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TCG BDC, Inc. Announces First Quarter 2019 Financial Results and Declares Second Quarter 2019 Dividend of $0.37 Per Share

/EIN News/ -- NEW YORK, May 07, 2019 (GLOBE NEWSWIRE) -- TCG BDC, Inc. (together with its consolidated subsidiaries, “we,” “us,” “our,” “TCG BDC” or the “Company”) (NASDAQ: CGBD) today announced its financial results for its first quarter ended March 31, 2019.

Selected Financial Highlights

(dollar amounts in thousands, except per share data) March 31, 2019   December 31, 2018
Total investments, at fair value $ 2,155,209     $ 1,972,157  
Total assets 2,214,279     2,084,743  
Total debt 1,107,064     960,678  
Total net assets $ 1,060,187     $ 1,063,218  
Net assets per share $ 17.30     $ 17.09  


  For the three month periods ended
  March 31, 2019   December 31, 2018
Total investment income $ 55,187     $ 56,311  
Net investment income (loss) 27,562     29,411  
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments 6,164     (30,571 )
Net increase (decrease) in net assets resulting from operations $ 33,726     $ (1,160 )
       
Basic and diluted per weighted-average common share:      
Net investment income (loss) $ 0.45     $ 0.47  
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments 0.10     (0.49 )
Net increase (decrease) in net assets resulting from operations $ 0.55     $ (0.02 )
Weighted-average shares of common stock outstanding—Basic and Diluted 61,772,774     62,496,338  
Dividends declared per common share $ 0.37     $ 0.57  

First Quarter 2019 Highlights
(dollar amounts in thousands, except per share data)

  • Net investment income for the three month period ended March 31, 2019 was $27,562, or $0.45 per share, as compared to $29,411, or $0.47 per share, for the three month period ended December 31, 2018;
  • Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments for the three month period ended March 31, 2019 was $6,164, or $0.10 per share, primarily driven by a decrease in market yields, as compared to $(30,571), or $(0.49) per share, for the three month period ended December 31, 2018;
  • Net increase (decrease) in net assets resulting from operations for the three month period ended March 31, 2019 was $33,726, or $0.55 per share, as compared to $(1,160), or $(0.02) per share, for the three month period ended December 31, 2018;
  • During the three month period ended March 31, 2019, the Company repurchased 958,182 shares of the Company's common stock pursuant to the Company’s $100 million stock repurchase program at an average cost of $14.70 per share, or $14.1 million in the aggregate, resulting in accretion to net assets per share of $0.04; and
  • On May 6, 2019, our Board of Directors declared a quarterly dividend of $0.37 per share, which is payable on July 17, 2019 to stockholders of record as of June 28, 2019.

Portfolio and Investment Activity
(dollar amounts in thousands, except per share data, unless otherwise noted)

As of March 31, 2019, the fair value of our investments was approximately $2,155,209, comprised of 131 investments in 103 portfolio companies/investment fund across 29 industries with 59 sponsors. This compares to the Company’s portfolio as of December 31, 2018, as of which date the fair value of our investments was approximately $1,972,157, comprised of 119 investments in 96 portfolio companies/investment fund across 27 industries with 57 sponsors.

As of March 31, 2019 and December 31, 2018, investments consisted of the following:

  March 31, 2019   December 31, 2018
 Type—% of Fair Value Fair Value   % of Fair Value   Fair Value   % of Fair Value
First Lien Debt (excluding First Lien/Last Out) $ 1,462,000     67.84 %   $ 1,343,422     68.12 %
First Lien/Last Out Unitranche 201,301     9.34     202,849     10.29  
Second Lien Debt 228,851     10.62     178,958     9.07  
Equity Investments 28,466     1.32     24,633     1.25  
Investment Fund 234,591     10.88     222,295     11.27  
Total $ 2,155,209     100.00 %   $ 1,972,157     100.00 %

The following table shows our investment activity for the three month period ended March 31, 2019:

  Funded   Sold/Repaid
Principal amount of investments: Amount   % of Total   Amount   % of Total
First Lien Debt (excluding First Lien/Last Out) $ 143,749     57.57 %   $ (25,902 )   37.07 %
First Lien/Last Out Unitranche 23,879     9.56     (25,264 )   36.16  
Second Lien Debt 49,344     19.76          
Equity Investments 2,241     0.90          
Investment Fund 30,500     12.21     (18,700 )   26.77  
Total $ 249,713     100.00 %   $ (69,866 )   100.00 %

Overall, total investments at fair value increased by 9.3%, or $183,052, during the three month period ended March 31, 2019 after factoring in repayments, sales, net fundings on revolvers and delayed draws and net change in unrealized appreciation (depreciation).

Total investments at fair value held by Middle Market Credit Fund, LLC (“Credit Fund”), which is not consolidated with the Company, increased by 7.2%, or $84,787, during the three month period ended March 31, 2019 after factoring in repayments, sales, net fundings on revolvers and delayed draws and net change in unrealized appreciation (depreciation). As of March 31, 2019, Credit Fund had total investments at fair value of $1,258,295, which comprised 97.8% of first lien senior secured loans, 1.8% of second lien senior secured loans, and 0.4% of equity investments at fair value. As of March 31, 2019, on a fair value basis, approximately 1.7% of Credit Fund’s debt investments bear interest at a fixed rate and approximately 98.3% of Credit Fund’s debt investments bear interest at a floating rate, which primarily are subject to interest rate floors.

As of March 31, 2019, the weighted average yields for our first and second lien debt investments on an amortized cost basis were 9.30% and 11.07%, respectively, with a total weighted average yield of 9.51%. Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of March 31, 2019. As of March 31, 2019, on a fair value basis, approximately 0.7% of our debt investments bear interest at a fixed rate and approximately 99.3% of our debt investments bear interest at a floating rate, which primarily are subject to interest rate floors.

As part of the monitoring process, our Investment Adviser has developed risk policies pursuant to which it regularly assesses the risk profile of each of our debt investments and rates each of them based on the following categories, which we refer to as “Internal Risk Ratings”:

Internal Risk Ratings Definitions

Rating   Definition
1   Performing—Low Risk: Borrower is operating more than 10% ahead of the base case.
   
2   Performing—Stable Risk: Borrower is operating within 10% of the base case (above or below). This is the initial rating assigned to all new borrowers.
   
3   Performing—Management Notice: Borrower is operating more than 10% below the base case. A financial covenant default may have occurred, but there is a low risk of payment default.
   
4   Watch List: Borrower is operating more than 20% below the base case and there is a high risk of covenant default, or it may have already occurred. Payments are current although subject to greater uncertainty, and there is moderate to high risk of payment default.
   
5   Watch List—Possible Loss: Borrower is operating more than 30% below the base case. At the current level of operations and financial condition, the borrower does not have the ability to service and ultimately repay or refinance all outstanding debt on current terms. Payment default is very likely or may have occurred. Loss of principal is possible.
   
6   Watch List—Probable Loss: Borrower is operating more than 40% below the base case, and at the current level of operations and financial condition, the borrower does not have the ability to service and ultimately repay or refinance all outstanding debt on current terms. Payment default is very likely or may have already occurred. Additionally, the prospects for improvement in the borrower’s situation are sufficiently negative that impairment of some or all principal is probable.

Our Investment Adviser’s risk rating model is based on evaluating portfolio company performance in comparison to the base case when considering certain credit metrics including, but not limited to, adjusted EBITDA and net senior leverage as well as specific events including, but not limited to, default and impairment.

Our Investment Adviser monitors and, when appropriate, changes the investment ratings assigned to each debt investment in our portfolio. In connection with our quarterly valuation process, our Investment Adviser reviews our investment ratings on a regular basis. The following table summarizes the Internal Risk Ratings of our debt portfolio as of March 31, 2019 and December 31, 2018:

  March 31, 2019   December 31, 2018
  Fair Value   % of Fair Value   Fair Value   % of Fair Value
(dollar amounts in millions)              
Internal Risk Rating 1 $ 70.8     3.74 %   $ 71.0     4.12 %
Internal Risk Rating 2 1,381.7     73.02     1,302.9     75.52  
Internal Risk Rating 3 212.5     11.23     208.4     12.08  
Internal Risk Rating 4 189.2     10.00     105.1     6.09  
Internal Risk Rating 5 23.3     1.23     23.5     1.36  
Internal Risk Rating 6 14.7     0.78     14.3     0.83  
Total $ 1,892.2     100.00 %   $ 1,725.2     100.00 %

As of March 31, 2019 and December 31, 2018, the weighted average Internal Risk Rating of our debt investment portfolio was 2.3.

Consolidated Results of Operations
(dollar amounts in thousands, except per share data)

Total investment income for the three month periods ended March 31, 2019 and December 31, 2018 was $55,187 and $56,311, respectively. This $1,124 net decrease during the three month period ended March 31, 2019 compared to the three month period ended December 31, 2018 was primarily due to a decrease in income recognized from the acceleration of OID and prepayment fees from reduced prepayments, partially offset by an increase in interest income from growth in the investment portfolio.

Total expenses for the three month periods ended March 31, 2019 and December 31, 2018 were $27,625 and $26,900, respectively. This $725 net increase during the three month period ended March 31, 2019 compared to the three month period ended December 31, 2018 was primarily attributable to an increase in interest expense as a result of an increase in average borrowings and LIBOR, partially offset by a decrease in incentive fees.

During the three month period ended March 31, 2019, the Company recorded a net realized gain and change in unrealized appreciation of $6,164. This was primarily driven by a decrease in market yields.

Liquidity and Capital Resources
(dollar amounts in thousands, except per share data)

As of March 31, 2019, the Company had cash and cash equivalents of $40,071, notes payable (before debt issuance costs) of $449,200, and secured borrowings outstanding of $660,959. As of March 31, 2019, the Company had $252,041 of remaining unfunded commitments and $109,420 available for additional borrowings under its revolving credit facilities, subject to leverage and borrowing base restrictions.

Dividend

On May 6, 2019, our Board of Directors declared a quarterly dividend of $0.37 per share, which is payable on July 17, 2019 to stockholders of record as of June 28, 2019.

Conference Call

The Company will host a conference call at 9:30 a.m. EDT on Wednesday, May 8, 2019 to discuss these quarterly financial results. The call and webcast will be available on the TCG BDC website at tcgbdc.com. The call may be accessed by dialing +1 (866) 394-4623 (U.S.) or +1 (409) 350-3158 (international) and referencing “TCG BDC Financial Results Call.” The conference call will be webcast simultaneously via a link on TCG BDC’s website and an archived replay of the webcast also will be available on the website soon after the live call for 21 days.


TCG BDC, INC.
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(dollar amounts in thousands, except per share data)

  March 31, 2019   December 31, 2018
  (unaudited)    
ASSETS      
Investments, at fair value      
Investments—non-controlled/non-affiliated, at fair value (amortized cost of $1,965,496 and $1,799,751, respectively) $ 1,899,537     $ 1,731,319  
Investments—non-controlled/affiliated, at fair value (amortized cost of $14,081 and $13,839, respectively) 21,081     18,543  
Investments—controlled/affiliated, at fair value (amortized cost of $241,801 and $230,001, respectively) 234,591     222,295  
Total investments, at fair value (amortized cost of $2,221,378 and $2,043,591, respectively) 2,155,209     1,972,157  
Cash and cash equivalents 40,071     87,186  
Receivable for investment sold     8,060  
Deferred financing costs 4,069     3,950  
Interest receivable from non-controlled/non-affiliated investments 7,658     5,853  
Interest receivable from non-controlled/affiliated investments 8     3  
Interest and dividend receivable from controlled/affiliated investments 7,256     7,405  
Prepaid expenses and other assets 8     129  
Total assets $ 2,214,279     $ 2,084,743  
LIABILITIES      
Secured borrowings $ 660,959     $ 514,635  
Notes payable, net of unamortized debt issuance costs of $3,095 and $3,157, respectively 446,105     446,043  
Payable for investments purchased     1,870  
Due to Investment Adviser 169     236  
Interest and credit facility fees payable 7,994     7,500  
Dividend payable 22,681     35,497  
Base management and incentive fees payable 13,531     13,834  
Administrative service fees payable 139     94  
Other accrued expenses and liabilities 2,514     1,816  
Total liabilities 1,154,092     1,021,525  
       
NET ASSETS      
Common stock, $0.01 par value; 200,000,000 shares authorized; 61,272,069 and 62,230,251 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively 613     622  
Paid-in capital in excess of par value 1,160,258     1,174,334  
Offering costs (1,633 )   (1,633 )
Total distributable earnings (loss) (99,051 )   (110,105 )
Total net assets $ 1,060,187     $ 1,063,218  
NET ASSETS PER SHARE $ 17.30     $ 17.09  
               


TCG BDC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollar amounts in thousands, except per share data)
(unaudited)

    For the three month periods ended
    March 31, 2019   December 31, 2018
Investment income:        
From non-controlled/non-affiliated investments:        
Interest income   $ 45,242     $ 45,500  
Other income   2,028     2,724  
Total investment income from non-controlled/non-affiliated investments   47,270     48,224  
From non-controlled/affiliated investments:        
Interest income   379     377  
Total investment income from non-controlled/affiliated investments   379     377  
From controlled/affiliated investments:        
Interest income   3,538     4,010  
Dividend income   4,000     3,700  
Total investment income from controlled/affiliated investments   7,538     7,710  
Total investment income   55,187     56,311  
Expenses:        
Base management fees   7,685     7,595  
Incentive fees   5,846     6,239  
Professional fees   745     814  
Administrative service fees   216     151  
Interest expense   11,991     10,905  
Credit facility fees   568     606  
Directors’ fees and expenses   93     87  
Other general and administrative   421     343  
Total expenses   27,565     26,740  
Net investment income (loss) before taxes   27,622     29,571  
Excise tax expense   60     160  
Net investment income (loss)   27,562     29,411  
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments:        
Net realized gain (loss) from:        
Non-controlled/non-affiliated investments   899     1,619  
Net change in unrealized appreciation (depreciation):        
Non-controlled/non-affiliated   2,473     (29,407 )
Non-controlled/affiliated   2,296     4,326  
Controlled/affiliated   496     (7,109 )
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments   6,164     (30,571 )
Net increase (decrease) in net assets resulting from operations   $ 33,726     $ (1,160 )
Basic and diluted earnings per common share   $ 0.55     $ (0.02 )
Weighted-average shares of common stock outstanding—Basic and Diluted   61,772,774     62,496,338  
             

About TCG BDC, Inc. 

TCG BDC is an externally managed specialty finance company focused on lending to middle-market companies. TCG BDC is managed by Carlyle Global Credit Investment Management L.L.C., an SEC-registered investment adviser and a wholly owned subsidiary of The Carlyle Group L.P. Since it commenced investment operations in May 2013 through March 31, 2019, TCG BDC has invested approximately $4.9 billion in aggregate principal amount of debt and equity investments prior to any subsequent exits or repayments. TCG BDC’s investment objective is to generate current income and capital appreciation primarily through debt investments in U.S. middle market companies. TCG BDC has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended.

Web: tcgbdc.com   

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 

This press release may contain forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by the use of forward-looking terminology such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may,” “plans,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words. You should read statements that contain these words carefully because they discuss our plans, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. There may be events in the future, however, that we are not able to predict accurately or control. You should not place undue reliance on these forward-looking statements, which speak only as of the date on which we make it. Factors or events that could cause our actual results to differ, possibly materially from our expectations, include, but are not limited to, the risks, uncertainties and other factors we identify in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in filings we make with the Securities and Exchange Commission, and it is not possible for us to predict or identify all of them. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Contacts:

Investors: Media:
Daniel Harris Elizabeth Gill
+1-212-813-4527
daniel.harris@carlyle.com 
+1-202-729-5385
elizabeth.gill@carlyle.com 

 


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