TICC Announces Results of Operations for the Quarter Ended September 30, 2016 and Announces Quarterly Distribution of $0.29 per Share
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GREENWICH, CT -- (Marketwired) -- 11/03/16 -- TICC Capital Corp. (NASDAQ: TICC) ("TICC," the "Company," "we," "us" or "our") announced today its financial results for the quarter ended September 30, 2016, and announced a distribution of $0.29 per share for the fourth quarter of 2016.
HIGHLIGHTS
- As of September 30, 2016, net asset value per share stood at $7.08 compared with a net asset value per share as of June 30, 2016 of $6.54.
- For the quarter ended September 30, 2016, we recorded net investment income of approximately $5.9 million, or approximately $0.11 per share. In the third quarter, we also recorded net unrealized appreciation of approximately $42.3 million and net realized capital losses of approximately $5.3 million. Our collateralized loan obligation ("CLO") positions represented approximately $25.8 million of the net unrealized appreciation for the quarter. In total we had a net increase in net assets from operations of approximately $42.9 million, or approximately $0.83 per share.
- Our core net investment income ("Core NII"), which is a non-GAAP measure, for the quarter ended September 30, 2016 was approximately $15.3 million, or approximately $0.30 per share.
- Core NII represents net investment income adjusted for additional cash distributions received, or entitled to be received (if any, in either case), on our CLO equity investments and also excludes any capital gains incentive fees we recognize but have no obligation to pay in any period. (See additional information under "Supplemental Information Regarding Core Net Investment Income" below).
- Total investment income for the third quarter of 2016 amounted to approximately $18.1 million, which represented an increase of approximately $1.0 million from the second quarter of 2016.
- For the quarter ended September 30, 2016, we recorded investment income from our portfolio as follows:
- approximately $8.7 million from our debt investments,
- approximately $8.6 million from our CLO equity investments, and
- approximately $0.8 million from all other sources.
- While our experience has been that cash flow distributions have historically represented useful indicators of our CLO equity investments' annual taxable income, we believe that current and future cash flow distributions may provide less useful indications as to the final determination of taxable income with respect to our CLO equity investments. In general, we currently expect our annual taxable income to be higher than our GAAP earnings for the current fiscal year.
- For the quarter ended September 30, 2016, we recorded investment income from our portfolio as follows:
- Our weighted average credit rating on a fair value basis was 2.2 at the end of the third quarter of 2016 (compared to 2.2 at the end of the second quarter of 2016).
- Our total expenses for the quarter ended September 30, 2016 were approximately $12.2 million, up by approximately $2.0 million compared to the second quarter of 2016.
- Our Board of Directors has declared a distribution of $0.29 per share for the fourth quarter of 2016.
- Payable Date: December 30, 2016
- Record Date: December 16, 2016
- During the third quarter of 2016:
- We made cash investments of approximately $46.8 million, consisting of approximately $24.4 million in corporate securities, approximately $2.5 million in CLO debt and approximately $19.9 million in CLO equity, as we continued our rotation of those portfolios. We received, or were entitled to receive, cash proceeds of approximately $44.2 million from sales of our CLO investments.
- We received, or were entitled to receive, cash proceeds of approximately $69.4 million from repayments, sales and amortization payments on our corporate loan investments. $36.0 million of those proceeds were applied towards a partial redemption of the TICC CLO 2012-1 LLC Class A-1 Notes.
- As of September 30, 2016, the weighted average yield of our debt investments at current cost was approximately 8.0%, compared with approximately 7.5% as of June 30, 2016.
- As of September 30, 2016, the weighted average effective yield (GAAP) of our CLO equity investments at current cost was approximately 14.0%, compared with approximately 12.8% as of June 30, 2016.
- As of September 30, 2016, the weighted average cash yield of our CLO equity investments at current cost was approximately 27.6%, compared with approximately 25.8% as of June 30, 2016.
- At September 30, 2016, we had no investments on non-accrual status.
Supplemental Information Regarding Core Net Investment Income
On a supplemental basis, we provide information relating to core net investment income, which is a non-GAAP measure. This measure is provided in addition to, but not as a substitute for, net investment income. Our non-GAAP measures may differ from similar measures by other companies, even if similar terms are used to identify such measures. Core net investment income represents net investment income adjusted for additional cash distributions received, or entitled to be received (if any, in either case), on our CLO equity investments and also excludes any capital gains incentive fees we recognize but have no obligation to pay in any period. The Company did not recognize any capital gains incentive fees for the quarter ended September 30, 2016.
Income from investments in the "equity" class securities of CLO vehicles, for GAAP purposes, is recorded using the effective interest method based upon an effective yield to the expected redemption utilizing estimated cash flows, compared to the cost resulting in an effective yield for the investment; the difference between the actual cash received or distributions entitled to be received and the effective yield calculation is an adjustment to cost. Accordingly, investment income recognized on CLO equity securities in the GAAP statement of operations differs from the cash distributions actually received by us during the period, (referred to below as "CLO equity additional distributions").
Further, in order to continue to qualify to be taxed as a regulated investment company ("RIC"), we are required, among other things, to distribute at least 90% of our investment company taxable income annually. Therefore, core net investment income may provide a better indication of estimated taxable income for a reporting period than does GAAP net investment income. Although we can offer no assurance that will be the case as the ultimate tax character of our earnings cannot be determined until tax returns are prepared after the end of a fiscal year. We note that these non-GAAP measures may not be useful indicators of taxable earnings, particularly during periods of market disruption and volatility.
The following table provides a reconciliation of net investment income to core net investment income for the three months ended September 30, 2016 and September 30, 2015:
Three Months Ended Three Months Ended
September 30, 2016 September 30, 2015
------------------------- -------------------------
Per Share Per Share
Amounts Amounts
Amount (basic) Amount (basic)
------------ ------------ ------------ ------------
Net investment income $ 5,891,178 $ 0.114 $ 10,874,618 $ 0.181
CLO equity additional
distributions 9,359,695 $ 0.182 9,343,218 $ 0.156
------------ ------------ ------------ ------------
Core net investment
income $ 15,250,873 $ 0.296 $ 20,217,836 $ 0.337
============ ============ ============ ============
We will host a conference call to discuss our third quarter results today, Thursday, November 3, 2016 at 10:00 AM ET. Please call 1-888-339-0740 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 10095857.
A presentation containing further detail regarding our quarterly results of operations has been posted under the Investor Relations section of our website at www.ticc.com.
The following financial statements are unaudited and without footnotes. Readers who would like additional information should obtain our Form 10-Q for the period ended September 30, 2016, and subsequent reports on Form 10-Q as they are filed.
TICC CAPITAL CORP.
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(unaudited)
September 30, 2016 December 31, 2015
------------------ ------------------
ASSETS
Non-affiliated/non-control
investments (cost: $647,636,933 @
9/30/16; $767,295,604 @12/31/15) $ 579,376,129 $ 638,890,282
Affiliated investments (cost:
$7,469,004 @ 9/30/16; $7,392,352 @
12/31/15) 11,525,733 6,825,269
Control investments (cost: $0 @
9/30/16; $16,750,000 @ 12/31/15) - 11,000,000
------------------ ------------------
Total investments at fair value
(cost: $655,105,937 @ 9/30/16;
$791,437,956 @ 12/31/15) 590,901,862 656,715,551
------------------ ------------------
Cash and cash equivalents 34,717,216 23,181,677
Restricted cash 23,995,830 17,965,232
Interest and distributions
receivable 10,148,927 12,268,997
Securities sold not settled 34,224,734 7,845,706
Other assets 1,101,595 321,044
------------------ ------------------
Total assets $ 695,090,164 $ 718,298,207
================== ==================
LIABILITIES
Accrued interest payable $ 4,326,956 $ 2,139,866
Investment advisory fee and net
investment income incentive fee
payable to affiliate 3,053,162 4,195,901
Securities purchased not settled 6,720,000 -
Accrued expenses 2,922,440 3,278,587
Notes payable - TICC CLO 2012-1
LLC, net of discount and deferred
issuance costs 199,118,430 233,887,130
Convertible senior notes payable,
net of deferred issuance costs 114,326,704 113,862,012
------------------ ------------------
Total liabilities 330,467,692 357,363,496
------------------ ------------------
NET ASSETS
Common stock, $0.01 par value,
100,000,000 share authorized;
51,479,409 and 56,396,435 shares
issued and outstanding,
respectively 514,794 563,965
Capital in excess of par value 568,508,328 594,047,019
Net unrealized depreciation on
investments (64,204,075) (134,722,405)
Accumulated net realized losses on
investments (81,963,011) (68,772,889)
Distributions in excess of net
investment income (58,233,564) (30,180,979)
------------------ ------------------
Total net assets 364,622,472 360,934,711
------------------ ------------------
Total liabilities and net assets $ 695,090,164 $ 718,298,207
================== ==================
Net asset value per common share $ 7.08 $ 6.40
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, 2016 30, 2015 30, 2016 30, 2015
------------ ------------ ------------ ------------
INVESTMENT INCOME
From non-
affiliated/non-
control investments:
Interest income -
debt investments $ 8,570,131 $ 13,720,125 $ 25,405,967 $ 39,025,069
Income from
securitization
vehicles and
investments 8,635,834 8,617,121 22,538,250 26,396,541
Commitment,
amendment fee
income and other
income 805,128 372,935 1,654,954 1,985,306
------------ ------------ ------------ ------------
Total investment
income from non-
affiliated/non-
control
investments 18,011,093 22,710,181 49,599,171 67,406,916
------------ ------------ ------------ ------------
From affiliated
investments:
Interest income -
debt investments 84,699 78,616 244,411 221,097
------------ ------------ ------------ ------------
Total investment
income from
affiliated
investments 84,699 78,616 244,411 221,097
------------ ------------ ------------ ------------
From control
investments:
Interest income -
debt investments - 345,591 567,219 1,026,283
------------ ------------ ------------ ------------
Total investment
income from
control
investments - 345,591 567,219 1,026,283
------------ ------------ ------------ ------------
Total investment
income 18,095,792 23,134,388 50,410,801 68,654,296
------------ ------------ ------------ ------------
EXPENSES
Compensation
expense 189,205 89,660 609,345 965,293
Investment advisory
fees 2,630,334 5,255,583 8,747,819 15,574,269
Professional fees 2,157,751 818,926 5,365,284 2,330,702
Interest expense 5,055,088 5,031,343 13,847,969 14,969,915
General and
administrative 1,749,408 488,939 3,439,292 1,673,389
------------ ------------ ------------ ------------
Total expenses
before incentive
fees 11,781,786 11,684,451 32,009,709 35,513,568
------------ ------------ ------------ ------------
Net investment
income incentive
fees 422,828 575,319 1,666,594 (929,933)
------------ ------------ ------------ ------------
Total expenses 12,204,614 12,259,770 33,676,303 34,583,635
------------ ------------ ------------ ------------
Net investment income 5,891,178 10,874,618 16,734,498 34,070,661
------------ ------------ ------------ ------------
Net change in
unrealized
appreciation/
depreciation on
investments
Non-Affiliate/non-
control
investments 39,813,458 (37,399,544) 60,144,518 (34,358,991)
Affiliated
investments 2,520,646 (1,610,530) 4,623,812 5,571,560
Control investments - (2,005,625) 5,750,000 (2,005,625)
------------ ------------ ------------ ------------
Total net change
in unrealized
appreciation/
depreciation on
investments 42,334,104 (41,015,699) 70,518,330 (30,793,056)
------------ ------------ ------------ ------------
Net realized (losses)
gains on investments
Non-Affiliated/non-
control
investments (5,312,519) 406,343 (10,190,122) 4,606,405
Affiliated
investments - - - (6,762,328)
Control investments - - (3,000,000) -
------------ ------------ ------------ ------------
Total net
realized
(losses) gains
on investments (5,312,519) 406,343 (13,190,122) (2,155,923)
------------ ------------ ------------ ------------
Net
increase/(decrease)
in net assets
resulting from
operations $ 42,912,763 $(29,734,738) $ 74,062,706 $ 1,121,682
============ ============ ============ ============
Net increase in net
assets resulting
from net investment
income per common
share:
Basic $ 0.11 $ 0.18 $ 0.32 $ 0.57
Diluted $ 0.11 $ 0.18 $ 0.32 $ 0.57
Net
increase/(decrease)
in net assets
resulting from
operations per
common share:
Basic $ 0.83 $ (0.50) $ 1.42 $ 0.02
Diluted $ 0.72 $ (0.50) $ 1.28 $ 0.02
Weighted average
shares of common
stock outstanding:
Basic 51,479,409 59,987,986 51,985,537 59,997,565
Diluted 61,512,561 70,021,138 62,018,689 70,030,717
Distributions per
share $ 0.29 $ 0.29 $ 0.87 $ 0.85
TICC CAPITAL CORP.
FINANCIAL HIGHLIGHTS - UNAUDITED
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September September September September
30, 2016 30, 2015 30, 2016 30, 2015
------------ ------------ ------------ ------------
Per Share Data
Net asset value at
beginning of period $ 6.54 $ 8.60 $ 6.40 $ 8.64
----------- ----------- ----------- -----------
Net investment income(1) 0.11 0.18 0.32 0.57
Net realized and
unrealized capital
gains (losses)(2) 0.72 (0.68) 1.11 (0.56)
----------- ----------- ----------- -----------
Net change in net asset
value from operations 0.83 (0.50) 1.43 0.01
----------- ----------- ----------- -----------
Distributions per share
from net investment
income (0.29) (0.29) (0.87) (0.85)
Distributions based on
weighted average share
impact - - 0.01 -
----------- ---------- ---------- ----------
Total distributions(3) (0.29) (0.29) (0.86) (0.85)
Effect of shares
repurchased, gross - - 0.11 0.01
----------- ----------- ----------- -----------
Net asset value at end
of period $ 7.08 $ 7.81 $ 7.08 $ 7.81
=========== =========== =========== ===========
Per share market value
at beginning of period $ 5.27 $ 6.72 $ 6.08 $ 7.53
Per share market value
at end of period $ 5.82 $ 6.71 $ 5.82 $ 6.71
Total return(4) 15.94% 4.17% 12.43% 0.60%
Shares outstanding at
end of period 51,479,409 59,987,986 51,479,409 59,987,986
Ratios/Supplemental Data
Net assets at end of
period (000's) 364,622 468,559 364,622 468,559
Average net assets
(000's) 350,631 492,124 332,591 510,712
Ratio of expenses to
average net assets(5) 13.92% 9.97% 13.50% 9.03%
Ratio of net investment
income to average net
assets(5) 6.72% 8.84% 6.71% 8.90%
Portfolio turnover rate 9.42% 4.95% 22.92% 22.03%
___________________
(1) Represents per share net investment income for the period, based upon
average shares outstanding.
(2) Net realized and unrealized capital gains include rounding adjustments
to reconcile change in net asset value per share.
(3) 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 ultimate tax
character of our earnings cannot be determined until tax returns are
prepared after the end of the fiscal year.
(4) Total return equals the increase or decrease of ending market value over
beginning market value, plus distributions, divided by the beginning
market value, assuming distribution reinvestment prices obtained under
the Company's distribution reinvestment plan, excluding any discounts.
Total return is not annualized.
(5) Annualized.
(6) The following table provides supplemental performance ratios
(annualized) measured for the three and nine months ended September 30,
2016 and 2015:
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
Ratio of expenses to September September September September
average net assets: 30, 2016 30, 2015 30, 2016 30, 2015
------------ ------------ ------------ ------------
Expenses before incentive
fees 13.44% 9.50% 12.83% 9.27%
Net investment income
incentive fees 0.48% 0.47% 0.67% (0.24)%
Ratio of expenses,
excluding interest
expense, 8.16% 5.88% 7.95% 5.12%
to average net assets
About TICC Capital Corp. TICC Capital Corp. is a publicly-traded business development company principally engaged in providing capital to established businesses, investing in syndicated bank loans and purchasing debt and equity tranches of collateralized loan obligation vehicles.
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, except as may be required by law.
Contact: Bruce Rubin 203-983-5280
Source: TICC Capital Corp.
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