Exhibit 99.1
TPG Specialty Lending, Inc. Announces Quarter Ended September 30, 2015 Financial Results; Board Declares Quarterly Dividend of $0.39 Per Share for the Fourth Fiscal Quarter of 2015
NEW YORK – (BUSINESS WIRE) – November 3, 2015 – TPG Specialty Lending, Inc. (NYSE: TSLX, or the “Company”) today reported net investment income of $25.8 million, or $0.48 per share, including a one-time charge of $0.06 per share related to the acceleration of deferred financing costs associated with the termination of the Company’s SPV Asset Facility, for the quarter ended September 30, 2015. Third quarter net investment income per share adjusted for this one-time charge was $0.54. Net income was $9.3 million, or $0.17 per share, for the quarter ended September 30, 2015. Net asset value per share was $15.62 at September 30, 2015 as compared to $15.84 at June 30, 2015. The Company’s Board of Directors declared a third quarter dividend of $0.39 per share, payable to stockholders of record as of September 30, 2015 that was paid on October 30, 2015.
The Company announced that its Board of Directors has declared a quarterly dividend of $0.39 per share for stockholders of record as of December 31, 2015, payable on or about January 29, 2016.
FINANCIAL HIGHLIGHTS:
| | | | | | | | | | | | |
| (amounts in thousands, except per share amounts) | | | | | (Unaudited) | | | | |
| | | | | | Three Months Ended | | | | |
| | | September 30, 2015 | | | June 30, 2015 | | | September 30, 2014 | |
Investments at Fair Value | | $ | 1,396,426 | | | $ | 1,397,560 | | | $ | 1,233,181 | |
Total Assets | | $ | 1,429,009 | | | $ | 1,459,005 | | | $ | 1,280,043 | |
Net Asset Value Per Share | | $ | 15.62 | | | $ | 15.84 | | | $ | 15.66 | |
| | | |
Investment Income | | $ | 46,774 | | | $ | 45,352 | | | $ | 38,404 | |
Net Investment Income | | $ | 25,849 | | | $ | 25,020 | | | $ | 23,116 | |
Net Income | | $ | 9,337 | | | $ | 34,105 | | | $ | 18,603 | |
| | | |
Net Investment Income Per Share | | $ | 0.48 | | | $ | 0.46 | | | $ | 0.43 | |
Net Realized and Unrealized Gains (and Losses) Per Share | | $ | (0.31 | ) | | $ | 0.17 | | | $ | (0.08 | ) |
Net Income Per Share | | $ | 0.17 | | | $ | 0.63 | | | $ | 0.35 | |
| | | |
Weighted Average Yield of Debt and Income Producing Securities at Fair Value | | | 10.5 | % | | | 10.3 | % | | | 10.5 | % |
Weighted Average Yield of Debt and Income Producing Securities at Amortized Cost | | | 10.5 | % | | | 10.4 | % | | | 10.6 | % |
| | | |
Percentage of Debt Investment Commitments at Floating Rates | | | 95 | % | | | 96 | % | | | 98 | % |
Conference Call and Webcast
Conference Call Information:
The conference call will be broadcast live at 8 a.m. Eastern Time on November 4, 2015. Please visit TSLX’s webcast link located on the Events & Presentation page of the Investor Resources section of TSLX’s website http://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: 51403934
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 November 4th through November 18th 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: 51403934
Portfolio and Investment Activity
For the three months ended September 30, 2015, gross originations totaled $184.8 million. This compares to $112.3 million for the three months ended June 30, 2015 and $288.6 million for the three months ended September 30, 2014.
For the three months ended September 30, 2015, the Company made new investment commitments of $184.8 million, $160.9 million to six new portfolio companies and $23.9 million to five existing portfolio companies. For this period, the Company had $148.4 million aggregate principal amount in exits and repayments, resulting in a net portfolio increase of $15.8 million aggregate principal amount.
For the three months ended September 30, 2014, the Company made new investment commitments of $248.6 million, $216.9 million to four new portfolio companies and $31.7 million to four existing portfolio companies. For this period, the Company had $109.6 million aggregate principal amount in exits and repayments, resulting in a net portfolio increase of $114.4 million aggregate principal amount.
As of September 30, 2015 and June 30, 2015, the Company had investments in 44 and 40 portfolio companies, respectively, with an aggregate fair value of $1,396.4 million and $1,397.6 million, respectively.
As of September 30, 2015, the portfolio consisted of 87.0% first-lien debt investments, 8.8% second-lien debt investments, 1.9% mezzanine and unsecured debt investments, and 2.3% equity and other investments. As of June 30, 2015, the portfolio consisted of 90.5% first-lien debt investments, 7.5% second-lien debt investments, 1.1% mezzanine and unsecured debt investments, and 0.9% equity and other investments.
As of September 30, 2015, 94.9% of debt investments bore interest at floating rates, subject to interest rate floors. The Company’s credit facility also bears interest at floating rates.
As of September 30, 2015 and June 30, 2015, 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 10.5% 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 10.5% and 10.4%, respectively.
The weighted average total yield of new debt and income producing securities made to new portfolio companies during the quarter was 10.7% at amortized cost.
As of September 30, 2015, 100.0% of debt investments were meeting all payment requirements and 98.1% of debt investments were meeting all covenant requirements. No investments were on non-accrual status at September 30, 2015.
Results of Operations for the Three Months Ended September 30, 2015 compared to the Three Months Ended September 30, 2014
Investment Income
For the three months ended September 30, 2015 and 2014, investment income totaled $46.8 million and $38.4 million, respectively. The increase in investment income for the quarter was primarily driven by an increase in the average size of our investment portfolio, accelerated amortization of upfront fees from unscheduled paydowns, prepayment fees, and dividend income, slightly offset by lower syndication, amendment and agency fees, as compared to the same period in 2014.
Expenses
Net expenses totaled $20.5 million and $14.9 million for the three months ended September 30, 2015 and 2014, respectively. The increase in net expenses was due to higher interest expense related to an increase in the weighted average debt outstanding and the acceleration of deferred financing cost of $3.2 million related to the termination of the SPV Asset Facility during the quarter, higher general and administrative expenses associated with servicing a growing investment portfolio, partially offset by a decrease in the average interest rate on our debt outstanding and a decrease in net incentive fees.
Liquidity and Capital Resources
As of September 30, 2015, the Company had $3.8 million in cash and cash equivalents, total debt outstanding of $538.6 million, and $355.0 million of undrawn commitments on its revolving credit facility, 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 September 30, 2015, as compared to 2.7% for the three months ended September 30, 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.
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 | | | Nine Months Ended | |
| | | September 30, 2015 | | | September 30, 2014 | | | September 30, 2015 | | | September 30, 2014 | |
Income | | | | | | | | | | | | | | | | |
Investment income from non-controlled, non-affiliated investments: | | | | | | | | | | | | | | | | |
Interest from investments | | $ | 43,986 | | | $ | 33,728 | | | $ | 120,040 | | | $ | 109,270 | |
Dividend income | | | 474 | | | | — | | | | 474 | | | | — | |
Other income | | | 708 | | | | 3,301 | | | | 4,714 | | | | 6,510 | |
| | | | | | | | | | | | | | | | |
Total investment income from non-controlled, non-affiliated investments | | | 45,168 | | | | 37,029 | | | | 125,228 | | | | 115,780 | |
Investment income from controlled, affiliated investments: | | | | | | | | | | | | | | | | |
Interest from investments | | | 1,532 | | | | 1,312 | | | | 4,442 | | | | 1,681 | |
Other income | | | 74 | | | | 63 | | | | 186 | | | | 81 | |
| | | | | | | | | | | | | | | | |
Total investment income from controlled, affiliated investments | | | 1,606 | | | | 1,375 | | | | 4,628 | | | | 1,762 | |
| | | | | | | | | | | | | | | | |
Total Investment Income | | | 46,774 | | | | 38,404 | | | | 129,856 | | | | 117,542 | |
| | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | |
Interest | | | 7,963 | | | | 3,812 | | | | 16,910 | | | | 11,096 | |
Management fees | | | 5,460 | | | | 4,651 | | | | 15,706 | | | | 13,409 | |
Incentive fees | | | 3,045 | | | | 4,161 | | | | 15,182 | | | | 14,495 | |
Professional fees | | | 2,366 | | | | 1,029 | | | | 4,857 | | | | 3,376 | |
Directors’ fees | | | 101 | | | | 90 | | | | 288 | | | | 249 | |
Other general and administrative | | | 1,634 | | | | 1,170 | | | | 4,061 | | | | 2,982 | |
| | | | | | | | | | | | | | | | |
Total expenses | | | 20,569 | | | | 14,913 | | | | 57,004 | | | | 45,607 | |
| | | | | | | | | | | | | | | | |
Management and incentive fees waived | | | (104 | ) | | | — | | | | (104 | ) | | | (2,465 | ) |
| | | | | | | | | | | | | | | | |
Net Expenses | | | 20,465 | | | | 14,913 | | | | 56,900 | | | | 43,142 | |
| | | | | | | | | | | | | | | | |
Net Investment Income Before Income Taxes | | | 26,309 | | | | 23,491 | | | | 72,956 | | | | 74,400 | |
Income taxes, including excise taxes | | | 460 | | | | 375 | | | | 1,301 | | | | 609 | |
| | | | | | | | | | | | | | | | |
Net Investment Income | | | 25,849 | | | | 23,116 | | | | 71,655 | | | | 73,791 | |
Unrealized and Realized Gains (Losses) | | | | | | | | | | | | | | | | |
Net change in unrealized gains (losses): | | | | | | | | | | | | | | | | |
Non-controlled, non-affiliated investments | | | (10,191 | ) | | | (6,251 | ) | | | (1,698 | ) | | | (6,168 | ) |
Controlled, affiliated investments | | | (4,454 | ) | | | (247 | ) | | | (3,925 | ) | | | (247 | ) |
Translation of assets and liabilities in foreign currencies | | | 1,227 | | | | 3,265 | | | | 4,536 | | | | 4,492 | |
Interest rate swaps | | | 1,879 | | | | (1,038 | ) | | | 672 | | | | (246 | ) |
Foreign currency forward contracts | | | — | | | | 17 | | | | — | | | | 1,261 | |
| | | | | | | | | | | | | | | | |
Total net change in unrealized losses | | | (11,539 | ) | | | (4,254 | ) | | | (415 | ) | | | (908 | ) |
| | | | | | | | | | | | | | | | |
Realized gains (losses): | | | | | | | | | | | | | | | | |
Non-controlled, non-affiliated investments | | | (4,975 | ) | | | 10 | | | | (5,042 | ) | | | 127 | |
Interest rate swaps | | | — | | | | — | | | | 1,852 | | | | — | |
Foreign currency transactions | | | 2 | | | | (269 | ) | | | (140 | ) | | | (1,765 | ) |
| | | | | | | | | | | | | | | | |
Total realized losses | | | (4,973 | ) | | | (259 | ) | | | (3,330 | ) | | | (1,638 | ) |
| | | | | | | | | | | | | | | | |
Total Unrealized and Realized Losses | | | (16,512 | ) | | | (4,513 | ) | | | (3,745 | ) | | | (2,546 | ) |
| | | | | | | | | | | | | | | | |
Increase in Net Assets Resulting from Operations | | $ | 9,337 | | | $ | 18,603 | | | $ | 67,910 | | | $ | 71,245 | |
| | | | | | | | | | | | | | | | |
Earnings per common share—basic and diluted | | $ | 0.17 | | | $ | 0.35 | | | $ | 1.26 | | | $ | 1.44 | |
| | | | | | | | | | | | | | | | |
Weighted average shares of common stock outstanding—basic and diluted | | | 54,017,302 | | | | 53,493,026 | | | | 53,969,423 | | | | 49,427,943 | |
| | | | | | | | | | | | | | | | |
TPG Specialty Lending, Inc.
Consolidated Balance Sheets
(Amounts in thousands, except share and per share amounts)
(Unaudited)
| | | | | | | | |
| | | September 30, 2015 | | | December 31, 2014 | |
Assets | | | | | | | | |
Investments at fair value | | | | | | | | |
Non-controlled, non-affiliated investments (amortized cost of $1,332,433 and $1,225,672, respectively) | | $ | 1,326,937 | | | $ | 1,221,875 | |
Controlled, affiliated investments (amortized cost of $79,358 and $47,580, respectively) | | | 69,489 | | | | 41,636 | |
| | | | | | | | |
Total investments at fair value (amortized cost of $1,411,791 and $1,273,252, respectively) | | | 1,396,426 | | | | 1,263,511 | |
Cash and cash equivalents | | | 3,788 | | | | 2,413 | |
Interest receivable | | | 9,185 | | | | 6,137 | |
Receivable for interest rate swaps | | | 1,692 | | | | 1,020 | |
Prepaid expenses and other assets | | | 17,918 | | | | 30,650 | |
| | | | | | | | |
Total Assets | | $ | 1,429,009 | | | $ | 1,303,731 | |
| | | | | | | | |
Liabilities | | | | | | | | |
Debt | | $ | 538,619 | | | $ | 395,864 | |
Management fees payable to affiliate | | | 5,439 | | | | 4,887 | |
Incentive fees payable to affiliate | | | 4,959 | | | | 5,955 | |
Dividends payable | | | 21,070 | | | | 20,981 | |
Payable for investments purchased | | | 6,737 | | | | 29,017 | |
Payables to affiliate | | | 1,762 | | | | 2,918 | |
Other liabilities | | | 6,451 | | | | 8,704 | |
| | | | | | | | |
Total Liabilities | | | 585,037 | | | | 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, 54,028,546 and 53,798,357 shares issued, respectively; and 54,025,547 and 53,797,358 shares outstanding, respectively | | | 540 | | | | 538 | |
Additional paid-in capital | | | 811,581 | | | | 808,053 | |
Treasury stock at cost; 2,999 and 999 shares held, respectively | | | (30 | ) | | | (1 | ) |
Undistributed net investment income | | | 15,555 | | | | 6,555 | |
Net unrealized gains (losses) | | | (226 | ) | | | 188 | |
Undistributed net realized gains | | | 16,552 | | | | 20,072 | |
| | | | | | | | |
Total Net Assets | | | 843,972 | | | | 835,405 | |
| | | | | | | | |
Total Liabilities and Net Assets | | $ | 1,429,009 | | | $ | 1,303,731 | |
| | | | | | | | |
Net Asset Value Per Share | | $ | 15.62 | | | $ | 15.53 | |
| | | | | | | | |
The Company’s investment activity for the three months ended September 30, 2015 and 2014 is presented below (information presented herein is at par value unless otherwise indicated).
| | | | | | | | |
| | | Three Months Ended | |
| ($ in millions) | | September 30, 2015 | | | September 30, 2014 | |
New investment commitments: | | | | | | | | |
Gross originations | | $ | 184.8 | | | $ | 288.6 | |
Less: Syndications/sell downs | | | — | | | | 40.0 | |
| | | | | | | | |
Total new investment commitments | | $ | 184.8 | | | $ | 248.6 | |
Principal amount of investments funded: | | | | | | | | |
First-lien | | $ | 99.6 | | | $ | 198.8 | |
Second-lien | | | 30.7 | | | | 25.2 | |
Mezzanine and unsecured | | | 15.1 | | | | — | |
Equity and other | | | 18.8 | | | | — | |
| | | | | | | | |
Total | | $ | 164.2 | | | $ | 224.0 | |
Principal amount of investments sold or repaid: | | | | | | | | |
First-lien | | $ | 138.4 | | | $ | 97.6 | |
Second-lien | | | 10.0 | | | | 12.0 | |
Mezzanine and unsecured | | | — | | | | — | |
| | | | | | | | |
Total | | $ | 148.4 | | | $ | 109.6 | |
| | | | | | | | |
Number of new investment commitments in new portfolio companies | | | 6 | | | | 4 | |
Average new investment commitment amount in new portfolio companies | | $ | 26.8 | | | $ | 54.2 | |
Weighted average term for new investment commitments in new portfolio companies (in years) | | | 5.1 | | | | 4.1 | |
Percentage of new debt investment commitments at floating rates | | | 91.1 | % | | | 98.7 | % |
Percentage of new debt investment commitments at fixed rates | | | 8.9 | % | | | 1.3 | % |
Weighted average interest rate of new investment commitments | | | 9.6 | % | | | 10.3 | % |
Weighted average spread over LIBOR of new floating rate investment commitments | | | 8.9 | % | | | 9.3 | % |
Weighted average interest rate on investments sold or paid down | | | 9.8 | % | | | 9.8 | % |
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, a 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 $12 billion of assets under management and the broader TPG platform, a global private investment firm with over $74 billion of assets under management. For more information, visit the Company’s website at www.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 number of factors, including those described from time to time in the Company’s filings with the Securities and Exchange Commission. The Company assumes no obligation to update any such forward-looking statements. TSLX undertakes no duty to update any forward-looking statements made herein.
Source: TPG Specialty Lending, Inc.
Investor Relations:
TPG Specialty Lending, Inc.
212-601-4753
212-430-4119
IRTSL@tpg.com
Media:
Luke Barrett, 212-601-4752
lbarrett@tpg.com
or
Owen Blicksilver PR, Inc.
Jennifer Hurson, 845-507-0571
jennifer@blicksilverpr.com
