CM Finance Inc Reports Results for its Fiscal Fourth Quarter ended June 30, 2018
September 04 2018 - 4:33PM
CM Finance Inc (NASDAQ: CMFN) (“CMFN” or “the Company”) announced
its financial results for its fiscal fourth quarter ended June 30,
2018.
HIGHLIGHTS
- The weighted average yield on debt investments, at
cost, increased to 11.19%, an increase of 7 basis points compared
to 11.12% as of March 31, 2018
- CMFN made five new investments in four portfolio
companies during the quarter with a total cost of $37.9mm.
The weighted average yield of debt investments made in the quarter
was 9.65%
- Six investments were realized during the quarter, five
fully realized and one partially realized, with a weighted average
IRR of 19.95%
- Net asset value (“NAV”) per share increased by 0.2% to
$12.57, compared to $12.55 as of March 31, 2018
Portfolio
results, as of June 30, 2018: |
|
|
Total
assets |
|
$314.5mm |
Investment
portfolio, at fair value |
|
$293.6mm |
Net
assets |
|
$171.5mm |
Weighted
average yield on debt investments, at cost |
|
11.19% |
Net asset
value per share |
|
$12.57 |
Portfolio
activity in the current quarter: |
|
|
Number of
new investments |
|
5 |
Total
capital invested |
|
$37.9mm |
Proceeds
from repayments, sales, and amortization |
|
$46.9mm |
Number of
portfolio companies, end of period |
|
25 |
Net
investment income (NII) |
|
$8.5mm |
Net
investment income per share |
|
$0.62 |
Net
increase in net assets from operations |
|
$3.5mm |
Net
increase in net assets from operations per share |
|
$0.26 |
Quarterly
per share distribution paid on October 5, 2018 |
|
$0.25 |
Mr. Michael C. Mauer, the Company’s Chief
Executive Officer, said, “The market continues to present
good opportunities, mostly on the first lien side in the
current environment. We saw some great realizations of
previously stressed situations during the fourth quarter and were
able to redeploy the proceeds into strong risk return investments
during the first quarter.”
On August 23, 2018, the Company’s Board of Directors declared a
distribution for the quarter ending September 30, 2018 of $0.25 per
share, payable on October 5, 2018, to shareholders of record as of
September 18, 2018. This represents a 10.93% yield on the Company’s
$9.15 share price as of the close on August 31, 2018.
Distributions may include net investment income, capital gains
and/or return of capital; however, the Company does not expect the
distribution to be comprised of a return of capital.The tax status
of distributions will be determined at the end of the taxable
year.
Portfolio and Investment
Activities
During the quarter, the Company made five new
investments in four portfolio companies. These five
investments totaled $37.9.mm at cost and were made at a weighted
average yield of 9.65%. The Company also realized $46.9mm of
repayments, sales, and amortization, primarily related to the sales
of PR Wireless, Inc., U.S. Well Services, LLC Classes A and B and
Dayton Superior Corporation, and the repayments of Bird Electric
Enterprises, LLC and CareerBuilder, LLC. Realized and unrealized
gains accounted for a decrease in the Company’s net investments of
approximately $5.0mm, or $0.37 per share. The total net
increase in net assets resulting from operations for the quarter
was $4.2mm, or $0.26 per share.
As of June 30 2018, the Company’s investment
portfolio consisted of investments in 25 portfolio companies, of
which 52.1% were first lien investments, 43.3% were second lien
investments, 0.2% were in unsecured debt investments, 4.2% were
unitranche loans, and 0.2% were in equities, warrants and other
positions. The Company’s debt portfolio consisted of 95.8%
floating rate investments and 4.2% fixed rate investments. As
of June 30, 2018, the Company had no investments on non-accrual
status.
Capital Resources
As of June 30, 2018, the Company had $5.6mm in cash, $2.7mm in
restricted cash and $32.2mm of capacity under its revolving credit
facility with UBS AG, London Branch.
Share Repurchases
During the quarter, the Company repurchased 42,627 shares of
common stock on the open market for $390,178 (including
commissions).
Subsequent Events
On July 2, 2018, we closed the public offering of $30 million in
aggregate principal amount of 6.125% notes due 2023 (the “Notes”).
On July 12, 2018, the underwriters exercised their over-allotment
option to purchase an additional $4.5 million in aggregate
principal amount of the Notes. The total net proceeds to us from
the Notes, including the exercise of the underwriters’
over-allotment option, after deducting underwriting discounts and
commissions of approximately $1.0 million and estimated offering
expenses of approximately $230,000, were approximately $33.2
million.
Subsequent to quarter end, the Company made investments in 5 new
portfolio companyies with a total cost of $34.1mm, and received
$13.3mm in repayments and sale proceeds.
|
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|
CM
Finance Inc and Subsidiaries |
|
|
|
|
|
Consolidated Statements of Assets and
Liabilities |
|
|
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|
|
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|
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|
|
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|
|
|
|
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|
|
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June 30, 2018 |
|
|
June 30, 2017 |
Assets |
|
|
|
|
|
|
Non-controlled, non-affiliated investments, at fair value
(amortized cost of |
$ |
293,592,013 |
|
|
$ |
254,907,171 |
|
|
$302,647,282 and $ 270,467,740, respectively) |
|
|
|
|
|
Derivatives, at fair value (cost of $0 and $0, respectively) |
|
229,918 |
|
|
|
5,830,501 |
|
Cash |
|
|
|
5,620,441 |
|
|
|
10,646,697 |
|
Cash,
restricted |
|
|
2,706,273 |
|
|
|
22,616,177 |
|
Receivable
for investments sold |
|
7,751,875 |
|
|
|
- |
|
Interest
receivable |
|
|
4,011,450 |
|
|
|
1,627,774 |
|
Deferred
offering costs |
|
|
121,922 |
|
|
|
186,513 |
|
Other
receivables |
|
|
245,550 |
|
|
|
- |
|
Prepaid
expenses and other assets |
|
255,139 |
|
|
|
219,045 |
|
|
Total
Assets |
|
$ |
314,534,581 |
|
|
$ |
296,033,878 |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Notes
payable: |
|
|
|
|
|
|
|
Term loan |
|
$ |
102,000,000 |
|
|
$ |
102,000,000 |
|
|
Revolving
credit facility |
|
17,823,000 |
|
|
|
- |
|
|
Deferred
debt issuance costs |
|
(1,953,771 |
) |
|
|
(578,074 |
) |
|
Notes payable, net |
|
|
117,869,229 |
|
|
|
101,421,926 |
|
Payable for
investments purchased |
|
12,569,450 |
|
|
|
12,490,000 |
|
Dividend
payable |
|
|
3,417,848 |
|
|
|
3,422,307 |
|
Deferred
financing costs payable |
|
2,071,167 |
|
|
|
620,500 |
|
Income-based incentive fees payable |
|
2,294,678 |
|
|
|
274,073 |
|
Base
management fees payable |
|
1,319,853 |
|
|
|
1,132,391 |
|
Accrued
provision for taxes |
|
|
2,579,337 |
|
|
|
- |
|
Derivatives, at fair value (cost $0 and $0, respectively) |
|
229,918 |
|
|
|
5,830,501 |
|
Interest
payable |
|
|
303,153 |
|
|
|
205,027 |
|
Directors'
fees payable |
|
|
99,296 |
|
|
|
100,000 |
|
Allocation
of administrative cost from advisor payable |
|
- |
|
|
|
85,000 |
|
Accrued
expenses and other liabilities |
|
257,986 |
|
|
|
504,041 |
|
|
Total
Liabilities |
|
|
143,011,915 |
|
|
|
126,085,766 |
|
|
|
|
|
|
|
|
|
Commitments and Contingencies (Note 6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Assets |
|
|
|
|
|
|
Common
stock, par value $0.001 per share (100,000,000 shares
authorized, |
|
|
|
|
|
|
13,649,504
and 13,689,221 shares issued and outstanding, respectively) |
|
13,649 |
|
|
|
13,689 |
|
Additional
paid-in capital |
|
|
198,700,999 |
|
|
|
199,066,123 |
|
Accumulated
net realized loss |
|
(21,087,280 |
) |
|
|
(11,231,827 |
) |
Undistributed (distributions in excess of) net investment
income |
|
2,950,567 |
|
|
|
(2,339,304 |
) |
Net
unrealized depreciation on investments |
|
(9,055,269 |
) |
|
|
(15,560,569 |
) |
|
Total Net
Assets |
|
|
171,522,666 |
|
|
|
169,948,112 |
|
|
Total Liabilities and Net Assets |
$ |
314,534,581 |
|
|
$ |
296,033,878 |
|
Net Asset
Value Per Share |
|
$ |
12.57 |
|
|
$ |
12.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
CM
Finance Inc and Subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
For the three months ended June
30, |
|
For the twelve months ended June
30, |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
2018 |
|
|
2017 |
|
|
2016 |
|
Investment Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income |
$ |
7,829,506 |
|
|
$ |
6,920,498 |
|
|
$ |
7,493,388 |
|
|
$ |
28,691,187 |
|
|
$ |
29,476,315 |
|
|
$ |
33,683,108 |
|
Payment
in-kind interest income |
|
272,386 |
|
|
|
237,065 |
|
|
|
- |
|
|
|
2,609,037 |
|
|
|
423,632 |
|
|
|
960,603 |
|
Dividend
income |
|
8,750,239 |
|
|
|
- |
|
|
|
- |
|
|
|
9,005,887 |
|
|
|
- |
|
|
|
- |
|
Payment
in-kind dividend income |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
333,333 |
|
|
|
- |
|
|
|
- |
|
Other fee
income |
|
90,060 |
|
|
|
36,476 |
|
|
|
321,395 |
|
|
|
152,308 |
|
|
|
1,112,250 |
|
|
|
936,211 |
|
|
Total
investment income |
|
16,942,191 |
|
|
|
7,194,039 |
|
|
|
7,814,783 |
|
|
|
40,791,752 |
|
|
|
31,012,197 |
|
|
|
35,579,922 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
1,703,395 |
|
|
|
1,321,181 |
|
|
|
1,012,620 |
|
|
|
6,310,842 |
|
|
|
4,748,449 |
|
|
|
4,048,527 |
|
Base
management fees |
|
1,319,853 |
|
|
|
1,132,392 |
|
|
|
1,257,768 |
|
|
|
4,871,706 |
|
|
|
4,652,064 |
|
|
|
5,511,532 |
|
Income-based incentive fees |
|
2,092,596 |
|
|
|
18,511 |
|
|
|
- |
|
|
|
3,932,710 |
|
|
|
1,289,927 |
|
|
|
1,229,031 |
|
Provision
for tax expense |
|
2,579,337 |
|
|
|
- |
|
|
|
- |
|
|
|
2,579,337 |
|
|
|
- |
|
|
|
- |
|
Professional fees |
|
315,091 |
|
|
|
114,462 |
|
|
|
356,769 |
|
|
|
1,063,528 |
|
|
|
806,810 |
|
|
|
1,039,802 |
|
Allocation
of administrative costs from advisor |
|
594,045 |
|
|
|
433,959 |
|
|
|
60,000 |
|
|
|
1,198,397 |
|
|
|
987,286 |
|
|
|
785,846 |
|
Amortization of deferred debt issuance costs |
|
195,377 |
|
|
|
102,013 |
|
|
|
364,195 |
|
|
|
695,470 |
|
|
|
932,417 |
|
|
|
1,441,044 |
|
Insurance
expense |
|
80,643 |
|
|
|
90,923 |
|
|
|
91,916 |
|
|
|
351,923 |
|
|
|
345,697 |
|
|
|
367,327 |
|
Directors'
fees |
|
104,573 |
|
|
|
201,235 |
|
|
|
97,672 |
|
|
|
402,240 |
|
|
|
501,233 |
|
|
|
425,922 |
|
Custodian
and administrator fees |
|
46,844 |
|
|
|
130,578 |
|
|
|
111,858 |
|
|
|
295,032 |
|
|
|
480,269 |
|
|
|
442,598 |
|
Offering
expense |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
186,513 |
|
|
|
- |
|
|
|
- |
|
Other
expenses |
|
(101,244 |
) |
|
|
215,127 |
|
|
|
61,067 |
|
|
|
455,645 |
|
|
|
818,532 |
|
|
|
434,337 |
|
|
Total
expenses |
|
8,930,510 |
|
|
|
3,760,381 |
|
|
|
3,413,865 |
|
|
|
22,343,343 |
|
|
|
15,562,684 |
|
|
|
15,725,966 |
|
Waiver of
income-based incentive fees |
|
(527,224 |
) |
|
|
- |
|
|
|
- |
|
|
|
(527,224 |
) |
|
|
(249,071 |
) |
|
|
- |
|
|
Net
expenses |
|
8,403,286 |
|
|
|
3,760,381 |
|
|
|
3,413,865 |
|
|
|
21,816,119 |
|
|
|
15,313,613 |
|
|
|
15,725,966 |
|
|
Net investment
income |
|
8,538,905 |
|
|
|
3,433,658 |
|
|
|
4,400,918 |
|
|
|
18,975,633 |
|
|
|
15,698,584 |
|
|
|
19,853,956 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
realized and unrealized gain/(loss) on investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
realized gain (loss) from investments |
|
(2,236,687 |
) |
|
|
(2,708,549 |
) |
|
|
1 |
|
|
|
(9,855,453 |
) |
|
|
(11,809,335 |
) |
|
|
283,276 |
|
Net change in unrealized appreciation (depreciatio) in value of
investments |
|
(2,762,636 |
) |
|
|
4,007,279 |
|
|
|
(411,534 |
) |
|
|
6,505,300 |
|
|
|
19,690,216 |
|
|
|
(29,482,002 |
) |
|
Total realized
and unrealized gain (loss) on investments |
|
(4,999,323 |
) |
|
|
1,298,730 |
|
|
|
(411,533 |
) |
|
|
(3,350,153 |
) |
|
|
7,880,881 |
|
|
|
(29,198,726 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in net assets resulting from
operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,539,582 |
|
|
$ |
4,732,388 |
|
|
$ |
3,989,385 |
|
|
$ |
15,625,480 |
|
|
$ |
23,579,465 |
|
|
$ |
(9,344,770 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
per share |
$ |
0.62 |
|
|
$ |
0.25 |
|
|
$ |
0.32 |
|
|
$ |
1.39 |
|
|
$ |
1.15 |
|
|
$ |
1.45 |
|
|
Earnings (loss) per
share |
$ |
0.26 |
|
|
$ |
0.35 |
|
|
$ |
0.29 |
|
|
$ |
1.14 |
|
|
$ |
1.72 |
|
|
$ |
(0.68 |
) |
|
Weighted average shares
of common stock outstanding |
|
13,687,517 |
|
|
|
13,689,170 |
|
|
|
13,679,532 |
|
|
|
13,689,823 |
|
|
|
13,686,288 |
|
|
|
13,674,197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
About CM Finance Inc
The Company is an externally-managed,
closed-end, non-diversified management investment company that has
elected to be regulated as a business development company under the
Investment Company Act of 1940. The Company’s investment
objective is to maximize the total return to its stockholders in
the form of current income and capital appreciation through debt
and related equity investments by targeting investment
opportunities with favorable risk-adjusted returns. The Company
seeks to invest primarily in middle-market companies that have
annual revenues of at least $50mm and earnings before interest,
taxes, depreciation and amortization of at least $15mm. The
Company’s investment activities are managed by its investment
adviser, CM Investment Partners LLC. To learn more about CM Finance
Inc, please visit www.cmfn-inc.com.
Forward-Looking Statements
Statements included herein may contain
“forward-looking statements,” which relate to future performance or
financial condition. Statements other than statements of historical
facts included in this press release may constitute forward-looking
statements and are not guarantees of future performance or results
and involve a number of assumptions, risks and uncertainties, which
change over time. Actual results may differ materially from those
anticipated in any forward-looking statements as a result of a
number of factors, including those described from time to time in
filings by the Company with the Securities and Exchange Commission.
The Company undertakes no duty to update any forward-looking
statement made herein except as required by law. All
forward-looking statements speak only as of the date of this press
release.
ContactsCM Finance IncInvestor Relations Email:
investorrelations@cmipllc.comPhone: 212-257-5199
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