Triangle Capital Corporation Reports Third Quarter Results and Increases Quarterly Dividend to $0.27 Per Share
RALEIGH, N.C., Nov. 7, 2007 (PRIME NEWSWIRE) -- Triangle Capital Corporation (Nasdaq:TCAP) ("Triangle" or "the Company"), a leading specialty finance company that provides customized financing solutions to lower middle market companies located throughout the United States, today announced its results for the third quarter of 2007, and increased its quarterly dividend to $0.27 per share.
Third Quarter 2007 Results
Total investment income during the third quarter of 2007 was $3.6 million, compared to total investment income of $3.3 million for the second quarter of 2007, representing an increase of 9.3%. The Company's increase in total investment income is primarily attributed to an increase in investment interest, fee and dividend income due to a net increase in portfolio investments from June 30, 2007 to September 30, 2007.
Net investment income during the third quarter of 2007 was $2.0 million, compared to net investment income of $1.6 million for the second quarter of 2007, representing an increase of 21.2%. Net investment income per share during the third quarter of 2007 was $0.30 compared to $0.25 during the second quarter of 2007. The Company's net investment income during the third quarter of 2007 was positively impacted by approximately $0.2 million of non-recurring fee income relating primarily to loan prepayment fees and debt amendment fees. These non-recurring fees equated to $0.03 of net investment income on a per share basis during the third quarter of 2007.
The Company's net increase in net assets resulting from operations was $3.4 million during the third quarter of 2007, as compared to $2.2 million during the second quarter of 2007. The Company's net increase in net assets resulting from operations was $0.50 per share during the third quarter of 2007 as compared to $0.33 per share during the second quarter of 2007.
The Company's net asset value per share at September 30, 2007, was $13.99 as compared to the Company's net asset value per share at June 30, 2007, of $13.75. As of September 30, 2007, the Company's weighted average yield on all of its outstanding debt investments was approximately 13.8%.
"We are very pleased to announce a solid quarter-over-quarter increase in net investment income, particularly during a time in the credit markets that many find challenging. We have continued to identify well-collateralized investment opportunities, and are very pleased with the quality of our investment portfolio which contains no sub-prime mortgage related exposure," said Garland S. Tucker, III, President and CEO of Triangle.
Dividend Information
Triangle's board of directors has declared a cash dividend of $0.27 per share. The dividend will be payable as follows:
Record Date: November 29, 2007
Payment Date: December 27, 2007
"Triangle continues to pace ahead of its business plan in terms of providing shareholders with a strong recurring dividend yield," said Steven C. Lilly, Triangle's Chief Financial Officer. "As our investment portfolio matures we anticipate our future dividend yield will continue to be attractive."
Triangle has adopted a dividend reinvestment plan ("DRIP") that provides for reinvestment of dividends on behalf of its shareholders, unless a shareholder elects to receive cash. As a result, when the Company declares a cash dividend, shareholders who have not opted out of the DRIP will have their cash dividends automatically reinvested in additional shares of the Company's common stock, rather than receiving cash dividends.
When the Company declares and pays dividends, it determines the allocation of the distribution between current income, accumulated income and return of capital on the basis of accounting principles generally accepted in the United States ("GAAP"). At each year end, the Company is required for tax purposes to determine the dividend allocation based on tax accounting principles. Due to differences between GAAP and tax accounting principles, the portion of each dividend distribution that is ordinary income, capital gain or return of capital may differ for GAAP and tax purposes.
Recent Portfolio Investments
During the third quarter the Company made an additional $1.9 million subordinated debt investment in an existing portfolio company, and two new investments totaling $11.2 million, of which $9.3 million was senior debt, $0.9 million was second lien debt, and $1 million was equity. Subsequent to quarter end, the Company has made investments totaling $10.6 million, of which $4.0 million was senior debt, $3.1 million was second lien debt, and $3.5 million was subordinated debt.
New investments since June 30, 2007 are summarized as follows:
On July 20, 2007, the Company invested approximately $4.3 million and $0.9 million in senior and second lien debt, respectively, of Cyrus Networks, LLC ("Cyrus Networks"), a provider of data center services based in Houston, Texas. Under the terms of the investments, Cyrus Networks will pay interest on the first lien senior debt at a floating rate of LIBOR plus 400 basis points per annum and will pay interest on the second lien senior debt at a floating rate of LIBOR plus 725 basis points per annum.
On September 17, 2007, the Company made a $5.0 million senior debt investment and a $1.0 million equity investment in Syrgis Holdings, Inc. ("Syrgis"). Syrgis, headquartered in Covington, Kentucky, is a holding company comprised of four distinct specialty chemical subsidiaries. Under the terms of the investments Syrgis will pay interest on the senior debt at a rate of 10.0% per annum.
On October 25, 2007, the Company invested $7.1 million in FCL Graphics, Inc. ("FCL") consisting of $4.0 million in senior debt and $3.1 million in second lien debt. FCL is a leading commercial printer based in Chicago, Illinois, producing such items as direct mailings, brochures, annual reports, posters, catalogs, sell sheets, newspaper inserts and labels. Under the terms of the investments FCL will pay interest on the first lien senior debt at floating rates ranging from LIBOR plus 350 basis points per annum to LIBOR plus 750 basis points per annum and will pay interest on the second lien senior debt at a fixed rate of 18.0%.
As previously announced, on October 25, 2007, the Company invested $3.5 million in Energy Hardware Holdings, LLC ("EH Holdings") consisting of $3.3 million in senior subordinated debt and $0.2 million in junior subordinated debt. EH Holdings is a global distributor of fasteners, machined parts, seals and gaskets to the power generation industry. Under the terms of the investments, EH Holdings will pay interest at fixed rates of 14.5% on the senior subordinated debt and 8.0% on the junior subordinated debt.
Important Disclosures Relating to Financial Statement Presentation
Certain financial data for prior periods, including data for the three months ended June 30, 2007 and for the three and nine months ended September 30, 2006, are included in this press release. In accordance with Statement of Financial Accounting Standards No. 141, Business Combinations ("SFAS 141"), the Company's results of operations for the three months ended June 30, 2007 and for the three and nine months ended September 30, 2007, are presented as if the Company's initial public offering and related formation transactions had occurred as of January 1, 2007. In addition, in accordance with SFAS 141, the results of the Company's operations for the three and nine months ended September 30, 2006, and the Company's financial position as of December 31, 2006, have been presented on a combined basis in order to provide comparative information with respect to prior periods.
About Triangle Capital Corporation
Triangle Capital Corporation (www.TCAP.com) is a specialty finance company organized to provide customized financing solutions to lower middle market companies located throughout the United States. Triangle's investment objective is to seek attractive returns by generating current income from debt investments and capital appreciation from equity related investments. Triangle's investment philosophy is to partner with business owners, management teams and financial sponsors to provide flexible financing solutions to fund growth, changes of control, or other corporate events. Triangle typically invests $5.0 - $15.0 million per transaction in companies with annual revenues between $20.0 and $75.0 million and EBITDA between $2.0 and $10.0 million.
Triangle has elected to be treated as a business development company under the Investment Company Act of 1940 ("1940 Act"). Triangle is required to comply with a series of regulatory requirements under the 1940 Act as well as applicable NASDAQ, federal and state laws and regulations. Triangle intends to elect to be treated as a regulated investment company under the Internal Revenue Code of 1986. Failure to comply with any of the laws and regulations that apply to Triangle could have a material adverse effect on Triangle and its shareholders.
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such statements, other than statements of historical fact, are likely to be affected by other unknowable future events and conditions, including elements of the future that are or are not under the Company's control, and that the Company may or may not have considered; accordingly, such statements cannot be guarantees or assurances of any aspect of future performance. Actual developments and results are highly likely to vary materially from these estimates and projections of the future. Such statements speak only as of the time when made, and the Company undertakes no obligation to update any such statement now or in the future.
TRIANGLE CAPITAL CORPORATION
Balance Sheets
September 30, December 31,
2007 2006
(Consolidated) (Combined)
------------------- -------------------
(Unaudited)
Assets
Investments at fair value:
Non-Control / Non-Affiliate
investments (cost of
$60,597,699 and $40,592,972
at September 30, 2007 and
December 31, 2006,
respectively) $ 63,449,412 $ 42,370,348
Affiliate investments (cost
of $13,420,305 and $9,453,445
at September 30, 2007 and
December 31, 2006,
respectively) 13,946,303 10,011,145
Control investments (cost of
$15,980,690 and $2,614,935
at September 30, 2007 and
December 31, 2006,
respectively) 18,483,136 2,614,935
-------------------------------
Total investments at fair
value 95,878,851 54,996,428
Deferred loan origination
revenue (1,125,654) (774,216)
Cash and cash equivalents 35,789,724 2,556,502
Interest and fees receivable 304,831 134,819
Prepaid expenses 30,382 --
Deferred offering costs -- 1,020,646
Deferred financing fees 998,746 985,477
Property and equipment, net 34,701 --
-------------------------------
Total assets $ 131,911,581 $ 58,919,656
===============================
Liabilities
Accounts payable and accrued
liabilities $ 740,300 $ 794,983
Interest payable 171,222 606,296
Partners tax distribution
payable -- 531,566
Payable to Triangle Capital
Partners, LLC -- 30,000
SBA guaranteed debentures
payable 35,800,000 31,800,000
-------------------------------
Total liabilities 36,711,522 33,762,845
Net Assets
General partner's capital -- 100
Limited partners' capital -- 21,250,000
Common stock, $0.001 par
value per share
(150,000,000 shares
authorized, 6,803,863 and
100 shares issued and
outstanding as of September
30, 2007 and December 31,
2006, respectively) 6,804 --
Additional paid-in capital 87,599,046 1,500
Accumulated undistributed
net realized earnings 1,714,052 1,570,135
Net unrealized appreciation
of investments 5,880,157 2,335,076
-------------------------------
Total net assets 95,200,059 25,156,811
-------------------------------
Total liabilities and net
assets $ 131,911,581 $ 58,919,656
===============================
Net asset value per share $ 13.99 N/A
=============
TRIANGLE CAPITAL CORPORATION
Unaudited Statements of Operations
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2007 2006 2007 2006
(Consolidated) (Combined) (Consolidated) (Combined)
-----------------------------------------------------
Investment
income:
Loan interest,
fee and
dividend
income:
Non-Control/
Non-Affiliate
investments $1,728,682 $1,137,179 $4,233,318 $3,353,636
Affiliate
investments 574,964 151,478 1,368,578 483,817
Control
investments 361,395 74,606 845,136 217,559
-----------------------------------------------------
Total loan
interest,
fee and
dividend
income 2,665,041 1,363,263 6,447,032 4,055,012
Paid-in-kind
interest
income:
Non-Control/
Non-Affiliate
investments 213,850 204,240 590,655 594,119
Affiliate
investments 63,556 10,336 159,098 29,187
Control
investments 143,188 42,370 294,501 123,558
-----------------------------------------------------
Total
paid-in-kind
interest
income 420,594 256,946 1,044,254 746,864
Interest
income
from cash
and cash
equivalent
investments 508,652 93,274 1,502,341 212,115
-----------------------------------------------------
Total
investment
income 3,594,287 1,713,483 8,993,627 5,013,991
-----------------------------------------------------
Expenses:
Interest
expense 525,081 459,746 1,545,798 1,378,736
Amortization
of deferred
financing
fees 28,515 25,158 83,731 74,397
Management
fees -- 398,441 232,423 1,190,632
General and
admini-
strative
expenses 1,048,690 81 2,690,946 39,820
-----------------------------------------------------
Total
expenses 1,602,286 883,426 4,552,898 2,683,585
-----------------------------------------------------
Net
investment
income 1,992,001 830,057 4,440,729 2,330,406
Net
realized
gain
(loss) on
investments
- Non
Control/
Non-Affiliate -- -- (1,464,224) 5,977,109
Net
realized
gain on
investments
- Affiliate 141,014 -- 141,014 --
Net
unrealized
appreciation
(depreciation)
of
investments 1,233,666 228,700 3,545,081 (2,552,800)
-----------------------------------------------------
Total net
gain on
investments 1,374,680 228,700 2,221,871 3,424,309
-----------------------------------------------------
Net increase
in net
assets
resulting
from
operations $ 3,366,681 $ 1,058,757 $ 6,662,600 $ 5,754,715
=====================================================
Net
investment
income per
share -
basic and
diluted $ 0.30 N/A $ 0.66 N/A
=====================================================
Net
increase
in net
assets
resulting
from
operations
per share -
basic and
diluted $ 0.50 N/A $ 0.99 N/A
=====================================================
Dividends
declared
per
common
share $ 0.26 N/A $ 0.41 N/A
=====================================================
Weighted
average
number of
shares
outstanding -
basic and
diluted 6,735,177 N/A 6,703,414 N/A
=====================================================
Allocation
of net
increase
in net
assets
resulting
from
operations
to:
General
partner N/A $ 211,751 N/A $ 1,150,943
Limited
partners N/A 847,006 N/A 4,603,772
-----------------------------------------------------
N/A $ 1,058,757 N/A $ 5,754,715
=====================================================
TRIANGLE CAPITAL CORPORATION
Unaudited Statements of Cash Flows
Nine Months Nine Months
Ended Ended
September 30, September 30,
2007 2006
(Consolidated) (Combined)
---------------------------------
Cash flows from operating
activities:
Net increase in net assets
resulting from operations $ 6,662,600 $ 5,754,715
Adjustments to reconcile net
increase in net assets
resulting from operations to
net cash used in operating
activities:
Purchases of portfolio
investments (42,534,975) (15,703,478)
Repayments received/sales
of portfolio investments 4,878,207 9,870,607
Loan origination and other
fees received 894,904 474,795
Net realized loss (gain)
on investments 1,323,210 (5,977,109)
Net unrealized depreciation
(appreciation) of
investments (3,545,081) 2,552,800
Paid-in-kind interest
accrued, net of payments
received (845,033) (383,073)
Amortization of deferred
financing fees 83,731 74,397
Recognition of loan
origination and other fees (543,466) (400,291)
Accretion of loan discounts (158,751) (119,593)
Depreciation expense 4,605 --
Changes in operating
assets and liabilities:
Interest and fees
receivable (170,012) (50,172)
Prepaid expenses (30,382) --
Accounts payable and
accrued liabilities (54,683) (13,226)
Interest payable (435,074) (414,494)
Receivable from /
payable to Triangle
Capital Partners, LLC (30,000) --
---------------------------------
Net cash used in
operating activities (34,500,200) (4,334,122)
---------------------------------
Cash flows from investing
activities:
Purchases of property and
equipment (39,306) --
---------------------------------
Net cash used in investing
activities (39,306) --
---------------------------------
Cash flows from financing
activities:
Borrowings under SBA
guaranteed debentures payable 4,000,000 --
Financing fees paid (97,000) --
Proceeds from initial public
offering, net of expenses 64,728,037 --
Change in deferred offering
costs 1,020,646 --
Partners' capital
contributions -- 10,625,000
Cash dividends paid (1,127,342) --
Distributions to partners (751,613) (5,000,010)
---------------------------------
Net cash provided by financing
activities 67,772,728 5,624,990
---------------------------------
Net increase in cash and cash
equivalents 33,233,222 1,290,868
Cash and cash equivalents,
beginning of period 2,556,502 6,067,164
---------------------------------
Cash and cash equivalents,
end of period $35,789,724 $ 7,358,032
=================================
Supplemental disclosure of
cash flow information:
Cash paid for interest $ 1,980,873 $ 1,793,230
=================================
CONTACT: Triangle Capital Corporation
Sheri B. Colquitt, Vice President, Investor Relations
919-719-4784
scolquitt@tcap.com
Steven C. Lilly, Chief Financial Officer
919-719-4789
slilly@tcap.com
Released November 7, 2007