TICC Announces Results of Operations for the Quarter Ended September 30, 2012 and Quarterly Distribution of $0.29 per share

Marketwired

GREENWICH, CT--(Marketwire - Nov 7, 2012) - TICC Capital Corp. (NASDAQ: TICC) announced today its financial results for the quarter ended September 30, 2012 and a distribution of $0.29 per share for the fourth quarter of 2012.

HIGHLIGHTS

  • Total investment income for the third quarter of 2012 amounted to approximately $15.6 million, down approximately 23.8% from the second quarter of 2012 due largely to the non-recurrence of a one-time fee of $3.4 million earned during the second quarter of 2012 as well as lower interest income in the third quarter.

  • For the quarter ended September 30, 2012, we recorded net investment income of approximately $4.6 million, or approximately $0.12 per share on a GAAP basis. Excluding the impact of a capital gains incentive fee accrual, our core net investment income(1) was approximately $9.3 million, or approximately $0.24 per share. We also recorded net unrealized appreciation of approximately $21.5 million and net realized capital gains of approximately $1.8 million. In total, we had a net increase in net assets resulting from operations of approximately $27.9 million or $0.71 per share for the third quarter.

    • As of the end of the third quarter of 2012 we held one loan with a fair value of approximately $1.1 million on non-accrual status.
    • Our weighted average credit rating on a fair value basis was 2.2 at the end of the third quarter of 2012 (compared to 2.1 at the end of the second quarter of 2012).

  • Operating expenses before the capital gains incentive fee for the quarter ended September 30, 2012 were approximately $6.3 million, which was down from the second quarter of 2012 by approximately $200,000.

  • The reported capital gains incentive fee expense was approximately $4.6 million for the quarter ended September 30, 2012. The capital gains incentive fee expense, as reported under generally accepted accounting principles, is calculated on the basis of net realized and unrealized gains and losses at the end of each period. The expense related to the hypothetical liquidation of the portfolio (and assuming no other changes in realized or unrealized gains and losses) would only become payable to our investment adviser in the event of a complete liquidation of our portfolio as of period end and the termination of the Investment Advisory Agreement (the "Agreement") on such date. The $5.7 million capital gains incentive fee accrual as of September 30, 2012 relates entirely to this hypothetical liquidation calculation.

    The amount of the capital gains incentive fee which will actually be payable is determined in accordance with the terms of the Agreement and is calculated as of the end of each calendar year (or upon termination of the Agreement). The terms of the Agreement state that the capital gains incentive fee calculation is based on net realized gains, if any, offset by gross unrealized depreciation for the calendar year. No effect is given to gross unrealized appreciation in this calculation.

  • Our Board of Directors has declared a distribution of $0.29 per share for the fourth quarter of 2012.

    • Payable Date: December 31, 2012
    • Record Date: December 17, 2012

  • During the third quarter of 2012, we deployed approximately $128 million in additional investments. For the same period, we received proceeds of approximately $54.3 million from repayments, sales and amortization payments on our debt investments.

  • At September 30, 2012, the weighted average yield of our debt investments was approximately 10.3%, compared with 11.2% at June 30, 2012.

  • At September 30, 2012, net asset value per share was $9.85 compared with the net asset value per share at June 30, 2012 of $9.47.

  • On August 23, 2012, we closed a $160 million debt securitization transaction, consisting of $120 million of secured notes and $40 million in subordinated notes. The secured notes were issued in four classes. The class A-1 notes have an initial face amount of $88 million, are rated AAA(sf)/Aaa(sf) by Standard & Poor's Ratings Services (S&P) and Moody's Investors Service, Inc. (Moody's), respectively, and bear interest at three-month LIBOR plus 1.75%. The class B-1 notes have an initial face amount of $10 million, are rated AA(sf)/Aa2(sf) by S&P and Moody's, respectively, and bear interest at three-month LIBOR plus 3.50%. The class C-1 notes have an initial face amount of $11.5 million, are rated A(sf)/A2(sf) by S&P and Moody's, respectively, and bear interest at three-month LIBOR plus 4.75%. The class D-1 notes have an initial face amount of $10.5 million, are rated BBB(sf)/Baa2(sf) by S&P and Moody's, respectively, and bear interest at three-month LIBOR plus 5.75%. TICC presently owns all of the subordinated notes and $3.0 million of the class D-1 notes issued in the CLO transaction. The secured notes have a stated maturity date of August 25, 2023 and are subject to a two year non-call period. The CLO has a four year reinvestment period.

  • On September 26, 2012, we closed a private placement of 5-year unsecured 7.50% Senior Convertible Notes Due 2017 (the "Notes"). A total of $105 million aggregate principal amount of the Notes were issued at the closing.

    • The Notes are convertible into shares of our common stock based on an initial conversion rate of 87.2448 shares of our common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $11.46 per share of common stock, representing an approximately 10.0% conversion premium over the last reported sale price of our common stock at the time of issuance on September 20, 2012, which was $10.42 per share. The conversion price for the Notes will be reduced for quarterly cash dividends paid to common shares to the extent that the quarterly dividend exceeds $0.29 per share, subject to adjustment.

    • The Notes bear interest at an annual rate of 7.50%, payable semiannually in arrears on May 1 and November 1 of each year, beginning May 1, 2013. The Notes will mature on November 1, 2017, unless previously converted in accordance with their terms. The Notes are general unsecured obligations of TICC, rank equally in right of payment with TICC's future senior unsecured debt, and will rank senior in right of payment to any potential subordinated debt, should any be issued in the future.

  • On October 22, 2012, we announced that we issued an additional $10 million aggregate principal amount of the Notes pursuant to the exercise of the initial purchasers' option.


(1) Supplemental Information Regarding Core Net Investment Income and Core Net Increase in Net Assets Resulting from Operations

On a supplemental basis, we provide information relating to core net investment income and core net increase in net assets resulting from operations, non-GAAP measures. These measures are provided in addition to, but not a substitute for, net investment income and net increase in net assets resulting from operations. Core net investment income represents net investment income excluding our capital gains incentive fee. Core net increase in net assets resulting from operations represents net increase in net assets resulting from operations excluding the capital gains incentive fee. As the capital gains incentive fee is based on a hypothetical event that did not occur, we believe that core net investment income and core net increase in net assets resulting from operations are useful indicators of non- hypothetical transactions during this period.

The following table provides a reconciliation of net investment income to core net investment income (for the three and nine months ended September 30, 2012):

         
         
    Three Months Ended
September 30, 2012
  Nine Months Ended
September 30, 2012
    Amount   Per Share
Amounts
  Amount   Per Share
Amounts
Net investment income   $ 4,607,574   $ 0.117   $ 27,799,570   $ 0.754
Capital gains incentive fee     4,649,814   $ 0.118     4,559,957   $ 0.124
Core net investment income   $ 9,257,388   $ 0.235   $ 32,359,527   $ 0.878
                         
                         

We will host a conference call to discuss our third quarter results on Wednesday, November 7 at 10:00 AM ET. Please call 1-877-317-6789 to participate. A replay of the conference call will be available for approximately 30 days. The replay number is 1-877-344-7529, and the replay passcode is 10020948.

The following financial statements are unaudited and without footnotes. Readers who would like additional information should obtain our Form 10-K for the period ended December 31, 2011, and subsequent reports on Form 10-Q as they are filed.

 
 
TICC CAPITAL CORP.
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
 
   
    September 30, 2012     December 31, 2011  
                 
ASSETS                
                 
  Non-affiliated/non-control investments (cost: $495,670,473 @ 9/30/12; $372,091,255 @ 12/31/11)   $ 521,247,939     $ 375,793,839  
  Control investments (cost: $17,239,639 @ 9/30/12; $17,434,371 @ 12/31/11)     16,450,000       15,675,000  
    Total investments at fair value     537,697,939       391,468,839  
  Cash and cash equivalents     122,905,470       4,494,793  
  Restricted cash     96,729,990       23,183,698  
  Deferred debt issuance costs     8,182,726       2,895,873  
  Interest and distributions receivable     4,497,012       1,837,882  
  Securities sold not settled     503,750       -  
  Other assets     102,138       238,485  
       Total assets   $ 770,619,025     $ 424,119,570  
   
LIABILITIES                
  Notes payable - TICC CLO LLC, net of discount   $ 99,842,691     $ 99,710,826  
  Notes payable - TICC CLO 2012-1 LLC, net of discount     112,600,474       -  
  Convertible senior notes payable     105,000,000       -  
  Accrued interest payable     1,027,631       1,076,113  
  Investment advisory fee payable to affiliate     3,800,311       2,895,799  
  Accrued capital gains incentive fee to affiliate     5,668,706       1,108,749  
  Securities purchased not settled     34,561,217       13,352,500  
  Accrued expenses     1,220,546       873,592  
     Total liabilities     363,721,576       119,017,579  
                 
NET ASSETS                
  Common stock, $0.01 par value, 100,000,000 shares authorized, and 41,312,780 and 32,818,428 issued and outstanding, respectively    
413,128
     
328,184
 
  Capital in excess of par value     452,280,904       376,991,540  
  Net unrealized appreciation on investments     24,787,827       1,943,213  
  Accumulated net realized losses on investments     (66,752,406 )     (70,308,108 )
  Distributions in excess of investment income     (3,832,004 )     (3,852,838 )
    Total net assets     406,897,449       305,101,991  
    Total liabilities and net assets   $ 770,619,025     $ 424,119,570  
Net asset value per common share   $ 9.85     $ 9.30  
                 
                 
   
   
TICC CAPITAL CORP.  
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)  
   
                     
    Three Months
 Ended
September 30, 2012
  Three Months
 Ended
September 30, 2011
    Nine Months
 Ended
September 30, 2012
  Nine Months
 Ended
September 30, 2011
 
                     
INVESTMENT INCOME                            
From non-affiliated/non-control investments:                            
  Interest income - debt investments   $ 8,908,966   $ 7,435,546     $ 27,159,248   $ 21,198,270  
  Distributions from securitization vehicles and equity investments     6,025,634     3,196,002       17,919,415     9,079,259  
  Commitment, amendment fee income and other income     278,613     60,953       4,524,825     506,972  
    Total investment income from non-affiliated/non-control investments     15,213,213     10,692,501       49,603,488     30,784,501  
From control investments:                            
  Interest income - debt investments     377,401     392,449       1,136,010     1,194,871  
  Distributions from equity investments     -     -       62,041     -  
  Total investment income from control investments     377,401     392,449       1,198,051     1,194,871  
    Total investment income     15,590,614     11,084,950       50,801,539     31,979,372  
EXPENSES                            
  Compensation expense     289,361     217,639       839,049     713,491  
  Investment advisory fees     2,796,873     1,942,657       7,390,894     5,218,773  
  Professional fees     420,696     386,087       1,647,733     847,301  
  Interest expense and other debt financing expenses     1,398,975     434,283       3,052,056     434,283  
  General and administrative     423,884     185,833       1,151,363     760,576  
    Total expenses before incentive fees     5,329,789     3,166,499       14,081,095     7,974,424  
  Net investment income incentive fees     1,003,437     455,864       4,360,917     1,444,415  
  Capital gains incentive fees     4,649,814     (4,153,198 )     4,559,957     873,288  
    Total incentive fees     5,653,251     (3,697,334 )     8,920,874     2,317,703  
    Total expenses     10,983,040     (530,835 )     23,001,969     10,292,127  
Net investment income     4,607,574     11,615,785       27,799,570     21,687,245  
Net change in unrealized (depreciation) appreciation on investments     21,471,506     (20,114,242 )     22,844,614     (17,051,762 )
Net realized gains on investments     1,777,564     83,178       3,555,702     2,713,526  
Net increase in net assets resulting from operations   $ 27,856,644   $ (8,415,279 )   $ 54,199,886   $ 7,349,009  
                             
Net increase in net assets resulting from net investment income per common share:                            
      Basic   $ 0.12   $ 0.36     $ 0.75   $ 0.67  
      Diluted   $ 0.12   $ 0.36     $ 0.75   $ 0.67  
Net increase in net assets resulting from operations per common share:                            
      Basic   $ 0.71   $ (0.26 )   $ 1.47   $ 0.23  
      Diluted   $ 0.69   $ (0.26 )   $ 1.45   $ 0.23  
Weighted average shares of common stock outstanding:                            
      Basic     39,383,076     32,672,294       36,859,005     32,327,163  
      Diluted     40,777,815     32,672,294       37,327,312     32,327,163  
                             
                             
   
   
TICC CAPITAL CORP.  
FINANCIAL HIGHLIGHTS (UNAUDITED)  
   
                         
    Three Months Ended
September 30, 2012
(unaudited)
    Three Months Ended
September 30, 2011
(unaudited)
    Nine Months Ended
September 30, 2012
(unaudited)
    Nine Months Ended
September 30, 2011
(unaudited)
 
                                 
Per Share Data                                
Net asset value at beginning of period   $ 9.47     $ 9.85     $ 9.30     $ 9.85  
                                 
Net investment income(1)     0.12       0.36       0.75       0.67  
Net realized and unrealized capital gains     0.59       (0.62 )     0.72       (0.44 )
                                 
Total from net investment operations     0.71       (0.26 )     1.47       0.23  
                                 
Distributions per share from net investment income     (0.29 )     (0.25 )     (0.83 )     (0.74 )
                                 
Distributions based on weighted average share impact     (0.03 )     -       (0.08 )     -  
                                 
Distributions from net realized capital gains     -       -       -       -  
                                 
Tax return of capital distributions     -       -       -       -  
                                 
Total distributions(2)     (0.32 )     (0.25 )     (0.91 )     (0.74 )
                                 
Effect of shares issued, net of offering expenses     (0.01 )     -       (0.01 )     -  
                                 
Net asset value at end of period   $ 9.85     $ 9.34     $ 9.85     $ 9.34  
                                 
Per share market value at beginning of period   $ 9.69     $ 9.60     $ 8.65     $ 11.21  
Per share market value at end of period   $ 10.40     $ 8.17     $ 10.40     $ 8.17  
Total return(3)     10.32 %     (12.29 %)     30.55 %     (21.23 %)
Shares outstanding at end of period     41,312,780       32,745,881       41,312,780       32,745,881  
Ratios/Supplemental Data                                
Net assets at end of period (000's)     406,897       305,801       406,897       305,801  
Average net assets (000's)     374,696       326,988       349,297       321,174  
Ratio of expenses to average net assets:                                
  Expenses before incentive fees(4)     5.69 %     3.87 %     5.37 %     3.31 %
  Net investment income incentive fees(4)     1.07 %     0.56 %     1.67 %     0.60 %
  Capital gains incentive fees(4)     4.96 %     (5.08 )%     1.74 %     0.36 %
                                 
Total ratio of expenses to average net assets(4)     11.72 %     (0.65 %)     8.78 %     4.27 %
                                 
Ratio of expenses, excluding interest expense, to average net assets(4)     10.23 %     (1.18 )%     7.62 %     4.09 %
                                 
Ratio of net investment income to average net assets(4)     4.92 %     14.21 %     10.61 %     9.00 %
                                 
                                 

(1) Represents per share net investment income for the period, based upon average shares outstanding.

(2) Management monitors available taxable earnings, including net investment income and realized capital gains, to determine if a tax return of capital may occur for the year. To the extent the Company's taxable earnings fall below the total amount of the Company's distributions for that fiscal year, a portion of those distributions may be deemed a tax return of capital to the Company's stockholders. The tax character of distributions will be determined at the end of the fiscal year. However, if the character of such distributions were determined as of September 30, 2012, none of the distributions for 2012 would have been characterized as a tax return of capital to the Company's stockholders; this tax return of capital may differ from the return of capital calculated with reference to net investment income for financial reporting purposes.

(3) Total return equals the increase or decrease of ending market value over beginning market value, plus distributions, divided by the beginning market value, assuming dividend reinvestment prices obtained under the Company's dividend reinvestment plan. Total return is not annualized.

(4) Annualized.

About TICC Capital Corp.
TICC Capital Corp. is a publicly-traded business development company principally engaged in providing capital to established small and mid-size companies, investing in syndicated bank loans and purchasing debt and equity tranches of collateralized loan obligations. Companies interested in learning more about financing opportunities should contact Debdeep Maji at (203) 983-5285.

Forward-Looking Statements
This press release contains forward-looking statements subject to the inherent uncertainties in predicting future results and conditions. Any statements that are not statements of historical fact (including statements containing the words "believes," "plans," "anticipates," "expects," "estimates" and similar expressions) should also be considered to be forward-looking statements. Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements. These factors are identified from time to time in our filings with the Securities and Exchange Commission. We undertake no obligation to update such statements to reflect subsequent events.

Contact:

Bruce Rubin
203-983-5280


Patrick Conroy
203-983-5282
View Comments (0)