Form: 8-K

Current report filing

November 2, 2016

Documents



Exhibit 99.1
tcaplogoa02a01a12.jpg
3700 Glenwood Ave., Ste. 530 Raleigh, NC 27612

TRIANGLE CAPITAL CORPORATION REPORTS THIRD
QUARTER 2016 RESULTS

RALEIGH, NC - November 2, 2016, 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 third quarter of 2016.
 
Highlights

•
Total Investment Portfolio: $947.7 million
•
Total Net Assets (Equity): $619.4 million
•
Net Asset Value Per Share (Book Value): $15.33
•
Weighted Average Yield on Debt Investments: 12.3%
•
Efficiency Ratio (Compensation and G&A Expenses/Total Investment Income): 17.6%
•
Investment Portfolio Activity for the Quarter Ended September 30, 2016
•
Cost of investments made during the period: $88.4 million
•
Principal repayments (excluding PIK interest repayments) during the period: $53.1 million
•
Proceeds related to the sale of equity investments during the period: $9.5 million
•
Non-Accrual Assets as a Percentage of Total Portfolio Cost and Fair Value: 3.9% and 2.1%, respectively
•
Financial Results for the Quarter Ended September 30, 2016
•
Total investment income: $27.4 million
•
Net investment income: $15.8 million
•
Net investment income per share: $0.42
•
Net realized losses: $11.2 million
•
Net increase in net assets resulting from operations: $7.9 million
•
Net increase in net assets resulting from operations per share: $0.21

In commenting on the Company’s third quarter investment activity and outlook, E. Ashton Poole, President and CEO, stated, “The third quarter was a very active quarter for Triangle on numerous fronts. During the quarter we raised approximately $129 million of growth equity capital, we successfully deployed over $88 million of capital, and, since quarter-end, we have deployed almost $58 million of additional capital. In addition to our investing activities, we strengthened our operational focus through the promotion of three longstanding Triangle team members and strengthened our Board of Directors with the recent appointment of Mark Mulhern. 2016 has been an exciting time of forward momentum at Triangle. As we begin to focus on 2017 and beyond, I am extremely pleased with the operational and strategic team we have assembled.”

Third Quarter 2016 Results

Total investment income during the third quarter of 2016 was $27.4 million, compared to total investment income of $30.8 million for the third quarter of 2015, representing a decrease of 11.1%. This decrease was primarily attributable to a $1.8 million decrease in non-recurring fee income, a $0.8 million decrease in investment income related to non-accrual assets and a decrease in the weighted average yield on our debt investments from September 30, 2015 to September 30, 2016.

Net investment income during the third quarter of 2016 was $15.8 million, compared to net investment income of $18.5 million for the third quarter of 2015, representing a decrease of 14.5%. Net investment income per share during the third quarter of 2016 was $0.42, based on weighted average shares outstanding during the quarter of 38.1 million, compared to $0.56 per share during the third quarter of 2015, based on weighted average shares outstanding of 33.3 million.





The Company’s net increase in net assets resulting from operations was $7.9 million during the third quarter of 2016, compared to a $17.9 million net increase during the third quarter of 2015. The Company’s net increase in net assets resulting from operations was $0.21 per share during the third quarter of 2016, based on weighted average shares outstanding of 38.1 million, compared to a net increase in net assets resulting from operations of $0.54 per share during the third quarter of 2015, based on weighted average shares outstanding of 33.3 million.

The Company’s net asset value, or NAV, at September 30, 2016, was $15.33 per share as compared to $15.23 per share at December 31, 2015. As of September 30, 2016, the Company’s weighted average yield on its outstanding, currently yielding debt investments was approximately 12.3%.

Liquidity and Capital Resources

Commenting on the Company’s liquidity position, Steven C. Lilly, Chief Financial Officer, stated, “With over $375 million of available liquidity through a combination of cash on hand and availability under our senior credit facility, Triangle has the capacity and flexibility to support our investing activities in the fourth quarter and as we enter 2017.”

At September 30, 2016, the Company had cash and cash equivalents totaling $168.3 million and $208.6 million of remaining borrowing capacity under its $300.0 million senior credit facility.

Dividend Information

On August 24, 2016, Triangle announced that its board of directors had declared a cash dividend of $0.45 per share. This was the Company’s 39th consecutive quarterly dividend since its initial public offering in February, 2007. The record date for the dividend was September 7, 2016, and the payment date was September 21, 2016.

Recent Portfolio Activity

During the quarter ended September 30, 2016, the Company made three new investments totaling approximately $83.9 million, debt investments in three existing portfolio companies totaling $2.9 million and equity investments in six existing portfolio companies totaling $1.7 million. The Company had three portfolio company loans repaid at par totaling $45.3 million resulting in realized gains totaling $0.7 million and received normal principal repayments and partial loan prepayments totaling $7.9 million. The Company wrote-off a debt investment in one portfolio company and recognized a realized loss on the write-off of $16.1 million. In addition, the Company received proceeds related to the sales of certain equity securities totaling $9.5 million and recognized net realized gains on such sales totaling $4.2 million.

New portfolio investments which occurred during the third quarter of 2016 are summarized as follows:

In August, 2016, the Company made a $25.2 million investment in Smile Brands Group (“Smile Brands”) consisting of subordinated debt and equity. Smile Brands provides general dentistry, dental hygiene and specialty services, as well as centralized scheduling, billing, marketing and financing for its office locations.

In September, 2016, the Company made a $31.1 million investment in Vantage Mobility International (“VMI”) consisting of subordinated debt and equity. VMI manufactures wheelchair accessible vehicles and related accessories.

In September, 2016, the Company made a $27.6 million second lien debt investment in KidKraft, Inc. (“KidKraft”). KidKraft is a designer and distributor of toys and playsets for children.

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

In October, 2016, the Company made a $23.5 million investment in Fridababy, LLC ("Fridababy") consisting of unitranche debt and equity. Fridababy markets and distributes baby products.

In October, 2016, the Company made a $17.0 million investment in Del Real, LLC ("Del Real") consisting of subordinated debt and equity. Del Real is a leading Hispanic refrigerated foods company.

In October, 2016, the Company made a $16.3 million investment in TG MIDCO, LLC ("TG MIDCO") consisting of subordinated debt and equity. TG MIDCO is a distributor of consumer products through various e-commerce platforms.





Conference Call to Discuss Third Quarter 2016 Results

Triangle has scheduled a conference call to discuss third quarter 2016 operating and financial results for Thursday, November 3, 2016, 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 November 7, 2016. To access the replay, please dial 855-859-2056 or 404-537-3406 and enter the passcode 93570780.

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 November 30, 2016.

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. (Eastern Time) on Wednesday, November 2, 2016, in conjunction with the filing of Triangle’s Form 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, November 3, 2016.

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, as amended ("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, as amended. 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.





Contacts

E. Ashton Poole
President & Chief Executive Officer
919-719-8618
apoole@tcap.com

Steven C. Lilly
Chief Financial Officer
919-719-4789
slilly@tcap.com








TRIANGLE CAPITAL CORPORATION
Consolidated Balance Sheets 
 
September 30, 2016
 
December 31, 2015
 
(Unaudited)
 
 
Assets:
 
 
 
Investments at fair value:
 
 
 
Non-Control / Non-Affiliate investments (cost of $771,052,767 and $795,244,907 as of September 30, 2016 and December 31, 2015, respectively)
$
748,363,034

 
$
774,238,518

Affiliate investments (cost of $163,759,331 and $171,486,103 as of September 30, 2016 and December 31, 2015, respectively)
170,111,172

 
177,581,965

Control investments (cost of $52,518,113 and $40,618,113 as of September 30, 2016 and December 31, 2015, respectively)
29,257,769

 
25,456,233

Total investments at fair value
947,731,975

 
977,276,716

Cash and cash equivalents
168,336,823

 
52,615,418

Interest, fees and other receivables
6,966,478

 
4,892,146

Prepaid expenses and other current assets
1,690,182

 
947,068

Deferred financing fees
2,897,224

 
3,480,444

Property and equipment, net
122,506

 
105,698

Total assets
$
1,127,745,188

 
$
1,039,317,490

Liabilities:
 
 
 
Accounts payable and accrued liabilities
$
4,636,217

 
$
7,463,514

Interest payable
1,537,490

 
3,714,470

Taxes payable
—

 
735,498

Deferred income taxes
3,027,000

 
4,988,317

Borrowings under credit facility
91,427,900

 
131,256,669

Notes
162,598,503

 
162,142,478

SBA-guaranteed debentures payable
245,162,869

 
220,648,789

Total liabilities
508,389,979

 
530,949,735

Commitments and contingencies
 
 
 
Net Assets:
 
 
 
Common stock, $0.001 par value per share (150,000,000 shares authorized, 40,405,403 and 33,375,126 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively)
40,405

 
33,375

Additional paid-in capital
684,618,304

 
549,242,439

Investment income in excess of distributions
6,553,437

 
16,127,141

Accumulated realized losses
(32,501,174
)
 
(25,813,329
)
Net unrealized depreciation
(39,355,763
)
 
(31,221,871
)
Total net assets
619,355,209

 
508,367,755

Total liabilities and net assets
$
1,127,745,188

 
$
1,039,317,490

Net asset value per share
$
15.33

 
$
15.23







TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Statements of Operations
 
Three Months
Ended
 
Three Months
Ended
 
Nine Months Ended
 
Nine Months Ended
 
September 30,
2016
 
September 30,
2015
 
September 30,
2016
 
September 30,
2015
Investment income:
 
 
 
 
 
 
 
Interest income:
 
 
 
 
 
 
 
Non-Control / Non-Affiliate investments
$
17,270,300

 
$
18,051,486

 
$
52,938,976

 
$
51,993,071

Affiliate investments
3,380,867

 
4,294,512

 
10,121,974

 
12,685,241

Control investments
303,708

 
248,609

 
764,622

 
298,090

Total interest income
20,954,875

 
22,594,607

 
63,825,572

 
64,976,402

Dividend income:
 
 
 
 
 
 
 
Non-Control / Non-Affiliate investments
167,468

 
259,431

 
(1,030,703
)
 
1,893,825

Affiliate investments
244,233

 
323,291

 
706,495

 
860,913

Control investments
—

 
—

 
300,000

 
—

Total dividend income
411,701

 
582,722

 
(24,208
)
 
2,754,738

Fee and other income:
 
 
 
 
 
 
 
Non-Control / Non-Affiliate investments
1,585,403

 
3,308,427

 
5,662,081

 
7,380,865

Affiliate investments
319,289

 
337,343

 
855,855

 
2,334,396

Control investments
110,000

 
100,000

 
310,000

 
300,000

Total fee and other income
2,014,692

 
3,745,770

 
6,827,936

 
10,015,261

Payment-in-kind interest income:
 
 
 
 
 
 
 
Non-Control / Non-Affiliate investments
2,719,831

 
2,735,701

 
8,373,124

 
8,077,552

Affiliate investments
1,175,899

 
1,126,244

 
3,259,634

 
3,445,253

Total payment-in-kind interest income
3,895,730

 
3,861,945

 
11,632,758

 
11,522,805

Interest income from cash and cash equivalents
135,459

 
58,401

 
228,129

 
178,713

Total investment income
27,412,457

 
30,843,445

 
82,490,187

 
89,447,919

Operating expenses:
 
 
 
 
 
 
 
Interest and other financing fees
6,757,718

 
6,561,298

 
20,040,942

 
20,319,093

Compensation expenses
3,963,797

 
4,951,026

 
17,510,762

 
13,876,141

General and administrative expenses
859,785

 
813,125

 
3,170,330

 
2,798,925

Total operating expenses
11,581,300

 
12,325,449

 
40,722,034

 
36,994,159

Net investment income
15,831,157

 
18,517,996

 
41,768,153

 
52,453,760

Realized and unrealized gains (losses) on investments and foreign currency borrowings:
 
 
 
 
 
 
 
Net realized gains (losses):
 
 
 
 
 
 
 
Non-Control / Non-Affiliate investments
(11,213,561
)
 
2,331,742

 
(5,007,647
)
 
8,746,844

Affiliate investments
2,106

 
(503,907
)
 
(1,680,198
)
 
(237,399
)
Control investments
—

 
(18,323,508
)
 
—

 
(38,807,152
)
Net realized gains (losses)
(11,211,455
)
 
(16,495,673
)
 
(6,687,845
)
 
(30,297,707
)
Net unrealized appreciation (depreciation):
 
 
 
 
 
 
 
Investments
2,881,131

 
14,375,221

 
(7,564,510
)
 
15,441,528

Foreign currency borrowings
342,409

 
1,081,391

 
(569,382
)
 
1,942,776

Net unrealized appreciation (depreciation)
3,223,540

 
15,456,612

 
(8,133,892
)
 
17,384,304

Net realized and unrealized losses on investments and foreign currency borrowings
(7,987,915
)
 
(1,039,061
)
 
(14,821,737
)
 
(12,913,403
)
Loss on extinguishment of debt
—

 
—

 
—

 
(1,394,017
)
Tax benefit
36,431

 
393,437

 
47,342

 
255,562

Net increase in net assets resulting from operations
$
7,879,673

 
$
17,872,372

 
$
26,993,758

 
$
38,401,902

Net investment income per share—basic and diluted
$
0.42

 
$
0.56

 
$
1.19

 
$
1.58

Net increase in net assets resulting from operations per share—basic and diluted
$
0.21

 
$
0.54

 
$
0.77

 
$
1.16

Dividends/distributions per share:
 
 
 
 
 
 
 
Regular quarterly dividends/distributions
$
0.45

 
$
0.54

 
$
1.44

 
$
1.62

Supplemental dividends/distributions
—

 
0.05

 
—

 
0.15

Total dividends/distributions per share
$
0.45

 
$
0.59

 
$
1.44

 
$
1.77

Weighted average shares outstanding—basic and diluted
38,115,449

 
33,274,586

 
35,199,704

 
33,203,414






TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Statements of Cash Flows 
 
Nine Months Ended
 
Nine Months Ended
 
September 30, 2016
 
September 30, 2015
Cash flows from operating activities:
 
 
 
Net increase in net assets resulting from operations
$
26,993,758

 
$
38,401,902

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:
 
 
 
Purchases of portfolio investments
(163,867,651
)
 
(352,445,028
)
Repayments received/sales of portfolio investments
182,153,894

 
261,002,599

Loan origination and other fees received
3,205,460

 
5,741,331

Net realized loss on investments
6,687,845

 
30,297,707

Net unrealized depreciation (appreciation) on investments
9,525,827

 
(18,127,974
)
Net unrealized depreciation (appreciation) on foreign currency borrowings
569,382

 
(1,942,776
)
Deferred income taxes
(1,961,317
)
 
2,686,444

Payment-in-kind interest accrued, net of payments received
(4,177,550
)
 
(2,084,305
)
Amortization of deferred financing fees
1,644,826

 
1,636,224

Loss on extinguishment of debt
—

 
1,394,017

Accretion of loan origination and other fees
(3,676,003
)
 
(4,897,834
)
Accretion of loan discounts
(307,081
)
 
(362,424
)
Accretion of discount on SBA-guaranteed debentures payable
31,899

 
140,185

Depreciation expense
52,369

 
44,552

Stock-based compensation
7,502,500

 
5,200,761

Changes in operating assets and liabilities:
 
 
 
Interest, fees and other receivables
(2,074,332
)
 
1,823,785

Prepaid expenses and other current assets
(743,114
)
 
(538,708
)
Accounts payable and accrued liabilities
(2,827,297
)
 
(1,847,069
)
Interest payable
(2,176,980
)
 
(2,098,783
)
Taxes payable
(735,498
)
 
(2,451,879
)
Net cash provided by (used in) operating activities
55,820,937

 
(38,427,273
)
Cash flows from investing activities:
 
 
 
Purchases of property and equipment
(69,177
)
 
(55,035
)
Net cash used in investing activities
(69,177
)
 
(55,035
)
Cash flows from financing activities:
 
 
 
Borrowings under SBA-guaranteed debentures payable
32,800,000

 
—

Repayments of SBA-guaranteed debentures payable
(7,800,000
)
 
—

Borrowings under credit facility
68,901,849

 
174,000,000

Repayments of credit facility
(109,300,000
)
 
(114,000,000
)
Proceeds from notes
—

 
83,372,640

Redemption of notes
—

 
(69,000,000
)
Financing fees paid
(1,123,400
)
 
(2,919,436
)
Net proceeds (expenses) related to public offering of common stock
129,136,296

 
(54,967
)
Common stock withheld for payroll taxes upon vesting of restricted stock
(3,581,872
)
 
(2,497,712
)
Cash dividends/distributions paid
(49,063,228
)
 
(56,142,936
)
Net cash provided by financing activities
59,969,645

 
12,757,589

Net increase (decrease) in cash and cash equivalents
115,721,405

 
(25,724,719
)
Cash and cash equivalents, beginning of period
52,615,418

 
78,759,026

Cash and cash equivalents, end of period
$
168,336,823

 
$
53,034,307

Supplemental disclosure of cash flow information:
 
 
 
Cash paid for interest
$
19,929,857

 
$
19,798,265

Summary of non-cash financing transactions:
 
 
 
Dividends/distributions paid through DRIP share issuances
$
2,325,971

 
$
2,676,433