

%

1.5

%

1.6

%

1.8

%

1.9

%

Average Exposure as a % of Total Portfolio at FV

0.7

%

0.8

%

0.9

%

1.0

%

1.1

%

Minimum % of Collateral in First Lien Loans (2)

90.8

%

91.0

%

91.0

%

91.0

%

91.0

%

Cumulative Cash Receipts as a % of Original Cost (3)

39.2

%

34.9

%

31.1

%

26.1

%

20.9

%

Liquidity and Capital Resources

Debt

Amount Available on Credit

     Facility

$

135,000

$

135,000

$

140,000

$

140,000

$

140,000

Amount Drawn on Credit Facility

$

98,800

$

110,200

$

124,800

$

123,800

$

127,800

Interest Rate on Debt as of Period-end

2.21

%

2.02

%

2.00

%

1.99

%

2.02

%

Cost of Funds as of Period-end (4)

2.60

%

2.32

%

2.41

%

2.40

%

2.40

%

Equity

NAV

$

117,187

$

117,929

$

135,256

$

145,363

$

145,126

NAV Per Share

$

11.72

$

11.79

$

13.53

$

14.54

$

14.51

Debt to Equity Ratio

0.84x

0.93x

0.92x

0.85x

0.88x

Quarterly Distributions to Stockholders   Per Share

$

0.291

$

0.291

$

0.291

$

0.291

$

0.290

Economic Return (5)

7.4

%

(10.2%)

(19.6%)

8.7

%

10.7

%

 

(1)  

Investment repayments include the distributions received from CLO equity investments.

(2)  

Represents the weighted-average minimum percent of assets as allowed by each CLO's indenture to be invested in first lien floating rate loans.  Actual amounts invested in first lien floating rate loans may be higher.

(3)  

Original cost included only for CLOs that have begun to make quarterly distributions to ACSF and are held at each period-end reporting date.  The average holding period (in years) for the CLOs that have begun to make quarterly distributions is 1.8 as of March 31, 2016, 1.6 as of December 31, 2015, 1.4 as of September 30, 2015, 1.2 as of June 30, 2015 and 1.1 as of March 31, 2015

(4)  

Cost of funds includes interest cost, amortization of upfront fees and unfunded commitment fees.

(5)  

Economic return defined as the distributions to stockholders paid in the quarter, plus the change in NAV per share for the quarter, over the starting NAV per share.  Quarterly returns have been annualized and are unaudited.

 

STOCKHOLDER CALL ACSF invites stockholders, prospective stockholders and analysts to attend the ACSF stockholder call on May 3, 2016 at 11:00 am ET.  Callers who do not plan on asking a question and have access to the internet are encouraged to utilize the free live webcast at www.ACSF.com.  Those who do plan on participating in the Q&A or do not have the internet available may access the call by dialing (877) 274-0811 (U.S. domestic) or (412) 902-6607 (international).  Please advise the operator you are dialing in for the American Capital Senior Floating stockholder call.

A slide presentation will accompany the stockholder call and will be available at www.ACSF.com.  Select the Q1 2016 Earnings Presentation link to download and print the presentation in advance of the stockholder call.

An archived audio replay of the stockholder call combined with the slide presentation will be made available on the ACSF website after the call on May 3, 2016.  In addition, there will be a phone recording available one hour after the live call on May 3, 2016 through May 17, 2016.  If you are interested in hearing the recording of the presentation, please access it for free on the ACSF website or dial (877) 344-7529 (U.S. domestic) or (412) 317-0088 (international).  The access code for both domestic and international callers is 10084787.

For further information, please contact Investor Relations at (301) 968-9310 or [email protected].

ABOUT AMERICAN CAPITAL SENIOR FLOATING, LTD.American Capital Senior Floating, Ltd. (Nasdaq: ACSF) is a non-diversified closed-end investment management company that invests primarily in senior first lien and second lien floating rate loans to large-market U.S. based companies ("Senior Floating Rate Loans") and in debt and equity tranches of collateralized loan obligations collateralized by Senior Floating Rate Loans.  The Company has elected to be treated as a business development company under the Investment Company Act of 1940, as amended. The Company is externally managed by American Capital ACSF Management, LLC, an indirect subsidiary of American Capital Asset Management, LLC, a wholly-owned portfolio company of American Capital, Ltd. For further information, please refer to www.ACSF.com.

ABOUT AMERICAN CAPITAL, LTD.American Capital, Ltd. (Nasdaq: ACAS) is a publicly traded private equity firm and global asset manager.  American Capital, both directly and through its asset management business, originates, underwrites and manages investments in middle market private equity, leveraged finance, real estate and structured products.  American Capital manages $21 billion of assets, including assets on its balance sheet and fee earning assets under management by affiliated managers, with $73 billion of total assets under management (including levered assets).  Through a wholly-owned affiliate, American Capital manages publicly traded American Capital Agency Corp. (Nasdaq: AGNC), American Capital Mortgage Investment Corp. (Nasdaq: MTGE) and American Capital Senior Floating, Ltd. (Nasdaq: ACSF) with approximately $10 billion of total net book value.  American Capital and its affiliates operate out of six offices in the U.S. and Europe.  For further information, please refer to www.americancapital.com.

FORWARD-LOOKING STATEMENTSThis press release contains forward-looking information and statements. Forward-looking statements give the Company's current expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate," "estimate," "expect," "project," "plan," "intend," "believe," "confident," "may," "should," "can have," "likely," "future" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. Forward-looking statements are not guarantees of performance or results, and involve known and unknown risks, uncertainties (some of which are beyond the Company's control), assumptions and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Should one or more of these risks or uncertainties materialize, the Company's actual results may vary in material respects from those projected in any forward-looking statements. A detailed discussion of these and other factors that may affect future results is contained in our filings with the U.S. Securities and Exchange Commission. Any forward-looking statement made by the Company in this press release speaks only as of the date on which it is made. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

CONTACT: Investors - (301) 968-9310 Media - (301) 968-9400

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/american-capital-senior-floating-reports-net-investment-income-of-029-per-share-300261157.html

SOURCE American Capital Senior Floating, Ltd.


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