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Alcentra Capital Corporation Announces Fourth Quarter and Fiscal Year 2018 Financial Results
NEW YORK, March 11, 2019 /PRNewswire/ --Alcentra Capital Corporation (NASDAQ: ABDC) ("ABDC" or the "Company"), a provider of debt financing solutions to middle-market companies based primarily in the United States, today announced its financial results for the fourth quarter of 2018.
Fourth Quarter and Fiscal Year 2018 Highlights
|·||Total investment income of $7.0 million for the quarter and $29.0 million for the year ended December 31, 2018|
|·||Net investment income of $3.7 million, or $0.27 per share, for the quarter and $13.9 million, or $1.01 per share, for the year ended December 31, 2018|
|·||Invested $27.8 million of capital into two new portfolio companies and one add-on investment during the fourth quarter|
|·||Received proceeds from repayments, loan dispositions and amortizations on investments of $64.4 million during the fourth quarter|
|·||Net asset value of $145.8 million, or $11.13 per share|
|·||Weighted average debt portfolio yield of approximately 11.0%|
|·||Repurchased 411,939 shares during the quarter as part of the share repurchase program authorized on November 5, 2018; repurchased approximately 7.9% of shares outstanding since January 1, 2018|
Vijay Rajguru, Chairman and Chief Executive Officer of the Company, stated, "We have made significant progress this quarter towards rotating our portfolio into our new strategy and continued to make accretive repurchases of our shares under our buyback program. In addition, we are delighted to announce that Suhail Shaikh has been appointed as Chief Executive Officer and that Peter Glaser will continue as sole President of the Company. We believe this is the right time for these transitions, as both Suhail and Peter have been instrumental in rotating the legacy assets into our new strategy and in leading the investment team. Moving forward, I will remain Chairman of the Board, and will continue to provide strategic direction to the Company."
"In addition to serving as President, Peter will also be taking over as Co-Head of our European Direct Lending effort, where he will work closely with Suhail, who will continue to lead our Direct Lending business in the US. We believe that these management changes will improve coordination between our European and US direct lending teams and accelerate the growth of the Company's rotation to larger middle-market, private-equity-backed transactions."
Fourth Quarter 2018 Financial Results
For the three months ended December 31, 2018, total investment income was $7.0 million, a decrease of $1.2 million from the $8.2 million of total investment income for the three months ended December 31, 2017. This decrease was due primarily to the continued transition of the portfolio to senior secured loans. For the three months ended December 31, 2018, interest and PIK income comprised $6.2 million and other non-recurring income was $0.8 million. Net investment income for the three months ended December 31, 2018 was $3.7 million, or $0.27 per share, as compared to $4.0 million, or $0.28 per share, for the three months ended December 31, 2017.
For the three months ended December 31, 2018, total net expenses were $3.3 million, a decrease of $0.9 million from the $4.2 million of total net expenses for the three months ended December 31, 2017. Net expenses decreased primarily due to the management fee reduction and temporary waiver that commenced in May of 2018. The base net management fee was $0.8 million and there was a reversal of previously earned incentive fees of $0.4 million. For the three months ended December 31, 2018, professional fees and other general and administrative expenses totaled $1.1 million, an increase of $0.3 million from December 31, 2017. The increase was due primarily to professional and consulting fees.
For the three months ended December 31, 2018, ABDC recorded a net realized loss and net change in unrealized appreciation from portfolio investments of $2.6 million after the provision for taxes. As a result, the Company's net increase in net assets resulting from operations was $1.1 million for the three months ended December 31, 2018, after the provision for taxes.
Portfolio and Investment Activities
As of December 31, 2018, the fair value of ABDC's investment portfolio totaled $234.8 million and consisted of 30 investments including 28 companies, 1 broadly syndicated loan, and 1 rated debt security in a CLO. The average portfolio investment size on a cost and fair market basis was $8.7 million and $6.9 million, respectively. The Company received proceeds from repayments, loan dispositions, and amortizations on investments of $64.4 million during the three months ended December 31, 2018.
New and add-on investments totaling $27.8 million during the quarter ended December 31, 2018 included the following:
|·||Impact Group – A first lien term loan ($12.9 million) and a delayed draw facility ($7.1 million) at L + 6.5%. Impact Group is a sales and marketing agency which provides outsourced sales, marketing and merchandising services to consumer packaged-goods companies.|
|·||Sandvine – A $4.5 million second lien term loan at L + 8.00%. Sandvine is a leading provider of active network intelligence solutions for network operators and enterprises globally.|
|·||Epic Healthcare staffing– a draw on their revolver of $3.3 million.|
As of December 31, 2018, ABDC had one debt investment (Southern Technical Institute, Inc.) on non-accrual status.
A risk rating of the portfolio companies is available in ABDC's website presentation (https://investors.alcentracapital.com/events-presentations) and in the MD&A section of the Form 10-K for the quarter ended December 31, 2018 filed with the SEC.
Liquidity and Capital Resources
At December 31, 2018, ABDC had $11.0 million in cash and cash equivalents, $28.5 million of borrowings outstanding on its $115 million senior secured revolving credit facility and $55.0 million outstanding of Alcentra Capital InterNotes.
|·||On January 3, 2019, the Company paid a dividend to shareholders of record as of December 29, 2018 of $0.18 per share.|
|·||On January 15, 2019, the Company funded $5.0 million of the second lien loan for Cambium Learning Group, Inc. at L + 8.5%.|
|·||On January 31, 2019, Epic Healthcare Staffing Intermediate Holdco, LLC repaid $3.6 million of its revolver with the Company.|
|·||On February 4, 2019, the Company funded $2.4 million to Aegis Toxicology Sciences Corporation, a first lien loan at L + 5.5%.|
|·||On February 8, 2019, Tunnel Hill (FKA City Carting) repaid its escrow shares for $0.8 million.|
|·||On February 8, 2019, FST Technical Services, LLC repaid its debt and equity for $13.6 million (consisting of the principal amount of $13.4 million plus accrued interest) and $3.1 million, respectively.|
|·||On February 11, 2019, VVC Holding Corp. repaid its debt plus accrued interest in the amount of $6.0 million, plus a prepayment penalty of $0.1 million.|
|·||On March 4, 2019, ABDC was allocated a $3.0 million position in the first lien loan at L + 4.5%, and a $2.0 million position in the second lien loan at L + 8.5%, for Institutional Shareholder Services Inc. The second lien loan was funded on March 8, 2019.|
|·||On March 11, 2019, the Company's Board of Directors approved the 2019 first quarter dividend of $0.18 per share, payable on April 4, 2019 to stockholders of record as of March 29, 2019.|
|·||From January 1, 2019 through March 11, 2019, the Company repurchased an additional 229,729 shares under its share repurchase program; since January 1, 2018 the Company has repurchased approximately 9.5% of the shares outstanding.|
|·||Effective March 12, 2019, ABDC's Board of Directors appointed Suhail A. Shaikh, a Co-President of the Company, to serve as Chief Executive Officer of the Company. Vijay Rajguru will continue to serve the Company as Chairman of ABDC's Board of Directors. In connection with Mr. Shaikh's appointment as Chief Executive Officer, Peter Glaser will continue to serve as the Company's sole President.|
The following information was filed by Alcentra Capital Corp (ABDC) on Tuesday, March 12, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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