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May 9, 2018
TCP Capital Corp. Announces First Quarter 2018 Financial Results Including Net Investment Income Of $0.37 Per Share; Second Quarter Dividend Of $0.36 Per Share

SANTA MONICA, Calif., May 9, 2018 /PRNewswire/ -- TCP Capital Corp. ("we," "us," "our," "TCPC" or the "Company"), a business development company ("BDC") (NASDAQ: TCPC), today announced its financial results for the first quarter ended March 31, 2018 and filed its Form 10-Q with the U.S. Securities and Exchange Commission.

TCP Capital Corp. (PRNewsFoto/Tennenbaum Capital Partners, LLC)

FINANCIAL HIGHLIGHTS

  • Net investment income for the quarter ended March 31, 2018 was $21.6 million, or $0.37 per share on a diluted basis, net of $0.09 per share in incentive compensation.
  • Net increase in net assets resulting from operations for the quarter ended March 31, 2018 was $27.2 million, or $0.46 per share.
  • Net asset value per share at March 31, 2018 increased to $14.90 from $14.80 at December 31, 2017.
  • Total acquisitions during the quarter ended March 31, 2018 were $169.1 million and total dispositions were $71.0 million.
  • On February 26, 2018, we established a new $100 million revolving, multi-currency credit facility with ING Capital LLC, maturing on February 28, 2022 and generally bearing interest at LIBOR plus 2.25%.
  • On May 9, 2018, our board of directors declared a second quarter dividend of $0.36 per share payable on June 29, 2018 to shareholders of record as of June 15, 2018.
  • On April 17, 2018Tennenbaum Capital Partners, LLC, our investment advisor (the "Advisor"), entered into a definitive agreement with BlackRock, Inc. ("BlackRock"), pursuant to which the Advisor will be merged with and into a wholly-owned subsidiary of BlackRock Capital Investment Advisors, LLC, an indirect wholly-owned subsidiary of BlackRock, with the Advisor being the surviving entity after the merger.

"We are pleased to have delivered strong performance in the first quarter of 2018, as we out-earned our dividend for the 24th consecutive quarter," said Howard Levkowitz, TCP Capital Corp. Chairman and CEO. "In the first quarter, we originated over $169 million in loans, with net deployments of approximately $98 million leveraging our robust direct origination platform. We continue to source attractive investment opportunities, while remaining highly selective and disciplined. We are excited about our recently announced transaction with BlackRock and believe it will further enhance our ability to deliver strong results for shareholders."

PORTFOLIO AND INVESTMENT ACTIVITY

As of March 31, 2018, our investment portfolio consisted of debt and equity positions in 97 portfolio companies with a total fair value of approximately $1.62 billion. Debt positions represented approximately 96% of the portfolio at fair value, the majority of which were senior secured debt. Equity positions, including equity interests in portfolios of debt and lease assets, represented approximately 4% of our investment portfolio.

As of March 31, 2018, the weighted average annual effective yield of our debt portfolio was approximately 11.3% and the weighted average annual effective yield of our total portfolio was approximately 11.0%.(1)  As of March 31, 2018, approximately 88% of our debt portfolio at fair value had floating interest rates. As of March 31, 2018, we had one debt investment on non-accrual status, totaling zero percent of the portfolio at fair value.

During the three months ended March 31, 2018, we invested approximately $169.1 million, primarily in twelve investments, comprised of six new and six existing portfolio companies. The investments were comprised of approximately $126.8 million in senior secured loans and $38.0 million in senior secured notes. The remaining $4.3 million represented additional equity interests in a portfolio of debt assets. Additionally, we received proceeds from sales and repayments of investment principal of approximately $71.0 million. We expect to continue to invest in senior secured loans, bonds and subordinated debt, as well as select equity investments, to obtain a high level of current income and create the potential for appreciation, with an emphasis on principal protection.

As of March 31, 2018, total assets were $1,665.6 million, net assets applicable to common shareholders were $876.6 million and net asset value per share was $14.90, as compared to $1,629.4 million, $870.7 million, and $14.80 per share, respectively, as of December 31, 2017.

CONSOLIDATED RESULTS OF OPERATIONS

Total investment income for the three months ended March 31, 2018 was approximately $44.2 million, or $0.75 per share, including $0.03 per share from prepayment premiums and related accelerated original issue discount and exit fee amortization, $0.03 per share from recurring original issue discount and exit fee amortization and $0.05 per share from recurring income paid in kind. This reflects our policy of recording interest income, adjusted for amortization of premiums and discounts, on an accrual basis. Origination, structuring, closing, commitment, and similar upfront fees received in connection with the outlay of capital are generally amortized into interest income over the life of the respective debt investment.

Total operating expenses for the three months ended March 31, 2018 were approximately $22.6 million, or $0.38 per share, including interest and other debt expenses of $9.6 million, or $0.16 per share and incentive compensation from net investment income of $5.4 million, or $0.09 per share. Excluding incentive compensation, interest and other debt expenses, annualized first quarter expenses were 3.5% of average net assets.

Net investment income for the three months ended March 31, 2018 was approximately $21.6 million, or $0.37 per share. Net investment income is net of incentive compensation as the incentive compensation structure was converted from a partnership profit allocation to a fee effective January 1, 2018. This conversion had no impact on the amount of the incentive compensation paid or services received by the Company.

Net realized and unrealized gains for the three months ended March 31, 2018 were $5.6 million, or $0.09 per share, comprised primarily of a $1.9 million increase in value of our investment in NEG Parent (CORE Entertainment), as well as various market gains resulting from generally tighter spreads.

Net increase in net assets applicable to common shareholders resulting from operations for the three months ended March 31, 2018 was $27.2 million, or $0.46 per share.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2018, available liquidity was approximately $254.5 million, comprised of approximately $242.0 million in available capacity under our leverage program and $13.7 million in cash and cash equivalents, less approximately $1.2 million in net outstanding settlements.

The combined weighted-average interest rate on debt outstanding at March 31, 2018 was 4.18%.

Total debt outstanding at March 31, 2018 was as follows:


Maturity


Rate


Carrying Value (1)


Available


Total Capacity

SVCP 2022 Facility

2022


L+2.25%


$

56,995,000



$

43,005,000



$

100,000,000


2019 Convertible Notes ($108 million par)

2019


5.25%


107,131,572





107,131,572


2022 Convertible Notes ($140 million par)

2022


4.625%


137,546,442





137,546,442


2022 Notes ($175 million par)

2022


4.125%


174,436,660





174,436,660


TCPC Funding Facility

2021


L+2.50%(2)


203,000,000



147,000,000



350,000,000


SBA Debentures

 2024−2028


2.63%(3)


98,000,000



52,000,000



150,000,000


Total leverage





777,109,674



$

242,005,000



$

1,019,114,674


Unamortized issuance costs





(8,454,219)






Debt, net of unamortized issuance costs





$

768,655,455








(1)

Except for the convertible notes and the 2022 Notes, all carrying values are the same as the principal amounts outstanding.

(2)

Or L+2.25% subject to certain funding requirements

(3)

Weighted-average interest rate on pooled loans, excluding fees of 0.36% or 0.35%. As of March 31, 2018, $15.0 million of the outstanding amount was not yet pooled, and bore interest at a temporary weighted-average rate of 2.72% plus fees of 0.35% through September 19, 2018, the date of the next SBA pooling.

On May 9, 2018, our board of directors re-approved our stock repurchase plan to acquire up to $50 million in the aggregate of our common stock at prices at certain thresholds below our net asset value per share, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934. During the three months ended March 31, 2018, we repurchased 11,300 shares for a total cost of $0.16 million.

RECENT DEVELOPMENTS

On April 17, 2018Tennenbaum Capital Partners, LLC, our investment advisor (the "Advisor"), entered into a definitive agreement with BlackRock, Inc. ("BlackRock"), pursuant to which the Advisor will be merged with and into a wholly-owned subsidiary of BlackRock Capital Investment Advisors, LLC, an indirect wholly-owned subsidiary of BlackRock, with the Advisor being the surviving entity after the merger.

On May 9, 2018, our board of directors declared a second quarter cash dividend of $0.36 per share payable on June 29, 2018 to shareholders of record as of the close of business on June 15, 2018.

CONFERENCE CALL AND WEBCAST

TCP Capital Corp. will host a conference call on Wednesday May 9, 2018 at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time) to discuss its financial results. All interested parties are invited to participate in the conference call by dialing (866) 393-0571; international callers should dial (206) 453-2872. Participants should enter the Conference ID 6059576 when prompted. For a slide presentation that we intend to refer to on the earnings conference call, please visit the Investor Relations section of our website (www.tcpcapital.com) and click on the First Quarter 2018 Investor Presentation under Events and Presentations. The conference call will be webcast simultaneously in the investor relations section of our website at http://investors.tcpcapital.com/. An archived replay of the call will be available approximately two hours after the live call, through May 16, 2018. For the replay, please visit http://investors.tcpcapital.com/events.cfm or dial (855) 859-2056. For international replay, please dial (404) 537-3406. For all replays, please reference program ID number 6059576.

TCP Capital Corp.





Consolidated Statements of Assets and Liabilities






March 31, 2018


December 31, 2017


(unaudited)



Assets




Investments, at fair value:




Companies less than 5% owned (cost of $1,446,893,939 and $1,356,459,251, respectively)

$

1,461,952,420



$

1,362,514,206


Companies 5% to 25% owned (cost of $95,001,060 and $84,153,698, respectively)

82,901,931



75,635,342


Companies more than 25% owned (cost of $105,442,881 and $106,543,799, respectively)

75,533,774



76,383,155


Total investments (cost of $1,647,337,880 and $1,547,156,748, respectively)

1,620,388,125



1,514,532,703






Cash and cash equivalents (including restricted cash of $0 and $798,108, respectively)

13,736,624



86,625,237


Accrued interest income:




Companies less than 5% owned

19,618,490



18,533,095


Companies 5% to 25% owned

1,141,466



817,984


Companies more than 25% owned

386,628



16,859


Deferred debt issuance costs

4,200,912



3,276,838


Receivable for investments sold

198,662



431,483


Prepaid expenses and other assets

5,944,857



5,188,169


Total assets

1,665,615,764



1,629,422,368






Liabilities




Debt, net of unamortized issuance costs of $8,454,219 and $8,624,072, respectively

768,655,455



725,200,281


Management and advisory fees payable

5,552,866




Incentive compensation payable

5,391,278



5,983,135


Interest payable

5,164,199



7,771,537


Payable for investments purchased

1,405,087



16,474,632


Payable to the Advisor

823,461



800,703


Unrealized depreciation on swaps



603,745


Accrued expenses and other liabilities

2,048,403



1,860,209


Total liabilities

789,040,749



758,694,242






Commitments and contingencies








Net assets applicable to common shareholders

$

876,575,015



$

870,728,126






Composition of net assets applicable to common shareholders




Common stock, $0.001 par value; 200,000,000 shares authorized, 58,836,148 and 58,847,256 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively

$

58,836



$

58,847


Paid-in capital in excess of par

1,038,698,067



1,038,855,948


Accumulated net investment income

4,824,877



4,443,768


Accumulated net realized losses

(140,023,479)



(139,390,703)


Accumulated net unrealized depreciation

(26,983,286)



(33,239,734)


Net assets applicable to common shareholders

$

876,575,015



$

870,728,126






Net assets per share

$

14.90



$

14.80


 

TCP Capital Corp.


Consolidated Statements of Operations (Unaudited)






Three Months Ended March 31,


2018


2017

Investment income




Interest income:




Companies less than 5% owned

$

40,797,854



$

35,418,453


Companies 5% to 25% owned

1,746,864



1,726,423


Companies more than 25% owned

1,280,613



1,635,334


Dividend income:




Companies more than 25% owned

17,902




Lease income:




Companies more than 25% owned

74,457



74,457


Other income:




Companies less than 5% owned



488,347


Companies 5% to 25% owned

297,356




Total investment income

44,215,046



39,343,014


Operating expenses




Interest and other debt expenses

9,641,894



7,755,027


Management and advisory fees

5,706,236



4,934,041


Incentive fee

5,391,278



N/A


Administrative expenses

597,232



589,561


Legal fees, professional fees and due diligence expenses

434,303



277,721


Director fees

156,816



159,970


Insurance expense

106,865



107,960


Custody fees

91,855



81,887


Other operating expenses

523,454



554,959


Total operating expenses

22,649,933



14,461,126






Net investment income

21,565,113



24,881,888






Net realized and unrealized gain (loss) on investments and foreign currency




Net realized loss:




Investments in companies less than 5% owned

(632,776)



(5,087,458)


Net realized loss

(632,776)



(5,087,458)






Change in net unrealized appreciation/depreciation

6,256,448



4,617,498


Net realized and unrealized gain (loss)

5,623,672



(469,960)






Net increase in net assets from operations

27,188,785



24,411,928






Distributions of incentive allocation to the General Partner from:




Net investment income

N/A



(4,976,378)






Net increase in net assets applicable to common shareholders resulting from operations

$

27,188,785



$

19,435,550






Basic and diluted earnings per common share

$

0.46



$

0.37






Basic and diluted weighted average common shares outstanding

58,844,381



53,041,902


ABOUT TCP CAPITAL CORP.

TCP Capital Corp. (NASDAQ: TCPC) is a specialty finance company focused on direct lending to middle-market companies as well as small businesses. TCPC lends primarily to companies with established market positions, strong regional or national operations, differentiated products and services and sustainable competitive advantages, investing across industries in which it has significant knowledge and expertise. TCPC's investment objective is to achieve high total returns through current income and capital appreciation, with an emphasis on principal protection. TCPC is a publicly-traded business development company, or BDC, regulated under the Investment Company Act of 1940 and is externally managed by its advisor, Tennenbaum Capital Partners, LLC, a leading alternative investment manager. For more information, visit www.tcpcapital.com.

FORWARD-LOOKING STATEMENTS

Prospective investors considering an investment in TCP Capital Corp. should consider the investment objectives, risks and expenses of the company carefully before investing. This information and other information about the company are available in the company's filings with the Securities and Exchange Commission ("SEC"). Copies are available on the SEC's website at www.sec.gov and the company's website at www.tcpcapital.com. Prospective investors should read these materials carefully before investing.

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on estimates, projections, beliefs and assumptions of management of the company at the time of such statements and are not guarantees of future performance. Forward-looking statements involve risks and uncertainties in predicting future results and conditions. Actual results could differ materially from those projected in these forward-looking statements due to a variety of factors, including, without limitation, changes in general economic conditions or changes in the conditions of the industries in which the company makes investments, risks associated with the availability and terms of financing, changes in interest rates, availability of transactions, and regulatory changes. Certain factors that could cause actual results to differ materially from those contained in the forward-looking statements are included in the "Risk Factors" section of the company's 10-K for the year ended December 31, 2017, and the company's subsequent periodic filings with the SEC. Copies are available on the SEC's website at www.sec.gov and the company's website at www.tcpcapital.com. Forward-looking statements are made as of the date of this press release, and are subject to change without notice. The company has no duty and does not undertake any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information, or otherwise.

__________________________


(1) Weighted average annual effective yield includes amortization of deferred debt origination and end-of-term fees and accretion of original issue discount, but excludes market discount and any prepayment and make-whole fee income. The weighted average effective yield on our debt portfolio excludes any debt investments that are distressed or on non-accrual status.

 

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SOURCE TCP Capital Corp.

TCP Capital Corp., Katie McGlynn, 310-566-1094, investor.relations@tcpcapital.com