NEW YORK, Aug. 11, 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 second quarter ended June 30, 2015.
Second Quarter 2015 Financial Highlights
- Total investment income of $8.5
million
- Net investment income of $4.6
million, or $0.34 per
share
- Adjusted net investment income of $5.0
million, or $0.376 per
share(1)
- Net increase in net assets resulting from operations of
$6.4 million, or $0.47 per share
- Invested $31.25 million in debt
and equity securities, including investments in three new portfolio
companies
- Received proceeds from repayments and
amortizations of $16.6
million
- Paid regular quarterly dividend of $0.34 per share on July 6,
2015
- Net asset value (NAV) of $203.1
million, or $15.03 per share,
as of June 30, 2015, up from
$14.63 at the time of the IPO
- Weighted Average Portfolio Leverage – 3.38x, which is constant
from the prior quarter
- Weighted Average Portfolio Yield – 12.1%, up from 11.9% in the
prior quarter
Management Commentary
"Our second quarter results demonstrate the strength, stability
and quality of our portfolio with adjusted net investment income
increasing 9.6% and 3.4% from the end of the year and from the
first quarter, respectively," said Paul
Echausse, President and CEO of Alcentra Capital Corporation.
"We invested $31.25 million in three new portfolio companies
made throughout the quarter, while we received proceeds from
repayments and amortizations of
$16.6 million. Our observation has
been that the lower middle market M&A has been a bit slower in
the first half of the year based on the published reports of our
peers. Based on our pipeline, we would expect the second half of
the year to be much stronger with respect to net originations. We
would also expect to benefit from these improved M&A market
conditions by having a number of realizations in our portfolio. We
have written up the value of our portfolio for the fifth straight
quarter since our IPO last May; and we would expect some of these
unrealized gains to become realized over the remainder of the year.
As some of our equity gains are realized, we intend to redeploy
that capital into debt securities, thus continuing to rebalance the
portfolio. We continue to remain prudent by focusing on
high-quality companies that generate strong free cash flow and have
positive long-term outlooks.
"Lastly, at a time when there is much discussion in the BDC
industry about the creation of value for shareholders, it should be
noted that the NAV of our shares has increased from $14.63 at the time of our IPO last year to
$15.03 at June
30, 2015."
(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.
Second Quarter 2015 Financial Results
For the three months ended June 30,
2015, total investment income was $8.5 million. The increase was primarily
attributable to an increase in interest income resulting from
higher average levels of debt investments outstanding.
For the three months ended June 30,
2015, total expenses were $3.8
million. Interest and financing expenses for the three
months ended June 30, 2015 was
$1.3 million. The base management fee
was $1.2 million for the three months
ended June 30, 2015 due to higher
average total assets less cash and cash equivalents for the three
months ended June 30, 2015. The
income based incentive fee for the three months ended June 30, 2015 was $0.397
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 $0.543 million for
the three months ended June 30,
2015.
Net investment income for the three months ended June 30, 2015 was $4.6
million.
During the three months ended June 30,
2015, we recorded a net change in unrealized appreciation on
investments of $2.3 million.
Alcentra Capital Corporation's net increase in net assets
resulting from operations during the three months ended
June 30, 2015, was $6.4 million, or $0.47 per share.
Per share results for the second quarter ended June 30, 2015 are based on shares outstanding of
13.5 million.
Portfolio and Investment Activities
As of June 30, 2015, Alcentra had
debt and equity investments in 29 portfolio companies with a total
fair value of $285.3 million. The
average portfolio investment on a cost basis was $9.7 million and equity constitutes 20.5% of the
portfolio, which is down from 28% at the time of the IPO. During
the second quarter ended June 30,
2015, Alcentra made investments of $31.25 million, including investments in three
new portfolio companies and received proceeds from repayments and amortizations of investments
of $16.6 million. As of June 30, 2015, the weighted average yield on debt
investments was 12.1%, which was an increase in the weighted
average yield from the March 31, 2015
reporting period of 11.9%.
Second quarter 2015 investment activity included the following
new portfolio company investments:
- Radiant Logistics is an asset-light transportation and
logistics services company, providing freight forwarding and supply
chain management services. Alcentra invested $10.0 million in subordinated notes on
April 2, 2015
- Alarm Capital Alliance is a security and alarm monitoring
company which services households and small commercial businesses
across the US. Alcentra invested $9.5
million in subordinated notes on April 30,2015
- Conisus, LLC, is a leading outsourced service provider
specializing in promotional drug marketing and continuing medical
education. Alcentra invested $11.75
million in second lien notes on June
23, 2015
Alcentra had no investments on non-accrual status as of
June 30, 2015.
Liquidity and Capital Resources
At June 30, 2015, Alcentra had
$3.8 million in cash and cash
equivalents. Alcentra had $38.1
million of borrowings outstanding on its $115 million senior secured revolving credit
facility as of June 30, 2015. The
weighted average interest rate on debt outstanding as of
June 30, 2015 was 3.53%.
Alcentra also issued $40.0 million
of Alcentra Capital InterNotes as of June
30, 2015. The weighted average interest rate on these
notes as of June 30, 2015 was
6.378%.
Subsequent Events
- Alcentra has a commitment to fund $15.5
million to a company in the healthcare industry that is
expected to close in Mid-August
- On July 9, 2015, Alcentra funded
an additional $1.7 million to A2Z
Wireless Holdings, Inc.
- On July 15, 2015 and August 6, 2015, we were repaid our debt
investment in North Atlantic Petroleum of $7.5 million and $5.3
million, respectively. This debt obligation has been
paid in full
- On August 5, 2015, we were repaid
our debt investment in Datascan of $3.0
million
Third Quarter 2015 Dividend of $0.34 Per Share Declared
On August 10, 2015, the Company's
Board of Directors declared a regular quarterly dividend of
$0.34 per share for the third quarter
of 2015 payable on October 6, 2015 to
stockholders of record as of September 30,
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.
Second Quarter 2015 Financial Results Conference Call
Management will host a conference call to discuss the operating
and financial results at 1:30 pm ET
on Tuesday, August 11, 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 #
98080867.
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 August 11, 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 intends
to elect 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
|
|
|
|
Alcentra Capital
|
Alcentra Capital
|
|
Corporation
and
Subsidiary
|
Corporation
and
Subsidiary
|
|
As of
June 30, 2015
(Unaudited)
|
As of
December 31,
2014
|
Assets
|
|
|
Portfolio
investments, at fair value
|
|
|
Non-controlled, non-affiliated investments, at fair
value
(cost of $188,206,865 and $165,921,535, respectively)
|
$
189,074,441
|
$
167,325,100
|
Non-controlled, affiliated investments, at fair
value
(cost of $63,034,876 and $61,564,299, respectively)
|
66,136,367
|
61,253,192
|
Controlled, affiliated
investments, at fair value
(cost $27,001,798 and $26,596,938, respectively)
|
30,078,391
|
30,055,562
|
Total of portfolio
investments, at fair value
(cost $278,243,539 and $254,082,772, respectively)
|
285,289,199
|
258,633,854
|
Cash
|
3,806,606
|
10,022,617
|
Dividends and
interest receivable
|
1,249,225
|
1,417,500
|
Receivable for
investments sold
|
—
|
4,753
|
Deferred financing
costs
|
1,719,764
|
1,986,520
|
Deferred note
offering costs
|
1,040,510
|
25,743
|
Prepaid expenses and
other assets
|
36,444
|
128,388
|
|
|
|
Liabilities
|
|
|
Credit facility
payable
|
$
38,054,738
|
$
62,499,154
|
Notes
payable
|
40,000,000
|
—
|
Payable for
investments purchased
|
—
|
8,717
|
Other accrued
expenses and liabilities
|
287,044
|
539,417
|
Directors' fees
payable
|
75,250
|
85,692
|
Professional fees
payable
|
518,261
|
409,628
|
Interest and credit
facility expense payable
|
780,522
|
216,476
|
Management fee
payable
|
1,219,963
|
615,668
|
Income-based
incentive fee payable
|
1,203,128
|
—
|
Capital gains
incentive fees payable
|
434,217
|
—
|
Distributions
payable
|
4,595,700
|
4,595,700
|
Unearned structuring
fee revenue
|
575,759
|
517,339
|
Income tax
liability
|
187,738
|
45,272
|
Deferred tax
liability
|
2,078,371
|
1,697,004
|
|
|
|
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
|
197,765,758
|
197,838,155
|
Accumulated net
realized gain (loss)
|
(74,737)
|
71,712
|
Undistributed net
investment income
|
646,968
|
211,846
|
Net unrealized
appreciation (depreciation) on investments,
net of provision for taxes of $2,266,109 and $1,697,004
as of June 30, 2015 and December 31, 2014, respectively
|
4,779,551
|
2,854,078
|
Total Net
Assets
|
203,131,057
|
200,989,308
|
Total Liabilities
and Net Assets
|
$
293,141,748
|
$
272,219,375
|
Net
Asset Value Per Share
|
$
15.03
|
$
14.87
|
Alcentra Capital Corporation and Subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of
Operations
|
|
|
|
|
Alcentra Capital
Corporation and Subsidiary
|
|
BNY
Mellon-Alcentra Mezzanine III, L.P.
|
|
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
June 30, 2015
(Unaudited)
|
|
For the
period from
April 1, 2014
through
May 7, 2014
(Unaudited)
|
|
For the
period from
May 8, 2014
through
June 30, 2014
(Unaudited)
|
|
For the
six months
ended
June 30, 2015
(Unaudited)
|
|
For the
period from
January 1,
2014 through
May 7, 2014
(Unaudited)
|
|
For the
period from
May 8, 2014
through
June 30, 2014
(Unaudited)
|
Investment
Income:
|
|
|
|
|
|
|
|
|
|
|
From non-controlled,
non-affiliated investments:
|
|
|
|
|
|
|
|
|
|
|
|
Interest income from
portfolio investments
|
$ 4,286,969
|
|
$ 942,684
|
|
$ 1,694,875
|
|
$ 8,444,528
|
|
$ 2,335,475
|
|
$ 1,694,875
|
Paid-in-kind interest
income from portfolio investments
|
1,166,440
|
|
196,299
|
|
469,072
|
|
1,902,164
|
|
569,637
|
|
469,072
|
Other income from
portfolio investments
|
295,386
|
|
544,872
|
|
—
|
|
955,282
|
|
649,961
|
|
—
|
Dividend income from
portfolio investments
|
302,874
|
|
—
|
|
—
|
|
302,874
|
|
251,752
|
|
—
|
From non-controlled,
affiliated investments:
|
|
|
|
|
|
|
|
|
|
|
|
Interest income from
portfolio investments
|
988,949
|
|
364,795
|
|
574,922
|
|
2,208,005
|
|
1,089,807
|
|
574,922
|
Paid in-kind income
from portfolio investments
|
631,046
|
|
146,467
|
|
252,888
|
|
1,242,545
|
|
341,850
|
|
252,888
|
Other income from
portfolio investments
|
20,527
|
|
766,907
|
|
—
|
|
48,885
|
|
788,083
|
|
—
|
From controlled,
affiliated investments:
|
|
|
|
|
|
|
|
|
|
|
Interest income from
portfolio investments
|
582,229
|
|
255,633
|
|
458,872
|
|
1,158,209
|
|
769,953
|
|
458,872
|
Paid in-kind income
from portfolio investments
|
206,077
|
|
115,201
|
|
183,995
|
|
404,858
|
|
521,321
|
|
183,995
|
Other income from
portfolio investments
|
27,043
|
|
433,573
|
|
—
|
|
64,843
|
|
444,055
|
|
—
|
Total investment
income
|
8,507,540
|
|
3,766,431
|
|
3,634,624
|
|
16,732,193
|
|
7,761,894
|
|
3,634,624
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Management
fees
|
1,219,963
|
|
—
|
|
524,548
|
|
2,367,968
|
|
699,473
|
|
524,548
|
Income-based
incentive fees
|
397,028
|
|
—
|
|
—
|
|
1,203,128
|
|
—
|
|
—
|
Capital gains
incentive fees
|
434,217
|
|
—
|
|
—
|
|
1,435,684
|
|
—
|
|
—
|
Professional
fees
|
170,549
|
|
5,315
|
|
83,570
|
|
359,935
|
|
84,642
|
|
83,570
|
Valuation
services
|
100,010
|
|
—
|
|
—
|
|
222,915
|
|
—
|
|
—
|
Interest and credit
facility expense
|
1,067,118
|
|
9,267
|
|
290,134
|
|
1,673,006
|
|
50,214
|
|
290,134
|
Amortization of
deferred financing costs
|
195,770
|
|
—
|
|
—
|
|
379,257
|
|
—
|
|
—
|
Directors'
fees
|
76,191
|
|
—
|
|
80,000
|
|
114,191
|
|
—
|
|
80,000
|
Insurance
expense
|
68,006
|
|
—
|
|
—
|
|
137,541
|
|
—
|
|
—
|
Organization
expenses
|
—
|
|
—
|
|
180,953
|
|
—
|
|
—
|
|
180,953
|
Other
expenses
|
129,339
|
|
7
|
|
20,792
|
|
213,512
|
|
7
|
|
20,792
|
Total
expenses
|
3,858,191
|
|
14,589
|
|
1,179,997
|
|
8,107,137
|
|
834,336
|
|
1,179,997
|
Waiver of capital
gains incentive fees
|
—
|
|
—
|
|
—
|
|
(1,001,467)
|
|
—
|
|
—
|
Waiver of income-based
incentive fees
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Net
expenses
|
3,858,191
|
|
14,589
|
|
1,179,997
|
|
7,105,670
|
|
834,336
|
|
1,179,997
|
Net investment
income
|
4,649,349
|
|
3,751,842
|
|
2,454,627
|
|
9,626,523
|
|
6,927,558
|
|
2,454,627
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized Gain
(Loss) and Net Change in Unrealized Appreciation (Depreciation)
From Portfolio Investments
|
|
|
|
|
|
|
|
|
|
|
|
Net realized gain
(loss) on:
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlled,
non-affiliated investments
|
(146,703)
|
|
(42,448)
|
|
—
|
|
(146,449)
|
|
51,961
|
|
—
|
Non-controlled,
affiliated investments
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
Controlled, affiliated
investments
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
Net realized gain
(loss) from portfolio investments
|
(146,703)
|
|
(42,448)
|
|
—
|
|
(146,449)
|
|
51,961
|
|
—
|
Net change in
unrealized appreciation (depreciation) on:
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlled,
non-affiliated investments
|
587,925
|
|
239,964
|
|
(52,193)
|
|
(535,989)
|
|
2,974,591
|
|
(52,193)
|
Non-controlled,
affiliated investments
|
2,016,324
|
|
(182,597)
|
|
(149,511)
|
|
3,412,598
|
|
|
|
(149,511)
|
Controlled, affiliated
investments
|
(286,458)
|
|
(279,333)
|
|
1,534,177
|
|
(382,031)
|
|
|
|
1,534,177
|
Net change in
unrealized appreciation (depreciation) from portfolio
investments
|
2,317,791
|
|
(221,966)
|
|
1,332,473
|
|
2,494,578
|
|
2,974,591
|
|
1,332,473
|
Benefit/(Provision)
for taxes on unrealized gain on investments
|
(406,781)
|
|
—
|
|
—
|
|
(569,105)
|
|
|
|
—
|
Net realized gain
(loss) and net change in unrealized appreciation (depreciation)
from portfolio investments
|
1,764,307
|
|
(264,414)
|
|
1,332,473
|
|
1,779,024
|
|
3,026,552
|
|
1,332,473
|
Net Increase in
Net Assets Resulting from Operations
|
$ 6,413,656
|
|
$ 3,487,428
|
|
$ 3,787,100
|
|
$ 11,405,547
|
|
$ 9,954,110
|
|
$ 3,787,100
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted:
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
per share
|
$
0.34
|
|
N.A.
|
|
$
0.18
|
|
$
0.71
|
|
N.A.
|
|
$
0.18
|
Earnings per
share
|
$
0.47
|
|
N.A.
|
|
$
0.28
|
|
$
0.84
|
|
N.A.
|
|
$
0.28
|
Weighted Average
Shares of Common Stock Outstanding
|
13,516,766
|
|
N.A.
|
|
13,516,766
|
|
13,516,766
|
|
N.A.
|
|
13,516,766
|
Dividends declared
per common share
|
$
0.34
|
|
N.A.
|
|
$
0.18
|
|
$
0.68
|
|
N.A.
|
|
$
0.18
|
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 six months ended
June 30, 2015 and 2014.
|
($ in
thousands)
|
|
($ in
thousands)
|
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
(unaudited)
|
|
(unaudited)
|
|
2015
|
|
2015
|
Net investment
income
|
$4,649
|
|
$9,626
|
Capital gains
incentive fee (reversal) expense
|
434
|
|
434
|
Adjusted net
investment income
|
$5,083
|
|
$10,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in
thousands)
|
|
($ in
thousands)
|
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
(unaudited)
|
|
(unaudited)
|
|
2015
|
|
2015
|
Net investment
income
|
$0.34
|
|
$0.71
|
Capital gains
incentive fee (reversal) expense
|
$0.03
|
|
$0.03
|
Adjusted net
investment income
|
$0.37
|
|
$0.74
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/alcentra-capital-corporation-announces-second-quarter-2015-financial-results-and-announces-quarterly-dividend-of-034-per-share-300126800.html
SOURCE Alcentra Capital Corporation