GREENWICH, Conn., Feb. 27, 2018 (GLOBE NEWSWIRE) -- TICC Capital Corp. (Nasdaq:TICC) (“TICC,” the “Company,” “we,” “us” or
“our”) announced today its financial results for the quarter ended December 31, 2017, and announced a distribution of $0.20 per
share for the quarter ending March 31, 2018.
- As of December 31, 2017, net asset value per share was $7.55 compared with the net asset value per share as of September 30,
2017 of $7.43.
- For the quarter ended December 31, 2017 we recorded net investment income of approximately $7.6 million, or approximately
$0.15 per share. In the fourth quarter, we recorded net realized losses of approximately $1.0 million, and net unrealized
appreciation of approximately $9.8 million. In total we had a net increase in net assets from operations of approximately $16.4
million, or approximately $0.32 per share.
- Our core net investment income (“Core NII”) for the quarter ended December 31, 2017 was $9.0 million, or approximately $0.17
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 collateralized loan obligation (“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).
- While our experience has been that cash flow distributions have historically represented useful indicators of our CLO
equity investments’ annual taxable income during certain periods, we believe that current and future cash flow distributions
may represent less accurate indicators of taxable income with respect to our CLO equity investments than they have in the
past. Accordingly, our taxable income may be materially different than either GAAP NII or Core NII.
- Total investment income for the fourth quarter of 2017 amounted to approximately $13.4 million, which represents a decrease
of approximately $1.1 million from the third quarter of 2017.
- For the quarter ended December 31, 2017, we recorded investment income from our portfolio as follows:
- approximately $5.6 million from our debt investments,
- approximately $7.2 million from our CLO equity investments, and
- approximately $0.6 million from all other sources.
- Our total expenses for the quarter ended December 31, 2017 were approximately $5.8 million, down by approximately $1.9
million compared to the third quarter of 2017. The primary driver of that decrease was lower interest expense for the quarter on
our outstanding debt.
- During the fourth quarter of 2017:
- We made investments of approximately $40.7 million in corporate loan investments. We received proceeds of approximately
$15.2 million and $2.0 million from sales of our CLO equity investments and corporate loan investments, respectively.
- We received or were entitled to receive proceeds of approximately $30.2 million from repayments, sales and amortization
payments on our corporate loan investments.
- As of December 31, 2017, the weighted average yield of our debt investments at current cost was approximately 9.7%, compared
with 9.5% as of September 30, 2017.
- As of December 31, 2017, the weighted average effective yield of our CLO equity investments at current cost was approximately
15.6%, compared with 15.9% as of September 30, 2017.
- As of December 31, 2017, the weighted average cash distribution yield of our CLO equity investments at current cost was
approximately 20.2%, compared with 17.5% as of September 30, 2017.
- Our weighted average credit rating on a fair value basis was 2.2 at the end of the fourth quarter of 2017 (compared to 2.2 at
the end of the third quarter of 2017).
- At December 31, 2017, we had no investments on non-accrual status.
- Our board of directors has declared the following distribution on our common stock:
|
Quarter Ending |
Record Date |
Payment Date |
Amount Per Share |
| March
31, 2018 |
March 16, 2018 |
March 30, 2018 |
$0.20 |
- On February 5, 2018, the Board of Directors authorized a new program for the purpose of repurchasing up to $25.0 million
worth of the Company’s common stock.
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 determined in accordance with GAAP. 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 (excluding those cash distributions believed to represent a return
of capital) 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 December 31, 2017.
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 and our taxable income may differ materially from our core net
investment income.
The following table provides a reconciliation of net investment income to Core NII for the three months and year ended December
31, 2017:
| |
| |
|
Three Months Ended
December 31, 2017 |
|
Year Ended
December 31, 2017 |
| |
|
Amount |
|
Per Share
Amounts |
|
Amount |
|
Per Share
Amounts |
| Net investment income |
|
$ |
7,628,828 |
|
|
$ |
0.148 |
|
|
$ |
30,726,730 |
|
|
$ |
0.597 |
|
| CLO equity additional distributions |
|
|
1,347,464 |
|
|
|
0.026 |
|
|
|
5,680,872 |
|
|
|
0.110 |
|
| Core net investment income |
|
$ |
8,976,292 |
|
|
$ |
0.174 |
|
|
$ |
36,407,602 |
|
|
$ |
0.707 |
|
We will host a conference call to discuss our fourth quarter results today, Tuesday, February 27, 2018 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 10117486.
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-K for the period ended December 31, 2017, and subsequent reports on Form 10-Q as they are filed.
TICC CAPITAL CORP.
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(unaudited)
| |
December
31,
2017 |
December
31,
2016 |
| ASSETS |
|
|
Non-affiliated/non-control investments (cost: $418,990,080 @
12/31/17; $616,542,612
@ 12/31/16) |
$ |
400,223,439 |
$ |
578,297,069 |
| Affiliated investments (cost: $10,528,740 @ 12/31/17; $7,497,229 @
12/31/16) |
|
18,218,787 |
|
11,626,007 |
| Cash and cash equivalents |
|
30,013,842 |
|
8,261,698 |
| Restricted cash |
|
— |
|
3,451,636 |
| Interest and distributions receivable |
|
5,085,494 |
|
9,682,672 |
| Securities sold not settled |
|
— |
|
7,406 |
| Other assets |
|
579,694 |
|
1,130,018 |
| Total assets |
$ |
454,121,256 |
$ |
612,456,506 |
| LIABILITIES |
|
|
| Notes payable – 6.50% Unsecured Notes, net of deferred issuance
costs |
$ |
62,340,159 |
$ |
— |
| Base management fee and net investment income incentive fee payable
to affiliate |
|
2,706,099 |
|
3,673,381 |
| Accrued interest payable |
|
11,621 |
|
1,731,111 |
| Accrued expenses |
|
644,735 |
|
1,089,043 |
Notes payable – TICC CLO 2012-1 LLC, net of discount and
deferred
issuance costs |
|
— |
|
125,853,720 |
| Notes payable – Convertible Notes, net of deferred issuance
costs |
|
— |
|
94,116,753 |
| Total liabilities |
|
65,702,614 |
|
226,464,008 |
| |
|
|
| NET ASSETS |
|
|
| Total net assets |
|
388,418,642 |
|
385,992,498 |
| Total liabilities and net assets |
$ |
454,121,256 |
$ |
612,456,506 |
| Net asset value per common share |
$ |
7.55 |
$ |
7.50 |
| Common stock shares issued and outstanding |
|
51,479,409 |
|
51,479,409 |
| |
|
|
|
|
TICC CAPITAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| |
Year
Ended
December 31, 2017 |
Year
Ended
December 31, 2016 |
Year
Ended
December 31, 2015 |
| INVESTMENT INCOME |
|
|
|
| From non-affiliated/non-control investments: |
|
|
|
| Interest income – debt investments |
$ |
24,561,956 |
|
$ |
33,649,267 |
|
$ |
48,556,075 |
|
| Income from securitization vehicles and investments |
|
33,274,392 |
|
|
32,503,279 |
|
|
34,901,766 |
|
| Other income |
|
3,198,469 |
|
|
2,228,877 |
|
|
2,332,680 |
|
| Total investment income from non-affiliated/non-control
investments |
|
61,034,817 |
|
|
68,381,423 |
|
|
85,790,521 |
|
| From affiliated investments: |
|
|
|
| Interest income – debt investments |
|
382,200 |
|
|
331,404 |
|
|
300,544 |
|
| Total investment income from affiliated investments |
|
382,200 |
|
|
331,404 |
|
|
300,544 |
|
| From control investments: |
|
|
|
| Interest income – debt investments |
|
— |
|
|
567,219 |
|
|
1,371,874 |
|
| Total investment income from control investments |
|
— |
|
|
567,219 |
|
|
1,371,874 |
|
| Total investment income |
|
61,417,017 |
|
|
69,280,046 |
|
|
87,462,939 |
|
| EXPENSES |
|
|
|
| Interest expense |
|
12,898,815 |
|
|
17,202,851 |
|
|
19,889,147 |
|
| Base management fees |
|
8,140,010 |
|
|
11,292,395 |
|
|
19,770,170 |
|
| Professional fees |
|
2,799,113 |
|
|
6,393,812 |
|
|
5,690,799 |
|
| Compensation expense |
|
901,472 |
|
|
837,343 |
|
|
1,158,622 |
|
| Director’s Fees |
|
584,580 |
|
|
642,000 |
|
|
514,501 |
|
| Insurance |
|
256,956 |
|
|
159,573 |
|
|
68,679 |
|
| Transfer agent and custodian fees |
|
244,115 |
|
|
316,577 |
|
|
332,796 |
|
| General and administrative |
|
1,014,580 |
|
|
2,861,803 |
|
|
1,340,326 |
|
| Total expenses before incentive fees |
|
26,839,641 |
|
|
39,706,354 |
|
|
48,765,040 |
|
| Net investment income incentive fees |
|
3,850,646 |
|
|
2,795,399 |
|
|
(929,933 |
) |
| Capital gains incentive fees |
|
— |
|
|
— |
|
|
— |
|
| Total incentive fees |
|
3,850,646 |
|
|
2,795,399 |
|
|
(929,933 |
) |
| Total expenses |
|
30,690,287 |
|
|
42,501,753 |
|
|
47,835,107 |
|
| Net investment income |
|
30,726,730 |
|
|
26,778,293 |
|
|
39,627,832 |
|
| Net change in unrealized appreciation/depreciation on investments |
|
|
|
| Non-Affiliate/non-control investments |
|
19,478,902 |
|
|
90,159,779 |
|
|
(101,525,472 |
) |
| Affiliated investments |
|
3,561,269 |
|
|
4,695,861 |
|
|
7,057,989 |
|
| Control investments |
|
— |
|
|
5,750,000 |
|
|
(3,910,000 |
) |
Total net change in unrealized appreciation/depreciation on
investments |
|
23,040,171 |
|
|
100,605,640 |
|
|
(98,377,483 |
) |
| Net realized (losses) gains |
|
|
|
| Non-Affiliated/non-control investments |
|
(7,007,892 |
) |
|
(11,262,943 |
) |
|
425,240 |
|
| Affiliated investments |
|
— |
|
|
— |
|
|
(6,762,328 |
) |
| Control investments |
|
— |
|
|
(3,000,000 |
) |
|
— |
|
| Extinguishment of debt |
|
(3,149,338 |
) |
|
(2,759,227 |
) |
|
(1,046,910 |
) |
| Total net realized losses |
|
(10,157,230 |
) |
|
(17,022,170 |
) |
|
(7,383,998 |
) |
| Net increase/(decrease) in net assets resulting from operations |
$ |
43,609,671 |
|
$ |
110,361,763 |
|
$ |
(66,133,649 |
) |
Net increase in net assets resulting from net investment income per
common share: |
|
|
|
| Basic |
$ |
0.60 |
|
$ |
0.52 |
|
$ |
0.66 |
|
| Diluted |
$ |
0.60 |
|
$ |
0.52 |
|
$ |
0.66 |
|
Net increase/(decrease) in net assets resulting from operations per common
share: |
|
|
|
| Basic |
$ |
0.85 |
|
$ |
2.13 |
|
$ |
(1.11 |
) |
| Diluted |
$ |
0.83 |
|
$ |
1.90 |
|
$ |
(1.11 |
) |
| Weighted average shares of common stock outstanding: |
|
|
|
| Basic |
|
51,479,409 |
|
|
51,858,313 |
|
|
59,752,896 |
|
| Diluted |
|
58,208,185 |
|
|
61,773,392 |
|
|
69,786,048 |
|
| Distributions per share |
|
0.80 |
|
$ |
1.16 |
|
$ |
1.14 |
|
| |
|
|
|
|
|
|
|
|
|
TICC CAPITAL CORP.
FINANCIAL HIGHLIGHTS - UNAUDITED
Financial highlights for the years ended December 31, 2017, 2016, 2015, 2014 and 2013 are as follows:
| |
Year
Ended
December 31,
2017 |
Year
Ended
December 31,
2016 |
Year
Ended
December 31,
2015 |
Year
Ended
December 31,
2014 |
Year
Ended
December 31,
2013 |
| Per Share Data |
|
|
|
|
|
| Net asset value at beginning of period |
$ |
7.50 |
|
$ |
6.40 |
|
$ |
8.64 |
|
$ |
9.85 |
|
$ |
9.90 |
|
| Net investment income(1)(3) |
|
0.60 |
|
|
0.52 |
|
|
0.66 |
|
|
1.17 |
|
|
1.09 |
|
Net realized and unrealized capital (losses)
gains(2)(3) |
|
0.25 |
|
|
1.62 |
|
|
(1.85 |
) |
|
(1.20 |
) |
|
0.06 |
|
| Net change in net asset value from operations |
|
0.85 |
|
|
2.14 |
|
|
(1.19 |
) |
|
(0.03 |
) |
|
1.15 |
|
| Distributions per share from net investment income |
|
(0.66 |
) |
|
(1.06 |
) |
|
(1.14 |
) |
|
(1.00 |
) |
|
(1.16 |
) |
| Distributions based on weighted average share impact |
|
— |
|
|
0.01 |
|
|
0.01 |
|
|
(0.03 |
) |
|
(0.04 |
) |
| Tax return of capital distributions |
|
(0.14 |
) |
|
(0.10 |
) |
|
— |
|
|
(0.16 |
) |
|
— |
|
| Total distributions(4) |
|
(0.80 |
) |
|
(1.15 |
) |
|
(1.13 |
) |
|
(1.19 |
) |
|
(1.20 |
) |
| Effect of shares issued, net of offering expenses |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| Effect of shares repurchased, gross |
|
— |
|
|
0.11 |
|
|
0.08 |
|
|
0.01 |
|
|
— |
|
| Net asset value at end of period |
$ |
7.55 |
|
$ |
7.50 |
|
$ |
6.40 |
|
$ |
8.64 |
|
$ |
9.85 |
|
| Per share market value at beginning of period |
$ |
6.61 |
|
$ |
6.08 |
|
$ |
7.53 |
|
$ |
10.34 |
|
$ |
10.12 |
|
| Per share market value at end of period |
$ |
5.74 |
|
$ |
6.61 |
|
$ |
6.08 |
|
$ |
7.53 |
|
$ |
10.34 |
|
| Total return(5) |
|
(2.01 |
)% |
|
33.29 |
% |
|
(4.35 |
)% |
|
(17.22 |
)% |
|
14.68 |
% |
| Shares outstanding at end of period |
|
51,479,409 |
|
|
51,479,409 |
|
|
56,396,435 |
|
|
60,303,769 |
|
|
53,400,745 |
|
| Ratios/Supplemental
Data(7) |
|
|
|
|
|
| Net assets at end of period (000’s) |
|
388,419 |
|
|
385,992 |
|
|
360,935 |
|
|
520,813 |
|
|
526,242 |
|
| Average net assets (000’s) |
|
385,947 |
|
|
343,328 |
|
|
487,894 |
|
|
560,169 |
|
|
506,093 |
|
| Ratio of expenses to average net assets |
|
7.95 |
% |
|
12.38 |
% |
|
9.80 |
% |
|
8.70 |
% |
|
9.74 |
% |
| Ratio of net investment income to average net assets |
|
7.96 |
% |
|
7.80 |
% |
|
8.12 |
% |
|
12.24 |
% |
|
11.02 |
% |
| Portfolio turnover rate(6) |
|
43.02 |
% |
|
25.73 |
% |
|
24.96 |
% |
|
45.91 |
% |
|
38.22 |
% |
____________
(1) Represents per share net investment income for the period, based upon weighted average shares outstanding.
(2) Net realized and unrealized capital gains include rounding adjustments to reconcile change in net asset value per
share.
(3) During the first quarter of 2015, the Company identified a non-material error in its accounting for income from CLO
equity investments — refer to “Note 2. Change of Accounting for Collateralized Loan Obligation Equity Income.”
Prospectively as of January 1, 2015, the Company records income from its CLO equity investments using the effective yield method in
accordance with the accounting guidance in ASC 325-40, Beneficial Interests in Securitized Financial Assets, based upon an
estimation of an effective yield to maturity utilizing assumed cash flows. An out-of-period adjustment to net investment income
incentive fees, in the amount of $2.4 million, or $0.04 per share, is reflected in the year ended December 31, 2015. Prior period
amounts are not materially affected.
During the quarter ended September 30, 2015, the Company recorded an out of period adjustment related to a miscalculation of
discount accretion which increased interest income and increased investment cost, by approximately $1.4 million. For the year ended
December 31, 2015, approximately $1.1 million, or $0.02 per share, of the adjustment related to prior years. The increase in the
investment cost has a corresponding effect on the investment’s unrealized depreciation of the same amount. Management concluded the
adjustment was not material to previously filed financial statements.
(4) 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 the Company’s earnings cannot be determined until tax returns are
prepared after the end of the fiscal year.
(5) Total return equals the increase or decrease of ending market value over beginning market value, plus
distributions, divided by the beginning market value per share, assuming distribution reinvestment prices obtained under the
Company’s distribution reinvestment plan, excluding any discounts.
(6) Portfolio turnover rate is calculated using the lesser of the annual cash investment sales and debt repayments or annual
cash investment purchases over the average of the total investments at fair value.
(7) The following table provides supplemental performance ratios measured for the years ended December 31, 2017, 2016,
2015, 2014 and 2013:
| |
|
|
|
|
|
| |
Year
Ended
December 31,
2017 |
Year
Ended
December 31,
2016 |
Year
Ended
December 31,
2015 |
Year
Ended
December 31,
2014 |
Year
Ended
December 31,
2013 |
| Ratio of expenses to average net assets: |
|
|
|
|
|
| Expenses before incentive fees |
6.95 |
% |
11.57 |
% |
10.00 |
% |
8.39 |
% |
8.68 |
% |
| Net investment income incentive fees |
1.00 |
% |
0.81 |
% |
(0.19 |
)% |
1.00 |
% |
1.30 |
% |
| Capital gains incentive fees |
— |
% |
— |
% |
— |
% |
(0.69 |
)% |
(0.24 |
)% |
Ratio of expenses, excluding interest
expense, to average net assets |
4.61 |
% |
7.37 |
% |
5.73 |
% |
5.17 |
% |
6.00 |
% |
About TICC Capital Corp.
TICC Capital Corp. is a publicly-traded business development company principally investing in syndicated bank loans
and debt and equity tranches of collateralized loan obligation (“CLO”) vehicles. CLO investments may also include warehouse
facilities, which are financing structures intended to aggregate loans that may be used to form the basis of a CLO vehicle.
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
