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Edited Transcript of GARS earnings conference call or presentation 13-Mar-20 3:00pm GMT

Q4 2019 Garrison Capital Inc Earnings Call

New York Mar 23, 2020 (Thomson StreetEvents) -- Edited Transcript of Garrison Capital Inc earnings conference call or presentation Friday, March 13, 2020 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Joseph B. Tansey

Garrison Capital Inc. - Chairman & CEO

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Presentation

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Operator [1]

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Welcome to today's Garrison Capital Inc. Fourth Quarter Ended December 31, 2019, Earnings Call. For the fourth quarter ended December 31, 2019, earnings presentation that we intend to refer to on this earnings call, please visit the Investor Relations link on the homepage of our website, www.garrisoncapitalbdc.com, and click on the fourth quarter ended December 31, 2019, earnings presentation under Upcoming Events.

As more fully described in that presentation, words such as anticipates, believes, expects, intends and similar expressions identify forward-looking statements. Actual results could differ materially from those implied or expressed in our forward-looking statements for any reason, and future results could differ materially from historical performance. You should not rely fully on the matters discussed in today's call as the basis of an investment in Garrison Capital. Please review our publicly available disclosure documents for further information on the risks of an investment in our company. (Operator Instructions)

It is now my pleasure to turn the webcast over to Mr. Joseph Tansey, CEO. You may begin.

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Joseph B. Tansey, Garrison Capital Inc. - Chairman & CEO [2]

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Good morning, everybody, and thank you for joining the call. I'm joined by Brian Chase, our Chief Operating Officer; and Daniel Hahn, our Chief Financial Officer. On Thursday afternoon, we issued a press release that included financial results for the fourth quarter ended December 31, 2019, and also posted the earnings presentation to our website, and we'll be referring to it throughout today's call. We expect to file our Form 10-K results on Monday after the market closes.

Before I begin today, I want to remind you that GARS has retained KBW and is in the midst of a strategic review process. While we are actively working with KBW to explore all options and are committed to taking actions that will maximize shareholder value, we cannot make assure -- any assurances that the company will be able to execute on any of them. As we've previously said, we do not expect to comment further or provide any periodic updates until -- to the market until the company's Board of Directors has approved a specific transaction or otherwise deemed disclosure appropriate or necessary. And I will not be commenting further or answering questions today regarding the strategic review process.

I'll start today by spending a few moments discussing our financial results and portfolio activity during the quarter. Then we provide a few comments on the current market conditions before opening up the lines for Q&A.

We reported fourth quarter net investment income of $0.16 per share, which was slightly higher than our fourth quarter dividend of $0.15 per share. Our NII was offset by net losses of $0.54 per share, resulting in a drop in net asset value to $8.51 per share. These losses were primarily driven by markdowns taken on 6 investments and realized losses from our investments in Gold Coast Bakeries and HRI -- exiting our investments in Gold Coast Bakeries and HRI Holding Corp. Both Gold Coast and HRI were a nonaccrual as of 3Q, bringing the number of nonaccruals down to 2 as of December 31 (inaudible). Finally, the Board declared a dividend of $0.15 per share in the first quarter of 2020 payable on March 31 to shareholders of record as of March 20.

During the fourth quarter, new par additions totaled $12.2 million across 8 portfolio companies, offset by repayments and sales of $64 million across 7 portfolio companies, resulting in a net decrease of $51.8 million. We have used a portion of these net proceeds to repay approximately $40 million of our SBIC debentures in 4Q 2019 and 1Q 2020. We expect to repay the approximately $20 million of debentures remaining over the next 2 quarters and intend to wind up the SBIC entity once the debentures have been repaid.

Now turning to current market conditions. We are seeing significant volatility in both credit and overall markets as a result of the COVID-19 headlines. Although it is too early to determine what the overall impact would be on our underlying portfolio of companies, we are closely monitoring the situation and are in contact with our portfolio companies as the situation continues to develop.

That concludes our prepared remarks for today's call. And with that, I'd like to open up the lines for questions.

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Operator [3]

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(Operator Instructions) There are no questions at this time.

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Joseph B. Tansey, Garrison Capital Inc. - Chairman & CEO [4]

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Okay. That will conclude the call. Thanks, everybody.

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Operator [5]

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Thank you for participating in today's conference call. You may now disconnect.