Fidus Investment Corporation Announces First Quarter 2020 Financial Results
First Quarter 2020 Financial Highlights
- Total investment income of
$20.0 million - Net investment income of
$17.4 million , or$0.71 per share - Adjusted net investment income of
$8.5 million , or$0.35 per share(1) - Net decrease in net assets resulting from operations of
$(27.0) million , or$(1.10) per share - Invested
$68.2 million in debt and equity securities, including three new portfolio companies - Received proceeds from repayments and realizations of
$73.8 million , recognizing$30.3 million in net realized gains - Paid regular quarterly dividend of
$0.39 per share onMarch 27, 2020 - Net asset value (NAV) of
$375.5 million , or$15.37 per share, as ofMarch 31, 2020 - Estimated spillover income (or taxable income in excess of distributions) as of
March 31, 2020 of$21 .6 million, or$0.89 per share
Management Commentary
“Through mid-March, Fidus’ portfolio was performing well and we redeployed proceeds from the partial sale of some equity investments into income-producing investments while adhering to our strategy of focusing on companies with defensive characteristics and strong, resilient cash flows,” said
Added
(1) Supplemental information regarding adjusted net investment income:
On a supplemental basis, we provide information relating to adjusted net investment income, which is a non-GAAP measure. This measure is provided in addition to, but not as a substitute for, net investment income. Adjusted net investment income represents net investment income excluding any capital gains incentive fee expense or (reversal) attributable to realized and unrealized gains and losses. The management agreement with our advisor provides that a capital gains incentive fee is determined and paid annually with respect to cumulative realized capital gains (but not unrealized capital gains) to the extent such realized capital gains exceed realized and unrealized losses. In addition, we accrue, but do not pay, a capital gains incentive fee in connection with any unrealized capital appreciation, as appropriate. As such, we believe that adjusted net investment income is a useful indicator of operations exclusive of any capital gains incentive fee expense or (reversal) attributable to realized and unrealized gains and losses. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. Reconciliations of net investment income to adjusted net investment income are set forth in Schedule 1.
First Quarter 2020 Financial Results
The following table provides a summary of our operating results for the three months ended
Three Months Ended |
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2020 | 2019 | $ Change | % Change | ||||||||||||
Interest income | $ | 17,467 | $ | 15,252 | $ | 2,215 | 14.5 | % | |||||||
Payment-in-kind interest income | 1,081 | 2,630 | (1,549 | ) | (58.9 | %) | |||||||||
Dividend income | 136 | 295 | (159 | ) | (53.9 | %) | |||||||||
Fee income | 1,282 | 2,099 | (817 | ) | (38.9 | %) | |||||||||
Interest on idle funds and other income | 17 | 54 | (37 | ) | (68.5 | %) | |||||||||
Total investment income | $ | 19,983 | $ | 20,330 | $ | (347 | ) | (1.7 | %) | ||||||
Net investment income | $ | 17,417 | $ | 9,599 | $ | 7,818 | 81.4 | % | |||||||
Net investment income per share | $ | 0.71 | $ | 0.39 | $ | 0.32 | 82.1 | % | |||||||
Adjusted net investment income (1) | $ | 8,539 | $ | 9,954 | $ | (1,415 | ) | (14.2 | %) | ||||||
Adjusted net investment income per share (1) | $ | 0.35 | $ | 0.41 | $ | (0.06 | ) | (14.6 | %) | ||||||
Net increase (decrease) in net assets resulting from operations | $ | (26,971 | ) | $ | 11,372 | $ | (38,343 | ) | (337.2 | %) | |||||
Net increase (decrease) in net assets resulting from operations per share | $ | (1.10 | ) | $ | 0.46 | $ | (1.56 | ) | (339.1 | %) | |||||
The
For the three months ended
Net investment income increased by
For the three months ended
Portfolio and Investment Activities
As of
First quarter 2020 investment activity included the following new portfolio company investments:
Combined Systems, Inc. , a leading designer, manufacturer, and marketer of non-lethal security products for the global defense and law enforcement markets.Fidus invested$11.9 million in a revolving loan and first lien debt.
Routeware, Inc. , a leading provider of highly integrated fleet automation software and systems for waste haulers and municipalities.Fidus invested$15.0 million in first lien debt.
- Western’s
Smokehouse, LLC , a preferred manufacturing solution for the top brands and retailers in premium crafted protein snacks.Fidus invested$10.0 million in first lien debt.
As of
Liquidity and Capital Resources
As of
Subsequent Events
On
Second Quarter 2020 Dividend of
On
When declaring dividends, our Board of Directors reviews estimates of taxable income available for distribution, which differs from consolidated income under generally accepted accounting principles due to (i) changes in unrealized appreciation and depreciation, (ii) temporary and permanent differences in income and expense recognition, and (iii) the amount of undistributed taxable income carried over from a given year for distribution in the following year. The final determination of 2020 taxable income, as well as the tax attributes for 2020 dividends, will be made after the close of the 2020 tax year. The final tax attributes for 2020 dividends will generally include ordinary taxable income but may also include capital gains, qualified dividends and return of capital.
First Quarter 2020 Financial Results Conference Call
Management will host a conference call to discuss the operating and financial results at
A live webcast of the conference call will be available at http://investor.fdus.com/events-presentations. Please access the website 15 minutes prior to the start of the call to download and install any necessary audio software.
A telephone replay of the conference call will be available from
ABOUT
Fidus Investment Corporation provides customized debt and equity financing solutions to lower middle-market companies, which management generally defines as
FORWARD-LOOKING STATEMENTS
This press release may contain certain forward-looking statements which are based upon current expectations and are inherently uncertain. 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 including the impact of COVID-19 and related changes in base interest rates and significant market volatility on our business, our portfolio companies, our industry and the global economy, 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 as a result of a number of factors, including those described from time to time in the Company’s filings with the Securities and Exchange Commission. Such statements speak only as of the time when made, and are based on information available to the Company as of the date hereof and are qualified in their entirety by this cautionary statement. The Company undertakes no obligation to update any such statement now or in the future, except as required by applicable law.
Consolidated Statements of Assets and Liabilities (in thousands, except shares and per share data) |
||||||||
(unaudited) | 2019 | |||||||
ASSETS | ||||||||
Investments, at fair value: | ||||||||
Control investments (cost: |
$ | 20,551 | $ | 21,820 | ||||
Affiliate investments (cost: |
67,504 | 121,555 | ||||||
Non-control/non-affiliate investments (cost: |
630,885 | 623,544 | ||||||
Total investments, at fair value (cost: |
718,940 | 766,919 | ||||||
Cash and cash equivalents | 27,225 | 15,012 | ||||||
Interest receivable | 5,442 | 6,331 | ||||||
Prepaid expenses and other assets | 935 | 1,177 | ||||||
Total assets | $ | 752,542 | $ | 789,439 | ||||
LIABILITIES | ||||||||
SBA debentures, net of deferred financing costs | $ | 152,922 | $ | 153,802 | ||||
Public Notes, net of deferred financing costs | 177,227 | 176,901 | ||||||
Borrowings under Credit Facility, net of deferred financing costs | 33,982 | 23,899 | ||||||
Accrued interest and fees payable | 2,222 | 3,505 | ||||||
Base management fee payable – due to affiliate | 3,272 | 3,334 | ||||||
Income incentive fee payable – due to affiliate | 1,855 | 1,497 | ||||||
Capital gains incentive fee payable – due to affiliate | 3,837 | 12,715 | ||||||
Administration fee payable and other – due to affiliate | 647 | 487 | ||||||
Taxes payable | 123 | 547 | ||||||
Accounts payable and other liabilities | 921 | 442 | ||||||
Total liabilities | 377,008 | 377,129 | ||||||
Commitments and contingencies | ||||||||
NET ASSETS | ||||||||
Common stock, |
24 | 24 | ||||||
Additional paid-in capital | 365,793 | 366,061 | ||||||
Total distributable earnings | 9,717 | 46,225 | ||||||
Total net assets | 375,534 | 412,310 | ||||||
Total liabilities and net assets | $ | 752,542 | $ | 789,439 | ||||
Net asset value per common share | $ | 15.37 | $ | 16.85 | ||||
Consolidated Statements of Operations (unaudited) (in thousands, except shares and per share data) |
|||||||||||
Three Months Ended | |||||||||||
2020 |
2019 |
||||||||||
Investment Income: | |||||||||||
Interest income | |||||||||||
Control investments | $ | 432 | $ | 282 | |||||||
Affiliate investments | 983 | 1,520 | |||||||||
Non-control/non-affiliate investments | 16,052 | 13,450 | |||||||||
Total interest income | 17,467 | 15,252 | |||||||||
Payment-in-kind interest income | |||||||||||
Control investments | 425 | 1,237 | |||||||||
Affiliate investments | 40 | 83 | |||||||||
Non-control/non-affiliate investments | 616 | 1,310 | |||||||||
Total payment-in-kind interest income | 1,081 | 2,630 | |||||||||
Dividend income | |||||||||||
Control investments | — | — | |||||||||
Affiliate investments | 107 | 368 | |||||||||
Non-control/non-affiliate investments | 29 | (73 | ) | ||||||||
Total dividend income | 136 | 295 | |||||||||
Fee income | |||||||||||
Control investments | — | 349 | |||||||||
Affiliate investments | — | 22 | |||||||||
Non-control/non-affiliate investments | 1,282 | 1,728 | |||||||||
Total fee income | 1,282 | 2,099 | |||||||||
Interest on idle funds and other income | 17 | 54 | |||||||||
Total investment income | 19,983 | 20,330 | |||||||||
Expenses: | |||||||||||
Interest and financing expenses | 4,960 | 3,724 | |||||||||
Base management fee | 3,272 | 2,871 | |||||||||
Incentive fee - income | 1,855 | 2,485 | |||||||||
Incentive fee - capital gains | (8,878 | ) | 355 | ||||||||
Administrative service expenses | 466 | 399 | |||||||||
Professional fees | 553 | 590 | |||||||||
Other general and administrative expenses | 335 | 305 | |||||||||
Total expenses | 2,563 | 10,729 | |||||||||
Net investment income before income taxes | 17,420 | 9,601 | |||||||||
Income tax provision (benefit) | 3 | 2 | |||||||||
Net investment income | 17,417 | 9,599 | |||||||||
Net realized and unrealized gains (losses) on investments: | |||||||||||
Net realized gains (losses): | |||||||||||
Control investments | — | (1,268 | ) | ||||||||
Affiliate investments | 24,332 | 35 | |||||||||
Non-control/non-affiliate investments | 7,046 | (358 | ) | ||||||||
Total net realized gain (loss) on investments | 31,378 | (1,591 | ) | ||||||||
Income tax (provision) benefit from realized gains on investments | (1,051 | ) | 8 | ||||||||
Net change in unrealized appreciation (depreciation): | |||||||||||
Control investments | (1,696 | ) | 1,637 | ||||||||
Affiliate investments | (39,253 | ) | 2,759 | ||||||||
Non-control/non-affiliate investments | (33,641 | ) | (851 | ) | |||||||
Total net change in unrealized appreciation (depreciation) on investments | (74,590 | ) | 3,545 | ||||||||
Net gain (loss) on investments | (44,263 | ) | 1,962 | ||||||||
Realized losses on extinguishment of debt | (125 | ) | (189 | ) | |||||||
Net increase (decrease) in net assets resulting from operations | $ | (26,971 | ) | $ | 11,372 | ||||||
Per common share data: | |||||||||||
Net investment income per share-basic and diluted | $ | 0.71 | $ | 0.39 | |||||||
Net increase (decrease) in net assets resulting from operations per share — basic and diluted | $ | (1.10 | ) | $ | 0.46 | ||||||
Dividends declared per share | $ | 0.39 | $ | 0.39 | |||||||
Weighted average number of shares outstanding — basic and diluted | 24,457,634 | 24,463,119 | |||||||||
Schedule 1
Supplemental Information Regarding Adjusted Net Investment Income
On a supplemental basis, we provide information relating to adjusted net investment income, which is a non-GAAP measure. This measure is provided in addition to, but not as a substitute for, net investment income. Adjusted net investment income represents net investment income excluding any capital gains incentive fee expense or (reversal) attributable to realized and unrealized gains and losses. The management agreement with our advisor provides that a capital gains incentive fee is determined and paid annually with respect to cumulative realized capital gains (but not unrealized capital gains) to the extent such realized capital gains exceed realized and unrealized losses for such year, less the aggregate amount of any capital gains incentive fees paid in all prior years. In addition, we accrue, but do not pay, a capital gains incentive fee in connection with any unrealized capital appreciation, as appropriate. As such, we believe that adjusted net investment income is a useful indicator of operations exclusive of any capital gains incentive fee expense or (reversal) attributable to realized and unrealized gains and losses. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. The following table provides a reconciliation of net investment income to adjusted net investment income for the three months ended
($ in thousands) | ||||||||
Three Months Ended | ||||||||
(unaudited) | ||||||||
2020 |
2019 |
|||||||
Net investment income | $ | 17,417 | $ | 9,599 | ||||
Capital gains incentive fee expense (reversal) | (8,878 | ) | 355 | |||||
Adjusted net investment income (1) | $ | 8,539 | $ | 9,954 | ||||
Three Months Ended | ||||||||
(unaudited) | ||||||||
2020 |
2019 |
|||||||
Net investment income | $ | 0.71 | $ | 0.39 | ||||
Capital gains incentive fee expense (reversal) | (0.36 | ) | 0.01 | |||||
Adjusted net investment income (1) | $ | 0.35 | $ | 0.41 | ||||
(1) Adjusted net investment income per share amounts are calculated as adjusted net investment income dividend by weighted average shares outstanding for the period. Due to rounding, the sum of net investment income per share and capital gains incentive fee expense (reversal) amounts may not equal the adjusted net investment income per share amount presented here.
Company Contact: | Investor Relations Contact: |
Chief Financial Officer | LHA |
(847) 859-3940 | (212) 838-3777 |
ssherard@fidusinv.com | jburfening@lhai.com |
Source: Fidus Investment Corporation