TICC Capital (TICC)
Q2 2012 Earnings Call
July 31, 2012 8:30 am ET
Jonathan H. Cohen - Chief Executive Officer and Director
Bruce L. Rubin - Senior Vice President, Treasurer and Controller
Patrick Francis Conroy - Chief Financial Officer, Principal Accounting Officer, Chief Compliance Officer and Secretary
Saul Barak Rosenthal - President and Chief Operating Officer
Mickey M. Schleien - Ladenburg Thalmann & Co. Inc., Research Division
John Hecht - Stephens Inc., Research Division
Boris E. Pialloux - National Securities Corporation, Research Division
Donald B. Gimbel - Carret Asset Management, LLC
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Good day, and welcome to the TICC Capital Corp. Second Quarter 2012 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Jonathan Cohen, CEO. Mr. Cohen, the floors is yours, sir.
Jonathan H. Cohen
Thanks very much. Good morning and welcome, everyone, to the TICC Capital Corp. Second Quarter 2012 Earnings Conference Call. I'm joined today by Saul Rosenthal, our President and Chief Operating Officer; Patrick Conroy, our Chief Financial Officer; and Bruce Rubin, our Controller and Treasurer. Bruce, could you open the call today with the discussion regarding forward-looking statements?
Bruce L. Rubin
Sure, Jonathan. Today's call is being recorded. An audio replay of the conference call will be available for 30 days. Replay information is included in our press release that was released last night. Please note that this call is the property of TICC Capital Corp. Any unauthorized rebroadcast of this call, in any form, is strictly prohibited. I'd also like to call your attention to the customary disclosure in our press release last night regarding forward-looking information.
Today's conference call includes forward-looking statements and projections, and we ask that you refer to our most recent filings at the SEC for important factors that could cause actual results to differ materially from these projections. We do not undertake to update our forward-looking statements unless required to do so by law. To obtain copies of our latest SEC filings, please visit our website at www.ticc.com.
With that, I'll turn the presentation back to Jonathan.
Jonathan H. Cohen
Thanks, Bruce. As we noted in our press release last night, TICC reported core net investment income of approximately $0.37 per share for the second quarter. We reported total investment income of approximately $20.5 million for the second quarter of 2012, representing an increase of approximately $5.7 million over the first quarter of 2012. This increase was driven in part by a onetime fee of approximately $3.4 million or approximately $0.09 per share associated with our investment in American Integration Technologies, LLC or AIT.
Excluding that impact of the AIT fee and consistent with recent quarters, our revenue components included the continuation of strong cash flows from our syndicated and bilateral loans, as well as distributions from our investments in the equity tranches of our CLO investments. Our second quarter net investment income was approximately $15 million or $0.40 per share, which includes the impact of a capital gains incentive fee accrual reduction of approximately $1.155 million. Excluding the impact of that accrual reduction, our core net investment income was approximately $13.9 million or that $0.37 per share.
We also recorded net unrealized appreciation of approximately $7.3 million and net realized capital gains of approximately $1.5 million for the quarter. As a result of those realized and unrealized gains and losses, we had a net increase in net assets resulting from operations of approximately $9.3 million or approximately $0.25 per share. At the same time, we believe that the credit quality of our portfolio remains stable. Our weighted average credit rating on a fair value basis was 2.1 at the end of the second quarter of 2012, which remained the same from the end of the first quarter of 2012.
Our Board of Directors has declared a $0.29 per share distribution for the third quarter this year, payable on September 28, 2012, to shareholders of record as of September 14, 2012. I believe that we saw a very strong second quarter, as reflected by our having deployed approximately $62.1 million of capital, consistent with our investment strategy, as well as by our taxable income continuing to equal or exceed our dividend distributions.
With regard to our CLO subsidiary, that is our internal financing vehicle, we note that we remain in full compliance with all of the various covenant tests and that the CLO's monthly trustee reports are available on our website.
We believe that the market is currently favorably positioned for our type of investing. Opportunities across a wide range of debt investments are available to us with what we believe are attractive risk return characteristics. Those opportunities include direct investments in middle-market and lower middle-market syndicated corporate loans and indirect investments in the same type of assets through CLO BB and equity investments.
With that, I'd like to turn the call over to Patrick who will describe our second quarter investment activities and go through some financial highlights from the second quarter.
Patrick Francis Conroy
Thanks, Jonathan. At June 30, net asset value per share was $9.47 compared with net asset value at the end of first quarter of $9.50. As mentioned previously during the second quarter, we deployed approximately $62.1 million in additional investments. For the quarter ended June 30, TICC recorded earned income from our investment portfolio as follows: approximately $12.1 million from our direct investments, including a $3.4 million fee from AIT; approximately $6.4 million from our CLO equity investments; and approximately $2 million from our CLO debt investments. At June 30, the weighted average yield of our debt investments was approximately 11.2% compared with 11.6% at March 31, and I would note that we currently have no investments on nonaccrual. The Board of Directors declared a distribution of $0.29 per share, as previously mentioned, for the third quarter, which will be payable September 28 to stockholders of record as of September 14.