Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Oxford Square Capital Corp. | v417002_8-k.htm |
| EX-99.2 - EXHIBIT 99.2 - Oxford Square Capital Corp. | v417002_ex99-2.htm |
Exhibit 99.1
TICC Announces Results of Operations for the Quarter Ended June 30, 2015 and
Quarterly Distribution of $0.29 per Share
GREENWICH, CT – 08/04/2015 – TICC Capital Corp. (NasdaqGS: TICC) (the “Company,” “we,” “us,” or “our”) announced today its financial results for the quarter ended June 30, 2015, and announced a distribution of $0.29 per share for the third quarter of 2015.
HIGHLIGHTS
| · | For the quarter ended June 30, 2015, we recorded GAAP net investment income of approximately $10.9 million, or approximately $0.18 per share. In the second quarter, we also recorded net realized capital gains of $4.1 million, and unrealized depreciation of $5.0 million. In total we had a net increase in net assets from operations of approximately $10.0 million, or $0.17 per share. |
| · | Our estimated distributable net investment income (“EDNII”) for the quarter ended June 30, 2015 was approximately $0.32 per share. |
| o | EDNII represents that portion of our estimated annual taxable net investment income available for distribution to our common shareholders attributable to the quarter. The Company’s distribution policy is based, to a significant extent, on our EDNII. |
| · | Total investment income for the second quarter of 2015 amounted to approximately $23.8 million, which represents an increase of approximately $2.0 million from the first quarter of 2015. |
| o | For the quarter ended June 30, 2015, we recorded GAAP investment income from our portfolio as follows: |
| · | approximately $12.9 million from our debt investments, |
| · | approximately $9.6 million from our CLO equity investments, |
| · | approximately $1.2 million from all other sources. |
| o | While reportable GAAP earnings from our CLO equity class investments for the three months ended June 30, 2015 was approximately $9.6 million, we received or were entitled to receive approximately $17.9 million in distributions. Our experience has been that cash flows have historically represented a reasonable estimate of CLO equity investment taxable earnings. In general, we currently expect our annual taxable income to be higher than our GAAP earnings on the basis of the difference between cash distributions actually received (and record date distributions to be received) and the effective yield income. Our distribution policy will be based upon our estimate of that taxable income (as required for a regulated investment company). |
| o | Our weighted average credit rating on a fair value basis was 2.1 at the end of the second quarter of 2015 (compared to 2.1 at the end of the first quarter of 2015). |
| o | As of the end of the second quarter of 2015 we had no loans held on non-accrual status. |
| · | Our operating expenses for the quarter ended June 30, 2015 were approximately $12.9 million, compared to total expenses of approximately $9.4 million for the quarter ended March 31, 2015 (which includes the effect of a one-time $2.4 million net investment income incentive fee reversal). |
| · | Our Board of Directors has declared a distribution of $0.29 per share for the third quarter of 2015. |
| o | Payable Date: September 30, 2015 |
| o | Record Date: September 16, 2015 |
| · | As of June 30, 2015, the weighted average yield of our debt investments at current cost stood at approximately 7.6%, compared with 7.7% as of March 31, 2015. |
| · | As of June 30, 2015, the weighted average effective yield (GAAP) of CLO equity investments at current cost was approximately 12.6%, compared with 11.4% as of March 31, 2015 |
| · | As of June 30, 2015, the weighted average cash yield of cash income producing CLO equity investments at current cost was approximately 25.4%, compared with 26.1% as of March 31, 2015. |
| o | We note that the cash yield calculated on the CLO equity investments is based on the cash distributions we received or were entitled to receive at each respective period end and excludes the CLO equity investments which have not yet made their inaugural payment. |
| · | As of June 30, 2015, net asset value per share was $8.60 compared with the net asset value per share as of March 31, 2015 of $8.72. |
| · | We issued a press release today announcing that the members of our investment adviser, TICC Management, LLC, have entered into an agreement with Benefit Street Partners L.L.C. (“BSP”), pursuant to which an affiliate of BSP will acquire TICC Management, LLC. For additional information regarding this transaction, see the press release that we issued today titled “TICC Capital’s Investment Adviser to be Acquired by Benefit Street Partners.” |
Supplemental Information Regarding Core Net Investment Income
On a supplemental basis, we provide information relating to core net investment income and its ratio to net assets, which are non-GAAP measures. These measures are 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. It should be noted that the current description of core net investment income differs from prior descriptions due to the change in the method of accounting for CLO equity investment income, effective January 1, 2015. Core net investment income represents net investment income adjusted for additional taxable income on our CLO equity investments and also excludes our capital gains incentive fee.
Income from CLO equity investments, for generally accepted accounting purposes, is recorded using the effective yield method. This method requires the calculation of an effective yield to expected redemption based upon an estimation of the amount and timing of future cash flows, including recurring cash flows as well as future principal payments; the difference between the actual cash received (and record date distributions to be received), and the effective yield calculation is an adjustment to cost. Accordingly, investment income recognized on CLO equity investments in the GAAP statement of operations differs from the estimated taxable net investment income (which is generally based upon the cash distributions actually received and record date distributions to be received by us during the period), and the resulting difference is referred to below as “CLO equity additional estimated taxable income.” In addition, since the capital gains incentive fee, for generally accepted accounting purposes, is based on the hypothetical liquidation of the entire portfolio (and as any capital gains incentive fee may be non-recurring), such fees are excluded when calculating core net investment income. We believe that core net investment income is a useful indicator of performance during this period. Further, because the RIC requirements are to distribute taxable earnings, and capital gains incentive fees may not be fully currently tax deductible, core net investment income provides a better indication of estimated taxable income for the period.
The following tables provide a reconciliation of net investment income to core net investment income (for the three months ended June 30, 2015 and 2014, respectively):
| Three Months Ended June 30, 2015 | Three Months Ended June 30, 2014 | |||||||||||||||
| Amount | Per Share Amounts (basic) | Amount | Per Share Amounts (basic) | |||||||||||||
| Net investment income | $ | 10,892,126 | $ | 0.18 | $ | 17,416,580 | $ | 0.29 | ||||||||
| CLO equity additional estimated taxable income | 8,200,770 | 0.14 | - | - | ||||||||||||
| Capital gains incentive fee | - | - | (856,158 | ) | (0.01 | ) | ||||||||||
| Core net investment income | $ | 19,092,896 | $ | 0.32 | $ | 16,560,422 | $ | 0.28 | ||||||||
We will host a conference call to discuss our second quarter results today, Tuesday, August 4, 2015 at 10:00 AM ET. Please call 888-339-0740 to participate. A replay of the conference call will be available for approximately 30 days. The replay number is 877-344-7529, and the replay passcode is 10070383.
A presentation containing further detail regarding our year-end and 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 June 30, 2015, and subsequent reports on Form 10-Q as they are filed.
| TICC CAPITAL CORP. | |||||||
| CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | |||||||
| (unaudited) | |||||||
| June 30, 2015 | December 31, 2014 | |||||||
| ASSETS | ||||||||
| Non-affiliated/non-control investments (cost: $957,933,611 @ 6/30/15; $999,433,538 @12/31/14) | $ | 934,074,019 | $ | 967,612,035 | ||||
| Affiliated investments (cost: $7,340,200 @ 6/30/15; $4,268,722 @ 12/31/14) | 6,917,513 | 1,585,303 | ||||||
| Control investments (cost: $16,750,000 6/30/15; $16,800,000 @ 12/31/14) | 14,910,000 | 14,960,000 | ||||||
| Total investments at fair value (cost: $982,023,811 @ 6/30/15; | ||||||||
| $1,020,502,260 @ 12/31/14) | 955,901,532 | 984,157,338 | ||||||
| Cash and cash equivalents | 13,681,148 | 20,505,323 | ||||||
| Restricted cash | 53,459,416 | 20,576,250 | ||||||
| Deferred debt issuance costs | 4,961,367 | 5,669,747 | ||||||
| Interest and distributions receivable | 12,560,451 | 11,442,289 | ||||||
| Securities sold not settled | 6,215,178 | - | ||||||
| Other assets | 276,113 | 290,245 | ||||||
| Total assets | $ | 1,047,055,205 | $ | 1,042,641,192 | ||||
| LIABILITIES | ||||||||
| Accrued interest payable | $ | 2,785,877 | $ | 2,596,564 | ||||
| Investment advisory fee and net investment income incentive fee payable to affiliate | 5,857,547 | 6,183,486 | ||||||
| Securities purchased not settled | 20,561,372 | 11,343,179 | ||||||
| Credit facility | 150,000,000 | 150,000,000 | ||||||
| Accrued expenses | 865,158 | 629,127 | ||||||
| Notes payable - TICC CLO 2012-1 LLC, net of discount | 236,295,251 | 236,075,775 | ||||||
| Convertible senior notes payable | 115,000,000 | 115,000,000 | ||||||
| Total liabilities | 531,365,205 | 521,828,131 | ||||||
| COMMITMENTS AND CONTINGENCIES (Note 14) | ||||||||
| NET ASSETS | ||||||||
| Common stock, $0.01 par value, 100,000,000 share authorized; 59,987,986 and 60,303,769 shares issued | ||||||||
| and outstanding, respectively | 599,880 | 603,038 | ||||||
| Capital in excess of par value | 620,635,767 | 623,018,818 | ||||||
| Net unrealized depreciation on investments | (26,122,279 | ) | (36,344,922 | ) | ||||
| Accumulated net realized losses on investments | (65,774,738 | ) | (63,212,472 | ) | ||||
| Distributions in excess of investment income | (13,648,630 | ) | (3,251,401 | ) | ||||
| Total net assets | 515,690,000 | 520,813,061 | ||||||
| Total liabilities and net assets | $ | 1,047,055,205 | $ | 1,042,641,192 | ||||
| Net asset value per common share | $ | 8.60 | $ | 8.64 | ||||
| TICC CAPITAL CORP. |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| (unaudited) |
| Three Months Ended June 30, 2015 | Three Months Ended June 30, 2014 | Six Months Ended June 30, 2015 | Six Months Ended June 30, 2014 | |||||||||||||
INVESTMENT INCOME | ||||||||||||||||
From non-affiliated/non-control investments: | ||||||||||||||||
| Interest income - debt investments | $ | 12,484,047 | $ | 12,964,092 | $ | 25,304,944 | $ | 25,622,320 | ||||||||
| Income from securitization vehicles and investments | 9,616,239 | 14,825,186 | 17,779,420 | 29,876,421 | ||||||||||||
| Commitment, amendment fee income and other income | 1,239,754 | 1,785,193 | 1,612,371 | 2,390,812 | ||||||||||||
| Total investment income from non-affiliated/non-control investments | 23,340,040 | 29,574,471 | 44,696,735 | 57,889,553 | ||||||||||||
From affiliated investments: | ||||||||||||||||
| Interest income - debt investments | 95,032 | 14,703 | 142,481 | 14,703 | ||||||||||||
| Total investment income from affiliated investments | 95,032 | 14,703 | 142,481 | 14,703 | ||||||||||||
From control investments: | ||||||||||||||||
| Interest income - debt investments | 341,835 | 345,564 | 680,692 | 687,330 | ||||||||||||
| Total investment income from control investments | 341,835 | 345,564 | 680,692 | 687,330 | ||||||||||||
| Total investment income | 23,776,907 | 29,934,738 | 45,519,908 | 58,591,586 | ||||||||||||
EXPENSES | ||||||||||||||||
| Compensation expense | 395,980 | 511,370 | 875,633 | 926,573 | ||||||||||||
| Investment advisory fees | 5,308,443 | 5,441,325 | 10,318,686 | 10,397,971 | ||||||||||||
| Professional fees | 905,924 | 267,505 | 1,511,776 | 997,943 | ||||||||||||
| Interest expense and other debt financing expenses | 4,996,214 | 4,933,738 | 9,938,572 | 9,841,386 | ||||||||||||
| General and administrative | 729,117 | 790,578 | 1,184,450 | 1,183,256 | ||||||||||||
| Total expenses before incentive fees | 12,335,678 | 11,944,516 | 23,829,117 | 23,347,129 | ||||||||||||
| Net investment income incentive fees | 549,103 | 1,429,800 | (1,505,252 | ) | 3,104,579 | |||||||||||
| Capital gains incentive fees | - | (856,158 | ) | - | (3,034,889 | ) | ||||||||||
| Total incentive fees | 549,103 | 573,642 | (1,505,252 | ) | 69,690 | |||||||||||
| Total expenses | 12,884,781 | 12,518,158 | 22,323,865 | 23,416,819 | ||||||||||||
Net investment income | 10,892,126 | 17,416,580 | 23,196,043 | 35,174,767 | ||||||||||||
Net change in unrealized appreciation/depreciation on investments | ||||||||||||||||
| Non-Affiliate/non-control investments | (4,523,697 | ) | (2,347,521 | ) | 3,040,553 | (3,236,229 | ) | |||||||||
| Affiliated investments | (442,785 | ) | 5,889,768 | 7,182,090 | 3,927,381 | |||||||||||
| Control investments | - | - | - | (740,000 | ) | |||||||||||
| Total net change in unrealized appreciation/depreciation on investments | (4,966,482 | ) | 3,542,247 | 10,222,643 | (48,848 | ) | ||||||||||
| Net realized gains/(losses) on investments | ||||||||||||||||
| Non-Affiliated/non-control investments | 4,110,376 | (2,558,205 | ) | 4,200,062 | (3,465,167 | ) | ||||||||||
| Affiliated investments | - | (5,264,838 | ) | (6,762,328 | ) | (5,264,838 | ) | |||||||||
| Total net realized gains/(losses) on investments | 4,110,376 | (7,823,043 | ) | (2,562,266 | ) | (8,730,005 | ) | |||||||||
| Net increase in net assets resulting from operations | $ | 10,036,020 | $ | 13,135,784 | $ | 30,856,420 | $ | 26,395,914 | ||||||||
Net increase in net assets resulting from net investment income per common share: | ||||||||||||||||
| Basic | $ | 0.18 | $ | 0.29 | $ | 0.39 | $ | 0.61 | ||||||||
| Diluted | $ | 0.18 | $ | 0.27 | $ | 0.38 | $ | 0.58 | ||||||||
Net increase in net assets resulting from operations per common share: | ||||||||||||||||
| Basic | $ | 0.17 | $ | 0.22 | $ | 0.51 | $ | 0.46 | ||||||||
| Diluted | $ | 0.17 | $ | 0.21 | $ | 0.49 | $ | 0.45 | ||||||||
| Weighted average shares of common stock outstanding: | ||||||||||||||||
| Basic | 59,987,986 | 60,214,211 | 60,002,434 | 57,311,454 | ||||||||||||
| Diluted | 70,021,138 | 70,247,363 | 70,035,586 | 67,344,606 | ||||||||||||
| Distributions per share | $ | 0.29 | $ | 0.29 | $ | 0.56 | $ | 0.58 | ||||||||
TICC CAPITAL CORP.
FINANCIAL HIGHLIGHTS (UNAUDITED)
| Three Months Ended June 30, 2015 (unaudited) | Three Months Ended June 30, 2014 (unaudited) | Six Months Ended June 30, 2015 (unaudited) | Six Months Ended June 30, 2014 (unaudited) | |||||||||||||
| Per Share Data | ||||||||||||||||
| Net asset value at beginning of period | $ | 8.72 | $ | 9.78 | $ | 8.64 | $ | 9.85 | ||||||||
| Net investment income(1)(3) | 0.18 | 0.29 | 0.39 | 0.61 | ||||||||||||
| Net realized and unrealized capital gains(2)(3) | (0.01 | ) | (0.07 | ) | 0.12 | (0.15 | ) | |||||||||
| Total from net investment operations | 0.17 | 0.22 | 0.51 | 0.46 | ||||||||||||
| Distributions per share from net investment income | (0.29 | ) | (0.29 | ) | (0.56 | ) | (0.58 | ) | ||||||||
| Distributions based on weighted average share impact | — | — | — | (0.02 | ) | |||||||||||
| Total distributions(4) | (0.29 | ) | (0.29 | ) | (0.56 | ) | (0.60 | ) | ||||||||
| Effect of shares repurchased, gross | — | — | 0.01 | — | ||||||||||||
| Net asset value at end of period | $ | 8.60 | $ | 9.71 | $ | 8.60 | $ | 9.71 | ||||||||
| Per share market value at beginning of period | $ | 6.92 | $ | 9.78 | $ | 7.53 | $ | 10.34 | ||||||||
| Per share market value at end of period | $ | 6.72 | $ | 9.90 | $ | 6.72 | $ | 9.90 | ||||||||
| Total return(5) | 1.30 | % | 4.19 | % | (3.27 | )% | 1.47 | % | ||||||||
| Shares outstanding at end of period | 59,987,986 | 60,267,093 | 59,987,986 | 60,267,093 | ||||||||||||
| Ratios/Supplemental Data | ||||||||||||||||
| Net assets at end of period (000’s) | 515,690 | 585,231 | 515,690 | 585,231 | ||||||||||||
| Average net assets (000’s) | 519,370 | 587,170 | 520,160 | 559,935 | ||||||||||||
| Ratio of expenses to average net assets(6) | 9.92 | % | 8.53 | % | 8.58 | % | 8.36 | % | ||||||||
| Ratio of net investment income to average net assets(6) | 8.39 | % | 11.86 | % | 8.92 | % | 12.56 | % | ||||||||
________
(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) During the first quarter of 2015, the Company identified a non-material error in its accounting for income from CLO equity investments. 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, is reflected in the first quarter of 2015. Prior period amounts are not materially affected.
(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 tax character of distributions will be determined at 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, assuming distribution reinvestment prices obtained under the Company’s distribution reinvestment plan, excluding any discounts. Total return is not annualized.
(6) Annualized.
(7) The following table provides supplemental performance ratios (annualized) measured for the quarters ended June 30, 2015 and June 30 2014:
| Three Months Ended June 30, 2015 (unaudited) | Three Months Ended June 30, 2014 (unaudited) | Six Months Ended June 30, 2015 (unaudited) | Six Months Ended June 30, 2015 (unaudited) | |||||||||||||
| Ratio of expenses before incentive fees to average net assets | 9.50 | % | 8.14 | % | 9.16 | % | 8.34 | % | ||||||||
| Ratio of net investment income incentive fees to average net assets | 0.42 | % | 0.97 | % | (0.58 | )% | 1.11 | % | ||||||||
| Ratio of capital gains incentive fees to average net assets | — | (0.58 | )% | — | (1.09 | )% | ||||||||||
| Ratio of expenses, excluding interest expense, to average net assets | 6.08 | % | 5.17 | % | 4.76 | % | 4.85 | % | ||||||||
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 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.