Exhibit 99.1
TPG Specialty Lending, Inc. Announces First Quarter 2015 Financial Results; Board Declares Dividend of $0.39 Per Share for the Second Fiscal Quarter of 2015
NEW YORK--(BUSINESS WIRE)—May 7, 2015—TPG Specialty Lending, Inc. (NYSE: TSLX, or the “Company”) today reported net investment income of $20.8 million, or $0.39 per share, for the quarter ended March 31, 2015. Net income was $24.5 million, or $0.45 per share, for the quarter ended March 31, 2015. Net asset value per share was $15.60 at March 31, 2015 as compared to $15.53 at December 31, 2014. The Company’s Board of Directors declared a first quarter dividend of $0.39 per share, payable to stockholders of record as of March 31, 2015 that was paid on April 30, 2015.
The Company also announced that its Board of Directors has declared a quarterly dividend of $0.39 per share for stockholders of record as of June 30, 2015, payable on or about July 31, 2015.
FINANCIAL HIGHLIGHTS:
| | | | | | |
| | | (Amounts in thousands, except per share amounts) (Unaudited) |
| | | Three Months Ended |
| March 31, 2015 | | December 31, 2014 | | March 31, 2014 |
| | | |
Investments at Fair Value | | $1,330,993 | | $1,263,511 | | $1,195,539 |
Total Assets | | $1,373,759 | | $1,303,731 | | $1,251,464 |
Net Asset Value Per Share | | $15.60 | | $15.53 | | $15.51 |
| | | |
Investment Income | | $37,730 | | $45,778 | | $33,481 |
Net Investment Income | | $20,787 | | $30,684 | | $21,242 |
Net Income | | $24,468 | | $13,805 | | $25,348 |
| | | |
Net Investment Income Per Share | | $0.39 | | $0.57 | | $0.51 |
Net Realized and Unrealized Gains (Losses) Per Share | | $0.06 | | ($0.31) | | $0.10 |
Net Income Per Share | | $0.45 | | $0.26 | | $0.61 |
| | | |
Weighted Average Yield of Debt and Income Producing Securities at Fair Value | | 10.4% | | 10.3% | | 10.2% |
Weighted Average Yield of Debt and Income Producing Securities at Amortized Cost | | 10.3% | | 10.3% | | 10.4% |
| | | |
Percentage of Debt Investments at Floating Rates | | 97% | | 97% | | 99% |
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Conference Call and Webcast
Conference Call Information:
The conference call will be broadcast live at 8 a.m. Eastern Time on May 8, 2015. Please visit TSLX’s webcast link located on the Events & Presentation page of the Investor Resources section of TSLX’s websitehttp://www.tpgspecialtylending.comfor a slide presentation that complements the Earnings Conference Call. Please visit the website to test your connection before the webcast.
Participants are also invited to access the conference call by dialing one of the following numbers:
Domestic: (877) 359-9508
International: +1 (224) 357-2393
Conference ID: 23769388
All callers will need to enter the Conference ID followed by the # sign and reference “TPG Specialty Lending” once connected with the operator. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected.
Replay Information:
An archived replay will be available from approximately 12:00 p.m. Eastern Time on May 8 through May 22 via a webcast link located on the Investor Resources section of the Company’s website, and via the dial-in numbers listed below:
Domestic: (855) 859-2056
International: +1 (404) 537-3406
Conference ID: 23769388
Portfolio and Investment Activity
For the three months ended March 31, 2015, gross originations totaled $267.8 million. This compares to $304.8 million for the three months ended December 31, 2014 and $369.6 million for the three months ended March 31, 2014.
For the three months ended March 31, 2015, the Company made new investment commitments of $137.8 million, $101.0 million in three new portfolio companies and $36.8 million in three existing portfolio companies. For this period, the Company had $60.8 million aggregate principal amount in exits and repayments, resulting in a net portfolio increase of $71.0 million aggregate principal amount.
For the three months ended March 31, 2014, the Company made new investment commitments of $314.6 million, $303.8 million in six new portfolio companies and $10.8 million in two existing portfolio companies. For this period, the Company had $101.2 million aggregate principal amount in exits and repayments, resulting in a net portfolio increase of $187.0 million aggregate principal amount.
As of March 31, 2015 and December 31, 2014, the Company had investments in 35 and 34 portfolio companies, respectively, with an aggregate fair value of $1,331.0 million and $1,263.5 million, respectively.
As of March 31, 2015, the portfolio consisted of 90.1% first-lien debt investments, 7.8% second-lien debt investments, 1.0% mezzanine debt investments, and 1.1% equity and other investments. As of December 31, 2014, the portfolio consisted of 89.0% first-lien debt investments, 8.8% second-lien debt investments, 1.0% mezzanine debt investments, and 1.2% equity and other investments.
As of March 31, 2015, 96.5% of debt investments bore interest at floating rates, subject to interest rate floors. The Company’s credit facilities also bear interest at floating rates.
As of March 31, 2015 and December 31, 2014, the weighted average total yield of debt and income producing securities at fair value (which includes interest income and amortization of fees and discounts) was 10.4% and 10.3%, respectively, and the weighted average total yield of debt and income producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 10.3% and 10.3%, respectively.
The weighted average total yield of new debt and other income producing securities made to new portfolio companies during the quarter was 11.6% at amortized cost (which includes interest income and amortization of fees and discounts).
As of March 31, 2015, 100% of debt investments were meeting all payment requirements and 94% of debt investments were meeting all covenant requirements. No investments were on non-accrual status at March 31, 2015.
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Results of Operations for the Three Months Ended March 31, 2015 compared to the Three Months Ended March 31, 2014
Investment Income
For the three months ended March 31, 2015 and 2014, investment income totaled $37.7 million and $33.5 million, respectively. The increase in investment income for the quarter was primarily driven by the growth of the investment portfolio.
Expenses
Net expenses totaled $16.6 million and $12.2 million for the three months ended March 31, 2015 and 2014, respectively. The increase in net expenses was due to a management fee waiver in place prior to the Company’s IPO, a slightly higher average interest rate on debt outstanding, higher management and incentive fees, and higher general and administrative expenses associated with servicing a larger investment portfolio.
Liquidity and Capital Resources
During the three months ended March 31, 2015, the Company drew down on the remaining commitment under its SPV Asset Facility prior to the reinvestment period ending in January 2015.
As of March 31, 2015, the Company had $3.3 million in cash and cash equivalents, an increase of $0.9 million from December 31, 2014. As of March 31, 2015, the Company had total debt outstanding of $485.2 million, and $537 million of undrawn commitments on its revolving credit facilities, subject to borrowing base and other limitations. The Company’s weighted average interest rate on debt outstanding was 2.6% for the three months ended March 31, 2015, as compared to 2.5% for the three months ended March 31, 2014.
The Company is rated BBB- by Fitch Ratings and Standard and Poor’s. Both Fitch Ratings and Standard and Poor’s affirmed the Company’s BBB- rating and stable outlook during the first quarter of 2015.
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Financial Statements and Tables
TPG Specialty Lending, Inc.
Consolidated Statements of Operations
(Amounts in thousands, except share and per share amounts)
(Unaudited)
| | | | | | | | |
| | | Three Months
Ended | | | Three Months
Ended | |
| | | March 31, 2015 | | | March 31, 2014 | |
Income | | | | | | | | |
Investment income from non-controlled, non-affiliated investments: | | | | | | | | |
Interest from investments | | $ | 32,879 | | | $ | 31,118 | |
Other income | | | 3,377 | | | | 2,363 | |
| | | | | | | | |
Total investment income from non-controlled, non-affiliated investments | | | 36,256 | | | | 33,481 | |
Investment income from controlled, affiliated investments: | | | | | | | | |
Interest from investments | | | 1,417 | | | | — | |
Other income | | | 57 | | | | — | |
| | | | | | | | |
Total investment income from controlled, affiliated investments | | | 1,474 | | | | — | |
| | | | | | | | |
Total Investment Income | | | 37,730 | | | | 33,481 | |
| | | | | | | | |
Expenses | | | | | | | | |
Interest | | | 4,220 | | | | 3,824 | |
Management fees | | | 4,950 | | | | 4,237 | |
Incentive fees | | | 5,007 | | | | 4,473 | |
Professional fees | | | 1,209 | | | | 1,172 | |
Directors’ fees | | | 96 | | | | 72 | |
Other general and administrative | | | 1,156 | | | | 916 | |
| | | | | | | | |
Total expenses | | | 16,638 | | | | 14,694 | |
| | | | | | | | |
Management fees waived | | | — | | | | (2,464 | ) |
| | | | | | | | |
Net Expenses | | | 16,638 | | | | 12,230 | |
| | | | | | | | |
Net Investment Income Before Income Taxes | | | 21,092 | | | | 21,251 | |
Income taxes, including excise taxes | | | 305 | | | | 9 | |
| | | | | | | | |
Net Investment Income | | | 20,787 | | | | 21,242 | |
Unrealized and Realized Gains (Losses) | | | | | | | | |
Net change in unrealized gains (losses): | | | | | | | | |
Non-controlled, non-affiliated investments | | | (5,907 | ) | | | 3,944 | |
Controlled, affiliated investments | | | 605 | | | | — | |
Translation of assets and liabilities in foreign currencies | | | 7,215 | | | | 1,771 | |
Interest rate swaps | | | (353 | ) | | | — | |
| | | | | | | | |
Total net change in unrealized gains | | | 1,560 | | | | 5,715 | |
| | | | | | | | |
Realized gains (losses): | | | | | | | | |
Non-controlled, non-affiliated investments | | | 265 | | | | — | |
Interest rate swaps | | | 1,852 | | | | — | |
Foreign currency transactions | | | 4 | | | | (1,609 | ) |
| | | | | | | | |
Total realized gains (losses) | | | 2,121 | | | | (1,609 | ) |
| | | | | | | | |
Total Unrealized and Realized Gains | | | 3,681 | | | | 4,106 | |
| | | | | | | | |
Increase in Net Assets Resulting from Operations | | $ | 24,468 | | | $ | 25,348 | |
| | | | | | | | |
Earnings per common share—basic and diluted | | $ | 0.45 | | | $ | 0.61 | |
| | | | | | | | |
Weighted average shares of common stock outstanding—basic and diluted | | | 53,902,074 | | | | 41,539,083 | |
| | | | | | | | |
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TPG Specialty Lending, Inc.
Consolidated Balance Sheets
(Amounts in thousands, except share and per share amounts)
(Unaudited)
| | | | | | | | |
| | | March 31,
2015 | | | December 31,
2014 | |
Assets | | | | | | | | |
Investments at fair value | | | | | | | | |
Non-controlled, non-affiliated investments (amortized cost of $1,295,328
and $1,225,672, respectively) | | $ | 1,285,623 | | | $ | 1,221,875 | |
Controlled, affiliated investments (amortized cost of $50,709 and $47,580, respectively) | | | 45,370 | | | | 41,636 | |
| | | | | | | | |
Total investments at fair value (amortized cost of $1,346,037 and $1,273,252, respectively) | | | 1,330,993 | | | | 1,263,511 | |
Cash and cash equivalents | | | 3,329 | | | | 2,413 | |
Interest receivable | | | 7,282 | | | | 6,137 | |
Receivable for interest rate swaps | | | 667 | | | | 1,020 | |
Prepaid expenses and other assets | | | 31,488 | | | | 30,650 | |
| | | | | | | | |
Total Assets | | $ | 1,373,759 | | | $ | 1,303,731 | |
| | | | | | | | |
Liabilities | | | | | | | | |
Debt | | $ | 485,223 | | | $ | 395,864 | |
Management fees payable to affiliate | | | 4,950 | | | | 4,887 | |
Incentive fees payable to affiliate | | | 5,007 | | | | 5,955 | |
Dividends payable | | | 21,044 | | | | 20,981 | |
Payable for investments purchased | | | 7,440 | | | | 29,017 | |
Payables to affiliate | | | 1,561 | | | | 2,918 | |
Other liabilities | | | 7,004 | | | | 8,704 | |
| | | | | | | | |
Total Liabilities | | | 532,229 | | | | 468,326 | |
| | | | | | | | |
Commitments and contingencies | | | | | | | | |
Net Assets | | | | | | | | |
Preferred stock, $0.01 par value; 100,000,000 shares authorized; no shares issued
and outstanding | | | — | | | | — | |
Common stock, $0.01 par value; 400,000,000 shares authorized, 53,960,847 and
53,798,357 shares issued, respectively; and 53,959,848 and 53,797,358 shares
outstanding, respectively | | | 540 | | | | 538 | |
Additional paid-in capital | | | 810,422 | | | | 808,053 | |
Treasury stock at cost; 999 shares | | | (1 | ) | | | (1 | ) |
Undistributed net investment income | | | 6,818 | | | | 6,555 | |
Net unrealized gains | | | 1,747 | | | | 188 | |
Undistributed net realized gains | | | 22,004 | | | | 20,072 | |
| | | | | | | | |
Total Net Assets | | | 841,530 | | | | 835,405 | |
| | | | | | | | |
Total Liabilities and Net Assets | | $ | 1,373,759 | | | $ | 1,303,731 | |
| | | | | | | | |
Net Asset Value Per Share | | $ | 15.60 | | | $ | 15.53 | |
| | | | | | | | |
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Note: The Company’s investment activity for the three months ended March 31, 2015 and 2014 is presented below (information presented herein is at par value unless otherwise indicated).
| | | | | | | | |
| | | Three Months Ended | |
($ in millions) | | March 31, 2015 | | | March 31, 2014 | |
New investment commitments: | | | | | | | | |
Gross originations | | $ | 267.8 | | | $ | 369.6 | |
Less: Syndications/sell downs | | | 130.0 | | | | 55.0 | |
| | | | | | | | |
Total new investment commitments | | $ | 137.8 | | | $ | 314.6 | |
Principal amount of investments funded: | | | | | | | | |
First-lien | | $ | 122.0 | | | $ | 218.0 | |
Second-lien | | | 9.8 | | | | 65.0 | |
Mezzanine | | | — | | | | 4.7 | |
Equity and other | | | — | | | | 0.5 | |
| | | | | | | | |
Total | | $ | 131.8 | | | $ | 288.2 | |
Principal amount of investments sold or repaid: | | | | | | | | |
First-lien | | $ | 43.8 | | | $ | 101.2 | |
Second-lien | | | 17.0 | | | | — | |
| | | | | | | | |
Total | | $ | 60.8 | | | $ | 101.2 | |
| | | | | | | | |
Number of new investment commitments
in new portfolio companies | | | 3 | | | | 6 | |
Average new investment commitment amount in
new portfolio companies | | $ | 33.7 | | | $ | 50.6 | |
Weighted average term for new investment
commitments in new portfolio companies
(in years) | | | 5.5 | | | | 4.7 | |
Percentage of new debt investment
commitments at floating rates | | | 92.9 | % | | | 98.5 | % |
Percentage of new debt investment
commitments at fixed rates | | | 7.1 | % | | | 1.5 | % |
Weighted average interest rate of new
investment commitments | | | 10.2 | % | | | 9.1 | % |
Weighted average spread over LIBOR of new
floating rate investment commitments | | | 9.3 | % | | | 7.8 | % |
Weighted average interest rate on investments
sold or paid down | | | 8.6 | % | | | 9.4 | % |
About TPG Specialty Lending, Inc.
TPG Specialty Lending, Inc. (“TSLX”, or the “Company”) is a specialty finance company focused on lending to middle-market companies. The Company seeks to generate current income primarily in U.S.-domiciled middle-market companies through direct originations of senior secured loans and, to a lesser extent, originations of mezzanine loans and investments in corporate bonds and equity securities. The Company has elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940 and the rules and regulations promulgated thereunder. TSLX is externally managed by TSL Advisers, LLC, an SEC-registered investment adviser. TSLX leverages the deep investment, sector, and operating resources of TPG Special Situations Partners, the dedicated special situations and credit platform of TPG, with over $11 billion of assets under management and the broader TPG platform, a global private investment firm with over $67 billion of assets under management. For more information, visit the Company’s website atwww.tpgspecialtylending.com.
Forward-Looking Statements
Statements included herein may constitute “forward-looking statements,” which relate to future events or the Company’s future performance or financial condition. These statements are not guarantees of future performance, conditions 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
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number of factors, including those described from time to time in the Company’s filings with the Securities and Exchange Commission. We assume no obligation to update any such forward-looking statements. TPG Specialty Lending, Inc. undertakes no duty to update any forward-looking statements made herein.
Source: TPG Specialty Lending, Inc.
Investor Relations:
TPG Specialty Lending, Inc.
415-486-5939
IRTSL@tpg.com
or
Press:
Owen Blicksilver PR, Inc.
Jennifer Hurson, 845-507-0571
jennifer@blicksilverpr.com
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