BlackRock Capital Investment Corporation Declares Regular Quarterly Distribution of $0.21 per Share, Announces March 31, 2015 Quarterly Financial Results
Financial Highlights |
Operating Results for the Quarter Ended March 31, 2015: |
Net investment income per share: $0.20 |
Distributions declared per share: $0.21 |
Basic earnings per share: $0.30 |
Net asset value per share: $10.58 |
Net investment income: $14.6 million |
Net realized and unrealized gains: $8.0 million |
Net increase in net assets from operations: $22.7 million |
Net investment income per share, as adjusted1: $0.21 |
Net investment income, as adjusted1: $15.7 million |
Basic earnings per share, as adjusted1: $0.32 |
Net increase in net assets from operations, as adjusted1: $23.7 million |
Highlight Transactions
-
We provided
$25.0 million of an$80.0 million incremental second lien term loan toFoundation Building Materials, LLC (“Foundation”). This loan was priced at LIBOR + 11.0%, with a 1.0% floor and issued at 99.0% of par for an underwritten return in this transaction of 12.3% to maturity. Foundation is the third largest distributor of drywall, steel studs, stucco and other related building products to commercial and residential contractors. -
We sold our investment in
M&M Tradition Holdings Corp. (“M&M”) toMiTek Holdings, Inc. , a subsidiary ofBerkshire Hathaway . Our 11.5% common equity ownership generated net proceeds of approximately$14.3 million , inclusive of$0.6 million to be held in escrow. This resulted in a$9.3 million realized gain, and represented a further increase of$0.8 million above our mark for this investment at year end. Inclusive of escrow proceeds, our IRR on this investment is 18.1%. -
We sold our
$5.0 million equity investment inMarquette Transportation Company Holdings, LLC (“Marquette”). Total proceeds of$9.9 million , inclusive of$0.6 million to be held in escrow, resulted in a$4.9 million realized gain and represented a further increase of$1.1 million above our mark for this investment at year end. Inclusive of escrow proceeds, our IRR on this investment is 9.1%. -
We received early repayment of our
$20.4 million par subordinated loan toThe Pay-O-Matic Corp. , the #1 check cashing service provider in the state ofNew York . We are pleased that our IRR on this investment is 14.7%. -
On
March 6, 2015 ,BlackRock Advisors, LLC (“BlackRock Advisors”), a wholly owned indirect subsidiary ofBlackRock, Inc. (“BlackRock”), andBlackRock Kelso Capital Advisors LLC (“BKCA”), the previous advisor to the Company, consummated a transaction pursuant to whichBlackRock Advisors acquired certain assets related to managing the Company from BKCA (the “Transaction”). In connection with the Transaction, the Company entered into a new investment management agreement (the “New Agreement”) withBlackRock Advisors . The New Agreement was approved by the Company’s stockholders at a special meeting held onFebruary 18, 2015 . Also approved was a new management and incentive fee structure that will become effective on the second anniversary of the closing of the Transaction.
Also effective
Portfolio and Investment Activity (dollar amounts in millions) |
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Three months |
Three months |
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Commitments | $ | 46.3 | $ | 63.0 | |||||
Investment exits | 74.9 | 188.0 | |||||||
Number of portfolio company investments at the end of period | 45 | 46 | |||||||
Weighted average (“WA”) yield of debt and income producing equity securities, at cost | 11.5% | 12.0% | |||||||
WA yield of senior secured loans, at cost | 11.1% | 11.4% | |||||||
WA yield of other debt securities, at cost | 12.7% | 12.9% | |||||||
Average investment by portfolio company, at amortized cost (excluding investments below $5.0 million) | $ | 30.5 | $ | 25.8 | |||||
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The portion of our portfolio invested in unsecured or subordinated
debt securities decreased 3% to 15% during the quarter, while the
portion of our portfolio invested in senior secured loans and cash and
cash equivalents increased 1% and 3%, respectively. During the
quarter, the sales of our equity interests in M&M and Marquette were
partially offset by continued net appreciation in our existing equity
investments, resulting in a modest 1% decline in our equity portfolio
to 20% at quarter end. Our portfolio composition of senior secured
loans over the last twelve months increased by 9% to 53% at
March 31, 2015 , resulting in a 50 basis point decrease in our total portfolio yield over the respective period ends.
-
At
March 31, 2015 , our$1.3 billion investment portfolio at fair value and our$30.5 million average portfolio company investment at amortized cost are both at their highest levels since inception. Our$10.58 net asset value per share is the highest it has been in approximately seven years. - We continue to have no investments on non-accrual, and our average investment rating was 1.32 as compared to 1.27 for the prior quarter. Our blended IRR on all exits during the quarter was in excess of 14%, and we were able to successfully exit two equity positions during the quarter at rates of return that were accretive to our overall portfolio returns.
-
Net unrealized appreciation decreased
$0.3 million during the current quarter, bringing total balance sheet unrealized appreciation to$120.0 million . The decrease was due primarily to the reversal of unrealized appreciation on investment dispositions during the quarter, partially offset by$7.5 million of continued net appreciation on our existing portfolio. Taken in conjunction with$8.3 million of realized gains during the period, our net realized and unrealized gains of$8.0 million helped to drive our net asset value per share up$0.09 for the quarter to$10.58 per share atMarch 31, 2015 . This was more than a 10% increase over our$9.59 net asset value per share on a year over year basis. -
Fee income earned on capital structuring, commitment, administration
and amendments, as well as prepayment penalties during the current
quarter totaled
$0.2 million , as compared to$0.9 million of fee income earned for the first quarter of 2014. Removing fee income, our remaining investment income increased approximately 8.0% from$28.5 million last quarter to$30.7 million for the current quarter. -
Incentive management fees for the quarter were
$1.4 million , or$0.02 per share, consisting primarily of$1.4 million of incentive management fees based on gains. The incentive management fees based on gains were driven by a$6.8 million increase in net realized and unrealized gains for the three month measurement period endingMarch 31, 2015 over a net$137.7 million as of last quarter end. A hypothetical liquidation is performed each quarter end resulting in an additional accrual if the amount is positive; however, the resulting fee accrual is not due and payable untilJune 30 , if at all. Furthermore, incentive management fees based on income were minimal for the first quarter of 2015. Pro-forma incentive management fees earned during the quarter were$0.3 million , had they been accrued ratably throughout the year, consistent with$0.3 million of pro-forma fees for the first quarter of 2014. -
Our leverage, net of available cash and receivables for investments
sold, stood at 0.53 times at quarter end, providing us with available
debt capacity under our asset coverage requirements of
$313.9 million and$231.8 million available under our senior secured, revolving credit facility. -
As compared to last year, our weighted average cost of debt decreased
27 basis points to 4.95%. Our average debt outstanding increased from
$410.0 million to $460.5 million , resulting in a 4.3% increase in total borrowing costs for the current quarter as compared to last year’s quarterly average. -
Our net investment income, as adjusted, was
$0.21 per share, relative to distributions declared of$0.21 per share, resulting in net investment income dividend coverage of 100% for the quarter. Realized gains during the quarter provided another$0.11 per share of earnings with no accompanying distribution requirement, resulting in$0.32 per share of combined net investment income and realized gains, for dividend coverage of 153%. We continue to redeploy proceeds from equity sales into income producing assets, and our run rate net investment income, pre-incentive fee, excluding any fee income, is$0.21 per share on a pro-forma basis as of quarter end, consistent with our quarterly distribution. -
Pursuant to our share repurchase plan, we may repurchase up to 5.0% of
our outstanding shares of common stock from time to time in open
market or privately negotiated transactions, however, no purchases
were made on the open market during the quarter. Since inception of
our repurchase plan we have purchased 1,758,615 shares of our common
stock on the open market for
$12.3 million , including brokerage commissions. 998,035 shares remain authorized for repurchase. -
Tax characteristics of all 2014 distributions were reported to
stockholders on Form 1099 after the end of the calendar year. Our 2014
tax distributions of
$0.94 per share were comprised of ordinary income of$0.68 per share and a$0.26 per share return of capital, bringing our return of capital distributions since inception to$1.96 per share. For more information on our GAAP distributions, please refer to the Section 19 Notice that will be posted within the Distribution History section of our website. -
We intend to continue to make timely distributions sufficient to
satisfy the annual distribution requirements necessary to maintain our
qualification as a
Regulated Investment Company . We also intend to make distributions of net realized capital gains, if any, at least annually. We may, at our discretion, carry forward taxable income in excess of calendar year distributions and pay a 4% excise tax on this income. We will accrue excise tax on estimated undistributed taxable income as required. There was no undistributed taxable income carried forward from 2014.
Liquidity and Capital Resources
At
Conference Call
Prior to the webcast/teleconference, an investor presentation that
complements the earnings conference call will be posted to
1 Non-GAAP basis financial measure. See Supplemental Information on page 7.
BlackRock Capital Investment Corporation |
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March 31, |
December 31, 2014 |
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Assets | |||||||||||
Investments at fair value: | |||||||||||
Non-controlled, non-affiliated investments (cost of $803,415,960 and $813,962,545) |
$ |
820,890,650 |
$ | 832,237,704 | |||||||
Non-controlled, affiliated investments (cost of $85,567,927 and $91,936,084) | 200,593,376 | 211,155,607 | |||||||||
Controlled investments (cost of $225,233,723 and $228,402,329) | 214,152,290 | 214,323,427 | |||||||||
Total investments at fair value (cost of $1,114,217,610 and $1,134,300,958) | 1,235,636,316 | 1,257,716,738 | |||||||||
Cash and cash equivalents | 45,335,615 | 10,326,174 | |||||||||
Receivable for investments sold | 11,606,438 | 10,360,202 | |||||||||
Interest receivable | 17,798,411 | 13,419,032 | |||||||||
Prepaid expenses and other assets | 8,532,500 | 10,233,677 | |||||||||
Total Assets |
$ |
1,318,909,280 |
$ | 1,302,055,823 | |||||||
Liabilities | |||||||||||
Debt |
$ |
472,288,395 |
$ | 448,227,689 | |||||||
Interest payable | 3,432,834 | 7,918,429 | |||||||||
Distributions payable | 15,681,195 | 15,655,007 | |||||||||
Base management fees payable | 6,370,630 | 5,749,219 | |||||||||
Incentive management fees payable | 28,912,677 | 37,507,592 | |||||||||
Accrued administrative services | 157,595 | 241,500 | |||||||||
Other accrued expenses and payables | 2,160,963 | 4,797,219 | |||||||||
Total Liabilities | 529,004,289 | 520,096,655 | |||||||||
Net Assets | |||||||||||
Common stock, par value $.001 per share, 200,000,000 common shares authorized, | |||||||||||
76,430,935 and 76,306,237 issued and 74,672,320 and 74,547,622 outstanding | 76,431 | 76,306 | |||||||||
Paid-in capital in excess of par | 880,931,189 | 879,959,915 | |||||||||
Distributions in excess of taxable net investment income | (16,733,543) | (15,675,925) | |||||||||
Accumulated net realized loss | (182,080,574) | (190,427,433) | |||||||||
Net unrealized appreciation (depreciation) | 119,995,473 | 120,310,290 | |||||||||
Treasury stock at cost, 1,758,615 and 1,758,615 shares held | (12,283,985) | (12,283,985) | |||||||||
Total Net Assets | 789,904,991 | 781,959,168 | |||||||||
Total Liabilities and Net Assets |
$ |
1,318,909,280 |
$ | 1,302,055,823 | |||||||
Net Asset Value Per Share |
$ |
10.58 |
$ | 10.49 | |||||||
BlackRock Capital Investment Corporation |
Three months |
Three months |
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Investment Income: | |||||||||
Interest income: | |||||||||
Non-controlled, non-affiliated investments | $ |
23,325,856 |
$ | 24,088,064 | |||||
Non-controlled, affiliated investments | 1,578,568 | 1,102,012 | |||||||
Controlled investments | 4,688,530 | 2,907,216 | |||||||
Total interest income | 29,592,954 | 28,097,292 | |||||||
Fee income: | |||||||||
Non-controlled, non-affiliated investments | 73,727 | 807,500 | |||||||
Non-controlled, affiliated investments | — | — | |||||||
Controlled investments | 150,683 | 100,000 | |||||||
Total fee income | 224,410 | 907,500 | |||||||
Dividend income: | |||||||||
Non-controlled, non-affiliated investments | 201,612 | 34,675 | |||||||
Non-controlled, affiliated investments | 402,679 | 527,411 | |||||||
Controlled investments | 497,757 | — | |||||||
Total dividend income | 1,102,048 | 562,086 | |||||||
Total investment income | 30,919,412 | 29,566,878 | |||||||
Expenses: | |||||||||
Base management fees | 6,370,630 | 6,160,619 | |||||||
Interest and credit facility fees | 5,857,620 | 6,001,208 | |||||||
Incentive management fees | 1,377,907 | 3,459,865 | |||||||
Administrative services | 731,697 | 155,460 | |||||||
Amortization of debt issuance costs | 513,357 | 544,599 | |||||||
Professional fees | 438,641 | 727,601 | |||||||
Investment advisor expenses | 202,307 | 532,806 | |||||||
Director fees | 173,500 | 173,500 | |||||||
Other | 630,176 | 717,025 | |||||||
Total expenses | 16,295,835 | 18,472,683 | |||||||
Net Investment Income | 14,623,577 | 11,094,195 | |||||||
Realized and Unrealized Gain (Loss): | |||||||||
Net realized gain (loss): | |||||||||
Non-controlled, non-affiliated investments | 5,437,850 | 33,827,245 | |||||||
Non-controlled, affiliated investments | 9,286,910 | — | |||||||
Controlled investments | (6,377,901) | — | |||||||
Foreign currency | — | — | |||||||
Net realized gain (loss) | 8,346,859 | 33,827,245 | |||||||
Net change in unrealized appreciation or depreciation on: | |||||||||
Non-controlled, non-affiliated investments | 1,547,571 | (25,340,019) | |||||||
Non-controlled, affiliated investments | (4,194,074 ) | 2,675,149 | |||||||
Controlled investments | 2,997,469 | 965,651 | |||||||
Foreign currency translation | (665,783) | (305,702) | |||||||
Net change in unrealized appreciation or depreciation | (314,817) | (22,004,921) | |||||||
Net realized and unrealized gain (loss) | 8,032,042 | 11,822,324 | |||||||
Net Increase in Net Assets Resulting from Operations | $ | 22,655,619 | $ | 22,916,519 | |||||
Net Investment Income Per Share – basic | $ | 0.20 | $ | 0.15 | |||||
Earnings Per Share – basic | $ | 0.30 | $ | 0.31 | |||||
Weighted-Average Shares Outstanding – basic | 74,664,007 | 74,517,547 | |||||||
Net Investment Income Per Share – diluted | $ | 0.19 | $ | 0.15 | |||||
Earnings Per Share – diluted | $ | 0.29 | $ | 0.29 | |||||
Weighted-Average Shares Outstanding – diluted | 84,560,734 | 84,414,275 | |||||||
Distributions Declared Per Share | $ | 0.21 | $ | 0.26 | |||||
The Company reports its financial results on a GAAP basis; however, management believes that evaluating the Company’s ongoing operating results may be enhanced if investors have additional non-GAAP basis financial measures. Management reviews non-GAAP financial measures to assess ongoing operations and, for the reasons described below, considers them to be effective indicators, for both management and investors, of the Company’s financial performance over time. The Company’s management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
The Company records its liability for incentive management fees based on
income as it becomes legally obligated to pay them, based on a
hypothetical liquidation at the end of each reporting period. The
Company’s obligation to pay incentive management fees with respect to
any fiscal quarter is based on a formula that reflects the Company’s
results over a trailing four-fiscal quarter period ending with the
current fiscal quarter. The Company is legally obligated to pay the
amount resulting from the formula less any cash payments of incentive
management fees during the prior three quarters. The formula’s
requirement to reduce the incentive management fee by amounts paid with
respect to such fees in the prior three quarters has caused the
Company’s incentive management fee expense to become, and currently is
expected to be, concentrated in the fourth quarter of each year.
Management believes that reflecting incentive management fees throughout
the year, as the related investment income is earned, is an effective
measure of the Company’s profitability and financial performance that
facilitates comparison of current results with historical results and
with those of the Company’s peers. The Company’s “as adjusted” results
reflect incentive management fees based on the formula the Company
utilizes for each trailing four-fiscal quarter period, with the formula
applied to the current quarter’s incremental earnings and without any
reduction for incentive management fees paid during the prior three
quarters. The resulting amount represents an upper limit of each
quarter’s incremental incentive management fees that the Company may
become legally obligated to pay at the end of the year. Prior year
amounts are estimated in the same manner. These estimates represent
upper limits because, in any calendar year, subsequent quarters’
investment underperformance could reduce the incentive management fees
payable by the Company with respect to prior quarters’ operating
results. Similarly, the Company records its liability for incentive
management fees based on capital gains by performing a hypothetical
liquidation at the end of each reporting period. The accrual of this
hypothetical capital gains incentive management fee is required by GAAP,
but it should be noted that a fee so calculated and accrued is not due
and payable until the end of the measurement period, or every
Computations for the periods below are derived from the Company's financial statements as follows:
Three months |
Three months |
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GAAP Basis: | |||||||||
Net Investment Income | $ | 14,623,577 | $ | 11,094,195 | |||||
Net Investment Income per share | 0.20 | 0.15 | |||||||
Addback: GAAP incentive management fee expense based on Gains | 1,366,846 | 3,459,865 | |||||||
Addback: GAAP incentive management fee expense based on Income | 11,061 | — | |||||||
Pre-Incentive Fee2: | |||||||||
Net Investment Income | $ | 16,001,484 | $ | 14,554,060 | |||||
Net Investment Income per share | 0.21 | 0.20 | |||||||
Less: Incremental incentive management fee expense based on Income | 288,268 | 277,207 | |||||||
As Adjusted1: | |||||||||
Net Investment Income | $ | 15,713,216 | $ | 14,276,853 | |||||
Net Investment Income per share | 0.21 | 0.19 | |||||||
As Adjusted1: Amounts are adjusted to remove the incentive management fee expense based on gains, as required by GAAP, and to include only the incremental incentive management fee expense based on Income. The incremental incentive management fee is based on each trailing four-fiscal quarter period, applied to the current quarter's incremental earnings, and without any reduction for incentive management fees paid during the prior three quarters. Amounts reflect the Company's ongoing operating results and reflect the Company's financial performance over time.
Pre-Incentive Fee2: Amounts are adjusted to remove all incentive management fees. Such fees are calculated but not necessarily due and payable at this time.
About
The Company's investment objective is to generate both current income and capital appreciation through debt and equity investments. The Company invests primarily in middle-market companies in the form of senior and junior secured and unsecured debt securities and loans, each of which may include an equity component, and by making direct preferred, common and other equity investments in such companies.
Forward-looking statements
This press release, and other statements that
In addition to factors previously disclosed in
BlackRock Capital Investment’s Annual Report on Form 10-K for the year
ended
Available Information
BlackRock Capital Investment’s filings with the
Source:
BlackRock Capital Investment Corporation
Investors:
Corinne
Pankovcin, 212-810-5798
or
Press:
Brian Beades,
212-810-5596