Solar Capital Ltd. (NASDAQ:SLRC), today reported net
investment income of $14.4 million, or $0.34 per share, for
the quarter ended March 31, 2015. Earnings are $10.9 million,
or $0.26 per share, for the first fiscal quarter. Net asset value
(NAV) per share was $21.91 at March 31, 2015.
Solar Capital Ltd. (the “Company”) also announced that its Board
of Directors has declared a quarterly distribution
of $0.40 per share payable on July 1, 2015 to
stockholders of record on June 25, 2015. Tax characteristics
of all distributions will be reported to shareholders on Form 1099
after the end of the calendar year.
HIGHLIGHTS:
At March 31, 2015:
Investment portfolio fair value: $1.04 billion Number of portfolio
companies: 42 Net assets: $930.5 million Net asset value per share:
$21.91
Portfolio Activity for the Quarter
Ended March 31, 2015
Investments made during the quarter: $30.2 million Investments
prepaid or sold during the quarter: $6.3 million
Operating Results for the Quarter Ended
March 31, 2015
Net investment income: $14.4 million Net realized and unrealized
loss: $3.5 million Net increase in net assets from operations:
$10.9 million Net investment income per share: $0.34
“During a quarter of muted new issue activity, we succeeded in
maintaining our portfolio size, and we’re pleased with its strong
credit performance. We have made strategic enhancements to our
origination and unitranche underwriting capabilities for our core
US middle market business and diversified our sourcing
opportunities through our life science lending initiative and asset
based lending at Crystal Financial,” said Michael Gross, Chairman
and CEO of Solar Capital Ltd. “With our low leverage, significant
available capital and expected reduced repayments, we anticipate
continued portfolio growth in Q2 and over the remainder of 2015.
Importantly, we have the capital to grow our net investment income
significantly without having to issue new equity.”
Conference Call and
Webcast
The Company will host an earnings conference call and audio
webcast at 10:00 a.m. (Eastern Time) on Wednesday, May 6, 2015. All
interested parties may participate in the conference call by
dialing (866) 953-6857 approximately 5-10 minutes prior to the
call, international callers should dial (617) 399-3481.
Participants should reference Solar Capital Ltd. and the
participant passcode of 88096317 when prompted. Following the call
you may access a replay of the event via audio webcast. This
conference call will be broadcast live over the Internet and can be
accessed by all interested parties through the Solar Capital Ltd.
website, www.solarcap.com. To listen to the live call, please go to
the Company's website at least 15 minutes prior to the start of the
call to register and download any necessary audio software. For
those who are not able to listen to the live broadcast, a replay
will be available shortly after the call on the Solar Capital Ltd.
website. Additionally, a replay dial-in will be available until May
20, 2015 and can be accessed by dialing (888) 286-8010 and using
the passcode 40553409. International callers should dial (617)
801-6888.
Portfolio and Investment
Activity
During the three months ended March 31, 2015, we invested
approximately $30 million across 5 portfolio companies.
Investments sold or prepaid during the quarter ended March 31, 2015
totaled approximately $6 million.
At March 31, 2015, our portfolio consisted of 42 portfolio
companies and was invested 59.7% in senior secured loans excluding
Crystal Financial LLC (“Crystal Financial”), 28.9% in Crystal
Financial whose portfolio is 100% comprised of senior secured
loans, 7.0% in subordinated debt, 2.1% in preferred equity and 2.3%
in common equity and warrants excluding Crystal Financial, measured
at fair value.
Crystal Financial’s $486 million funded portfolio consists of
senior secured loans from 25 issuers with an average exposure of
approximately $19 million. All of the commitments from Crystal
Financial are floating-rate, senior-secured loans. During the
quarter ended March 31, 2015, Crystal Financial funded new loans
totaling $40 million and had approximately $30 million of
exits.
The fair value weighted average yield on our portfolio of
income-producing investments was 10.0% at March 31, 2015.
At March 31, 2015, 87.1% or $884.5 million of our
income-producing investment portfolio* was floating rate and 12.9%
or $130.7 million of our income producing-portfolio was fixed rate,
measured at fair value.
From inception in 2006 through March 31, 2015, Solar Capital
Ltd. and its predecessor companies have invested approximately $3.9
billion in 124 portfolio companies. Over the same period, Solar
Capital Ltd. completed transactions with more than 85 different
financial sponsors.
* We have included Crystal Financial as 100% floating rate.
Results of Operations for the Three
Months Ended March 31, 2015 compared to the Three Months Ended
March 31, 2014
Investment Income
For the fiscal quarters ended March 31, 2015 and March 31, 2014,
gross investment income totaled $25.6 million and $32.6 million,
respectively. The decrease in gross investment income year over
year was primarily due to a reduction in income from call premiums
received as well as portfolio yield compression.
Expenses
Expenses totaled $11.2 million and $15.2 million, respectively,
for the three months ended March 31, 2015 and March 31, 2014. The
decrease in expenses year over year was primarily due to a decrease
in performance-based incentive fees on lower net investment income,
as well as decreases in administrative and other general and
administrative expenses.
Net Investment Income
The Company’s net investment income totaled $14.4 million or
$0.34 per average share and $17.4 million or $0.40 per average
share, respectively, for the three months ended March 31, 2015 and
March 31, 2014, respectively.
Net Realized and Unrealized Losses
Net realized and unrealized loss for the fiscal quarters ended
March 31, 2015 and March 31, 2014 totaled approximately $3.5
million and $3.7 million, respectively.
Net Increase in Net Assets Resulting From Operations
For the three months ended March 31, 2015 and March 31, 2014,
the Company had a net increase in net assets resulting from
operations of $10.9 million and $13.8 million, respectively. For
the same periods, earnings per average share were $0.26 and $0.31,
respectively.
Liquidity and Capital Resources
At March 31, 2015, the Company had $105 million of cash and a
total of $490 million of unused borrowing capacity under the Credit
Facility, subject to effective borrowing base limits.
SOLAR CAPITAL LTD.
CONSOLIDATED STATEMENTS OF ASSETS AND
LIABILITIES
(in thousands, except share
amounts)
March 31, 2015
(unaudited)
December 31,2014
Assets Investments at fair value: Companies less than 5%
owned (cost: $681,057 and $659,552, respectively) $ 674,179 $
652,288 Companies 5% to 25% owned (cost: $8,511 and $8,511,
respectively) 3,612 4,646 Companies more than 25% owned (cost:
$337,816 and $339,380, respectively) 365,256
363,804 Total investments (cost: $1,027,384 and
$1,007,443, respectively) 1,043,047 1,020,738 Cash 104,244 145,075
Cash equivalents 490,045 490,000 Foreign currency (cost: $444 and
$275, respectively) 407 265 Interest receivable 7,268 4,549
Dividends receivable 8,254 8,258 Deferred financing costs 3,254
3,263 Receivable for investments sold 14,393 13,138 Prepaid
expenses and other assets 1,494 1,048
Total assets $ 1,672,406 $ 1,686,334
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 16,986
Payable for investments and cash equivalents purchased 490,045
492,475 Management fee payable 5,865 6,109 Performance-based
incentive fee payable — 4,198 Administrative services expense
payable 278 2,427 Interest payable 2,590 1,504 Other liabilities
and accrued expenses 1,161 1,067
Total liabilities $ 741,925 $ 749,766
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 42,465,162
shares issued and outstanding, respectively
$ 425 $ 425 Paid-in capital in excess of par 991,963 991,963
Distributions in excess of net investment income (11,195 ) (8,599 )
Accumulated net realized loss (66,338 ) (60,506 ) Net unrealized
appreciation 15,626 13,285
Total net assets $ 930,481 $ 936,568
Net Asset Value Per Share $ 21.91 $ 22.05
SOLAR CAPITAL LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share
amounts)
Three months ended March 31,
2015 March 31, 2014 INVESTMENT INCOME: Interest:
Companies less than 5% owned [btr $ 16,323 $ 22,947 Companies 5% to
25% owned — 235 Companies more than 25% owned 700 960 Dividends:
Companies more than 25% owned 8,477 8,416 Other income: Companies
less than 5% owned 125 68 Companies more than 25% owned 5
4 Total investment income 25,630
32,630
EXPENSES: Management fees
$ 5,865 $ 6,210 Performance-based incentive fees — 3,213 Interest
and other credit facility expenses 3,601 3,592 Administrative
services expense 1,039 1,169 Other general and administrative
expenses 735 1,022 Total
expenses 11,240 15,206 Net
investment income $ 14,390 $ 17,424
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, CASH EQUIVALENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments and cash equivalents:
Companies less than 5% owned $ (4,779 ) $ 8 Companies 5% to 25%
owned (1,050 ) 928 Companies more than 25% owned —
(25,310 ) Net realized loss on investments and cash
equivalents (5,829 ) (24,374 ) Net realized loss on foreign
currencies: (3 ) (1,979 ) Net realized loss
(5,832 ) (26,353 ) Net change in unrealized
gain (loss) on investments and cash equivalents 2,368 20,782 Net
change in unrealized gain (loss) on foreign currencies (27 )
1,897 Net change in unrealized gain
2,341 22,679 Net realized and
unrealized gain (loss) on investments, cash equivalents and foreign
currencies (3,491 ) (3,674 )
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS
$ 10,899 $ 13,750
EARNINGS PER SHARE $
0.26 $ 0.31
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 including first lien, unitranche, and second lien debt
instruments.
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, condition 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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