NEW YORK, May 06, 2019 (GLOBE NEWSWIRE) -- Solar Senior Capital Ltd. (NASDAQ: SUNS) (the “Company” “Solar Senior” or “SUNS”), today reported net investment income of $5.7 million, or $0.35 per average share, for the quarter ended March 31, 2019.
At March 31, 2019, net asset value (NAV) was $16.40 per share, up $0.10 per share from the prior quarter.
The Company’s Board of Directors declared a monthly distribution for May of $0.1175 per share payable on June 4, 2019 to stockholders of record on May 23, 2019. Tax characteristics of all distributions will be reported to shareholders on Form 1099 after the end of the calendar year.
HIGHLIGHTS:
At March 31, 2019:
Comprehensive Investment portfolio* fair value: $598.5 million
Number of portfolio companies*: 162
Net assets: $263.1 million
Net asset value per share: $16.40
Comprehensive Portfolio Activity** for the Quarter Ended March 31, 2019
Investments made during the quarter: $56.1 million
Investments prepaid or sold during the quarter: $37.1 million
Operating Results for the Quarter Ended March 31, 2019
Net investment income: $5.7 million
Net investment income per share: $0.35
Net realized and unrealized gain: $1.7 million
Net increase in net assets from operations: $7.4 million
Earnings per share: $0.46
* The Comprehensive Investment Portfolio is comprised of Solar Senior Capital Ltd.’s investment portfolio, Gemino Healthcare Finance’s (“Gemino”) full portfolio and North Mill Capital LLC’s (“North Mill”) full portfolio, and excludes the Company’s fair value of its equity interest in Gemino and North Mill.
** Comprehensive Portfolio Activity includes gross originations/repayments through Gemino and North Mill attributable to the Company.
“We are pleased with Solar Senior Capital’s first quarter operating performance. Overall, the financial health of our portfolio companies remains sound and over 98% of our portfolio is invested in first lien senior secured loans. With our continued focus on asset-based specialty lending and cash flow investments in defensive, non-cyclical industries, we believe SUNS is positioned to perform well through economic cycles,” said Michael Gross, Chairman and CEO of Solar Senior Capital Ltd. "The Company has ample capital to expand our specialty finance platform while continuing to be highly selective in cash flow lending."
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 7, 2019. All interested parties may participate in the conference call by dialing (844) 889-7785 approximately 5-10 minutes prior to the call, international callers should dial (661) 378-9929. Participants should reference Solar Senior Capital Ltd. and the participant passcode of 7625319 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 7625319. 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 Senior Capital’s website, www.solarseniorcap.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
Investment Activity
During the quarter ended March 31, 2019, Solar Senior Capital had total originations of $56.1 million and repayments of $37.1 million across the Company’s core businesses comprised of senior secured cash flow, traditional asset-based lending and healthcare asset-based lending, resulting in net originations of $19.0 million to the comprehensive portfolio.
The investment activity of our Comprehensive Investment Portfolio for the quarter ended March 31, 2019 was as follows:
| Total Portfolio Activity(1) – Q1 2019 (in millions) | |||||||||
| Asset Classes | Cash Flow Loans | Asset-based Loans North Mill | Asset-based Healthcare Loans Gemino | Total Portfolio Activity | |||||
| Originations | $31.2 | $15.5 | $9.4 | $56.1 | |||||
| Repayments / Amortization | $15.6 | $18.4 | $3.1 | $37.1 | |||||
| Net Portfolio Activity | $15.6 | $(2.9) | $6.3 | $19.0 | |||||
- Total Portfolio Activity includes gross originations/repayments across each business unit.
Portfolio Composition
Our Comprehensive Investment Portfolio composition by business unit at March 31, 2019 was as follows:
| Comprehensive Investment Portfolio Composition (at fair value) | Amount | Weighted Average Asset-level Yield | ||||
| ($mm) | % | |||||
| First Lien Senior Secured Loans | ||||||
| Cash Flow 1st Lien Senior Secured Loans | $354.2 | 59.2% | 8.1%5 | |||
| Traditional Asset-Based 1st Lien Senior Secured Loans(1) (North Mill) | $118.1 | 19.7% | 13.1%6 | |||
| Healthcare Asset-Based 1st Lien Senior Secured Loans(2) (Gemino) | $114.9 | 19.2% | 11.6%6 | |||
| Total First Lien Senior Secured Loans | $587.2 | 98.1% | ||||
| Cash Flow 2nd Lien Senior Secured Loans | $9.9 | 1.7% | ||||
| Total Senior Secured Loans | $597.1 | 99.8% | 9.8% | |||
| Equity and Equity-like Securities(3) | $1.4 | 0.2% | ||||
| Total Comprehensive Investment Portfolio | $598.5 | 100% | ||||
| Floating Rate Investments(4) | $566.7 | 94.9% | ||||
- Includes North Mill’s full portfolio, all of which are 1st lien senior secured loans.
- Includes Gemino’s full portfolio, all of which are 1st lien senior secured loans.
- Excludes the Company’s equity investments in North Mill and Gemino, which distribute quarterly dividends to the Company.
- Floating rate investments calculated as a percent of the Company’s income-producing Comprehensive Investment Portfolio.
- Represents the yield to maturity based on fair market value at 3/31/19.
- Represents total interest and fee income for the three month period ending on March 31, 2019 against the average portfolio over the same fiscal period, annualized.
The Comprehensive Investment Portfolio is diversified across approximately 162 unique borrowers with average issuer exposure of $3.7 million, or 0.6% of the comprehensive portfolio at March 31, 2019.
The Comprehensive Investment Portfolio is invested 98.1% in first lien senior secured cash flow and asset-based loans and 1.7% in second lien senior secured cash flow loans.
Solar Senior Capital Ltd. Portfolio
Asset Quality
At March 31, 2019, 99.8% and 98.5% of Solar Senior’s portfolio was performing on a fair value and cost basis, respectively.
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 | ||
| 1 | $51.5 | 11.0% | ||
| 2 | $399.5 | 85.4% | ||
| 3 | $15.8 | 3.4% | ||
| 4 | $0.9 | 0.2% | ||
Solar Senior Capital Ltd.’s Results of Operations for the Quarter Ended March 31, 2019 compared to the Quarter Ended March 31, 2018:
Investment Income
For the quarters ended March 31, 2019 and 2018, gross investment income totaled $10.2 million and $9.3 million, respectively. The increase in gross investment income was primarily due to average portfolio growth.
Our gross investment income by business unit is broken out below.
| Investment Income Contribution by Business Unit(1) (in millions) | ||||
| For the Quarter Ended: | Cash Flow Lending | Asset-based Lending (North Mill) | Asset-based Healthcare Lending (Gemino) | Total |
| 3/31/2019 | $7.9 | $1.4 | $0.9 | $10.2 |
| % Contribution | 77.5% | 13.7% | 8.8% | 100.0% |
- Investment Income Contribution by Business Unit includes interest income/fees from cash flow loans on balance sheet and distributions from North Mill Capital and Gemino Healthcare Finance.
Expenses
Net expenses totaled $4.6 million and $3.7 million, respectively, for the quarters ended March 31, 2019 and 2018. For the fiscal quarters ended March 31, 2019 and March 31, 2018, $0.5 million and $0.3 million, respectively, of performance-based incentive fees were voluntarily waived by the Company’s investment manager.
Net Investment Income
Net investment income totaled $5.7 million and $5.7 million, or $0.35 and $0.35 per average share, respectively, for the quarters ended March 31, 2019 and 2018.
Net Realized and Unrealized Gain (Loss)
Net realized and unrealized gain (loss) for the quarters ended March 31, 2019 and 2018 totaled approximately $1.7 million and $(0.1) million, respectively.
Net Increase in Net Assets Resulting From Operations
For the quarters ended March 31, 2019 and 2018, the Company had a net increase in net assets resulting from operations of $7.4 million and $5.5 million, respectively. For the quarters ended March 31, 2019 and 2018, earnings per average share were $0.46 and $0.34, respectively.
Liquidity and Capital Resources
As of March 31, 2019, the Company had a total of approximately $88 million of unused borrowing capacity under the Company’s revolving credit facilities, subject to borrowing base limits. When including North Mill and Gemino non-recourse credit facilities, the Company had approximately $225 million of unused borrowing capacity under its revolving credit facilities, subject to borrowing base limits at March 31, 2019.
| SOLAR SENIOR CAPITAL LTD. | |||||||
| CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | |||||||
| (in thousands, except share amounts) | |||||||
| March 31, 2019 (unaudited) | December 31, 2018 | ||||||
| Assets | |||||||
| Investments at fair value: | |||||||
| Companies less than 5% owned (cost: $371,295 and $355,354, respectively) | $ | 362,949 | $ | 348,211 | |||
| Companies 5% to 25% owned (cost: $3,518 and $3,524, respectively) | 2,624 | 2,350 | |||||
| Companies more than 25% owned (cost: $98,439 and $98,439, respectively) | 102,100 | 99,550 | |||||
| Cash | 6,448 | 4,875 | |||||
| Interest receivable | 2,170 | 2,141 | |||||
| Dividends receivable | 1,893 | 1,893 | |||||
| Receivable for investments sold | 60 | 87 | |||||
| Prepaid expenses and other assets | 342 | 188 | |||||
| Total assets | $ | 478,586 | $ | 459,295 | |||
| Liabilities | |||||||
| Payable for investments purchased | $ | — | $ | 22,805 | |||
| Credit facility ($155,100 and $119,200 face amounts, respectively, reported net of unamortized debt issuance costs of $1,569 and $1,662, respectively.) | 153,531 | 117,538 | |||||
| FLLP 2015-1, LLC revolving credit facility (the “FLLP Facility”) | 56,453 | 51,371 | |||||
| Distributions payable | 1,885 | 1,885 | |||||
| Management fee payable | 1,156 | 1,189 | |||||
| Performance-based incentive fee payable | 8 | 106 | |||||
| Interest payable | 1,440 | 1,260 | |||||
| Administrative services expense payable | 83 | 923 | |||||
| Other liabilities and accrued expenses | 887 | 826 | |||||
| Total liabilities | $ | 215,443 | $ | 197,903 | |||
| 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 16,041,604 and 16,040,485 issued and outstanding, respectively | $ | 160 | $ | 160 | |||
| Paid-in capital in excess of par | 288,808 | 288,789 | |||||
| Accumulated distributable net loss | (25,825 | ) | (27,557 | ) | |||
| Total net assets | $ | 263,143 | $ | 261,392 | |||
| Net Asset Value Per Share | $ | 16.40 | $ | 16.30 | |||
| SOLAR SENIOR CAPITAL LTD. | |||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | |||||||
| (in thousands, except share amounts) | |||||||
| Three months ended | |||||||
| March 31, 2019 | March 31, 2018 | ||||||
| INVESTMENT INCOME: | |||||||
| Interest: | |||||||
| Companies less than 5% owned | $ | 7,814 | $ | 5,817 | |||
| Companies 5% to 25% owned | 85 | 51 | |||||
| Dividends: | |||||||
| Companies more than 25% owned | 2,265 | 3,387 | |||||
| Other income: | |||||||
| Companies less than 5% owned | 70 | 67 | |||||
| Companies more than 25% owned | — | 19 | |||||
| Total investment income | 10,234 | 9,341 | |||||
| EXPENSES: | |||||||
| Management fees | $ | 1,156 | $ | 1,048 | |||
| Performance-based incentive fees | 544 | 618 | |||||
| Interest and other credit facility expenses | 2,685 | 1,586 | |||||
| Administrative services expense | 396 | 382 | |||||
| Other general and administrative expenses | 335 | 361 | |||||
| Total expenses | 5,116 | 3,995 | |||||
| Performance-based incentive fees waived | (536 | ) | (308 | ) | |||
| Net expenses | 4,580 | 3,687 | |||||
| Net investment income | $ | 5,654 | $ | 5,654 | |||
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND CASH EQUIVALENTS: | |||||||
| Net realized gain (loss) on investments and cash equivalents (companies less than 5% owned) | $ | 105 | $ | (7 | ) | ||
| Net change in unrealized gain (loss) on investments and cash equivalents: | |||||||
| Companies less than 5% owned | (1,203 | ) | (1,442 | ) | |||
| Companies 5% to 25% owned | 280 | 108 | |||||
| Companies more than 25% owned | 2,550 | 1,204 | |||||
| Net change in unrealized gain (loss) on investments and cash equivalents | 1,627 | (130 | ) | ||||
| Net realized and unrealized gain (loss) on investments and cash equivalents | 1,732 | (137 | ) | ||||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 7,386 | $ | 5,517 | |||
| EARNINGS PER SHARE | $ | 0.46 | $ | 0.34 | |||
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. A specialty finance company with expertise in several niche markets, the Company primarily invests directly and indirectly in leveraged, U. S. middle market companies primarily in the form of cash flow first lien senior secured debt instruments and asset-based loans including senior secured loans collateralized on a first lien basis primarily by current assets.
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.
Contact
Investor Relations
(646) 308-8770