NEW YORK, Nov. 3, 2016 /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, 2016.
Third Quarter 2016 Financial Highlights
- Total investment income of $9.1
million
- Net investment income of $4.8
million, or $0.35 per
share
- Net decrease in net assets resulting from operations of
$1.8 million, or $(0.14) per share
- Invested $51.9 million in debt
and equity securities, including investments in 3 new portfolio
companies
- Received proceeds from repayments and amortizations of
$30.1 million
- Paid regular quarterly dividend of $0.34 per share on October
6, 2016
- Net asset value (NAV) of $184.7
million, or $13.69 per
share
- Weighted Average Portfolio Leverage – 4.34x, which is up from
the prior quarter of 3.88x
- Weighted Average Portfolio Yield – 11.8%, in line with the
prior quarter
Management Commentary
"We had another good quarter with net investment income meeting
expectations of $0,35 cents per
share. We made a strategic decision to reduce our equity portfolio
via a secondary sale of select equity investments (Tunnel Hill,
Media Storm and Dentistry for Children), thus positioning the
portfolio favorably to maintain or grow net investment income going
forward; as well as reduce some of the volatility in the equity
portfolio.
The reduction of equity exposure in our portfolio positions us
favorably to redeploy capital into new debt investments. Including
the value of our warrant in DBI, we will have redeemed
approximately $24 million of equity,
which can be redeployed into approximately $48 million of debt investments. While the
secondary sale came at the cost of a slight discount to our June
FMV, it positions the portfolio favorably for the future."
Originations in the third quarter improved from the first two
quarters consistent with an improved M&A climate for lower
middle market companies. We closed three new deals in the quarter
totaling $51.9 million of invested capital, thus representing
a moderate increase in assets under management for the quarter. We
continue to see attractive opportunities to deploy capital in
growth companies across a variety of industry sectors.
Weighted Average Leverage increased above 4.0x due largely to
two portfolio companies that have been on our Watch List for the
past several quarters. Excluding these two companies, weighted
average leverage would be 3.68x.
We experienced some renewed volatility in our remaining equity
portfolio, specifically within our remediation company whose
performance is highly related to weather-related events. Absent
this portfolio company event, and the previously mentioned
secondary sale, the market-to-market changes were relatively
modest."
Third Quarter 2016 Financial Results
For the three months ended September 30,
2016, total investment income was $9.1 million. This is an increase from the same
period in the prior year mainly due to an increase in portfolio
investments as well as repayment fees. Interest and PIK income
comprised $8.6 million and other
income comprised $0.5 million,
including prepayment and amendment fee income.
For the three months ended September 30,
2016, total expenses were $4.3
million. Interest and financing expenses for the quarter
were $1.9 million and the base
management fee was $1.3 million. The
income based incentive fee for the three months ended September 30, 2016 was $0.6 million and there was no capital gains
incentive fee accrual. Professional fees and other general and
administrative expenses totaled $0.5
million for the three months ended September 30, 2016.
Net investment income for the three months ended September 30, 2016 was $4.8 million ($0.35
per share).
During the three months ended September
30, 2016, we recorded a net realized gain on investments of
$8.9 million and a net change in
unrealized depreciation on investments of $19.0 million.
The net decrease in net assets resulting from operations during
the three months September 30, 2016,
was $1.8 million, or $(0.14) per share.
Per share results for the second quarter ended September 30, 2016 are based on average shares
outstanding of 13.49 million.
Portfolio and Investment Activities
As of September 30, 2016, Alcentra
had debt and equity investments in 35 portfolio companies with a
total fair market value of $305.9
million. The average portfolio investment on a cost basis
was $9.1 million and equity
constituted 11% of the portfolio, down from 29% at the time of the
IPO. During the third quarter ending September 30, 2016, Alcentra made investments of
$51.9 million, including investments
in 3 new portfolio companies and add on financings, and received
proceeds from repayments and amortizations of investments of
$30.1 million. As of September 30, 2016, the weighted average yield on
debt investments was 11.8%, which was a slight increase in the
weighted average yield from the June 30,
2016 reporting period of 11.7%.
Third quarter 2016 investment activity included the following
new portfolio company investments:
- Limbach Holdings ("Limbach") provides building infrastructure
services, including the design, installation, and maintenance of
HVAC and mechanical, electrical, and plumbing systems for
commercial and institutional building owners. Alcentra
invested $13.0 million in Senior
Subordinated Notes on July 20,
2016.
- Lighting Retrofit International ("LRI") is a leading provider
of lighting and water building efficiency services to government,
institutional, and commercial customers. Alcentra invested
$18.0 million in First Lien Notes and
$1.0 million of equity on
September 28, 2016.
- NextCare Holdings ("NextCare") is one of the nation's largest
privately-owned providers of urgent care and occupational medicine
services. NextCare operates over 100 clinics nationwide and
represents 10 brands across 11 states. Alcentra invested
$15.0 million in Senior Subordinated
Notes on August 31, 2016.
Alcentra had one investment on non-accrual at the end of the
third quarter,–Xpress Global Systems, LLC – which has been on our
Watch List and represents less than 1% of our portfolio.
Liquidity and Capital Resources
At September 30, 2016, Alcentra
had $6.7 million in cash and cash
equivalents. Alcentra had $70.8
million of borrowings outstanding on its $135 million senior secured revolving credit
facility and $55.0 million
outstanding of Alcentra Capital InterNotes.
Subsequent Events
- On October 19, 2016, Alcentra
sold its interest in Tunnel Hill Partners in a secondary sale for
$10.2 million.
- On October 21, 2016, Alcentra
assigned $8.0 million of its interest
in LRI to a third party.
- On October 21, 2016, Alcentra
sold its equity interest in Media Storm and Dentistry for Children
in a secondary sale for $3.8
million.
- On October 24, 2016, Alcentra
invested $6.0 million in Lugano Diamond and Jewelry, Inc. (Libor + 10.75
Senior Secured Notes)
- On October 27, 2016, Alcentra
invested $10.0 million in Safe
Security (13.0% cash/1.0% PIK Subordinated Notes)
- On October 28, 2016 Aphena Pharma
repaid its debt investment in the amount of $1.1 million.
Fourth Quarter 2016 Dividend of $0.34 Per Share Declared
On November 3, 2016, the Company's
Board of Directors declared a regular quarterly dividend of
$0.34 per share for the fourth
quarter of 2016 payable on January 5,
2017 to stockholders of record as of December 31, 2016.
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 2016 Financial Results Conference Call
Management will host a conference call to discuss the operating
and financial results at 10:00 am ET
on Friday, November 4, 2016. 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 #
12049925.
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 4, 2017.
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,
2016
(Unaudited)
|
|
As of
December 31,
2015
|
Assets
|
|
Portfolio
investments, at fair value
|
|
Non-controlled,
non-affiliated investments, at fair value (cost of $285,609,124 and
$219,715,263, respectively)
|
|
$
|
269,067,466
|
|
$
|
221,349,073
|
Non-controlled,
affiliated investments, at fair value (cost of $29,583,292 and
$56,426,475, respectively)
|
|
|
23,066,462
|
|
|
59,243,999
|
Controlled, affiliated
investments, at fair value (cost $14,954,174 and $27,289,995,
respectively)
|
|
|
13,814,627
|
|
|
15,748,539
|
Total of portfolio
investments, at fair value (cost $330,146,590 and $303,431,733,
respectively)
|
|
|
305,948,555
|
|
|
296,341,611
|
Cash
|
|
|
6,708,245
|
|
|
4,866,972
|
Dividends and
interest receivable
|
|
|
1,572,352
|
|
|
2,607,205
|
Receivable for
investments sold
|
|
|
1,364,550
|
|
|
—
|
Deferred financing
costs
|
|
|
1,501,745
|
|
|
2,183,881
|
Deferred tax
asset
|
|
|
5,994,993
|
|
|
1,382,408
|
Prepaid expenses and
other assets
|
|
|
174,886
|
|
|
113,730
|
Total
Assets
|
|
$
|
323,265,326
|
|
$
|
307,495,807
|
|
|
Liabilities
|
|
Credit facility
payable
|
|
$
|
70,872,238
|
|
$
|
63,504,738
|
Notes payable (net of
deferred note offering costs of $1,548,824 and $1,156,622,
respectively)
|
|
|
53,451,176
|
|
|
38,843,378
|
Other accrued
expenses and liabilities
|
|
|
743,521
|
|
|
271,801
|
Directors' fees
payable
|
|
|
117,000
|
|
|
37,025
|
Professional fees
payable
|
|
|
365,894
|
|
|
481,333
|
Interest and credit
facility expense payable
|
|
|
1,471,876
|
|
|
813,222
|
Management fee
payable
|
|
|
1,335,294
|
|
|
1,302,213
|
Income-based
incentive fees payable
|
|
|
1,914,909
|
|
|
1,081,797
|
Distributions
payable
|
|
|
4,586,816
|
|
|
4,595,700
|
Unearned structuring
fee revenue
|
|
|
1,373,992
|
|
|
689,577
|
Income tax
liability
|
|
|
2,374,417
|
|
|
842,812
|
Total
Liabilities
|
|
|
138,607,133
|
|
|
112,463,596
|
|
|
Commitments and
Contingencies (Note 12)
|
|
|
|
Net
Assets
|
|
Common stock, par
value $0.001 per share (100,000,000 shares authorized, 13,490,636
and 13,516,766 shares issued and outstanding,
respectively)
|
|
|
13,491
|
|
|
13,517
|
Additional paid-in
capital
|
|
|
197,181,027
|
|
|
197,652,086
|
Accumulated net
realized gain
|
|
|
4,423,425
|
|
|
2,791,590
|
Undistributed net
investment income
|
|
|
3,651,025
|
|
|
1,130,327
|
Net unrealized
appreciation (depreciation) on investments, net of
benefit/(provision) for taxes of $3,587,260 and $534,813 as of
September 30, 2016 and December 31, 2015, respectively
|
|
|
(20,610,775)
|
|
|
(6,555,309)
|
Total Net
Assets
|
|
|
184,658,193
|
|
|
195,032,211
|
Total Liabilities
and Net Assets
|
|
$
|
323,265,326
|
|
$
|
307,495,807
|
|
|
Net Asset Value Per
Share
|
|
$
|
13.69
|
|
$
|
14.43
|
|
|
|
|
|
|
|
|
|
Alcentra Capital
Corporation and Subsidiary
|
|
|
|
Consolidated
Statements of Operations
|
|
|
|
|
For the three
months ended
September 30, 2016
(Unaudited)
|
|
For the three
months ended
September 30, 2015
(Unaudited)
|
|
For the nine
months ended
September 30, 2016
(Unaudited)
|
|
For the nine
months ended
September 30, 2015
(Unaudited)
|
|
Investment
Income:
|
|
From non-controlled,
non-affiliated investments:
|
|
Interest income from
portfolio investments
|
$
|
6,306,358
|
|
$
|
5,133,259
|
|
|
$
|
16,743,520
|
|
$
|
13,577,787
|
|
Paid-in-kind interest
income from portfolio investments
|
|
409,638
|
|
|
439,608
|
|
|
|
2,769,251
|
|
|
2,341,772
|
|
Other income from
portfolio investments
|
|
158,048
|
|
|
452,038
|
|
|
|
1,729,498
|
|
|
1,407,320
|
|
Dividend income from
portfolio investments
|
|
52,021
|
|
|
—
|
|
|
|
52,021
|
|
|
302,874
|
|
From non-controlled,
affiliated investments:
|
|
Interest income from
portfolio investments
|
|
827,500
|
|
|
1,001,296
|
|
|
|
2,522,867
|
|
|
3,209,301
|
|
Paid in-kind income
from portfolio investments
|
|
462,161
|
|
|
655,205
|
|
|
|
1,947,325
|
|
|
1,897,750
|
|
Other income from
portfolio investments
|
|
336,679
|
|
|
23,435
|
|
|
|
2,287,616
|
|
|
72,320
|
|
From controlled,
affiliated investments:
|
|
Interest income from
portfolio investments
|
|
398,185
|
|
|
588,627
|
|
|
|
1,162,820
|
|
|
1,746,836
|
|
Paid in-kind income
from portfolio investments
|
|
165,878
|
|
|
213,674
|
|
|
|
487,910
|
|
|
618,532
|
|
Other income from
portfolio investments
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
64,843
|
|
Total investment
income
|
|
9,116,468
|
|
|
8,507,142
|
|
|
|
29,702,828
|
|
|
25,239,335
|
|
|
|
Expenses:
|
|
Management
fees
|
|
1,335,294
|
|
|
1,273,705
|
|
|
|
3,908,093
|
|
|
3,641,673
|
|
Income-based
incentive fees
|
|
607,739
|
|
|
546,027
|
|
|
|
2,324,624
|
|
|
1,749,155
|
|
Capital gains
incentive fees
|
|
—
|
|
|
(434,217)
|
|
|
|
—
|
|
|
1,001,467
|
|
Professional
fees
|
|
273,965
|
|
|
167,356
|
|
|
|
1,000,502
|
|
|
527,291
|
|
Valuation
services
|
|
57,722
|
|
|
89,822
|
|
|
|
199,769
|
|
|
312,737
|
|
Interest and credit
facility expense
|
|
1,476,911
|
|
|
1,197,553
|
|
|
|
4,120,365
|
|
|
2,870,559
|
|
Amortization of
deferred financing costs
|
|
299,932
|
|
|
229,716
|
|
|
|
848,367
|
|
|
608,973
|
|
Directors'
fees
|
|
83,313
|
|
|
57,635
|
|
|
|
232,608
|
|
|
171,826
|
|
Insurance
expense
|
|
65,915
|
|
|
67,449
|
|
|
|
198,296
|
|
|
204,990
|
|
Amortization of
deferred note offering costs
|
|
91,852
|
|
|
—
|
|
|
|
91,852
|
|
|
—
|
|
Other
expenses
|
|
37,032
|
|
|
170,052
|
|
|
|
488,321
|
|
|
383,564
|
|
Total
expenses
|
|
4,329,675
|
|
|
3,365,098
|
|
|
|
13,412,797
|
|
|
11,472,235
|
|
Waiver of capital
gains incentive fees
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(1,001,467)
|
|
Net
expenses
|
|
4,329,675
|
|
|
3,365,098
|
|
|
|
13,412,797
|
|
|
10,470,768
|
|
Net investment
income
|
|
4,786,793
|
|
|
5,142,044
|
|
|
|
16,290,031
|
|
|
14,768,567
|
|
|
|
Realized Gain
(Loss) and Net Change in Unrealized Appreciation (Depreciation)
From Portfolio Investments
|
|
Net realized gain
(loss) on:
|
|
Non-controlled,
non-affiliated investments
|
|
(361,060)
|
|
|
244,000
|
|
|
|
1,539,380
|
|
|
97,551
|
|
Non-controlled,
affiliated investments
|
|
9,334,765
|
|
|
—
|
|
|
|
11,356,462
|
|
|
—
|
|
Controlled, affiliated
investments
|
|
(109,512)
|
|
|
—
|
|
|
|
(11,264,007)
|
|
|
—
|
|
Net realized gain
(loss) from portfolio investments
|
|
8,864,193
|
|
|
244,000
|
|
|
|
1,631,835
|
|
|
97,551
|
|
Net change in
unrealized appreciation (depreciation) on:
|
|
Non-controlled,
non-affiliated investments
|
|
(8,615,042)
|
|
|
(744,397)
|
|
|
|
(18,175,468)
|
|
|
(1,280,386)
|
|
Non-controlled,
affiliated investments
|
|
(9,685,943)
|
|
|
390,429
|
|
|
|
(9,334,354)
|
|
|
3,803,027
|
|
Controlled, affiliated
investments
|
|
(742,006)
|
|
|
(2,874,502)
|
|
|
|
10,401,909
|
|
|
(3,256,533)
|
|
Net change in
unrealized appreciation (depreciation) from portfolio
investments
|
|
(19,042,991)
|
|
|
(3,228,470)
|
|
|
|
(17,107,913)
|
|
|
(733,892)
|
|
Benefit/(Provision)
for taxes on unrealized gain on investments
|
|
3,549,478
|
|
|
1,096,875
|
|
|
|
3,052,447
|
|
|
527,770
|
|
Net realized gain
(loss) and net change in unrealized appreciation (depreciation)
from portfolio investments
|
|
(6,629,320)
|
|
|
(1,887,595)
|
|
|
|
(12,423,631)
|
|
|
(108,571)
|
|
Net Increase
(Decrease) in Net Assets Resulting from Operations
|
$
|
(1,842,527)
|
|
$
|
3,254,449
|
|
|
$
|
3,866,400
|
|
$
|
14,659,996
|
|
|
|
Basic and
diluted:
|
|
Net investment income
per share
|
$
|
0.35
|
|
$
|
0.38
|
|
|
$
|
1.21
|
|
$
|
1.09
|
|
Earnings (loss) per
share
|
$
|
(0.14)
|
|
$
|
0.24
|
|
|
$
|
0.29
|
|
$
|
1.08
|
|
Weighted Average
Shares of Common Stock Outstanding
|
|
13,490,636
|
|
|
13,516,766
|
|
|
|
13,502,152
|
|
|
13,516,766
|
|
Dividends declared
per common share
|
$
|
0.340
|
|
$
|
0.340
|
|
|
$
|
1.020
|
|
$
|
1.020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/alcentra-capital-corporation-announces-third-quarter-2016-financial-results-and-announces-quarterly-dividend-of-034-per-share-300357378.html
SOURCE Alcentra Capital Corporation