Triangle Capital Corporation Reports First Quarter 2011 Results and Announces $12.2 Million Gain on Sale of Portfolio Company

RALEIGH, N.C., May 4, 2011 (GLOBE NEWSWIRE) -- Triangle Capital Corporation (NYSE: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 first quarter of 2011.

Commenting on the quarter, Garland S. Tucker, III, President and CEO, stated, "Our investment pipeline remained robust during the first quarter as we closed five new investments totaling approximately $51.5 million. From a capital markets perspective, our February equity offering appears to have been very well timed in terms of providing fresh growth capital at an opportune time. As a result of this fortunate timing, we not only were able to generate significantly higher net investment income per share than we originally had anticipated, but we also believe it positions us to continue increasing our dividend over the next several quarters."

First Quarter 2011 Results

Total investment income during the first quarter of 2011 was $12.4 million, compared to total investment income of $7.5 million for the first quarter of 2010, representing an increase of 66.0%. The Company's increase in investment income is primarily attributable to new portfolio investments made during 2010 and 2011 which resulted in an increase in total loan interest, fee, dividend and paid-in-kind interest income of approximately $5.0 million, partially offset by a decrease in non-recurring fee income of $0.1 million.

Net investment income during the first quarter of 2011 was $7.7 million, compared to net investment income of $3.8 million for the first quarter of 2010, representing an increase of 103.7%. The Company's net investment income per share during the first quarter of 2011 was $0.46, based on a weighted average share count of 16,848,570, as compared to $0.32 during the first quarter of 2010, based on a weighted average share count of 11,877,688.

The Company's net increase in net assets resulting from operations was $12.4 million during the first quarter of 2011, as compared to a net increase in net assets resulting from operations of $4.1 million during the first quarter of 2010. The Company's net increase in net assets resulting from operations was $0.73 per share during the first quarter of 2011 based on a weighted average share count of 16,848,570, as compared to a net increase in net assets resulting from operations of $0.35 per share during the first quarter of 2010, based on a weighted average share count of 11,877,688.

The Company's net asset value per share at March 31, 2011, was $13.42 as compared to $12.09 per share at December 31, 2010. As of March 31, 2011, the Company's weighted average yield on its outstanding, currently yielding, debt investments was approximately 15.2%.

Liquidity and Capital Resources

At March 31, 2011, the Company had cash and cash equivalents totaling $73.4 million.

During the first quarter of 2011, the Company completed a public offering of 3.5 million shares of common stock with net proceeds of approximately $63.1 million.

Also during the first quarter of 2011, Triangle pre-paid $9.5 million in Small Business Administration ("SBA") guaranteed debentures that had a maturity date of September 1, 2015, and which bore interest at a weighted average interest rate of 5.8%. As of March 31, 2011, the Company had non-callable, fixed rate SBA guaranteed debentures outstanding totaling $214.6 million. Under current SBA limits, the Company has the ability to issue up to a total of $9.5 million in additional SBA-guaranteed debentures.

Commenting on the Company's liquidity position, Steven C. Lilly, Chief Financial Officer, stated, "Given the amount of investment activity we experienced during the first quarter, we are pleased to still have sufficient liquidity available to us as of March 31, 2011. In addition, we expect to close on our senior credit facility before June 30, 2011, which will provide significant additional liquidity as we continue to look for attractive investment opportunities."

Gain on Sale of Portfolio Company

On May 2, 2011, Triangle recognized a long term capital gain of approximately $12.2 million, or approximately $0.66 per share, in connection with the sale of certain assets of Fischbein, LLC ("Fischbein"). Triangle's investment in Fischbein consisted of $8.4 million in subordinated debt and $4.8 million in equity. The total investment yielded an internal rate of return of 33.7%. Fischbein is a global manufacturer of flexible packaging and materials handling equipment.

Dividend and Distribution Information

On February 23, 2011, Triangle announced that its board of directors had declared a cash dividend of $0.42 per share. This was the Company's seventeenth consecutive quarterly dividend since its initial public offering in February, 2007. The dividend was payable as follows:

Record Date:      March 16, 2011
      Payment Date:     March 30, 2011

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 first quarter of 2011, Triangle made five new investments totaling approximately $51.5 million, three debt investments in existing portfolio companies totaling approximately $16.6 million, and two equity investments in existing portfolio companies of approximately $0.1 million. Also during the first quarter of 2011, two portfolio company loans repaid at par totaling approximately $11.5 million and the Company received normal principal repayments and partial loan prepayments totaling approximately $3.4 million.

Investment transactions which occurred during the first quarter of 2011 are summarized as follows:

On February 11, 2011, Triangle made a $10.0 million subordinated debt investment in Pomeroy IT Solutions, Inc. ("Pomeroy"). Headquartered in Hebron, KY, Pomeroy is a provider of information technology infrastructure outsourcing services.

On February 28, 2011, Triangle made an $8.8 million investment in Captek Softgels, Inc. ("Captek") consisting of subordinated debt and equity. Captek is an integrated manufacturer, packager and marketer of custom designed softgel nutraceutical products. Captek provides standard and customized formulations under contract manufacturing relationships for leading global brands in the United States.

On March 11, 2011, Triangle made a senior subordinated debt investment of $9.0 million in DLR Restaurants, LLC ("DLR"). DLR operates Dick's Last Resort restaurants with multiple locations throughout the United States. DLR offers a unique dining experience with an interactive wait staff that entertains customers throughout the meal with tasteful humor.

On March 21, 2011, Triangle made a $12.3 million investment in National Investment Managers, Inc. ("NIM") consisting of subordinated debt and equity. NIM is a national provider of retirement plan design, consulting, administration and pension actuarial services for small and medium-sized businesses. NIM subsequently announced a name change to United Retirement Plan Consultants, Inc.

On March 25, 2011, Triangle made an $11.5 million investment in Home Physicians Management, LLC ("Home Physicians") consisting of senior and junior subordinated debt. Home Physicians is a provider of primary care physician services and podiatry services in homes and assisted living facilities.

Investments subsequent to quarter end are summarized as follows:

On April 2, 2011, Triangle made a $5.0 million investment in The Main Resource ("TMR") consisting of subordinated debt with warrants. TMR sells a wide range of automotive supplies, repair items and replacement parts used in automotive service garages.

On April 8, 2011, Triangle made a $5.3 million investment in Main Street Gourmet ("MSG") consisting of subordinated debt, junior subordinated debt with warrants and equity. MSG is a wholesale bakery that develops, produces and sells a broad line of bakery products. Customers include fast casual restaurants, bakery/cafes, coffee chains, family restaurants, grocery retailers, and broad-line distributors.

Conference Call to Discuss First Quarter 2011 Results

Triangle has scheduled a conference call to discuss first quarter results for Thursday, May 5, 2011, at 9:00 a.m. ET.

To listen to the call, please dial 877-312-5521 or 253-237-1143 approximately 10 minutes prior to the start of the call. A taped replay will be made available approximately two hours after the conclusion of the call and will remain available until August 5, 2011. To access the replay, please dial 800-642-1687 or 706-645-9291 and enter the passcode 61858980.

Triangle's quarterly results conference call will also be available via a live webcast on the investor relations section of its website at http://ir.tcap.com/events.cfm. Access the website 15 minutes prior to the start of the call to download and install any necessary audio software. An archived webcast replay will be available on the Company's website until July 31, 2011.

Annual Meeting of Stockholders

The 2011 Annual Meeting of Stockholders of Triangle convened at The Woman's Club of Raleigh, 3300 Woman's Club Drive, Raleigh, NC 27612 on Wednesday, May 4, 2011, at 8:30 a.m. (Eastern Time) for stockholders of record as of the close of business on March 3, 2011, and a quorum was present. Five of the six proposals were approved on May 4, 2011. The 2011 Annual Meeting of Stockholders was adjourned until Monday, June 13, 2011, at 8:30 a.m. (Eastern Time), in order to provide additional time to solicit proxies for Proposal Number 2, the approval to authorize Triangle, pursuant to the approval of its Board of Directors, to sell shares of its common stock during the next year at a price below Triangle's then current net asset value, or book value, per share. The meeting will be reconvened at 3700 Glenwood Avenue, Suite 530, Raleigh, North Carolina 27612. The results of the proposals that were voted on will be reported through a current report on Form 8-K within four days of the 2011 Annual Meeting of Stockholders. 

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 million - $15.0 million per transaction in companies with annual revenues between $20.0 million and $100.0 million and EBITDA between $3.0 million 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 NYSE, 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.

Forward Looking Statements

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 and some of these uncertainties are enumerated in Triangle's filings with the Securities and Exchange Commission. Certain factors that could cause actual results to differ materially from those contained in the forward-looking statements are included in our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, each as filed with the Securities and Exchange Commission. Copies are available on the SEC's website at www.sec.gov. 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
     
                                                                                                                                                                                                                                                         
                                                                                                                                                                                                             March 31,
    2011     December 31,
    2010
                                                                                                                                                                                                   Assets            (Unaudited)                         
                                                                                                                                                                               Investments at fair value:                                               
                                                           Non–Control / Non–Affiliate investments (cost of $287,830,346 and $244,197,828 
    at March 31, 2011 and December 31, 2010, respectively)         $ 290,736,361            $ 245,392,144
                                                                                   Affiliate investments (cost of $66,285,172 and $60,196,084 at March 31, 2011 and 
    December 31, 2010, respectively)             63,438,848                55,661,878
                                                                                     Control investments (cost of $23,332,268 and $19,647,795 at March 31, 2011 and 
    December 31, 2010, respectively)             30,011,421                24,936,571
                                                                                                                                                                          Total investments at fair value            384,186,630               325,990,593
                                                                                                                                                                                Cash and cash equivalents             73,420,711                54,820,222
                                                                                                                                                                             Interest and fees receivable              1,400,613                   867,627
                                                                                                                                                                Prepaid expenses and other current assets                338,094                   119,151
                                                                                                                                                                                  Deferred financing fees              6,414,292                 6,200,254
                                                                                                                                                                              Property and equipment, net                 58,698                    47,647
                                                                                                                                                                                             Total assets         $ 465,819,038            $ 388,045,494
                                                                                                                                                                                              Liabilities                                               
                                                                                                                                                                 Accounts payable and accrued liabilities             $ 927,738              $ 2,268,898
                                                                                                                                                                                         Interest payable                613,677                 2,388,505
                                                                                                                                                                                            Taxes payable                  6,307                   197,979
                                                                                                                                                                                         Deferred revenue                 42,787                    37,500
                                                                                                                                                                                    Deferred income taxes                402,787                   208,587
                                                                                                                                                                        SBA-guaranteed debentures payable            214,607,244               202,464,866
                                                                                                                                                                                        Total liabilities            216,600,540               207,566,335
                                                                                                                                                                                               Net Assets                                               
     Common stock, $0.001 par value per share (150,000,000 shares authorized, 
    18,569,856 and 14,928,987 shares issued and outstanding as of March 31, 2011 
    and December 31, 2010, respectively)                 18,570                    14,929
                                                                                                                                                                               Additional paid-in-capital            247,760,609               183,602,755
                                                                                                                                                             Investment income in excess of distributions              3,347,637                 3,365,548
                                                                                                                                                               Accumulated realized losses on investments            (8,244,376)               (8,244,376)
                                                                                                                                                               Net unrealized appreciation of investments              6,336,058                 1,740,303
                                                                                                                                                                                         Total net assets            249,218,498               180,479,159
                                                                                                                                                                         Total liabilities and net assets         $ 465,819,038            $ 388,045,494
                                                                                                                                                                                Net asset value per share               $ 13.42                  $ 12.09

 

 
                                                                                                                                                         TRIANGLE CAPITAL CORPORATION
                                                                                                                               Unaudited Consolidated Statements of Operations
     
                                                                                           Three Months 
    Ended
    March 31, 2011     Three Months 
    Ended
    March 31, 2010
                                                                     Investment income:                                                                                            
                                                Loan interest, fee and dividend income:                                                                                            
                                            Non–Control / Non–Affiliate investments                                   $ 8,749,449                                 $  4,801,642
                                                                  Affiliate investments                                      1,374,243                                      1,030,596
                                                                    Control investments                                        258,268                                        353,145
                                           Total loan interest, fee and dividend income                                     10,381,960                                      6,185,383
                                                      Paid–in–kind interest income:                                                                                            
                                            Non–Control / Non–Affiliate investments                                      1,481,820                                        827,601
                                                                  Affiliate investments                                        395,171                                        262,677
                                                                    Control investments                                         65,297                                        125,948
                                                 Total paid–in–kind interest income                                      1,942,288                                      1,216,226
                              Interest income from cash and cash equivalent investments                                        101,149                                         83,298
                                                                Total investment income                                     12,425,397                                      7,484,907
                                                                              Expenses:                                                                                            
                                                                       Interest expense                                      1,989,984                                      1,739,980
                                                Amortization of deferred financing fees                                        309,763                                         96,431
                                                    General and administrative expenses                                      2,397,523                                      1,854,812
                                                                         Total expenses                                      4,697,270                                      3,691,223
                                                                  Net investment income                                      7,728,127                                      3,793,684
                       Net realized gain on investments—Non Control / Non–Affiliate                                            —                                        199,200
                                             Net unrealized appreciation of investments                                      4,595,755                                        209,343
                                      Total net gain on investments before income taxes                                      4,595,755                                        408,543
                                                         Income tax benefit (provision)                                         27,359                                       (52,898)
                                   Net increase in net assets resulting from operations                                  $ 12,351,241                                   $ 4,149,329
                                    Net investment income per share—basic and diluted                                        $ 0.46                                        $ 0.32
     Net increase in net assets resulting from operations per share—basic and diluted                                        $ 0.73                                        $ 0.35
                                                    Dividends declared per common share                                        $ 0.42                                        $ 0.41
                      Weighted average number of shares outstanding—basic and diluted                                     16,848,570                                     11,877,688
                                                                                                                                                                                  

 

 
                                                                                                                                                                                                     TRIANGLE CAPITAL CORPORATION
                                                                                                                                                                           Unaudited Consolidated Statements of Cash Flows
     
                                                                                                                                                                                                                                
                                                                                                                                     Three Months 
    Ended 
    March 31, 2011     Three Months 
    Ended 
    March 31, 2010
                                                                                                                                                                                                                              
                                                                                            Cash flows from operating activities:                                                                                              
                                                                             Net increase in net assets resulting from operations                                    $ 12,351,241                                     $ 4,149,329
     Adjustments to reconcile net increase in net assets resulting from operations to 
    net cash used in operating activities:                                                                                              
                                                                                               Purchases of portfolio investments                                    (68,275,512)                                    (14,143,949)
                                                                               Repayments received/sales of portfolio investments                                      14,936,864                                       6,520,580
                                                                                         Loan origination and other fees received                                       1,466,292                                         301,875
                                                                                                 Net realized gain on investments                                             —                                       (199,200)
                                                                                       Net unrealized appreciation of investments                                     (4,789,955)                                       (246,344)
                                                                                                            Deferred income taxes                                         194,200                                          37,000
                                                                   Payment–in–kind interest accrued, net of payments received                                       (857,493)                                     (1,059,516)
                                                                                          Amortization of deferred financing fees                                         309,763                                          96,431
                                                                                     Accretion of loan origination and other fees                                       (415,247)                                       (215,033)
                                                                                                      Accretion of loan discounts                                       (260,986)                                       (117,201)
                                                                       Accretion of discount on SBA-guaranteed debentures payable                                          42,378                                             —
                                                                                                             Depreciation expense                                           7,064                                           5,478
                                                                                                         Stock-based compensation                                         414,329                                         248,556
                                                                                     Changes in operating assets and liabilities:                                                                                              
                                                                                                     Interest and fees receivable                                       (532,986)                                       (563,354)
                                                                                                                 Prepaid expenses                                       (218,943)                                        (62,373)
                                                                                         Accounts payable and accrued liabilities                                     (1,341,160)                                     (1,192,113)
                                                                                                                 Interest payable                                     (1,774,828)                                     (1,738,084)
                                                                                                                 Deferred revenue                                           5,287                                        (37,500)
                                                                                                                    Taxes payable                                       (191,672)                                        (27,245)
                                                                                            Net cash used in operating activities                                    (48,931,364)                                     (8,242,663)
                                                                                                                                                                                                                              
                                                                                            Cash flows from investing activities:                                                                                              
                                                                                              Purchases of property and equipment                                        (18,115)                                             —
                                                                                            Net cash used in investing activities                                        (18,115)                                             —
                                                                                                                                                                                                                              
                                                                                            Cash flows from financing activities:                                                                                              
                                                                               Borrowings under SBA-guaranteed debentures payable                                      21,600,000                                             —
                                                                                  Repayments of SBA-guaranteed debentures payable                                     (9,500,000)                                             —
                                                                                                              Financing fees paid                                       (523,801)                                             —
                                                                            Proceeds from public stock offerings, net of expenses                                      63,138,255                                         (2,255)
                                                         Common stock withheld for payroll taxes upon vesting of restricted stock                                       (485,595)                                       (123,840)
                                                                                                              Cash dividends paid                                     (6,678,891)                                     (3,558,973)
                                                                              Net cash provided by (used in) financing activities                                      67,549,968                                     (3,685,068)
                                                                             Net increase (decrease) in cash and cash equivalents                                      18,600,489                                    (11,927,731)
                                                                                   Cash and cash equivalents, beginning of period                                      54,820,222                                      55,200,421
                                                                                         Cash and cash equivalents, end of period                                   $ 73,420,711                                   $ 43,272,690
                                                                                                                                                                                                                              
                                                                                Supplemental disclosure of cash flow information:                                                                                              
                                                                                                          Cash paid for interest                                    $ 3,722,434                                    $ 3,478,064
CONTACT: Sheri Blair Colquitt
         Vice President, Investor Relations
         919-719-4784
         scolquitt@tcap.com
         
         Steven C. Lilly
         Chief Financial Officer
         919-719-4789
         slilly@tcap.com

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Source: Triangle Capital Corporation