Full Circle Capital Corporation Announces Second Quarter Fiscal 2015 Earnings
– Closed $13.3 Million in New Investments in the Fiscal Second Quarter –
– Net Investment Income of $2.4 Million or $0.19 per Share –
– Streamlines Management Structure, Appoints Gregg Felton CEO, John Stuart to Remain Chairman –
GREENWICH, Conn., Feb. 9, 2015 (GLOBE NEWSWIRE) — Full Circle Capital Corporation (FULL) (the “Company”) today announced its financial results for the second quarter of fiscal 2015 ended December 31, 2014.
Financial Highlights for the Second Quarter of Fiscal 2015
- Originations to three new portfolio companies totaled $13.3 million. Repayments or realizations from portfolio companies and sales were $8.4 million.
- Total investment income was $4.9 million, an increase of 22.5% compared with $4.0 million for the prior year period.
- Net investment income (“NII”) increased 23.9% to $2.4 million, or $0.19 per share, compared with $1.9 million, or $0.25 per share, for the three months ended December 31, 2013.
- Net realized and unrealized losses were $8.9 million, or $0.75 per share. Unrealized losses on investments were $7.6 million, or $0.64 per share. Realized losses on investments were $1.3 million, or $0.11 per share.
- Net decrease in net assets from operations was $6.6 million, or $0.55 per share.
- Net asset value was $5.48 per share at December 31, 2014.
- Per share amounts are based on approximately 11.9 million weighted average shares outstanding compared to 7.6 million weighted average shares outstanding for the second quarter of fiscal 2014, reflecting the capital markets activities completed during calendar 2014.
- Total portfolio at fair value was $128.5 million at December 31, 2014.
- Weighted average portfolio interest rate was 10.23% at December 31, 2014.
- At December 31, 2014, 92% of portfolio company investments were first lien senior secured loans.
In addition, the Company announced today that Gregg Felton has been named Chief Executive Officer, while John Stuart will maintain his role as Chairman of the Board of Directors.
“The ongoing transformation of our investment and portfolio strategy to include Gregg’s areas of investment experience and expertise has made his appointment as CEO the logical next step in that process,” said John Stuart, Chairman of Full Circle Capital Corporation. “Gregg has played a vital role in our continuing efforts to develop a greater breadth of investment opportunities as evidenced by our portfolio growth and composition over the past year.”
“I look forward to continuing to work closely with John and our expanded investment team as we position ourselves for long-term growth,” said Gregg Felton, President and CEO of Full Circle Capital Corporation. “While our recent performance has been disappointing, we believe that our aggressive efforts to exit or restructure our legacy positions will enable us to take advantage of current market opportunities. With the recent back-up in the middle market corporate credit markets, we have seen a significant increase in transaction opportunities that fit within our return and risk parameters. We believe this market environment will allow us to continue to execute on our broadened investment strategies while providing greater portfolio diversification. These key elements are central to our efforts to improve and produce sustainable returns to our stockholders.”
Second Quarter Fiscal 2015 Results
The Company’s net asset value at December 31, 2014 was $5.48 per share. During the quarter, the Company generated $4.5 million of interest income compared to $2.8 million in the second quarter of fiscal 2014, an increase of 60.1%. Income from fees and other sources in the quarter totaled $0.5 million, compared to $1.2 million in the prior year quarter.
The Company recorded NII of $2.4 million, or $0.19 per share, in the quarter ended December 31, 2014 compared to $1.9 million, or $0.25 per share, in the quarter ended December 31, 2013. Per share amounts for the quarter ended December 31, 2014 are based on approximately 11.9 million weighted average shares outstanding compared to 7.6 million weighted average shares outstanding for the quarter ended December 31, 2013, reflecting the common equity offerings that Full Circle Capital completed in calendar 2014.
Net realized and unrealized losses in the quarter were $8.9 million, or $0.75 per share. Net unrealized depreciation of $7.6 million was comprised of $2.3 million of net unrealized depreciation on equity investments and $5.3 million of net unrealized depreciation on debt investments. Realized losses on investments were $1.3 million, or $0.11 per share. Net decrease in net assets from operations was $6.6 million, or $0.55 per share.
During the quarter ended December 31, 2014 the Company added $13.3 million in new loans to three new portfolio companies. Repayments from portfolio companies during the second quarter were $8.4 million from four portfolio companies.
At December 31, 2014, the Company’s portfolio included debt investments in 27 companies at an average of $4.6 million per investment. The weighted average interest rate on debt investments was 10.23%. At fair value, 92% of portfolio investments were first lien loans, 5% were second lien loans and 3% were equity investments. Approximately 78% of the debt investment portfolio, at fair value, bore interest at floating rates. The loan-to-value ratio on the Company’s loans was 60% at December 31, 2014 compared to 71% at December 31, 2013.
Subsequent Events
On January 21, 2015, the Company partially exercised its warrant issued by Advanced Cannabis Solutions, Inc. in a cashless exercise in exchange for 660,263 shares of Advanced Cannabis Solutions Inc. The cashless exercise reduced the amount of common shares underlying the remaining warrant by 1,215,000, leaving the Company with a warrant to purchase 185,000 shares in Advanced Cannabis Solutions, Inc. with a strike price of $4.00 per share.
On January 30, 2015, the Company funded $2.0 million of a $50.0 million second lien term loan with GK Holdings, Inc., an IT and business skill training company. The credit facility bears interest at one month LIBOR plus 9.50% with a LIBOR floor of 1.00% and has a final maturity of January 30, 2022.
Conference Call Details
Management will host a conference call at 8:30 am ET on Tuesday, February 10, 2015 to discuss results. A live webcast of the conference call and accompanying slide presentation will be available at https://ir.fccapital.com. Please access the website approximately 10 minutes before the conference call begins.
To participate in the call, please call (888) 206-4916 (domestic toll-free) or (913) 312-1411 (international) and reference PIN: 6223832.
A webcast replay of the call, along with an archived copy of the presentation, will be available athttps://ir.fccapital.com for one year following the call.
An audio replay will also be available until February 17, 2015, by dialing (877) 870-5176 (toll-free) or (858) 384-5517 (international), PIN: 6223832.
About Full Circle Capital Corporation
Full Circle Capital Corporation (www.fccapital.com) is a closed-end investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Full Circle lends to and invests in senior secured loans and, to a lesser extent, mezzanine loans and equity securities issued by lower middle-market companies that operate in a diverse range of industries. Full Circle’s investment objective is to generate both current income and capital appreciation through debt and equity investments. For additional information visit the company’s website www.fccapital.com.
Forward-Looking Statements
This press release contains forward-looking statements which relate to future events or Full Circle’s future performance or financial condition. Any statements that are not statements of historical fact (including statements containing the words “believes,” “should,” “plans,” “anticipates,” “expects,” “estimates” and similar expressions) should also be considered to be forward-looking statements. These forward-looking 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 Full Circle’s filings with the Securities and Exchange Commission. Full Circle undertakes no duty to update any forward-looking statements made herein.
| FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES | |||
| CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | |||
| December 31, 2014 | June 30, 2014 | ||
| Unaudited | |||
| Assets | |||
| Control Investments at Fair Value (Cost of $20,587,987 and $20,253,149, respectively) | $ 11,676,772 | $ 17,539,057 | |
| Affiliate Investments at Fair Value (Cost of $25,749,265 and $20,177,115, respectively) | 17,435,853 | 14,588,417 | |
| Non-Control/Non-Affiliate Investments at Fair Value (Cost of $105,607,136 and $123,605,311, respectively) | 99,347,153 | 118,063,285 | |
| Total Investments at Fair Value (Cost of $151,944,388 and $164,035,575, respectively) | 128,459,778 | 150,190,759 | |
| Cash | 2,595,416 | — | |
| Deposit with Broker | — | 2,525,000 | |
| Interest Receivable | 2,141,949 | 1,016,726 | |
| Principal Receivable | 34,053 | 207,233 | |
| Due from Affiliates | 339,922 | 4,273 | |
| Due from Portfolio Investments | 181,402 | 135,288 | |
| Prepaid Expenses | 160,951 | 57,470 | |
| Other Assets | 790,261 | 750,326 | |
| Deferred Offering Expenses | 143,150 | — | |
| Deferred Debt Issuance Costs | 911,922 | 947,937 | |
| Deferred Credit Facility Fees | 410,767 | 449,350 | |
| Total Assets | 136,169,571 | 156,284,362 | |
| Liabilities | |||
| Due to Affiliates | 1,111,088 | 891,966 | |
| Bank Overdraft | — | 821,316 | |
| Accrued Liabilities | 142,268 | 184,857 | |
| Due to Broker | — | 25,000,221 | |
| Payable for Investments Acquired | — | 24,900,172 | |
| Distributions Payable | 800,585 | 766,683 | |
| Interest Payable | 119,064 | 45,254 | |
| Other Liabilities | 803,421 | 1,076,800 | |
| Accrued Offering Expenses | 20,689 | 35,828 | |
| Line of Credit | 33,817,832 | 8,435,463 | |
| Notes Payable 8.25% due June 30, 2020 | 33,815,406 | 21,145,525 | |
| Total Liabilities | 70,630,353 | 83,304,085 | |
| Commitments and contingencies | — | — | |
| Net Assets | $ 65,539,218 | $ 72,980,277 | |
| Components of Net Assets | |||
| Common Stock, par value $0.01 per share (100,000,000 authorized; 11,949,034 and 11,443,034 issued and outstanding, respectively) | $ 119,490 | $ 114,430 | |
| Paid-in Capital in Excess of Par | 95,805,231 | 92,103,666 | |
| Distributions in Excess of Net Investment Income | (739,348) | (131,251) | |
| Accumulated Net Realized Losses | (6,161,545) | (5,261,752) | |
| Accumulated Net Unrealized Losses | (23,484,610) | (13,844,816) | |
| Net Assets | $ 65,539,218 | $ 72,980,277 | |
| Net Asset Value Per Share | $ 5.48 | $ 6.38 | |
| FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES | |||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | |||||
| Three Months Ended | Six Months Ended | ||||
| December 31, | December 31, | ||||
| 2014 | 2013 | 2014 | 2013 | ||
| Investment Income | |||||
| Interest Income from Non-Control/Non-Affiliate Investments | $ 3,367,613 | $ 1,649,533 | $ 6,175,544 | $ 3,530,671 | |
| Interest Income from Affiliate Investments | 665,621 | 656,935 | 1,206,181 | 1,310,653 | |
| Interest Income from Control Investments | 433,638 | 484,207 | 962,746 | 942,111 | |
| Dividend Income from Control Investments | — | — | — | 34,411 | |
| Other Income from Non-Control/Non-Affiliate Investments | 427,026 | 1,189,891 | 614,081 | 1,363,362 | |
| Other Income from Affiliate Investments | 5,822 | 3,837 | 15,292 | 8,881 | |
| Other Income from Control Investments | 12,500 | 12,500 | 25,000 | 25,000 | |
| Total Investment Income | 4,912,220 | 3,996,903 | 8,998,844 | 7,215,089 | |
| Operating Expenses | |||||
| Management Fee | 581,329 | 382,489 | 1,153,887 | 791,747 | |
| Incentive Fee | 526,242 | 474,897 | 916,092 | 789,636 | |
| Total Advisory Fees | 1,107,571 | 857,386 | 2,069,979 | 1,581,383 | |
| Allocation of Overhead Expenses | 36,962 | 34,881 | 73,517 | 98,711 | |
| Sub-Administration Fees | 66,595 | 50,000 | 129,804 | 100,000 | |
| Officers’ Compensation | 75,913 | 75,529 | 151,826 | 150,867 | |
| Total Costs Incurred Under Administration Agreement | 179,470 | 160,410 | 355,147 | 349,578 | |
| Directors’ Fees | 40,750 | 31,625 | 88,696 | 60,250 | |
| Interest Expenses | 1,177,094 | 718,502 | 2,179,477 | 1,439,479 | |
| Professional Services Expense | 139,926 | 158,620 | 359,594 | 354,481 | |
| Bank Fees | 10,918 | 21,622 | 21,189 | 35,468 | |
| Other | 151,523 | 149,150 | 260,394 | 250,635 | |
| Total Gross Operating Expenses | 2,807,252 | 2,097,315 | 5,334,476 | 4,071,274 | |
| Expense Reimbursement | (248,373) | — | (531,047) | — | |
| Total Net Operating Expenses | 2,558,879 | 2,097,315 | 4,803,429 | 4,071,274 | |
| Net Investment Income | 2,353,341 | 1,899,588 | 4,195,415 | 3,143,815 | |
| Net Change in Unrealized Gain (Loss) on Investments | (7,624,759) | (2,627,312) | (9,639,794) | (5,450,203) | |
| Net Realized Gain (Loss) on: | |||||
| Investments | (1,301,452) | (492,216) | (898,545) | (1,170,769) | |
| Foreign Currency Transactions | — | — | (1,248) | 68 | |
| Net Realized Gain (Loss) | (1,301,452) | (492,216) | (899,793) | (1,170,701) | |
| Net Increase (Decrease) in Net Assets Resulting from Operations | $ (6,572,870) | $ (1,219,940) | $ (6,344,172) | $ (3,477,089) | |
| Earnings (Loss) per Common Share Basic and Diluted | $ (0.55) | $ (0.16) | $ (0.53) | $ (0.46) | |
| Net Investment Income per Common Share Basic and Diluted | $ 0.19 | $ 0.25 | $ 0.35 | $ 0.42 | |
| Weighted Average Shares of Common Stock Outstanding Basic and Diluted | 11,949,034 | 7,569,382 | 11,913,284 | 7,569,382 | |
| FULL CIRCLE CAPITAL CORPORATION AND SUBSIDIARIES | ||||
| FINANCIAL HIGHLIGHTS | ||||
| Three months ended | Three months ended | Six months ended | Six months ended | |
| December 31, 2014 | December 31, 2013 | December 31, 2014 | December 31, 2013 | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
| Per Share Data (1) : | ||||
| Net asset value at beginning of period | $ 6.24 | $ 7.48 | $ 6.38 | $ 8.01 |
| Accretion (dilution) from offering (2) | — | — | 0.04 | — |
| Offering costs | (0.00) | — | 0.00 | — |
| Net investment income | 0.19 | 0.25 | 0.35 | 0.42 |
| Net change in unrealized gain (loss) | (0.64) | (0.34) | (0.81) | (0.73) |
| Net realized gain (loss) | (0.11) | (0.07) | (0.08) | (0.15) |
| Dividends from net investment income | (0.19) | (0.23) | (0.35) | (0.42) |
| Return of capital | (0.01) | — | (0.05) | (0.04) |
| Net asset value at end of period | $ 5.48 | $ 7.09 | $ 5.48 | $ 7.09 |
| (1) Financial highlights are based on weighted average shares outstanding. | ||||
| (2) Accretion and dilution from offering is based on the net change in net asset value from each follow-on offering. | ||||
Company Contact: John Stuart, Chairman Gregg J. Felton, President and Chief Executive Officer Full Circle Capital Corporation (203) 900 - 2100 info@fccapital.com Investor Relations Contacts: Garrett Edson/Brad Cohen ICR, LLC (203) 818 - 1089
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