Solar Capital Ltd. (the “Company”) (NASDAQ:SLRC), today
reported earnings of $17.1 million, or $0.40 per share for the
quarter ended June 30, 2014. Net investment income was $16.1
million, or $0.38 per share, for the second quarter. At June 30,
2014, net asset value (NAV) per share was $22.44.
The Company’s Board of Directors declared a third quarter
distribution of $0.40 per share payable on October
1, 2014 to stockholders of record on September 18, 2014.
The specific tax characteristics will be reported to stockholders
on Form 1099 after the end of the calendar year.
HIGHLIGHTS:
At June 30, 2014:
Investment portfolio fair value: $984.1
millionNumber of portfolio companies: 43Net assets: $952.9
millionNet asset value per share: $22.44
Portfolio Activity for the Quarter Ended June 30,
2014:
Investments made during the quarter: $89.4
millionInvestments prepaid or sold during the quarter: $137.8
million
Operating Results for the Quarter Ended June 30,
2014:
Net investment income: $16.1 millionNet
realized and unrealized gain: $1.0 millionNet increase in net
assets from operations: $17.1 millionNet investment income per
share: $0.38
“Our predominantly senior secured, floating rate portfolio
positions us well in both current market conditions, as well as a
rising rate environment. We continue to believe that traditional
senior secured loans and unitranche loans offer the best
risk-reward profiles, and our origination platform is actively
pursuing initiatives to capitalize on this opportunity set,” said
Michael Gross, Chairman and CEO of Solar Capital Ltd. “Throughout
the past two years of heated credit market conditions, we’ve
remained disciplined with our capital, which has enabled us to be
highly selective in the construction of our portfolio and provides
us with the capacity to pursue attractive growth
opportunities.”
Conference Call and
Webcast
The company will host an earnings conference call and audio
webcast at 10:00 a.m. (Eastern Time) on Tuesday, August 5,
2014.
All interested parties may participate in the conference call by
dialing (877) 415-3181 approximately 5-10 minutes prior to the
call. International callers should dial (857) 244-7324.
Participants should reference Solar Capital Ltd. and the
participant passcode of 54156597 when prompted. This conference
call also can be accessed by all interested parties through Solar
Capital’s website, www.solarcapltd.com. Additionally, a replay
dial-in will be available until August 19, 2014 and can
be accessed by dialing (888) 286-8010 and using the passcode
88909951. International callers should dial (617) 801-6888 to
listen to the replay.
Portfolio and Investment
Activity
During the three months ended June 30, 2014, we invested
approximately $89.4 million across nine portfolio companies.
Investments prepaid or sold during the quarter ended June 30, 2014
totaled approximately $137.8 million.
At June 30, 2014, our portfolio consisted of 43 portfolio
companies and was invested 43.9% in senior secured loans excluding
Crystal Financial, 30.4% in Crystal Financial whose portfolio is
100% comprised of senior secured loans, 18.3% in subordinated debt,
2.3% in preferred equity and 5.1% in common equity and warrants
excluding Crystal Financial, measured at fair value.
Crystal Financial’s $351.0 million funded portfolio consists of
senior secured loans from 24 issuers with an average exposure of
$14.6 million. All of the commitments from Crystal Financial are
floating rate, senior secured loans. During the quarter ended June
30, 2014, Crystal Financial funded new loans totaling $5.1 million
and had $68.5 million of funded loans repaid.
The fair value weighted average yield on our portfolio of
income-producing investments was 10.5% at June 30, 2014.
At June 30, 2014, 71.0% or $663.1 million of our
income-producing investment portfolio* is floating rate and 29.0%
or $271.1 million of our income-producing portfolio is fixed rate,
measured at fair value.
From inception in 2006 through June 30, 2014, Solar Capital Ltd.
and its predecessor companies have invested approximately $3.5
billion in 112 portfolio companies. Over the same period, Solar
Capital Ltd. completed transactions with more than 80 different
financial sponsors.
* We have included Crystal Financial as 100% floating rate.
Results of Operations for the Three
Months Ended June 30, 2014 compared to the Three Months Ended June
30, 2013.
Investment Income
For the three months ended June 30, 2014 and 2013, gross
investment income totaled $28.0 million and $39.1 million,
respectively. The decrease in gross investment income year over
year was primarily due to a smaller income-producing portfolio from
the net effect of portfolio repayments, as well as portfolio yield
compression.
Expenses
Expenses totaled $11.9 million and $19.9 million, respectively,
for the three months ended June 30, 2014 and 2013. The decrease in
expenses year over year was primarily due to a decrease in
management and performance-based incentive fees on lower investment
income and portfolio size, as well as decreases in debt expenses
due to lower average borrowings.
Net Investment Income
The Company’s net investment income totaled $16.1 million and
$19.3 million, or $0.38 and $0.43 per average share, for the three
months ended June 30, 2014 and 2013, respectively.
Net Realized and Unrealized Gain (Loss)
Net realized and unrealized gain (loss) for the three months
ended June 30, 2014 and 2013 totaled approximately $1.0 million and
($19.3) million, respectively.
Net Increase (Decrease) in Net Assets Resulting From
Operations
For the three months ended June 30, 2014 and 2013, the Company
had a net increase (decrease) in net assets resulting from
operations of $17.1 million and ($0.0) million, respectively. For
the same periods, earnings (loss) per average share were $0.40 and
($0.00), respectively.
Liquidity and Capital Resources
At June 30, 2014, the Company had approximately $208.3 million
of cash and a total of $490 million of unused credit capacity,
subject to borrowing base limitations.
During the three months ended June 30, 2014, the Company
repurchased $19.5 million of its common stock at an average price
of approximately $21.93 per share, representing a 2.3% discount to
the NAV per share at June 30, 2014. The Company repurchased a total
of $56.6 million out of $100 million authorized. The share
repurchase program expired on July 31, 2014.
Financial Statements and
Tables
SOLAR CAPITAL LTD. CONSOLIDATED STATEMENTS OF ASSETS AND
LIABILITIES (in thousands, except share amounts)
June 30, 2014(unaudited)
December 31,2013
Assets Investments at fair value: Companies less than 5%
owned (cost: $614,284 and $688,685, respectively) $ 608,088 $
680,720 Companies 5% to 25% owned (cost: $8,264 and $7,789,
respectively) 7,933 7,789 Companies more than 25% owned (cost:
$342,541 and $394,285, respectively) 368,126
399,890 Total investments (cost: $965,089 and $1,090,759,
respectively) 984,147 1,088,399 Cash and cash equivalents 696,642
585,278 Foreign currency (cost: $1,667 and $1,702, respectively)
1,683 1,701 Interest receivable 7,404 5,623 Dividends receivable
4,272 8,605 Deferred financing costs 3,282 3,300 Derivatives — —
Receivable for investments sold 7,591 14,870 Prepaid expenses and
other assets 1,080 666
Total
assets $ 1,706,101 $ 1,708,442
Liabilities
Revolving credit facilities $ — $ — Unsecured senior notes 100,000
100,000 Senior secured notes 75,000 75,000 Term loan 50,000 50,000
Distributions payable 16,986 17,698 Payable for investments and
cash equivalents purchased 501,235 454,887 Management fee payable
6,173 5,780 Performance-based incentive fee payable — 4,633
Administrative services expense payable 968 2,085 Interest payable
1,489 1,499 Other liabilities and accrued expenses 1,327
1,223
Total liabilities $ 753,178
$ 712,805
Net Assets Common
stock, par value $0.01 per share, 200,000,000 and 200,000,000
common shares authorized, respectively, and 42,465,162 and
44,244,195 shares issued and outstanding, respectively $ 425 $ 442
Paid-in capital in excess of par 1,071,484 1,110,545 Distributions
in excess of net investment income (18,258 ) (17,344 ) Accumulated
net realized loss (119,802 ) (92,706 ) Net unrealized appreciation
(depreciation) 19,074 (5,300 )
Total net
assets $ 952,923 $ 995,637
Net Asset Value Per
Share $ 22.44 $ 22.50
SOLAR CAPITAL
LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except share amounts)
Three months ended June 30, 2014
June 30, 2013 INVESTMENT INCOME: Interest: Companies
less than 5% owned $ 19,020 $ 26,390 Companies 5% to 25% owned 245
1,466 Companies more than 25% owned 4,232 2,434 Dividends:
Companies 5% to 25% owned — (65 ) Companies more than 25% owned
4,507 8,920 Total investment income
28,004 39,145
EXPENSES:
Management fees $ 6,173 $ 7,267 Performance-based incentive fees —
4,814 Interest and other credit facility expenses 3,621 4,819
Administrative services expense 1,442 1,529 Other general and
administrative expenses 636 1,460 Total
expenses 11,872 19,889 Net investment
income $ 16,132 $ 19,256
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, CASH EQUIVALENTS, FOREIGN CURRENCIES AND
DERIVATIVES:
Net realized gain (loss) on investments and cash equivalents:
Companies less than 5% owned $ (2 ) $ (1,619 ) Companies 5% to 25%
owned 248 — Companies more than 25% owned 26 —
Net realized gain (loss) on investments and cash equivalents
272 (1,619 ) Net realized loss on foreign currencies and
derivatives: (1,015 ) (293 ) Net realized loss
(743 ) (1,912 ) Net change in unrealized gain (loss) on
investments and cash equivalents 637 (18,263 ) Net change in
unrealized gain (loss) on foreign currencies and derivatives
1,058 906 Net change in unrealized gain (loss)
1,695 (17,357 ) Net realized and unrealized
gain (loss) on investments, cash equivalents, foreign currencies
and derivatives 952 (19,269 )
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
$ 17,084 $ (13 )
EARNINGS (LOSS) PER SHARE $ 0.40
$ (0.00 )
About Solar Capital Ltd.
Solar Capital Ltd. is a closed-end investment company that has
elected to be treated as a business development company under the
Investment Company Act of 1940. The Company invests primarily in
leveraged, middle market companies in the form of senior secured
loans, mezzanine loans, and equity securities.
Forward-Looking
Statements
Statements included herein may constitute “forward-looking
statements,” which relate to future events or our future
performance or financial condition. These statements are not
guarantees of future performance, conditions or results and involve
a number of risks and uncertainties. Actual results may differ
materially from those in the forward-looking statements as a result
of a number of factors, including those described from time to time
in our filings with the Securities and Exchange Commission. Solar
Capital Ltd. undertakes no duty to update any forward-looking
statements made herein.
Solar Capital Ltd.Investor RelationsRichard Pivirotto(646)
308-8770
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