Triangle Capital Corporation Reports Second Quarter 2015 Results

RALEIGH, N.C., Aug. 05, 2015 (GLOBE NEWSWIRE) -- Triangle Capital Corporation (NYSE:TCAP) (“Triangle” or the “Company”), a leading provider of capital to lower middle market companies, today announced its financial and operating results for the second quarter of 2015.

Highlights

  • Total Investment Portfolio:  $884.9 million
  • Total Net Assets (Equity):  $514.8 million
  • Net Asset Value Per Share (Book Value):  $15.47
  • Weighted Average Yield on Debt Investments:  12.6%
  • Efficiency Ratio (G&A Expenses/Total Investment Income):  15.6%
  • Investment Portfolio Activity for the Quarter Ended June 30, 2015
    • Cost of investments made during the period:  $65.1 million
    • Principal repayments (excluding PIK interest repayments) during the period:  $52.3 million
    • Proceeds related to the sale of equity investments during the period:  $4.8 million
  • Non-Accrual Assets as a Percentage of Total Portfolio Cost/Fair Value: 3.1% / 1.6%
  • Financial Results for the Quarter Ended June 30, 2015
    • Total investment income:  $27.8 million
    • Net investment income:  $16.2 million
    • Net investment income per share:  $0.49
    • Regular quarterly dividend per share:  $0.54
    • Supplemental dividend per share:  $0.05
    • Net realized losses:  $17.1 million
    • Net increase in net assets resulting from operations:  $12.2 million
    • Net increase in net assets resulting from operations per share:  $0.37



In commenting on the Company’s results, Garland S. Tucker, III, Chairman and Chief Executive Officer, stated, “The second quarter was another active quarter for Triangle.  In addition to making $65 million of new investments, we entered into a new $300 million senior credit facility and redeemed our first baby bond issuance, thereby achieving a lower overall cost of capital. Our expanded balance sheet enables Triangle to focus on new portfolio opportunities during the remainder of 2015.”

Second Quarter 2015 Results

Total investment income during the second quarter of 2015 was $27.8 million, compared to total investment income of $24.9 million for the second quarter of 2014, representing an increase of 11.6%. The Company’s increase in investment income was primarily attributable to an increase in portfolio debt investments from June 30, 2014 to June 30, 2015.  This increase was partially offset by a $1.4 million decrease in investment income relating to non-accrual assets, a $0.6 million decrease in non-recurring fee and dividend income and a decrease in the weighted average yield on our debt investments from June 30, 2014 to June 30, 2015.

Net investment income during the second quarter of 2015 was $16.2 million, compared to net investment income of $14.7 million for the second quarter of 2014, representing an increase of 10.3%. Net investment income per share during the second quarter of 2015 was $0.49, based on weighted average shares outstanding during the quarter of 33.2 million, compared to $0.53 per share during the second quarter of 2014, based on weighted average shares outstanding of 27.9 million.

The Company’s net increase in net assets resulting from operations was $12.2 million during the second quarter of 2015, compared to $24.2 million during the second quarter of 2014.  The Company’s net increase in net assets resulting from operations was $0.37 per share during the second quarter of 2015, based on weighted average shares outstanding of 33.2 million, compared to $0.87 per share during the second quarter of 2014, based on weighted average shares outstanding of 27.9 million. 

The Company’s net asset value, or NAV, at June 30, 2015, was $15.47 per share as compared to $16.11 per share at December 31, 2014. As of June 30, 2015, the Company’s weighted average yield on its outstanding, currently yielding debt investments was approximately 12.6%.

Liquidity and Capital Resources

Commenting on the Company’s liquidity position, Steven C. Lilly, Chief Financial Officer of the Company, stated, “We were pleased to utilize a portion of our new senior credit facility to redeem our 2019 Notes in June. This redemption is expected to generate interest savings of approximately $3.0 million per year.  Our available liquidity of over $300.0 million at quarter-end puts Triangle in a strong position to support our investment activities as we enter the second half of the year.”

In May, 2015, Triangle closed a new $300.0 million senior credit facility (“Credit Facility”), which replaced the Company’s existing $165.0 million senior credit facility.  The Credit Facility, which was jointly arranged by BB&T Capital Markets, ING Capital LLC and Fifth Third Bank, has an accordion feature which allows for an increase in the total borrowing size up to $350.0 million.  The Credit Facility’s availability period ends May 3, 2019, followed by a one-year amortization period with a final maturity date of May 3, 2020.  The interest rate for borrowings under the Credit Facility is LIBOR/CDOR plus 2.75%. 

In June, 2015, the Company redeemed in full $69.0 million of unsecured notes issued in March, 2012, and due 2019 (the “Notes”) which resulted in a loss on the extinguishment of debt of $1.4 million.  Prior to redemption, the Notes bore interest at a rate of 7.00% per year. 

Dividend Information

On May 27, 2015, Triangle announced that its board of directors had declared cash dividends totaling $0.59 per share, consisting of a regular quarterly dividend of $0.54 per share and a supplemental dividend of $0.05 per share. The regular quarterly dividend was the Company’s 34th consecutive quarterly dividend since its initial public offering in February, 2007.  The record date for both the regular quarterly dividend and the supplemental dividend was June 10, 2015, and the payment date was June 24, 2015.

Recent Portfolio Activity

During the quarter ended June 30, 2015, the Company made four new investments totaling $49.9 million, debt investments in three existing portfolio companies totaling $10.7 million and equity investments in six existing portfolio companies totaling $4.5 million.  The Company had five portfolio company loans repaid at par totaling $49.8 million resulting in realized gains totaling $0.8 million and received normal principal repayments and partial loan prepayments totaling $2.5 million.  The Company converted subordinated debt investments in one portfolio company into an equity investment and recognized a net realized loss on such conversion totaling $20.5 million. In addition, the Company received proceeds related to the sales of certain equity securities totaling $4.8 million and recognized net realized gains on such sales totaling $2.6 million.

New investment transactions which occurred during the second quarter of 2015 are summarized as follows:

In April, 2015, the Company made a $15.0 million subordinated debt investment in Radiant Logistics, Inc., a non-asset based transportation and logistics company.

In June, 2015, the Company made a $5.0 million preferred equity investment in Team Waste, LLC, a provider of waste collection, disposal and recycling services.

In June, 2015, the Company made a $17.4 million subordinated debt investment in All Metro Health Care Services, Inc., a licensed provider of home healthcare services.

In June, 2015, the Company made a $12.5 million subordinated debt investment in FrontStream Payments, Inc. (“FrontStream”) as part of a recapitalization financing. FrontStream is a multi-national provider of integrated back-end merchant solutions and front-end payment and donation management products.

New portfolio investments subsequent to quarter end are summarized as follows:

In July, 2015, the Company made a $15.3 million investment in Community Medical Group (“CMG”) consisting of subordinated debt and equity.  CMG is an operator of primary care clinics.

In July, 2015, the Company made an $11.2 million subordinated debt investment in Community Intervention Services, a provider of community-based and outpatient behavioral health services.

Conference Call to Discuss Second Quarter 2015 Results

Triangle has scheduled a conference call to discuss second quarter 2015 operating and financial results for Thursday, August 6, 2015, at 9:00 a.m. (Eastern Time).

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 10, 2015. To access the replay, please dial 855-859-2056 or 404-537-3406 and enter the passcode 82107813.

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 September 4, 2015.

Triangle will post a brief, pre-recorded on-demand podcast on the investor relations section of the Company’s website after 4:00 p.m. ET on Wednesday, August 5, 2015, in conjunction with the filing of Triangle’s 10-Q. The purpose of the podcast is to provide interested analysts and investors with meaningful statistical and financial information in advance of the participatory earnings call on Thursday, August 6, 2015.

About Triangle Capital Corporation

Triangle Capital Corporation (www.TCAP.com) invests capital in established companies in the lower middle market to fund growth, changes of control and other corporate events.  Triangle offers a wide variety of investment structures with a primary focus on mezzanine financing with equity components.  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.  Triangle typically invests $5.0 million - $35.0 million per transaction in companies with annual revenues between $20.0 million and $200.0 million and EBITDA between $3.0 million and $35.0 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 and stockholders may receive a hard copy of the completed audited financial statements free of charge upon request to the Company at 3700 Glenwood Avenue, Suite 530, Raleigh, NC 27612. 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
       
  June 30,  2015   December 31, 2014
  (Unaudited)    
Assets:      
Investments at fair value:      
Non-Control / Non-Affiliate investments (cost of $677,505,732 and $717,233,688 at June 30, 2015 and December 31, 2014, respectively) $ 662,866,063     $ 693,312,886  
Affiliate investments (cost of $193,995,315 and $175,182,171 at June 30, 2015 and December 31, 2014, respectively) 197,281,194     178,935,236  
Control investments (cost of $46,406,803 and $29,636,763 at June 30, 2015 and December 31, 2014, respectively) 24,751,233     14,975,000  
Total investments at fair value 884,898,490     887,223,122  
Cash and cash equivalents 117,547,039     78,759,026  
Interest and fees receivable 6,834,561     7,409,105  
Prepaid expenses and other current assets 646,272     438,861  
Deferred financing fees 3,682,831     1,230,577  
Property and equipment, net 116,619     108,753  
Total assets $ 1,013,725,812     $ 975,169,444  
Liabilities:      
Accounts payable and accrued liabilities $ 3,417,774     $ 7,144,673  
Interest payable 3,577,430     3,365,237  
Taxes payable 54,152     2,506,031  
Deferred income taxes 4,117,502     3,363,669  
Payable from unsettled transaction 16,961,500      
Borrowings under credit facility 88,758,498     62,619,883  
Notes 161,850,261     145,646,224  
SBA-guaranteed debentures payable 220,171,914     219,697,098  
Total liabilities 498,909,031     444,342,815  
Commitments and contingencies      
Net Assets:      
Common stock, $0.001 par value per share (150,000,000 shares authorized, 33,272,167 and 32,950,288 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively) 33,272     32,950  
Additional paid in capital 544,771,957     542,119,994  
Investment income in excess of distributions 6,138,723     12,926,514  
Accumulated realized gains (losses) (1,337,335 )   12,464,699  
Net unrealized appreciation (depreciation) (34,789,836 )   (36,717,528 )
Total net assets 514,816,781     530,826,629  
Total liabilities and net assets $ 1,013,725,812     $ 975,169,444  
Net asset value per share $ 15.47     $ 16.11  


TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Statements of Operations
 
  Three Months Ended   Three Months Ended   Six Months Ended   Six Months Ended
  June 30,
 2015
  June 30,
 2014
  June 30,
 2015
  June 30,
 2014
Investment income:              
Interest income:              
Non-Control / Non-Affiliate investments $ 16,982,885     $ 15,241,853     $ 33,941,585     $ 29,710,399  
Affiliate investments 4,199,380     2,208,077     8,390,729     4,564,512  
Control investments 49,481     43,835     49,481     87,343  
Total interest income 21,231,746     17,493,765     42,381,795     34,362,254  
Dividend income:              
Non-Control / Non-Affiliate investments 45,689     787,689     1,634,394     1,051,616  
Affiliate investments 281,369     207,899     537,622     1,148,070  
Total dividend income 327,058     995,588     2,172,016     2,199,686  
Fee and other income:              
Non-Control / Non-Affiliate investments 835,092     1,263,026     4,072,438     3,038,318  
Affiliate investments 1,500,096     383,616     1,997,053     663,801  
Control investments 100,000     600,000     200,000     701,852  
Total fee and other income 2,435,188     2,246,642     6,269,491     4,403,971  
Payment-in-kind interest income:              
Non-Control / Non-Affiliate investments 2,613,528     3,404,283     5,341,851     6,402,060  
Affiliate investments 1,150,008     736,516     2,319,009     1,467,173  
Control investments     6,084         12,071  
Total payment-in-kind interest income 3,763,536     4,146,883     7,660,860     7,881,304  
Interest income from cash and cash equivalents 67,376     56,888     120,312     131,496  
Total investment income 27,824,904     24,939,766     58,604,474     48,978,711  
Operating expenses:              
Interest and other financing fees 7,325,340     5,158,543     13,757,795     10,298,055  
General and administrative expenses 4,333,379     5,122,875     10,910,915     10,178,967  
Total operating expenses 11,658,719     10,281,418     24,668,710     20,477,022  
Net investment income 16,166,185     14,658,348     33,935,764     28,501,689  
Realized and unrealized gains (losses) on investments and foreign currency borrowings:              
Net realized gains (losses):              
Non-Control / Non-Affiliate investments 3,178,433     11,462,275     6,415,102     11,734,476  
Affiliate investments 238,806     228,252     266,508     228,252  
Control investments (20,483,644 )       (20,483,644 )   (208,553 )
Net realized gains (losses) (17,066,405 )   11,690,527     (13,802,034 )   11,754,175  
Net unrealized appreciation (depreciation):              
Investments 14,782,147     (1,172,480 )   1,066,307     (2,670,950 )
Foreign currency borrowings (312,322 )   (395,269 )   861,385     (34,734 )
Net unrealized appreciation (depreciation) 14,469,825     (1,567,749 )   1,927,692     (2,705,684 )
Net realized and unrealized gains (losses) on investments and foreign currency borrowings (2,596,580 )   10,122,778     (11,874,342 )   9,048,491  
Loss on extinguishment of debt (1,394,017 )       (1,394,017 )    
Provision for taxes     (586,788 )   (137,875 )   (853,343 )
Net increase in net assets resulting from operations $ 12,175,588     $ 24,194,338     $ 20,529,530     $ 36,696,837  
Net investment income per share—basic and diluted $ 0.49     $ 0.53     $ 1.02     $ 1.02  
Net increase in net assets resulting from operations per share—basic and diluted $ 0.37     $ 0.87     $ 0.62     $ 1.32  
Dividends/distributions per share:              
Regular quarterly dividends/distributions $ 0.54     $ 0.54     $ 1.08     $ 1.08  
Supplemental dividends/distributions 0.05     0.15     0.10     0.30  
Total dividends/distributions per share $ 0.59     $ 0.69     $ 1.18     $ 1.38  
Weighted average shares outstanding—basic and diluted 33,234,532     27,910,468     33,166,865     27,857,788  


TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Statements of Cash Flows
 
  Six Months Ended   Six Months Ended
  June 30, 2015   June 30, 2014
Cash flows from operating activities:      
Net increase in net assets resulting from operations $ 20,529,530     $ 36,696,837  
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:      
Purchases of portfolio investments (163,270,565 )   (164,840,342 )
Repayments received/sales of portfolio investments 154,211,535     105,026,498  
Loan origination and other fees received 2,819,164     2,838,426  
Net realized loss (gain) on investments 13,802,034     (11,754,175 )
Net unrealized depreciation (appreciation) on investments (1,820,140 )   1,867,995  
Net unrealized depreciation (appreciation) on foreign currency borrowings (861,385 )   34,734  
Deferred income taxes 753,833     802,955  
Payment-in-kind interest accrued, net of payments received 23,501     (2,614,188 )
Amortization of deferred financing fees 1,107,207     800,583  
Loss on extinguishment of debt 1,394,017      
Accretion of loan origination and other fees (3,202,668 )   (1,783,603 )
Accretion of loan discounts (238,229 )   (644,575 )
Accretion of discount on SBA-guaranteed debentures payable 92,784     90,792  
Depreciation expense 29,225     20,114  
Stock-based compensation 3,412,181     2,828,410  
Changes in operating assets and liabilities:      
Interest and fees receivable 574,544     1,186,064  
Prepaid expenses and other current assets (207,411 )   238,828  
Accounts payable and accrued liabilities (3,726,899 )   (4,277,738 )
Interest payable 212,193     4,770  
Taxes payable (2,451,879 )   (655,858 )
Payable from unsettled transaction 16,961,500      
Net cash provided by (used in) operating activities 40,144,072     (34,133,473 )
Cash flows from investing activities:      
Purchases of property and equipment (37,091 )   (34,827 )
Net cash used in investing activities (37,091 )   (34,827 )
Cash flows from financing activities:      
Borrowings under credit facility 83,000,000     20,000,000  
Repayments of credit facility (56,000,000 )    
Proceeds from notes 83,372,640      
Redemption of notes (69,000,000 )    
Financing fees paid (2,740,049 )    
Expenses related to public offering of common stock (54,967 )    
Common stock withheld for payroll taxes upon vesting of restricted stock (2,400,352 )   (2,474,121 )
Cash dividends/distributions paid (37,496,240 )   (37,068,840 )
Net cash used in financing activities (1,318,968 )   (19,542,961 )
Net increase (decrease) in cash and cash equivalents 38,788,013     (53,711,261 )
Cash and cash equivalents, beginning of period 78,759,026     133,304,346  
Cash and cash equivalents, end of period $ 117,547,039     $ 79,593,085  
Supplemental disclosure of cash flow information:      
Cash paid for interest $ 11,673,774     $ 9,008,748  
Summary of non-cash financing transactions:      
Dividends/distributions paid through DRIP share issuances $ 1,695,423     $ 1,426,201  

 

Contacts

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

Primary Logo

Source: Triangle Capital Corporation