Triangle Capital Corporation Reports Third Quarter 2009 Results
RALEIGH, N.C., Nov. 4, 2009 (GLOBE 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 financial results for the third quarter of 2009.
Commenting on the quarter, Garland S. Tucker, III, President and CEO, stated, "After a relatively slow start to the year in terms of investment opportunities, we closed three new transactions totaling over $18 million in the third quarter. While we have been very pleased with the cost saving measures implemented by our portfolio companies, the current operating environment continues to be challenging. As we move into 2010, revenue growth will become a primary focus for most companies."
Third Quarter 2009 Results
Total investment income during the third quarter of 2009 was $7.1 million, compared to total investment income of $5.9 million for the third quarter of 2008, representing an increase of 20.9%. The Company's increase in investment income is primarily attributable to new portfolio investments made during 2008 and 2009 which resulted in an increase in total loan interest, fee, dividend and paid-in-kind interest income of approximately $1.1 million.
Net investment income during the third quarter of 2009 was $3.7 million, compared to net investment income of $3.2 million for the third quarter of 2008, representing an increase of 15.8%. Net investment income per share during the third quarter of 2009 was $0.41 compared to $0.46 during the third quarter of 2008.
The Company's net decrease in net assets resulting from operations was $0.8 million during the third quarter of 2009, as compared to a net increase in net assets resulting from operations of $2.5 million during the third quarter of 2008. The Company's net decrease in net assets resulting from operations was $0.09 per share during the third quarter of 2009 as compared to a net increase in net assets resulting from operations of $0.36 per share during the third quarter of 2008.
The Company's net asset value per share at September 30, 2009, was $10.60 as compared to $11.31 per share at June 30, 2009, and $11.07 per share on August 12, 2009, after the completion of the Company's public offering of 1,495,000 shares of its common stock. As of September 30, 2009, the Company's weighted average yield on all of its outstanding debt investments was approximately 14.4%.
Liquidity and Capital Resources
At September 30, 2009, the Company had cash and cash equivalents totaling $33.4 million.
"With over $33 million in cash on hand and approximately $35 million in available SBA leverage as of September 30, 2009, Triangle is fortunate to be in a very healthy liquidity position. This financial strength provides us significant flexibility as we continue to navigate the current operating environment," commented Steven C. Lilly, Chief Financial Officer.
As of September 30, 2009, the Company had non-callable, 10-year, fixed rate Small Business Administration ("SBA") guaranteed debentures totaling $115.1 million. The Company has the ability to issue additional SBA-guaranteed debentures of $34.9 million under its existing SBIC license. In addition, the Company has applied for a second SBIC license, which would allow the Company to issue up to an additional $75.0 million in SBA-guaranteed debentures.
On August 7, 2009, Triangle filed a prospectus supplement pursuant to which 1,300,000 shares of common stock were offered for sale at a price to the public of $10.42 per share. In addition, the underwriters involved were granted an overallotment option to purchase an additional 195,000 shares of common stock at the same public offering price. Pursuant to this offering, all shares (including the overallotment option shares) were sold and delivered on August 12, 2009 resulting in net proceeds to Triangle, after underwriting discounts and offering expenses, of approximately $14.6 million.
Dividend Information
On September 23, 2009, Triangle announced that its board of directors had declared a cash dividend of $0.41 per share. This was the Company's eleventh consecutive quarterly dividend since its initial public offering in February, 2007, and reflected a 2.5% increase over the second quarter of 2009 and a 7.9% increase over the third quarter of 2008. The dividend was payable as follows:
Record Date: October 8, 2009 Payment Date: October 22, 2009
Triangle has adopted a dividend reinvestment plan ("DRIP") that provides for reinvestment of dividends on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, when the Company declares a cash dividend, stockholders 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 Activity
During the third quarter of 2009, Triangle made three new investments totaling $18.8 million. The Company also received partial principal repayments from three portfolio companies totaling approximately $2.4 million and received payment in kind interest repayments totaling approximately $1.1 million in the third quarter of 2009. New investments since June 30, 2009, are summarized as follows:
On July 30, 2009, Triangle made a $7.5 million subordinated debt investment in Frozen Specialties, Inc. ("FSI"). FSI is a leading manufacturer of private label frozen pizzas and pizza bites, sold primarily through the retail grocery channel.
On September 17, 2009, the Company closed a $5.8 million subordinated debt investment in Grindmaster-Cecilware Corporation ("Grindmaster-Cecilware"). Grindmaster-Cecilware is a leading designer, manufacturer and distributor of a broad line of beverage dispensing, cooking, and other equipment for the foodservice market.
On September 22, 2009, Triangle made a $5.5 million subordinated debt and equity investment in Technology Crops International ("TCI"). TCI works with customers to develop and maintain supply chains for high value, plant derived oils and oil seeds used as manufacturing ingredients in the food, chemical, cosmetics and pharmaceutical industries.
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 $20.0 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 has elected 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 stockholders.
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
Consolidated Balance Sheets
September 30, December 31,
2009 2008
------------- -------------
(Unaudited)
Assets
Investments at fair value:
Non-Control / Non-Affiliate
investments (cost of $135,212,872
and $138,413,589 at September
30, 2009 and December 31, 2008,
respectively) $ 127,517,222 $ 135,712,877
Affiliate investments (cost of
$55,100,201 and $30,484,491
at September 30, 2009 and
December 31, 2008, respectively) 49,780,689 33,894,556
Control investments (cost of
$11,558,825 and $11,253,458
at September 30, 2009 and
December 31, 2008, respectively) 11,093,125 12,497,858
------------- -------------
Total investments at fair value 188,391,036 182,105,291
Cash and cash equivalents 33,414,295 27,193,287
Interest and fees receivable 365,532 679,828
Prepaid expenses and other current
assets 276,297 95,325
Deferred financing fees 3,470,600 3,545,410
Property and equipment, net 34,503 48,020
------------- -------------
Total assets $ 225,952,263 $ 213,667,161
============= =============
Liabilities
Accounts payable and accrued
liabilities $ 1,450,875 $ 1,608,909
Interest payable 570,519 1,881,761
Deferred revenue 112,500 --
Dividends payable 4,029,456 2,766,945
Taxes payable 24,899 30,436
Deferred income taxes 437,827 843,947
SBA guaranteed debentures payable 115,110,000 115,110,000
------------- -------------
Total liabilities 121,736,076 122,241,998
Net Assets
Common stock, $0.001 par value per
share (150,000,000 shares
authorized, 9,827,942 and 6,917,363
shares issued and outstanding as
of September 30, 2009 and December
31, 2008, respectively) 9,828 6,917
Additional paid-in capital 115,370,671 87,836,786
Investment income in excess of
distributions 1,902,083 2,115,157
Accumulated realized gains on
investments 852,293 356,495
Net unrealized appreciation
(depreciation) of investments (13,918,688) 1,109,808
------------- -------------
Total net assets 104,216,187 91,425,163
------------- -------------
Total liabilities and net assets $ 225,952,263 $ 213,667,161
============= =============
Net asset value per share $ 10.60 $ 13.22
============= =============
TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Statements of Operations
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2009 2008 2009 2008
------------ ------------ ------------ ------------
Investment
income:
Loan interest,
fee and
dividend
income:
Non-Control
/ Non-
Affiliate
investments $ 3,850,305 $ 3,447,176 $ 12,252,053 $ 8,166,903
Affiliate
invest-
ments 1,374,819 936,965 3,215,690 2,572,546
Control
invest-
ments 232,575 315,408 713,553 1,194,603
------------ ------------ ------------ ------------
Total loan
interest,
fee and
dividend
income 5,457,699 4,699,549 16,181,296 11,934,052
Paid-in-kind
interest
income:
Non-Control
/ Non-
Affiliate
investments 711,882 840,543 2,322,402 1,709,348
Affiliate
investments 600,532 175,491 978,568 489,005
Control
investments 122,738 96,393 286,816 356,700
------------ ------------ ------------ ------------
Total paid-in-
kind interest
income 1,435,152 1,112,427 3,587,786 2,555,053
Interest
income from
cash and cash
equivalent
investments 203,792 57,661 408,464 264,607
------------ ------------ ------------ ------------
Total
investment
income 7,096,643 5,869,637 20,177,546 14,753,712
------------ ------------ ------------ ------------
Expenses:
Interest
expense 1,749,593 1,125,469 5,137,159 2,586,279
Amortization
of deferred
financing
fees 90,500 64,596 268,810 160,765
General and
admini-
strative
expenses 1,538,693 1,467,866 4,766,841 4,338,825
------------ ------------ ------------ ------------
Total expenses 3,378,786 2,657,931 10,172,810 7,085,869
------------ ------------ ------------ ------------
Net investment
income 3,717,857 3,211,706 10,004,736 7,667,843
Net realized
gains on
investments -
Non-Control/
Non-Affiliate
-- 51,089 848,164 51,089
Net unrealized
appreciation
(depreciation)
of investments (4,504,933) (736,636) (15,028,496) (1,376,704)
------------ ------------ ------------ ------------
Total net
gain (loss)
on investments
before income
taxes (4,504,933) (685,547) (14,180,332) (1,325,615)
Income tax
benefit
(expense) 8,417 (49,813) (38,277) (251,984)
------------ ------------ ------------ ------------
Net increase
(decrease) in
net assets
resulting from
operations $ (778,659) $ 2,476,346 $ (4,213,873) $ 6,090,244
============ ============ ============ ============
Net investment
income per
share - basic
and diluted $ 0.41 $ 0.46 $ 1.25 $ 1.12
============ ============ ============ ============
Net increase
(decrease) in
net assets
resulting from
operations per
share - basic
and diluted $ (0.09) $ 0.36 $ (0.53) $ 0.89
============ ============ ============ ============
Dividends
declared per
common share $ 0.41 $ 0.35 $ 1.21 $ 0.66
============ ============ ============ ============
Distributions
of capital
gains
declared per
common share $ -- $ -- $ 0.05 $ --
============ ============ ============ ============
Weighted
average
number of
shares
outstanding -
basic and
diluted 9,129,192 6,917,363 8,024,933 6,864,341
============ ============ ============ ============
TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Statements of Cash Flows
Nine Months Nine Months
Ended Ended
September 30, September 30,
2009 2008
------------ ------------
Cash flows from operating activities:
Net increase (decrease) in net assets
resulting from operations $ (4,213,873) $ 6,090,244
Adjustments to reconcile net increase
(decrease) in net assets resulting
from operations to net cash
provided by (used in) operating
activities:
Purchases of portfolio investments (27,943,735) (73,645,254)
Repayments received/sales of
portfolio investments 9,289,106 9,060,478
Loan origination and other fees
received 540,000 1,401,996
Net realized gain on investments (848,164) (51,089)
Net unrealized depreciation of
investments 15,434,615 718,784
Deferred income taxes (406,120) 657,919
Paid-in-kind interest accrued, net
of payments received (2,008,357) (1,788,984)
Amortization of deferred financing
fees 268,810 160,765
Recognition of loan origination and
other fees (443,135) (309,140)
Accretion of loan discounts (306,075) (95,132)
Depreciation expense 16,711 11,110
Stock-based compensation 512,448 172,189
Changes in operating assets and
liabilities:
Interest and fees receivable 314,296 36,671
Prepaid expenses and other
current assets (180,972) (65,890)
Accounts payable and accrued
liabilities (158,034) (27,296)
Interest payable (1,311,242) (431,762)
Deferred revenue 112,500 --
Taxes payable (5,537) (52,598)
------------ ------------
Net cash provided by (used in)
operating activities (11,336,758) (58,156,989)
------------ ------------
Cash flows from investing activities:
Purchases of property and equipment (3,194) (25,030)
------------ ------------
Net cash used in investing activities (3,194) (25,030)
------------ ------------
Cash flows from financing activities:
Borrowings under SBA guaranteed
debentures payable -- 56,100,000
Short-term borrowings -- 5,100,000
Financing fees paid (194,000) (2,268,025)
Proceeds from common stock offerings,
net of expenses 27,091,248 --
Common stock withheld for payroll
taxes upon vesting of restricted
stock (66,900) --
Cash dividends paid (8,917,022) (6,606,618)
Cash distributions paid (352,366) --
------------ ------------
Net cash provided by financing
activities 17,560,960 52,325,357
------------ ------------
Net increase (decrease) in cash
and cash equivalents 6,221,008 (5,856,662)
Cash and cash equivalents, beginning
of period 27,193,287 21,787,750
------------ ------------
Cash and cash equivalents, end of
period $ 33,414,295 $ 15,931,088
============ ============
Supplemental disclosure of cash flow
information:
Cash paid for interest $ 6,448,401 $ 3,018,042
============ ============
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 4, 2009