NEW YORK, Nov. 9, 2015 /PRNewswire/ -- Alcentra Capital
Corporation (NASDAQ: ABDC) ("Alcentra" or the "Company"), a
provider of customized debt and equity financing solutions
primarily to lower middle-market companies based in the United States, today announced its
financial results for the third quarter ended September 30, 2015.
Third Quarter 2015 Financial Highlights
- Total investment income of $8.5
million
- Net investment income of $5.1
million, or $0.38 per
share
- Adjusted net investment income of $4.7
million, or $0.348 per
share(1)
- Net increase in net assets resulting from operations of
$3.2 million, or $0.24 per share
- Invested $21.2 million in debt
and equity securities, including investments in two new portfolio
companies
- Received proceeds from repayments and amortizations of
$15.8 million
- Paid regular quarterly dividend of $0.34 per share on October
6, 2015
- Net asset value (NAV) of $201.7
million, or $14.92 per share,
as of September 30, 2015, which is
down slightly from the prior quarter, but up from $14.63 at the time of the IPO.
- Weighted Average Portfolio Leverage – 3.70x, which is a slight
increase from the prior quarter
- Weighted Average Portfolio Yield – 12.2%, up from 12.1% in the
prior quarter
Management Commentary
"Our third quarter results demonstrate our focus on managing the
portfolio for yield at a time when capital is relatively fixed. The
yield on new investments has been higher than the yield on redeemed
investments for the 2nd and 3rd quarters. Net originations were
moderately up, but we had a few deals close in the first week after
the close of the quarter which could have easily closed in the
September period.
We have previously stated that the M&A market would benefit
our portfolio, and we have seen that in the announced sale of
HealthFusion to Quality Systems Inc. (NASDAQ: "QSII") for
$165 million of cash consideration
plus potential additional contingent consideration of up to
$25 million. HealthFusion is a
privately held developer of web-based cloud computing software for
physicians, hospitals and medical billing services.
In addition, Cologix, Inc. announced the purchase of Net Access
LLC in a transaction expected to close before year-end. The
sale of Net Access will produce a gain on our investment and allow
us to reduce the equity weighting in the portfolio towards our
stated goal of 10% - 15%.
We expect more M&A activity to occur in our portfolio over
the next six-to nine months".
(1) Supplemental information regarding adjusted net
investment income:
On a supplemental basis, we provide information relating to
adjusted net investment income, which is a non-GAAP measure. This
measure is provided in addition to, but not as a substitute for,
net investment income. Adjusted net investment income represents
net investment income excluding any capital gains incentive fee
expense or (reversal) attributable to realized and unrealized gains
and losses. The management agreement with our advisor provides that
a capital gains incentive fee is determined and paid annually with
respect to cumulative realized capital gains (but not unrealized
capital gains) to the extent such realized capital gains exceed
realized and unrealized losses. In addition, we accrue, but do not
pay, a capital gains incentive fee in connection with any
unrealized capital appreciation, as appropriate. As such, we
believe that adjusted net investment income is a useful indicator
of operations exclusive of any capital gains incentive fee expense
or (reversal) attributable to realized and unrealized gains and
losses. The presentation of this additional information is not
meant to be considered in isolation or as a substitute for
financial results prepared in accordance with GAAP. Reconciliations
of net investment income to adjusted net investment income are set
forth in Schedule 1.
Third Quarter 2015 Financial Results
For the three months ended September 30,
2015, total investment income was $8.507 million. This is flat from last quarter
mainly due to timing of repayments and deployment of capital.
Interest and PIK income comprised $8.032
million and other income comprised $0.475 million of which prepayment fee income was
approximately $0.387 for the quarter
ended September 30, 2015.
For the three months ended September 30,
2015, total expenses were $3.365
million. Interest and financing expenses for the three
months ended September 30, 2015 was
$1.427 million and the base
management fee was $1.274 million.
The income based incentive fee for the three months ended
September 30, 2015 was $0.546 million and the capital gains incentive
fee accrual was $(0.434) million. The
administrative service fee, professional fees and other general and
administrative expenses totaled $0.552
million for the three months ended September 30, 2015.
Net investment income for the three months ended September 30, 2015 was $5.142 million ($0.38 per share).
During the three months ended September
30, 2015, we recorded a net change in unrealized
depreciation on investments of $3.228
million.
Alcentra Capital Corporation's net increase in net assets
resulting from operations during the three months September 30, 2015, was $3.254 million, or $0.24 per share.
Per share results for the second quarter ended September 30, 2015 are based on shares
outstanding of 13.516 million.
Portfolio and Investment Activities
As of September 30, 2015, Alcentra
had debt and equity investments in 29 portfolio companies with a
total fair value of $288.9 million.
The average portfolio investment on a cost basis was $9.9 million and equity constitutes 20.0% of the
portfolio, which is down from 28% at the time of the IPO. During
the third quarter ended September 30,
2015, Alcentra made investments of $21.23 million, including investments in two new
portfolio companies and received proceeds from repayments and
amortizations of investments of $15.8
million. As of September 30,
2015, the weighted average yield on debt investments was
12.2%, which was an increase in the weighted average yield from the
June 30, 2015 reporting period of
12.1%.
Third quarter 2015 investment activity included the following
new portfolio company investments:
- PharmaLogic Holdings, LLC operates specialty nuclear pharmacies
throughout rural and suburban areas in the United States. Alcentra invested
$15.5 million in subordinated notes
on September 1, 2015
- Graco Supply Company is a leading value-added distributor of
chemical products, packaging services, and related supply chain and
vendor managed inventory services for the manufacture and
maintenance, repair and overhaul of commercial and military
aircraft. Alcentra provided capital on September 17, 2015.
Alcentra had no investments on non-accrual status as of
September 30, 2015.
Liquidity and Capital Resources
At September 30, 2015, Alcentra
had $11.4 million in cash and cash
equivalents. The cash balance was larger than normal in
anticipation of funding one to two investments whose closing was
then pushed into October. Alcentra had $52.6 million of borrowings outstanding on its
$135 million senior secured revolving
credit facility and $40.0 million
outstanding of Alcentra Capital Internotes as of September 30, 2015.
Subsequent Events
- On October 15, 2015, Alcentra
funded a $5,500,000 investment in
Xpress Global Systems, LLC (13.5% 2nd Lien).
- On October 15, 2015, Stancor
repaid a portion of its debt in the amount of $1,028,364.
- On October 16, 2015, Alcentra
funded an $8,225,000 investment in
NTI Holdings, LLC (9% Unitranche and equity).
- On October 20, 2015, Alcentra
amended the terms of its deal with My Alarm Company from 16.25%
subordinated debt to 12% 2nd Lien Debt and extended the
maturity to July 2019.
- On October 20, 2015, Cologix,
Inc. announced the purchase of Net Access LLC, an existing
portfolio company. Alcentra's investment consists of equity. We
expect the transaction to close before year-end.
- On October 30, 2015, Alcentra
funded an additional $2,000,000
million to Alpine, an existing portfolio company.
- On October 30, 2015, Quality
Systems, Inc. announced an agreement to acquire Health Fusion
Holdings, Inc. for $165 million plus
potential additional contingent consideration of up to $25 million. Health Fusion is an existing
portfolio company and Alcentra's investment consists of
$5,923,000 of 1st lien
debt and 1.79% of warrants. We expect the transaction to close
before year-end.
Fourth Quarter 2015 Dividend of $0.34 Per Share Declared
On November 5, 2015, the Company's
Board of Directors declared a regular quarterly dividend of
$0.34 per share for the fourth
quarter of 2015 payable on January 7,
2016 to stockholders of record as of December 31, 2015.
Alcentra 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 at least three days prior to the
dividend payment date will have their cash dividends automatically
reinvested in additional shares of the Company's common stock.
Those stockholders whose shares are held by a broker or other
financial intermediary may receive dividends in cash by notifying
their broker or other financial intermediary of their election.
Third Quarter 2015 Financial Results Conference Call
Management will host a conference call to discuss the operating
and financial results at 11:00 am ET
on Tuesday, November 10, 2015. To
participate in the conference call, please dial (844) 832-0218
approximately 10 minutes prior to the call. International callers
should dial (484) 756-4314. Please reference conference ID #
74817751.
A live webcast of the conference call will be available at
http://investors.alcentracapital.com/events-presentations. Please
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 10, 2016.
ABOUT ALCENTRA CAPITAL CORPORATION
Alcentra Capital Corporation provides customized debt and equity
financing solutions to lower middle-market companies, which the
Company generally defines as U.S. based companies having revenues
between $10.0 million and $100.0
million. Alcentra' investment objective is to provide
attractive risk-adjusted returns by generating both current income
from our debt investments and capital appreciation from our equity
related investments. Alcentra seeks to partner with business
owners, management teams and financial sponsors by providing
customized financing for change of ownership transactions,
recapitalizations, strategic acquisitions, business expansion and
other growth initiatives.
Alcentra is an externally managed, closed-end, non-diversified
management investment company that has elected to be treated as a
business development company under the Investment Company Act of
1940, as amended. In addition, for tax purposes, Alcentra has
elected to be treated as a regulated investment company, or RIC,
under Subchapter M of the Internal Revenue Code of 1986, as
amended, or the Code.
FORWARD-LOOKING STATEMENTS
This press release may contain certain forward-looking
statements. Any such statements, other than statements of
historical fact, are based on management's current expectations,
estimates, projections, beliefs and assumptions about the Company,
its current and prospective portfolio investments, and its
industry. These statements are not guarantees of future performance
and are subject to risks, uncertainties and other factors, some of
which are beyond the Company's control, difficult to predict and
could cause actual results to differ materially from those expected
or forecasted in such forward-looking statements. Actual
developments and results are likely to vary materially from these
estimates and projections as a result of a number of factors,
including those described from time to time in Alcentra' filings
with the Securities and Exchange Commission. Such statements speak
only as of the time when made, and Alcentra undertakes no
obligation to update any such forward-looking statements, whether
as a result of new information, future events, or otherwise, except
as required by law.
|
Alcentra Capital
Corporation and Subsidiary
|
|
|
|
|
Consolidated
Statements of Assets and Liabilities
|
|
|
|
|
|
As
of
September 30,
2015
(Unaudited)
|
|
|
As
of
December
31,
2014
|
|
|
Assets
|
|
|
Portfolio
investments, at fair value
|
|
|
Non-controlled,
non-affiliated investments, at fair value (cost of $194,158,069 and
$165,921,535, respectively)
|
|
$
|
194,281,248
|
|
$
|
167,325,100
|
|
Non-controlled,
affiliated investments, at fair value (cost of $63,745,820 and
$61,564,299, respectively)
|
|
|
67,237,740
|
|
|
61,253,192
|
|
Controlled,
affiliated investments, at fair value (cost $27,215,471 and
$26,596,938, respectively)
|
|
|
27,417,562
|
|
|
30,055,562
|
|
Total of portfolio
investments, at fair value (cost $285,119,360 and $254,082,772,
respectively)
|
|
|
288,936,550
|
|
|
258,633,854
|
|
Cash
|
|
|
11,472,602
|
|
|
10,022,617
|
|
Dividends and
interest receivable
|
|
|
2,184,610
|
|
|
1,417,500
|
|
Receivable for
investments sold
|
|
|
—
|
|
|
4,753
|
|
Deferred financing
costs
|
|
|
2,187,410
|
|
|
1,986,520
|
|
Deferred note
offering costs
|
|
|
1,031,906
|
|
|
25,743
|
|
Prepaid expenses and
other assets
|
|
|
189,274
|
|
|
128,388
|
|
Total
Assets
|
|
$
|
306,002,352
|
|
$
|
272,219,375
|
|
|
|
Liabilities
|
|
|
Credit facility
payable
|
|
$
|
52,654,738
|
|
$
|
62,499,154
|
|
Notes
payable
|
|
|
40,000,000
|
|
|
—
|
|
Payable for
investments purchased
|
|
|
—
|
|
|
8,717
|
|
Other accrued
expenses and liabilities
|
|
|
362,462
|
|
|
539,417
|
|
Directors' fees
payable
|
|
|
36,500
|
|
|
85,692
|
|
Professional fees
payable
|
|
|
330,927
|
|
|
409,628
|
|
Interest and credit
facility expense payable
|
|
|
1,244,429
|
|
|
216,476
|
|
Management fee
payable
|
|
|
1,273,705
|
|
|
615,668
|
|
Income-based
incentive fees payable
|
|
|
1,749,155
|
|
|
—
|
|
Distributions
payable
|
|
|
4,595,700
|
|
|
4,595,700
|
|
Unearned structuring
fee revenue
|
|
|
856,612
|
|
|
517,339
|
|
Income tax
liability
|
|
|
187,269
|
|
|
45,272
|
|
Deferred tax
liability
|
|
|
977,183
|
|
|
1,697,004
|
|
Total
Liabilities
|
|
|
104,268,680
|
|
|
71,230,067
|
|
|
|
Commitments and
Contingencies (Note 13)
|
|
|
|
|
Net
Assets
|
|
|
Common stock, par
value $0.001 per share (100,000,000 shares authorized, 13,516,766
and 13,516,766 shares issued and outstanding,
respectively)
|
|
|
13,517
|
|
|
13,517
|
|
Additional paid-in
capital
|
|
|
197,709,624
|
|
|
197,838,155
|
|
Accumulated net
realized gain (loss)
|
|
|
169,263
|
|
|
71,712
|
|
Undistributed net
investment income
|
|
|
1,193,312
|
|
|
211,846
|
|
Net unrealized
appreciation (depreciation) on investments, net of provision for
taxes of $1,169,234 and $1,697,004 as of September 30, 2015 and
December 31, 2014, respectively
|
|
|
2,647,956
|
|
|
2,854,078
|
|
Total Net
Assets
|
|
|
201,733,672
|
|
|
200,989,308
|
|
Total Liabilities
and Net Assets
|
|
$
|
306,002,352
|
|
$
|
272,219,375
|
|
|
|
Net Asset Value Per
Share
|
|
$
|
14.92
|
|
$
|
14.87
|
|
Alcentra Capital
Corporation and Subsidiary
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alcentra Capital
Corporation and Subsidiary
|
|
Alcentra Capital
Corporation and Subsidiary
|
|
Alcentra Capital
Corporation and Subsidiary
|
|
BNY
Mellon-Alcentra Mezzanine III, L.P.
|
|
Alcentra Capital
Corporation and Subsidiary
|
|
For the three
months ended
September 30, 2015
(Unaudited)
|
|
For the three
months ended
September 30, 2014
(Unaudited)
|
|
For the nine
months ended
September 30, 2015
(Unaudited)
|
|
For the period
from January
1, 2014
through May
7, 2014
(Unaudited)
|
|
For the period
from May 8,
2014 through
September 30, 2014
(Unaudited)
|
|
Investment
Income:
|
|
|
|
|
|
|
|
|
|
From non-controlled,
non-affiliated investments:
|
|
|
|
|
|
|
|
|
|
|
Interest income from
portfolio investments
|
$
5,133,259
|
|
$
2,000,127
|
|
$
13,577,787
|
|
$
2,335,475
|
|
$
3,695,002
|
|
Paid-in-kind interest
income from portfolio investments
|
439,608
|
|
142,614
|
|
2,341,772
|
|
569,637
|
|
611,686
|
|
Other income from
portfolio investments
|
452,038
|
|
882,879
|
|
1,407,320
|
|
649,961
|
|
882,879
|
|
Dividend income from
portfolio investments
|
—
|
|
374,660
|
|
302,874
|
|
251,752
|
|
374,660
|
|
From non-controlled,
affiliated investments:
|
|
|
|
|
|
|
|
|
|
|
Interest income from
portfolio investments
|
1,001,296
|
|
968,009
|
|
3,209,301
|
|
1,089,807
|
|
1,542,931
|
|
Paid in-kind income
from portfolio investments
|
655,205
|
|
411,491
|
|
1,897,750
|
|
341,850
|
|
664,379
|
|
Other income from
portfolio investments
|
23,435
|
|
947
|
|
72,320
|
|
788,083
|
|
947
|
|
From controlled,
affiliated investments:
|
|
|
|
|
|
|
|
|
|
|
Interest income from
portfolio investments
|
588,627
|
|
698,620
|
|
1,746,836
|
|
769,953
|
|
1,157,492
|
|
Paid in-kind income
from portfolio investments
|
213,674
|
|
209,415
|
|
618,532
|
|
521,321
|
|
393,410
|
|
Other income from
portfolio investments
|
—
|
|
172,425
|
|
64,843
|
|
444,055
|
|
172,425
|
|
Total investment
income
|
8,507,142
|
|
5,861,187
|
|
25,239,335
|
|
7,761,894
|
|
9,495,811
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Management
fees
|
1,273,705
|
|
925,477
|
|
3,641,673
|
|
699,473
|
|
1,450,025
|
|
Income-based
incentive fees
|
546,027
|
|
—
|
|
1,749,155
|
|
—
|
|
—
|
|
Capital gains
incentive fees
|
(434,217)
|
|
763,550
|
|
1,001,467
|
|
—
|
|
763,550
|
|
Professional
fees
|
167,356
|
|
141,252
|
|
527,291
|
|
84,642
|
|
224,822
|
|
Valuation
services
|
89,822
|
|
—
|
|
312,737
|
|
—
|
|
162,700
|
|
Interest and credit
facility expense
|
1,197,553
|
|
376,569
|
|
2,870,559
|
|
50,214
|
|
595,924
|
|
Amortization of
deferred financing costs
|
229,716
|
|
123,905
|
|
608,973
|
|
—
|
|
194,683
|
|
Directors'
fees
|
57,635
|
|
26,916
|
|
171,826
|
|
—
|
|
106,916
|
|
Insurance
expense
|
67,449
|
|
—
|
|
204,990
|
|
—
|
|
—
|
|
Organization
expenses
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Other
expenses
|
170,052
|
|
281,937
|
|
383,564
|
|
7
|
|
320,983
|
|
Total
expenses
|
3,365,098
|
|
2,639,606
|
|
11,472,235
|
|
834,336
|
|
3,819,603
|
|
Waiver of capital
gains incentive fees
|
—
|
|
(610,568)
|
|
—
|
|
—
|
|
(610,568)
|
|
Waiver of
income-based incentive fees
|
—
|
|
(763,550)
|
|
(1,001,467)
|
|
—
|
|
(763,550)
|
|
Net
expenses
|
3,365,098
|
|
1,265,488
|
|
10,470,768
|
|
834,336
|
|
2,445,485
|
|
Net investment
income
|
5,142,044
|
|
4,595,699
|
|
14,768,567
|
|
6,927,558
|
|
7,050,326
|
|
|
|
|
|
|
|
|
|
|
|
Realized Gain
(Loss) and Net Change in Unrealized Appreciation (Depreciation)
From Portfolio Investments
|
|
|
|
|
|
|
|
|
|
|
Net realized gain
(loss) on:
|
|
|
|
|
|
|
|
|
|
|
Non-controlled,
non-affiliated investments
|
244,000
|
|
17,875
|
|
97,551
|
|
51,961
|
|
17,875
|
|
Non-controlled,
affiliated investments
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Controlled,
affiliated investments
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Net realized gain
(loss) from portfolio investments
|
244,000
|
|
17,875
|
|
97,551
|
|
51,961
|
|
17,875
|
|
Net change in
unrealized appreciation (depreciation) on:
|
|
|
|
|
|
|
|
|
|
|
Non-controlled,
non-affiliated investments
|
(744,397)
|
|
870,554
|
|
(1,280,386)
|
|
2,974,591
|
|
818,361
|
|
Non-controlled,
affiliated investments
|
390,429
|
|
1,118,082
|
|
3,803,027
|
|
—
|
|
968,571
|
|
Controlled,
affiliated investments
|
(2,874,502)
|
|
1,299,642
|
|
(3,256,533)
|
|
—
|
|
2,833,819
|
|
Net change in
unrealized appreciation (depreciation) from portfolio
investments
|
(3,228,470)
|
|
3,288,278
|
|
(733,892)
|
|
2,974,591
|
|
4,620,751
|
|
Benefit/(Provision) for taxes on unrealized gain
on investments
|
1,096,875
|
|
—
|
|
527,770
|
|
—
|
|
—
|
|
Net realized gain
(loss) and net change in unrealized appreciation (depreciation)
from portfolio investments
|
(1,887,595)
|
|
3,306,153
|
|
(108,571)
|
|
3,026,552
|
|
4,638,626
|
|
Net Increase in
Net Assets Resulting from Operations
|
$
3,254,449
|
|
$
7,901,852
|
|
$
14,659,996
|
|
$
9,954,110
|
|
$
11,688,952
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted:
|
|
|
|
|
|
|
|
|
|
|
Net investment income
per share
|
$
0.38
|
|
$
0.34
|
|
$1.09
|
|
N.A.
|
|
$0.52
|
|
Earnings per
share
|
$
0.24
|
|
$
0.58
|
|
$1.08
|
|
N.A.
|
|
$0.86
|
|
Weighted Average
Shares of Common Stock Outstanding
|
13,516,766
|
|
13,516,766
|
|
13,516,766
|
|
N.A.
|
|
13,516,766
|
|
Dividends declared
per common share
|
$
0.34
|
|
$
0.34
|
|
$1.02
|
|
N.A.
|
|
$0.518
|
Schedule 1
Supplemental Information Regarding Adjusted Net
Investment Income
On a supplemental basis, we provide information relating
to adjusted net investment income, which is a non-GAAP measure.
This measure is provided in addition to, but not as a substitute
for, net investment income. Adjusted net investment income
represents net investment income excluding any capital gains
incentive fee expense or (reversal) attributable to realized and
unrealized gains and losses. The management agreement with our
advisor provides that a capital gains incentive fee is determined
and paid annually with respect to cumulative realized capital gains
(but not unrealized capital gains) to the extent such realized
capital gains exceed realized and unrealized losses for such year.
In addition, we accrue, but do not pay, a capital gains incentive
fee in connection with any unrealized capital appreciation, as
appropriate. As such, we believe that adjusted net investment
income is a useful indicator of operations exclusive of any capital
gains incentive fee expense or (reversal) attributable to realized
and unrealized gains and losses. The presentation of this
additional information is not meant to be considered in isolation
or as a substitute for financial results prepared in accordance
with GAAP. The following table provides a reconciliation of net
investment income to adjusted net investment income for the three
and nine months ended September 30,
2015.
|
($ in
thousands)
|
|
($ in
thousands)
|
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
|
(unaudited)
|
|
(unaudited)
|
|
2015
|
|
2015
|
|
Net investment
income
|
$5,142
|
|
$14,768
|
|
Capital gains
incentive fee (reversal) expense
|
(434)
|
|
0
|
|
Adjusted net
investment income
|
$4,708
|
|
$14,768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in
thousands)
|
|
($ in
thousands)
|
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
|
(unaudited)
|
|
(unaudited)
|
|
2015
|
|
2015
|
|
Net investment
income
|
$0.38
|
|
$1.09
|
|
Capital gains
incentive fee (reversal) expense
|
($0.03)
|
|
$0.00
|
|
Adjusted net
investment income
|
$0.35
|
|
$1.09
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/alcentra-capital-corporation-announces-third-quarter-2015-financial-results-and-announces-quarterly-dividend-of-034-per-share-300175311.html
SOURCE Alcentra Capital Corporation