Triangle Capital Corporation Reports Third Quarter 2016 Results

RALEIGH, N.C., Nov. 02, 2016 (GLOBE NEWSWIRE) -- Triangle Capital Corporation (NYSE:TCAP) ("Triangle" or the "Company"), a leading provider of capital to lower middle market companies, today announced its financial and operating results for the third quarter of 2016.

Highlights
  • Total Investment Portfolio: $947.7 million
  • Total Net Assets (Equity): $619.4 million
  • Net Asset Value Per Share (Book Value): $15.33
  • Weighted Average Yield on Debt Investments: 12.3%
  • Efficiency Ratio (Compensation and G&A Expenses/Total Investment Income): 17.6%
  • Investment Portfolio Activity for the Quarter Ended September 30, 2016
    • Cost of investments made during the period: $88.4 million
    • Principal repayments (excluding PIK interest repayments) during the period: $53.1 million
    • Proceeds related to the sale of equity investments during the period: $9.5 million
  • Non-Accrual Assets as a Percentage of Total Portfolio Cost and Fair Value: 3.9% and 2.1%, respectively
  • Financial Results for the Quarter Ended September 30, 2016
    • Total investment income: $27.4 million
    • Net investment income: $15.8 million
    • Net investment income per share: $0.42
    • Net realized losses: $11.2 million
    • Net increase in net assets resulting from operations: $7.9 million
    • Net increase in net assets resulting from operations per share: $0.21

In commenting on the Company's third quarter investment activity and outlook, E. Ashton Poole, President and CEO, stated, "The third quarter was a very active quarter for Triangle on numerous fronts. During the quarter we raised approximately $129 million of growth equity capital, we successfully deployed over $88 million of capital, and, since quarter-end, we have deployed almost $58 million of additional capital. In addition to our investing activities, we strengthened our operational focus through the promotion of three longstanding Triangle team members and strengthened our Board of Directors with the recent appointment of Mark Mulhern. 2016 has been an exciting time of forward momentum at Triangle. As we begin to focus on 2017 and beyond, I am extremely pleased with the operational and strategic team we have assembled."

Third Quarter 2016 Results

Total investment income during the third quarter of 2016 was $27.4 million, compared to total investment income of $30.8 million for the third quarter of 2015, representing a decrease of 11.1%. This decrease was primarily attributable to a $1.8 million decrease in non-recurring fee income, a $0.8 million decrease in investment income related to non-accrual assets and a decrease in the weighted average yield on our debt investments from September 30, 2015 to September 30, 2016.

Net investment income during the third quarter of 2016 was $15.8 million, compared to net investment income of $18.5 million for the third quarter of 2015, representing a decrease of 14.5%. Net investment income per share during the third quarter of 2016 was $0.42, based on weighted average shares outstanding during the quarter of 38.1 million, compared to $0.56 per share during the third quarter of 2015, based on weighted average shares outstanding of 33.3 million.

The Company's net increase in net assets resulting from operations was $7.9 million during the third quarter of 2016, compared to a $17.9 million net increase during the third quarter of 2015.  The Company's net increase in net assets resulting from operations was $0.21 per share during the third quarter of 2016, based on weighted average shares outstanding of 38.1 million, compared to a net increase in net assets resulting from operations of $0.54 per share during the third quarter of 2015, based on weighted average shares outstanding of 33.3 million.

The Company's net asset value, or NAV, at September 30, 2016, was $15.33 per share as compared to $15.23 per share at December 31, 2015. As of September 30, 2016, the Company's weighted average yield on its outstanding, currently yielding debt investments was approximately 12.3%.

Liquidity and Capital Resources

Commenting on the Company's liquidity position, Steven C. Lilly, Chief Financial Officer, stated, "With over $375 million of available liquidity through a combination of cash on hand and availability under our senior credit facility, Triangle has the capacity and flexibility to support our investing activities in the fourth quarter and as we enter 2017."

At September 30, 2016, the Company had cash and cash equivalents totaling $168.3 million and $208.6 million of remaining borrowing capacity under its $300.0 million senior credit facility.

Dividend Information

On August 24, 2016, Triangle announced that its board of directors had declared a cash dividend of $0.45 per share. This was the Company's 39th consecutive quarterly dividend since its initial public offering in February, 2007.  The record date for the dividend was September 7, 2016, and the payment date was September 21, 2016.

Recent Portfolio Activity

During the quarter ended September 30, 2016, the Company made three new investments totaling approximately $83.9 million, debt investments in three existing portfolio companies totaling $2.9 million and equity investments in six existing portfolio companies totaling $1.7 million.  The Company had three portfolio company loans repaid at par totaling $45.3 million resulting in realized gains totaling $0.7 million and received normal principal repayments and partial loan prepayments totaling $7.9 million. The Company wrote-off a debt investment in one portfolio company and recognized a realized loss on the write-off of $16.1 million. In addition, the Company received proceeds related to the sales of certain equity securities totaling $9.5 million and recognized net realized gains on such sales totaling $4.2 million.

New portfolio investments which occurred during the third quarter of 2016 are summarized as follows:

In August, 2016, the Company made a $25.2 million investment in Smile Brands Group ("Smile Brands") consisting of subordinated debt and equity. Smile Brands provides general dentistry, dental hygiene and specialty services, as well as centralized scheduling, billing, marketing and financing for its office locations.

In September, 2016, the Company made a $31.1 million investment in Vantage Mobility International ("VMI") consisting of subordinated debt and equity.  VMI manufactures wheelchair accessible vehicles and related accessories.

In September, 2016, the Company made a $27.6 million second lien debt investment in KidKraft, Inc. ("KidKraft"). KidKraft is a designer and distributor of toys and playsets for children.

New portfolio investments subsequent to quarter end are summarized as follows:

In October, 2016, the Company made a $23.5 million investment in Fridababy, LLC ("Fridababy") consisting of unitranche debt and equity.  Fridababy markets and distributes baby products.

In October, 2016, the Company made a $17.0 million investment in Del Real, LLC ("Del Real") consisting of subordinated debt and equity.  Del Real is a leading Hispanic refrigerated foods company.

In October, 2016, the Company made a $16.3 million investment in TG MIDCO, LLC ("TG MIDCO") consisting of subordinated debt and equity. TG MIDCO is a distributor of consumer products through various e-commerce platforms.

Conference Call to Discuss Third Quarter 2016 Results

Triangle has scheduled a conference call to discuss third quarter 2016 operating and financial results for Thursday, November 3, 2016, at 9:00 a.m. (Eastern Time).

To listen to the call, please dial 877-312-5521 or 253-237-1143 approximately 10 minutes prior to the start of the call. A taped replay will be made available approximately two hours after the conclusion of the call and will remain available until November 7, 2016. To access the replay, please dial 855-859-2056 or 404-537-3406 and enter the passcode 93570780.

Triangle's quarterly results conference call will also be available via a live webcast on the investor relations section of its website at http://ir.tcap.com/events.cfm . Access the website 15 minutes prior to the start of the call to download and install any necessary audio software. An archived webcast replay will be available on the Company's website until November 30, 2016.

Triangle will post a brief, pre-recorded on-demand podcast on the investor relations section of the Company's website after 4:00 p.m. (Eastern Time) on Wednesday, November 2, 2016, in conjunction with the filing of Triangle's Form 10-Q. The purpose of the podcast is to provide interested analysts and investors with meaningful statistical and financial information in advance of the participatory earnings call on Thursday, November 3, 2016.

About Triangle Capital Corporation

Triangle Capital Corporation ( www.TCAP.com) invests capital in established companies in the lower middle market to fund growth, changes of control and other corporate events.  Triangle offers a wide variety of investment structures with a primary focus on mezzanine financing with equity components.  Triangle's investment objective is to seek attractive returns by generating current income from debt investments and capital appreciation from equity related investments.  Triangle's investment philosophy is to partner with business owners, management teams and financial sponsors to provide flexible financing solutions.  Triangle typically invests $5.0 million - $35.0 million per transaction in companies with annual revenues between $20.0 million and $200.0 million and EBITDA between $3.0 million and $35.0 million.

Triangle has elected to be treated as a business development company under the Investment Company Act of 1940, as amended ("1940 Act").  Triangle is required to comply with a series of regulatory requirements under the 1940 Act as well as applicable NYSE, federal and state laws and regulations.  Triangle has elected to be treated as a regulated investment company under the Internal Revenue Code of 1986, as amended.  Failure to comply with any of the laws and regulations that apply to Triangle could have a material adverse effect on Triangle and its stockholders.

Forward Looking Statements

This press release may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Any such statements, other than statements of historical fact, are likely to be affected by other unknowable future events and conditions, including elements of the future that are or are not under the Company's control, and that the Company may or may not have considered; accordingly, such statements cannot be guarantees or assurances of any aspect of future performance.  Actual developments and results are highly likely to vary materially from these estimates and projections of the future and some of these uncertainties are enumerated in Triangle's filings with the Securities and Exchange Commission.  Certain factors that could cause actual results to differ materially from those contained in the forward-looking statements are included in our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, each as filed with the Securities and Exchange Commission. Copies are available on the SEC's website at www.sec.gov and stockholders may receive a hard copy of the completed audited financial statements free of charge upon request to the Company at 3700 Glenwood Avenue, Suite 530, Raleigh, NC 27612. Such statements speak only as of the time when made, and the Company undertakes no obligation to update any such statement now or in the future.
TRIANGLE CAPITAL CORPORATION
Consolidated Balance Sheets
 
  September 30, 2016   December 31, 2015
  (Unaudited)    
Assets:      
Investments at fair value:      
Non-Control / Non-Affiliate investments (cost of $771,052,767 and $795,244,907 as of September 30, 2016 and December 31, 2015, respectively) $ 748,363,034     $ 774,238,518  
Affiliate investments (cost of $163,759,331 and $171,486,103 as of September 30, 2016 and December 31, 2015, respectively) 170,111,172     177,581,965  
Control investments (cost of $52,518,113 and $40,618,113 as of September 30, 2016 and December 31, 2015, respectively) 29,257,769     25,456,233  
Total investments at fair value 947,731,975     977,276,716  
Cash and cash equivalents 168,336,823     52,615,418  
Interest, fees and other receivables 6,966,478     4,892,146  
Prepaid expenses and other current assets 1,690,182     947,068  
Deferred financing fees 2,897,224     3,480,444  
Property and equipment, net 122,506     105,698  
Total assets $ 1,127,745,188     $ 1,039,317,490  
Liabilities:      
Accounts payable and accrued liabilities $ 4,636,217     $ 7,463,514  
Interest payable 1,537,490     3,714,470  
Taxes payable     735,498  
Deferred income taxes 3,027,000     4,988,317  
Borrowings under credit facility 91,427,900     131,256,669  
Notes 162,598,503     162,142,478  
SBA-guaranteed debentures payable 245,162,869     220,648,789  
Total liabilities 508,389,979     530,949,735  
Commitments and contingencies      
Net Assets:      
Common stock, $0.001 par value per share (150,000,000 shares authorized, 40,405,403 and 33,375,126 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively) 40,405     33,375  
Additional paid-in capital 684,618,304     549,242,439  
Investment income in excess of distributions 6,553,437     16,127,141  
Accumulated realized losses (32,501,174 )   (25,813,329 )
Net unrealized depreciation (39,355,763 )   (31,221,871 )
Total net assets 619,355,209     508,367,755  
Total liabilities and net assets $ 1,127,745,188     $ 1,039,317,490  
Net asset value per share $ 15.33     $ 15.23  
               

TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Statements of Operations
 
  Three Months Ended September 30,  2016   Three Months Ended September 30,  2015   Nine Months Ended September 30,  2016   Nine Months Ended September 30,2015
       
Investment income:              
Interest income:              
Non-Control / Non-Affiliate investments $ 17,270,300     $ 18,051,486     $ 52,938,976     $ 51,993,071  
Affiliate investments 3,380,867     4,294,512     10,121,974     12,685,241  
Control investments 303,708     248,609     764,622     298,090  
Total interest income 20,954,875     22,594,607     63,825,572     64,976,402  
Dividend income:              
Non-Control / Non-Affiliate investments 167,468     259,431     (1,030,703 )   1,893,825  
Affiliate investments 244,233     323,291     706,495     860,913  
Control investments         300,000      
Total dividend income 411,701     582,722     (24,208 )   2,754,738  
Fee and other income:              
Non-Control / Non-Affiliate investments 1,585,403     3,308,427     5,662,081     7,380,865  
Affiliate investments 319,289     337,343     855,855     2,334,396  
Control investments 110,000     100,000     310,000     300,000  
Total fee and other income 2,014,692     3,745,770     6,827,936     10,015,261  
Payment-in-kind interest income:              
Non-Control / Non-Affiliate investments 2,719,831     2,735,701     8,373,124     8,077,552  
Affiliate investments 1,175,899     1,126,244     3,259,634     3,445,253  
Total payment-in-kind interest income 3,895,730     3,861,945     11,632,758     11,522,805  
Interest income from cash and cash equivalents 135,459     58,401     228,129     178,713  
Total investment income 27,412,457     30,843,445     82,490,187     89,447,919  
Operating expenses:              
Interest and other financing fees 6,757,718     6,561,298     20,040,942     20,319,093  
Compensation expenses 3,963,797     4,951,026     17,510,762     13,876,141  
General and administrative expenses 859,785     813,125     3,170,330     2,798,925  
Total operating expenses 11,581,300     12,325,449     40,722,034     36,994,159  
Net investment income 15,831,157     18,517,996     41,768,153     52,453,760  
Realized and unrealized gains (losses) on investments and foreign currency borrowings:              
Net realized gains (losses):              
Non-Control / Non-Affiliate investments (11,213,561 )   2,331,742     (5,007,647 )   8,746,844  
Affiliate investments 2,106     (503,907 )   (1,680,198 )   (237,399 )
Control investments     (18,323,508 )       (38,807,152 )
Net realized gains (losses) (11,211,455 )   (16,495,673 )   (6,687,845 )   (30,297,707 )
Net unrealized appreciation (depreciation):              
Investments 2,881,131     14,375,221     (7,564,510 )   15,441,528  
Foreign currency borrowings 342,409     1,081,391     (569,382 )   1,942,776  
Net unrealized appreciation (depreciation) 3,223,540     15,456,612     (8,133,892 )   17,384,304  
Net realized and unrealized losses on investments and foreign currency borrowings (7,987,915 )   (1,039,061 )   (14,821,737 )   (12,913,403 )
Loss on extinguishment of debt             (1,394,017 )
Tax benefit 36,431     393,437     47,342     255,562  
Net increase in net assets resulting from operations $ 7,879,673     $ 17,872,372     $ 26,993,758     $ 38,401,902  
Net investment income per share—basic and diluted $ 0.42     $ 0.56     $ 1.19     $ 1.58  
Net increase in net assets resulting from operations per share—basic and diluted $ 0.21     $ 0.54     $ 0.77     $ 1.16  
Dividends/distributions per share:              
Regular quarterly dividends/distributions $ 0.45     $ 0.54     $ 1.44     $ 1.62  
Supplemental dividends/distributions     0.05         0.15  
Total dividends/distributions per share $ 0.45     $ 0.59     $ 1.44     $ 1.77  
Weighted average shares outstanding—basic and diluted 38,115,449     33,274,586     35,199,704     33,203,414  
 

TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Statements of Cash Flows
       
  Nine Months Ended   Nine Months Ended
  September 30, 2016   September 30, 2015
Cash flows from operating activities:      
Net increase in net assets resulting from operations $ 26,993,758     $ 38,401,902  
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:      
Purchases of portfolio investments (163,867,651 )   (352,445,028 )
Repayments received/sales of portfolio investments 182,153,894     261,002,599  
Loan origination and other fees received 3,205,460     5,741,331  
Net realized loss on investments 6,687,845     30,297,707  
Net unrealized depreciation (appreciation) on investments 9,525,827     (18,127,974 )
Net unrealized depreciation (appreciation) on foreign currency borrowings 569,382     (1,942,776 )
Deferred income taxes (1,961,317 )   2,686,444  
Payment-in-kind interest accrued, net of payments received (4,177,550 )   (2,084,305 )
Amortization of deferred financing fees 1,644,826     1,636,224  
Loss on extinguishment of debt     1,394,017  
Accretion of loan origination and other fees (3,676,003 )   (4,897,834 )
Accretion of loan discounts (307,081 )   (362,424 )
Accretion of discount on SBA-guaranteed debentures payable 31,899     140,185  
Depreciation expense 52,369     44,552  
Stock-based compensation 7,502,500     5,200,761  
Changes in operating assets and liabilities:      
Interest, fees and other receivables (2,074,332 )   1,823,785  
Prepaid expenses and other current assets (743,114 )   (538,708 )
Accounts payable and accrued liabilities (2,827,297 )   (1,847,069 )
Interest payable (2,176,980 )   (2,098,783 )
Taxes payable (735,498 )   (2,451,879 )
Net cash provided by (used in) operating activities 55,820,937     (38,427,273 )
Cash flows from investing activities:      
Purchases of property and equipment (69,177 )   (55,035 )
Net cash used in investing activities (69,177 )   (55,035 )
Cash flows from financing activities:      
Borrowings under SBA-guaranteed debentures payable 32,800,000      
Repayments of SBA-guaranteed debentures payable (7,800,000 )    
Borrowings under credit facility 68,901,849     174,000,000  
Repayments of credit facility (109,300,000 )   (114,000,000 )
Proceeds from notes     83,372,640  
Redemption of notes     (69,000,000 )
Financing fees paid (1,123,400 )   (2,919,436 )
Net proceeds (expenses) related to public offering of common stock 129,136,296     (54,967 )
Common stock withheld for payroll taxes upon vesting of restricted stock (3,581,872 )   (2,497,712 )
Cash dividends/distributions paid (49,063,228 )   (56,142,936 )
Net cash provided by financing activities 59,969,645     12,757,589  
Net increase (decrease) in cash and cash equivalents 115,721,405     (25,724,719 )
Cash and cash equivalents, beginning of period 52,615,418     78,759,026  
Cash and cash equivalents, end of period $ 168,336,823     $ 53,034,307  
Supplemental disclosure of cash flow information:      
Cash paid for interest $ 19,929,857     $ 19,798,265  
Summary of non-cash financing transactions:      
Dividends/distributions paid through DRIP share issuances $ 2,325,971     $ 2,676,433  
 

 
ContactsE. Ashton PoolePresident & Chief Executive Officer919-719-8618apoole@tcap.comSteven C. LillyChief Financial Officer919-719-4789slilly@tcap.com

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