TCG BDC, Inc. Announces Fourth Quarter 2018 Financial Results and Declares First Quarter 2019 Dividend of $0.37 Per Share
Selected Financial Highlights
(dollar amounts in thousands, except per share data) | December 31, 2018 | September 30, 2018 | ||||||
Total investments, at fair value | $ | 1,972,157 | $ | 2,018,998 | ||||
Total assets | 2,084,743 | 2,147,841 | ||||||
Total debt | 960,678 | 1,000,207 | ||||||
Total net assets | $ | 1,063,218 | $ | 1,104,742 | ||||
Net assets per share | $ | 17.09 | $ | 17.66 |
For the three month periods ended | ||||||||
December 31, 2018 | September 30, 2018 | |||||||
Total investment income | $ | 56,311 | $ | 51,280 | ||||
Net investment income (loss) | 29,411 | 25,685 | ||||||
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments | (30,571 | ) | (19,605 | ) | ||||
Net increase (decrease) in net assets resulting from operations | $ | (1,160 | ) | $ | 6,080 | |||
Basic and diluted per weighted-average common share: | ||||||||
Net investment income (loss) | $ | 0.47 | $ | 0.41 | ||||
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments | (0.49 | ) | (0.31 | ) | ||||
Net increase (decrease) in net assets resulting from operations | $ | (0.02 | ) | $ | 0.10 | |||
Weighted-average shares of common stock outstanding—Basic and Diluted | 62,496,338 | 62,568,651 | ||||||
Dividends declared per common share | $ | 0.57 | $ | 0.37 |
Fourth Quarter 2018 Highlights
(dollar amounts in thousands, except per share data)
- During the three month period ended December 31, 2018, the Company repurchased 338,408 shares of the Company's common stock pursuant to the Company’s previously announced
$100 million stock repurchase program at an average cost of$14.36 per share, or$4.9 million in the aggregate, resulting in accretion to net assets per share of$0.02 . The program is expected to be in effect untilNovember 5 , 2019, or until the approved dollar amount has been used to repurchase shares; - On
February 22, 2019 , our Board of Directors declared a quarterly dividend of$0.37 per share, which is payable onApril 17, 2019 to stockholders of record as ofMarch 29, 2019 ; - Net investment income for the three month period ended December 31, 2018 was
$29,411 , or $0.47 per share, as compared to$25,685 , or $0.41 per share, for the three month period ended September 30, 2018; - Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments for the three month period ended December 31, 2018 was $(30,571), or $(0.49) per share, primarily driven by an increase in market yields, as compared to
$(19,605) , or $(0.31) per share, for the three month period ended September 30, 2018; and - Net increase (decrease) in net assets resulting from operations for the three month period ended December 31, 2018 was $(1,160), or $(0.02) per share, as compared to $6,080, or $0.10 per share, for the three month period ended September 30, 2018.
Portfolio and Investment Activity
(dollar amounts in thousands, except per share data, unless otherwise noted)
As of December 31, 2018, the fair value of our investments was approximately
As of December 31, 2018 and
December 31, 2018 | September 30, 2018 | ||||||||||||
Type—% of Fair Value | Fair Value | % of Fair Value | Fair Value | % of Fair Value | |||||||||
First Lien Debt (excluding First Lien/Last Out) | $ | 1,343,422 | 68.12 | % | $ | 1,402,279 | 69.46 | % | |||||
First Lien/Last Out Unitranche | 202,849 | 10.29 | 199,350 | 9.87 | |||||||||
Second Lien Debt | 178,958 | 9.07 | 170,657 | 8.45 | |||||||||
Equity Investments | 24,633 | 1.25 | 23,308 | 1.15 | |||||||||
Investment Fund | 222,295 | 11.27 | 223,404 | 11.07 | |||||||||
Total | $ | 1,972,157 | 100.00 | % | $ | 2,018,998 | 100.00 | % |
The following table shows our investment activity for the three month period ended December 31, 2018:
Funded | Sold/Repaid | ||||||||||||
Principal amount of investments: | Amount | % of Total | Amount | % of Total | |||||||||
First Lien Debt (excluding First Lien/Last Out) | $ | 169,446 | 51.64 | % | $ | (209,053 | ) | 60.87 | % | ||||
First Lien/Last Out Unitranche | 7,014 | 2.14 | (339 | ) | 0.10 | ||||||||
Second Lien Debt | 88,993 | 27.12 | (78,028 | ) | 22.72 | ||||||||
Equity Investments | 659 | 0.20 | — | — | |||||||||
Investment Fund | 62,000 | 18.90 | (56,000 | ) | 16.31 | ||||||||
Total | $ | 328,112 | 100.00 | % | $ | (343,420 | ) | 100.00 | % |
Overall, total investments at fair value decreased by 2.3%, or
Total investments at fair value held by
As of December 31, 2018, the weighted average yields for our first and second lien debt investments on an amortized cost basis were 9.38% and 11.04%, respectively, with a total weighted average yield of 9.54%. Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of December 31, 2018. As of December 31, 2018, on a fair value basis, approximately 0.8% of our debt investments bear interest at a fixed rate and approximately 99.2% of our debt investments bear interest at a floating rate, which primarily are subject to interest rate floors.
As part of the monitoring process, our Investment Adviser has developed risk policies pursuant to which it regularly assesses the risk profile of each of our debt investments and rates each of them based on the following categories, which we refer to as “Internal Risk Ratings”:
Internal Risk Ratings Definitions
Rating | Definition | |
1 | Performing—Low Risk: Borrower is operating more than 10% ahead of the base case. | |
2 | Performing—Stable Risk: Borrower is operating within 10% of the base case (above or below). This is the initial rating assigned to all new borrowers. | |
3 | Performing—Management Notice: Borrower is operating more than 10% below the base case. A financial covenant default may have occurred, but there is a low risk of payment default. | |
4 | Watch List: Borrower is operating more than 20% below the base case and there is a high risk of covenant default, or it may have already occurred. Payments are current although subject to greater uncertainty, and there is moderate to high risk of payment default. | |
5 | Watch List—Possible Loss: Borrower is operating more than 30% below the base case. At the current level of operations and financial condition, the borrower does not have the ability to service and ultimately repay or refinance all outstanding debt on current terms. Payment default is very likely or may have occurred. Loss of principal is possible. | |
6 | Watch List—Probable Loss: Borrower is operating more than 40% below the base case, and at the current level of operations and financial condition, the borrower does not have the ability to service and ultimately repay or refinance all outstanding debt on current terms. Payment default is very likely or may have already occurred. Additionally, the prospects for improvement in the borrower’s situation are sufficiently negative that impairment of some or all principal is probable. |
Our Investment Adviser’s risk rating model is based on evaluating portfolio company performance in comparison to the base case when considering certain credit metrics including, but not limited to, adjusted EBITDA and net senior leverage as well as specific events including, but not limited to, default and impairment.
Our Investment Adviser monitors and, when appropriate, changes the investment ratings assigned to each debt investment in our portfolio. In connection with our quarterly valuation process, our Investment Adviser reviews our investment ratings on a regular basis. The following table summarizes the Internal Risk Ratings of our debt portfolio as of December 31, 2018 and
December 31, 2018 | September 30, 2018 | ||||||||||||
Fair Value | % of Fair Value | Fair Value | % of Fair Value | ||||||||||
(dollar amounts in millions) | |||||||||||||
Internal Risk Rating 1 | $ | 71.0 | 4.12 | % | $ | 104.7 | 5.91 | % | |||||
Internal Risk Rating 2 | 1,302.9 | 75.52 | 1,298.0 | 73.24 | |||||||||
Internal Risk Rating 3 | 208.4 | 12.08 | 224.7 | 12.68 | |||||||||
Internal Risk Rating 4 | 105.1 | 6.09 | 119.1 | 6.72 | |||||||||
Internal Risk Rating 5 | 23.5 | 1.36 | 9.4 | 0.53 | |||||||||
Internal Risk Rating 6 | 14.3 | 0.83 | 16.4 | 0.92 | |||||||||
Total | $ | 1,725.2 | 100.00 | % | $ | 1,772.3 | 100.00 | % |
As of December 31, 2018 and
Consolidated Results of Operations
(dollar amounts in thousands, except per share data)
Total investment income for the three month periods ended December 31, 2018 and
Total expenses for the three month periods ended December 31, 2018 and
During the three month period ended December 31, 2018, the Company recorded a net realized gain and change in unrealized depreciation of
Liquidity and Capital Resources
(dollar amounts in thousands, except per share data)
As of December 31, 2018, the Company had cash and cash equivalents of $87,186, notes payable (before debt issuance costs) of
Dividend
On
Conference Call
The Company will host a conference call at
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(dollar amounts in thousands, except per share data)
December 31, 2018 | September 30, 2018 | ||||||
(unaudited) | (unaudited) | ||||||
ASSETS | |||||||
Investments, at fair value | |||||||
Investments—non-controlled/non-affiliated, at fair value (amortized cost of $1,799,751 and $1,820,646, respectively) | $ | 1,731,319 | $ | 1,781,621 | |||
Investments—non-controlled/affiliated, at fair value (amortized cost of $13,839 and $13,595, respectively) | 18,543 | 13,973 | |||||
Investments—controlled/affiliated, at fair value (amortized cost of $230,001 and $224,001, respectively) | 222,295 | 223,404 | |||||
Total investments, at fair value (amortized cost of $2,043,591 and $2,058,242, respectively) | 1,972,157 | 2,018,998 | |||||
Cash and cash equivalents | 87,186 | 112,911 | |||||
Receivable for investment sold | 8,060 | — | |||||
Deferred financing costs | 3,950 | 4,126 | |||||
Interest receivable from non-controlled/non-affiliated investments | 5,853 | 4,895 | |||||
Interest receivable from non-controlled/affiliated investments | 3 | 10 | |||||
Interest and dividend receivable from controlled/affiliated investments | 7,405 | 6,881 | |||||
Prepaid expenses and other assets | 129 | 20 | |||||
Total assets | $ | 2,084,743 | $ | 2,147,841 | |||
LIABILITIES | |||||||
Secured borrowings | $ | 514,635 | $ | 554,299 | |||
Notes payable, net of unamortized debt issuance costs of $3,157 and $3,292, respectively | 446,043 | 445,908 | |||||
Payable for investments purchased | 1,870 | — | |||||
Due to Investment Adviser | 236 | 131 | |||||
Interest and credit facility fees payable | 7,500 | 4,478 | |||||
Dividend payable | 35,497 | 23,150 | |||||
Base management and incentive fees payable | 13,834 | 12,992 | |||||
Administrative service fees payable | 94 | 116 | |||||
Other accrued expenses and liabilities | 1,816 | 2,025 | |||||
Total liabilities | 1,021,525 | 1,043,099 | |||||
NET ASSETS | |||||||
Common stock, $0.01 par value; 200,000,000 shares authorized; 62,230,251 and 62,568,651 shares issued and outstanding at December 31, 2018 and September 30, 2018, respectively | 622 | 626 | |||||
Paid-in capital in excess of par value | 1,174,334 | 1,179,432 | |||||
Offering costs | (1,633 | ) | (1,633 | ) | |||
Total distributable earnings (loss) | (110,105 | ) | (73,683 | ) | |||
Total net assets | $ | 1,063,218 | $ | 1,104,742 | |||
NET ASSETS PER SHARE | $ | 17.09 | $ | 17.66 |
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollar amounts in thousands, except per share data)
(unaudited)
For the three month periods ended | ||||||||
December 31, 2018 | September 30, 2018 | |||||||
Investment income: | ||||||||
From non-controlled/non-affiliated investments: | ||||||||
Interest income | $ | 45,500 | $ | 41,736 | ||||
Other income | 2,724 | 1,925 | ||||||
Total investment income from non-controlled/non-affiliated investments | 48,224 | 43,661 | ||||||
From non-controlled/affiliated investments: | ||||||||
Interest income | 377 | 418 | ||||||
Total investment income from non-controlled/affiliated investments | 377 | 418 | ||||||
From controlled/affiliated investments: | ||||||||
Interest income | 4,010 | 3,401 | ||||||
Dividend income | 3,700 | 3,800 | ||||||
Total investment income from controlled/affiliated investments | 7,710 | 7,201 | ||||||
Total investment income | 56,311 | 51,280 | ||||||
Expenses: | ||||||||
Base management fees | 7,595 | 7,543 | ||||||
Incentive fees | 6,239 | 5,449 | ||||||
Professional fees | 814 | 869 | ||||||
Administrative service fees | 151 | 179 | ||||||
Interest expense | 10,905 | 10,372 | ||||||
Credit facility fees | 606 | 583 | ||||||
Directors’ fees and expenses | 87 | 92 | ||||||
Other general and administrative | 343 | 478 | ||||||
Total expenses | 26,740 | 25,565 | ||||||
Net investment income (loss) before taxes | 29,571 | 25,715 | ||||||
Excise tax expense | 160 | 30 | ||||||
Net investment income (loss) | 29,411 | 25,685 | ||||||
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments: | ||||||||
Net realized gain (loss) from: | ||||||||
Non-controlled/non-affiliated investments | 1,619 | (4,633 | ) | |||||
Net change in unrealized appreciation (depreciation): | ||||||||
Non-controlled/non-affiliated | (29,407 | ) | (14,795 | ) | ||||
Non-controlled/affiliated | 4,326 | (76 | ) | |||||
Controlled/affiliated | (7,109 | ) | (101 | ) | ||||
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments | (30,571 | ) | (19,605 | ) | ||||
Net increase (decrease) in net assets resulting from operations | $ | (1,160 | ) | $ | 6,080 | |||
Basic and diluted earnings per common share | $ | (0.02 | ) | $ | 0.10 | |||
Weighted-average shares of common stock outstanding—Basic and Diluted | 62,496,338 | 62,568,651 |
About
Web: tcgbdc.com
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by the use of forward-looking terminology such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may,” “plans,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words. You should read statements that contain these words carefully because they discuss our plans, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. There may be events in the future, however, that we are not able to predict accurately or control. You should not place undue reliance on these forward-looking statements, which speak only as of the date on which we make it. Factors or events that could cause our actual results to differ, possibly materially from our expectations, include, but are not limited to, the risks, uncertainties and other factors we identify in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in filings we make with the
Contacts:
Investors: | Media: |
Daniel Harris | Elizabeth Gill |
+1-212-813-4527 daniel.harris@carlyle.com |
+1-202-729-5385 elizabeth.gill@carlyle.com |
Source: TCG BDC, Inc.