05/06/2019 | Press release | Distributed by Public on 05/06/2019 14:10
NEW YORK, May 06, 2019 (GLOBE NEWSWIRE) -- Solar Capital Ltd. (NASDAQ: SLRC) (the 'Company' or 'Solar Capital'), today reported net investment income of $18.5 million, or $0.44 per share, for the first quarter 2019.
At March 31, 2019, net asset value (NAV) was $21.93 per share, an increase from $21.75 the prior quarter. In addition, the Company's portfolio was 100% performing at March 31, 2019.
The Board declared a second quarter distribution of $0.41 per share payable on July 2, 2019 to stockholders of record as of June 20, 2019. The specific tax characteristics will be reported to stockholders on Form 1099 after the end of the calendar year.
At March 31, 2019:
Comprehensive Investment Portfolio Activity** for the Quarter Ended March 31, 2019:
Operating Results for the Quarter Ended March 31, 2019:
* The Comprehensive Investment Portfolio is comprised of Solar Capital Ltd.'s investment portfolio, Crystal Financial's full portfolio (including its ownership of its SBIC), and NEF Holdings, LLC's ('NEF') full portfolio and excludes the fair value of the equity interests in Crystal Financial and NEF.
** Includes investment activity through Crystal Financial (including its ownership of its SBIC) and NEF.
'We are pleased with our first quarter's results, as well as the Company's strong foundation,' said Michael Gross, Chairman and CEO of Solar Capital Ltd. 'Our portfolio is one hundred percent performing, and our NII per share continued to exceed distributions. At March 31, 2019, approximately 75% of the Company's assets were investments in Solar Capital's commercial finance verticals, reflecting our successful transition to a diversified specialty finance business focused on senior secured lending across a number of middle market lending niches. With our available credit and capacity to expand our asset-based loan portfolio, Solar Capital is positioned for net investment income growth in 2019.'
Conference Call and Webcast
The Company will host an earnings conference call and audio webcast at 10:00 a.m. (Eastern Time) on Tuesday, May 7, 2019. All interested parties may participate in the conference call by dialing (844) 889-7786 approximately 5-10 minutes prior to the call, international callers should dial (661) 378-9930. Participants should reference Solar Capital Ltd. and the participant passcode of 6191296 when prompted. A telephone replay will be available until May 21, 2019 and can be accessed by dialing (855) 859-2056 and using the passcode 6191296. International callers should dial (404) 537-3406. This conference call will also be broadcast live over the Internet and can be accessed by all interested parties through Solar Capital's website, www.solarcapltd.com. To listen to the webcast, please go to the Company's website 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 of the webcast will be available soon after the call.
Comprehensive Investment Portfolio
During the three months ended March 31, 2019, Solar Capital had total originations of $193.9 million and repayments of $122.0 million across its four core business units: cash flow, asset-based, equipment finance, and life science lending.
Comprehensive Investment Portfolio Activity(1)
Loans / Crystal Financial(2)
Financings / NEF(3)
|Repayments / Amortization||$27.8||$36.7||$21.6||$35.9||$122.0|
|Net Portfolio Activity||($19.5)||$34.3||$17.1||$40.0||$71.9|
Our Comprehensive Investment Portfolio composition by business unit at March 31, 2019 was as follows:
Comprehensive Investment Portfolio Composition
(at fair value)
|Cash Flow Senior Secured Loans||$424.8||23.8%||9.9%(5)|
|Asset-Based Senior Secured Loans / Crystal Financial(1)||$640.7||35.9%||11.7%(6)|
|Equipment Senior Secured Financings / NEF(2)||$398.2||22.3%||10.2%(7)|
|Life Science Senior Secured Loans||$293.2||16.4%||11.5%(8)|
|Total Senior Secured Loans||$1,756.9||98.4%||10.9%|
|Equity and Equity-like Securities(3)||$29.2||1.6%|
|Total Comprehensive Investment Portfolio||$1,786.1||100%|
|Floating Rate Investments(4)||$1,335.5||75.7%|
|First Lien Senior Secured Loans||$1,562.1||87.5%|
|Second Lien Senior Secured Loans||$194.8||10.9%|
The Comprehensive Investment Portfolio is diversified across approximately 226 unique issuers across approximately 93 industries and with an average exposure of $7.9 million or 0.4% per issuer.
At March 31, 2019, 98.4% of the Company's Comprehensive Investment Portfolio was invested in senior secured loans, comprised of 87.5% first lien senior secured loans and approximately 10.9% second lien senior secured loans.
The weighted average yield at fair value of all income-producing investments in the Comprehensive Portfolio was 10.9% at March 31, 2019.
Solar Capital Ltd. Portfolio
As of March 31, 2019, 100% of the Company's portfolio was performing.
The Company puts its greatest emphasis on risk mitigation and credit performance. On a quarterly basis, or more frequently if deemed necessary, the Company formally rates each portfolio investment on a scale of one to four, with one representing the least amount of risk.
As of March 31, 2019, the composition of our portfolio, on a risk ratings basis, was as follows:
|Internal Investment Rating||Investments at Fair Value||% of Total Portfolio|
Investment Income Contribution by Business Unit
Business Unit Contribution to Gross Investment Income
Lending / Crystal Financial(2)
Financing / NEF(3)
Solar Capital Ltd.'s Results of Operations for the Quarter Ended March 31, 2019 compared to the Quarter Ended March 31, 2018.
For the fiscal quarters ended March 31, 2019 and 2018, gross investment income totaled $39.3 million and $39.0 million, respectively. The increase in gross investment income from Q1 2018 to Q1 2019 was primarily due to an increase in the average size of the income-producing investment portfolio.
Net expenses totaled $20.8 million and $20.1 million, respectively, for the fiscal quarters ended March 31, 2019 and 2018.
Net Investment Income
The Company's net investment income totaled $18.5 million and $18.9 million, or $0.44 and $0.45 per average share, respectively, for the fiscal quarters ended March 31, 2019 and 2018.
Net Realized and Unrealized Gain
Net realized and unrealized gains for the fiscal quarters ended March 31, 2019 and 2018 totaled approximately $6.4 million and $1.2 million, respectively.
Net Increase in Net Assets Resulting From Operations
For the fiscal quarters ended March 31, 2019 and 2018, the Company had a net increase in net assets resulting from operations of $24.8 million and $20.0 million, respectively. For the fiscal quarters ended March 31, 2019 and 2018, earnings per average share were $0.59 and $0.47, respectively.
Liquidity and Capital Resources
As of March 31, 2019 the Company had a total of $430.2 million of unused borrowing capacity under the Company's credit facilities, subject to borrowing base limits.
When including Crystal Financial and NEF Holdings, the Company had a total of approximately $546 million of unused borrowing capacity under its revolving credit facilities, subject to borrowing base limits.
Financial Statements and Tables
SOLAR CAPITAL LTD.
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except share amounts)
|March 31, 2019 (unaudited)||
|Investments at fair value:|
|Companies less than 5% owned (cost: $983,114 and $948,478, respectively)||$||979,273||$||944,597|
|Companies more than 25% owned (cost: $503,898 and $500,792, respectively)||521,451||511,483|
|Cash equivalents (cost: $249,523 and $199,646, respectively)||249,523||199,646|
|Receivable for investments sold||27,663||2,073|
|Prepaid expenses and other assets||917||783|
|Debt ($595,785 and $476,185 face amounts, respectively, reported net of unamortized debt issuance costs of $2,514 and $2,647, respectively)||$||593,271||$||473,538|
|Payable for investments and cash equivalents purchased||249,523||251,391|
|Management fee payable||6,562||6,504|
|Performance-based incentive fee payable||4,616||4,613|
|Administrative services expense payable||323||2,716|
|Other liabilities and accrued expenses||3,525||3,455|
Common stock, par value $0.01 per share, 200,000,000 and 200,000,000 common shares authorized, respectively, and 42,260,826
and 42,260,826 shares issued and outstanding, respectively
|Paid-in capital in excess of par||992,438||992,438|
|Accumulated distributable net loss||(66,185)||(73,690)|
|Total net assets||$||926,676||$||919,171|
|Net Asset Value Per Share||$||21.93||$||21.75|
SOLAR CAPITAL LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share amounts)
|Three months ended|
|March 31, 2019||March 31, 2018|
|Companies less than 5% owned||$||28,143||$||24,181|
|Companies more than 25% owned||1,063||285|
|Companies less than 5% owned||3||6|
|Companies more than 25% owned||9,952||14,363|
|Companies less than 5% owned||93||62|
|Companies more than 25% owned||5||63|
|Total investment income||39,259||38,960|
|Performance-based incentive fees||4,616||4,714|
|Interest and other credit facility expenses||7,328||5,909|
|Administrative services expense||1,368||1,286|
|Other general and administrative expenses||921||1,721|
|Net investment income||$||18,464||$||18,857|
|REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND CASH EQUIVALENTS:|
|Net realized gain (loss) on investments and cash equivalents:|
|Companies less than 5% owned||$||29||$||197|
|Companies 5% to 25% owned||-||175|
|Companies more than 25% owned||(563)||(5)|
|Net realized gain (loss) on investments and cash equivalents||(534)||367|
|Net change in unrealized gain (loss) on investments and cash equivalents:|
|Companies less than 5% owned||39||2,648|
|Companies more than 25% owned||6,863||(1,824)|
|Net change in unrealized gain on investments and cash equivalents||6,902||824|
|Net realized and unrealized gain on investments and cash equivalents||6,368||1,191|
|NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS||$||24,832||$||20,048|
|EARNINGS PER SHARE||$||0.59||$||0.47|
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. A specialty finance company with expertise in several niche markets, the Company primarily invests directly and indirectly in leveraged, U. S. middle market companies in the form of cash flow senior secured loans including first lien and second lien debt instruments and asset-based loans including senior secured loans collateralized on a first lien basis primarily by current assets.
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, unless required to do so by applicable law.
Solar Capital Ltd.
Source: Solar Capital Ltd.