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.
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
MonthsEndedSeptember 30,
2016 |
|
Three
MonthsEndedSeptember 30,
2015 |
|
Nine Months EndedSeptember
30, 2016 |
|
Nine Months EndedSeptember
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 |
|
|
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 Corp. (delisted) (NYSE:TCAP)
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From Mar 2024 to Apr 2024
Triangle Capital Corp. (delisted) (NYSE:TCAP)
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From Apr 2023 to Apr 2024