Solar Senior Capital Ltd. (NASDAQ:SUNS) today reported earnings of $4.0 million, or $0.35 per share for the quarter ended March 31, 2014. Net investment income was $3.9 million, or $0.33 per share, for the first quarter. At March 31, 2014, net asset value (NAV) per share was $18.04.
Solar Senior Capital Ltd. (the “Company”) also announced that its Board of Directors has declared a monthly distribution of $0.1175 per share for May 2014, which will be payable on May 30, 2014 to stockholders of record on May 22, 2014. The specific tax characteristics will be reported to stockholders on Form 1099 after the end of the calendar year.
HIGHLIGHTS: |
At March 31, 2014: |
Investment portfolio: $274.9 million |
| Number of portfolio companies: 37 |
Net assets: $208.0 million |
Net asset value per share: $18.04 |
Operating Results for the Quarter Ended March 31, 2014 |
| Net investment income: $3.9 million |
| Net realized and unrealized gains: $0.1 million |
| Net increase in net assets from operations: $4.0 million |
| Net investment income per share: $0.33 |
“We believe that our cash-pay, predominantly floating-rate and senior-secured loan portfolio should continue to perform well in a rising rate environment. Our strategic investment in Gemino Senior Secured Healthcare Finance has been accretive to our earnings and diversified our origination platform,” said Michael Gross, Chairman and CEO of Solar Senior Capital Ltd. “We’re pleased with our originations for the quarter, which were consistent with our historical average pace.”
Conference Call and Webcast
The Company will host an earnings conference call and audio webcast at 11:00 a.m. (Eastern Time) on Tuesday, May 6, 2014. All interested parties may participate in the conference call by dialing (866) 271-5140 approximately 5-10 minutes prior to the call, international callers should dial (617) 213-8893. Participants should reference Solar Senior Capital Ltd. and the participant passcode of 72947834 when prompted. Following the call you may access a replay of the event via audio webcast. This conference call will be broadcast live over the Internet and can be accessed by all interested parties through Solar Senior Capital’s website, www.solarseniorcap.com. To listen to the live call, please go to the Company's website at least 15 minutes 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 will be available shortly after the call on the Solar Senior Capital website. Additionally, a replay dial-in will be available until May 20, 2014 and can be accessed by dialing (888) 286-8010 and using the passcode 85709525. International callers should dial (617) 801-6888.
Portfolio and Investment Activity
During the three months ended March 31, 2014, we invested $49.7 million across nine portfolio companies. Investments sold or prepaid during the three months ended March 31, 2014 totaled $43.5 million.
At March 31, 2014, the portfolio consisted of 37 portfolio companies and was invested 86% in senior secured loans, 12% in Gemino, whose portfolio is 100% comprised of senior secured loans, and less than 2% in unsecured notes, measured at fair value. At the end of this same period, the fair value weighted average yield on the income-producing portfolio of investments was 7.7%. Based on fair value, the income-producing investment portfolio at March 31, 2014 consisted of $254.5 million of floating rate investments (93%) and $19.0 million of fixed rate investments (7%). Our total investment in Gemino is included as 100% floating rate.
Gemino’s $103.3 million of funded senior secured loans is across 33 issuers with an average balance outstanding of $3.1 million. All of the $174.8 million of commitments from Gemino are floating-rate, senior-secured loans. During the quarter ended March 31, 2014, Gemino committed $16.0 million across three issuers. During that time frame, $11.0 million of commitments were extinguished.
Since the initial public offering of Solar Senior Capital Ltd. on February 24, 2011 and through March 31, 2014, invested capital totaled approximately $660 million in 64 portfolio companies. Over the same period, Solar Senior Capital Ltd. completed transactions with more than 40 different financial sponsors.
Results of Operations for the Three Months Ended March 31, 2014 compared to the Three Months Ended March 31, 2013.
Investment Income
For the three months ended March 31, 2014 and 2013, gross investment income totaled $5.7 million and $4.5 million, respectively. The increase in gross investment income year over year was primarily due to portfolio yield improvement and net portfolio growth.
Expenses
Expenses totaled $1.9 million and $1.3 million, respectively for the three months ended March 31, 2014 and 2013. The increase in total expenses for the three months ended March 31, 2014 as compared to the year ago period primarily resulted from the comparatively larger portfolio.
Net Investment Income
The Company’s net investment income totaled $3.9 million and $3.1 million, or $0.33 and $0.28 per average share, for the three months ended March 31, 2014 and 2013, respectively.
Net Realized and Unrealized Gain (Loss)
Net realized and unrealized gain (loss) for the three months ended March 31, 2014 and 2013 totaled $0.1 million and ($0.2) million, respectively.
Net Increase in Net Assets Resulting From Operations
For the three months ended March 31, 2014 and 2013, the Company had a net increase in net assets resulting from operations of $4.0 million and $2.9 million, respectively. For the three months ended March 31, 2014 and 2013, earnings per average share were $0.35 and $0.26, respectively.
Liquidity and Capital Resources
At March 31, 2014, the Company had $56.6 million in borrowings outstanding on its revolving credit facility and $143.4 million of unused capacity, subject to borrowing base limits.
Financial Statements and Tables
| SOLAR SENIOR CAPITAL LTD. | ||||||||||
| CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | ||||||||||
| (in thousands, except share amounts) | ||||||||||
March 31, | December 31, | |||||||||
| Assets | ||||||||||
| Investments, at fair value: | ||||||||||
| Companies less than 5% owned (cost: $234,318 and $227,868, respectively) | $ | 236,640 | $ | 228,943 | ||||||
| Companies 5% to 25% owned (cost: $4,034 and $4,409, respectively) | 4,034 | 4,409 | ||||||||
| Companies more than 25% owned (cost: $32,839 and $32,839, respectively) | 34,200 | 34,500 | ||||||||
| Total investments (cost: $271,191 and $265,116, respectively) | 274,874 | 267,852 | ||||||||
| Cash | 7,742 | 2,774 | ||||||||
| Receivable for investments sold | 88 | — | ||||||||
| Interest and dividends receivable | 1,806 | 1,734 | ||||||||
| Prepaid expenses and other assets | 394 | 201 | ||||||||
| Total assets | $ | 284,904 | $ | 272,561 | ||||||
| Liabilities | ||||||||||
| Credit facility payable | $ | 56,600 | $ | 61,400 | ||||||
| Distributions payable | 1,296 | 1,355 | ||||||||
| Payable for investments purchased | 17,234 | — | ||||||||
| Management fee payable | 687 | 703 | ||||||||
| Performance-based incentive fees payable | 213 | 33 | ||||||||
| Interest payable | 177 | 139 | ||||||||
| Administrative services expense payable | 304 | 630 | ||||||||
| Other liabilities and accrued expenses | 380 | 284 | ||||||||
| Total liabilities | $ | 76,891 | $ | 64,544 | ||||||
Commitments and contingencies | ||||||||||
| Net Assets | ||||||||||
| Common stock, par value $0.01 per share, 200,000,000 and 200,000,000 common shares | ||||||||||
authorized, respectively, and 11,533,315 and 11,529,303 issued and outstanding, respectively | $ | 115 | $ | 115 | ||||||
| Paid-in capital in excess of par | 212,736 | 212,663 | ||||||||
| Distributions in excess of net investment income | (2,962 | ) | (2,750 | ) | ||||||
| Accumulated net realized loss | (5,559 | ) | (4,747 | ) | ||||||
| Net unrealized appreciation | 3,683 | 2,736 | ||||||||
| Total net assets | $ | 208,013 | $ | 208,017 | ||||||
| Net Asset Value Per Share | $ | 18.04 | $ | 18.04 | ||||||
| SOLAR SENIOR CAPITAL LTD. | ||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||||||||
| (in thousands, except share amounts) | ||||||||||
| Three months ended | ||||||||||
| March 31, 2014 | March 31, 2013 | |||||||||
| INVESTMENT INCOME: | ||||||||||
| Interest: | ||||||||||
| Companies less than 5% owned | $ | 4,862 | $ | 4,461 | ||||||
| Companies 5% to 25% owned | 57 | — | ||||||||
| Companies more than 25% owned | 247 | — | ||||||||
| Dividends: | ||||||||||
| Companies more than 25% owned | 570 | — | ||||||||
| Total investment income | 5,736 | 4,461 | ||||||||
| EXPENSES: | ||||||||||
| Management fees | $ | 687 | $ | 570 | ||||||
| Performance-based incentive fees | 213 | 80 | ||||||||
| Interest and other credit facility expenses | 437 | 207 | ||||||||
| Administrative services expense | 242 | 232 | ||||||||
| Insurance expense | 30 | 70 | ||||||||
| Other general and administrative expenses | 274 | 175 | ||||||||
| Total expenses | 1,883 | 1,334 | ||||||||
| Net investment income | $ | 3,853 | $ | 3,127 | ||||||
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | ||||||||||
| Net realized gain (loss) on investments (companies less than 5% owned) | $ | (812 | ) | $ | 22 | |||||
| Net change in unrealized gain (loss) on investments | 947 | (245 | ) | |||||||
| Net realized and unrealized gain (loss) on investments | 135 | (223 | ) | |||||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 3,988 | $ | 2,904 | ||||||
| EARNINGS PER SHARE | $ | 0.35 | $ | 0.26 | ||||||
About Solar Senior Capital Ltd.
Solar Senior 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. The Company invests primarily in leveraged, middle market companies in the form of senior secured loans including first lien and second lien debt instruments.
Forward-Looking Statements
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, 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 our filings with the Securities and Exchange Commission. Solar Senior Capital Ltd. undertakes no duty to update any forward-looking statements made herein.
Contacts:
Investor Relations
Rick Pivirotto
646-308-8770
