First Eagle Alternative Capital BDC Reports Fourth Quarter 2020 Financial Results and Declares a Dividend of $0.10 Per Share
First Eagle Alternative Capital BDC (FCRD) reported financial results for Q4 and full-year 2020, highlighting total assets of $356.4 million and a net asset value per share of $6.15. The company declared a dividend of $0.10 per share for Q1 2021, payable on March 31, 2021. Investment income decreased to $29.8 million for the year, primarily due to a smaller investment portfolio and lower LIBOR rates. For 2020, net investment income was $10.8 million, down from $27.4 million in 2019. The company faced a net decrease in net assets of $36.7 million, impacted by realized and unrealized losses on investments.
- Declared a dividend of $0.10 per share for Q1 2021.
- Successfully made eight new investments totaling $23 million in Q4 2020.
- Reduced total expenses by 25.6% from 2019, due in part to management fee waivers.
- Net investment income decreased from $27.4 million in 2019 to $10.8 million in 2020.
- Total investment income dropped by 43.2%, from $52.5 million in 2019 to $29.8 million in 2020.
- Realized losses on investments of $44.2 million for 2020.
BOSTON, March 04, 2021 (GLOBE NEWSWIRE) -- First Eagle Alternative Capital BDC, Inc. (NASDAQ: FCRD) (“First Eagle Alternative Capital BDC” or the “Company”), a direct lender to middle market companies, today announced financial results for its fourth fiscal quarter and year ended December 31, 2020. Additionally, the Company announced that its Board of Directors (the “Board”) has declared a first fiscal quarter 2021 dividend of
HIGHLIGHTS
($ in millions, except per share amounts) | |||||
Portfolio results | As of Dec. 31, 2020 | ||||
Total assets | $ | 356.4 | |||
Investment portfolio, at fair value | $ | 337.7 | |||
Net assets | $ | 185.2 | |||
Net asset value per share | $ | 6.15 | |||
Weighted average yield on investments | 7.1 | % | |||
Year ended Dec. 31, 2020 | Quarter ended Dec. 31, 2020 | ||||
Portfolio activity | |||||
Total portfolio investments made, at par | $ | 82.0 | $ | 31.2 | |
Total portfolio investments made, at cost | $ | 80.6 | $ | 30.3 | |
Number of new portfolio investments | 15 | 8 | |||
Number of portfolio investments at end of year | 51 | 51 | |||
Operating results | |||||
Total investment income | $ | 29.8 | $ | 7.5 | |
Net investment income | $ | 10.8 | $ | 3.3 | |
Net increase (decrease) in net assets from operations | $ | (36.7 | ) | $ | 0.1 |
Net investment income per share | $ | 0.35 | $ | 0.11 | |
Dividends declared per share | $ | 0.51 | $ | 0.10 |
PORTFOLIO AND INVESTMENT ACTIVITY
In the fourth quarter, the Company closed on eight new investments totaling
New investments during the fourth quarter at par were:
$3.8 million first lien senior secured term loan in Multi Speciality Healthcare LLC;$3.3 million first lien senior secured term loan in Action Point, Inc.;$3.2 million first lien senior secured term loan in MarkLogic Corporation;$3.1 million first lien senior secured term loan in Aurotech, LLC;$3.0 million first lien senior secured term loan in Trace3, LLC;$2.9 million first lien senior secured term loan in AppFire Technologies, LLC;$1.6 million first lien senior secured term loan in Doxa Insurance Holdings, LLC; and,$2.1 million first lien senior secured term loan in Advanced Web Technologies.
Notable realizations for the quarter included:
- Repayment of a first lien senior term loan in SynteractHCR Holdings Corporation at par, which resulted in proceeds received of
$6.1 million ; - Repayment of first lien senior secured term loans in Simplicity Financial Marketing Holdings Inc. at par, which resulted in proceeds received of
$4.5 million ; - Repayment of first lien senior secured term loans in NCP Investor, Inc. at par, which resulted in proceeds of
$7.6 million ; and - Sale of equity holdings in C&K Market, Inc., which resulted in cash proceeds of
$10.7 million , the receipt of a subordinated sellers note of$5.8 million at par value, and warrants with a nominal value.
As of December 31, 2020, these transactions, coupled with changes in net unrealized depreciation on the portfolio during the quarter, bring the total fair value of First Eagle Alternative BDC’s investment portfolio to
Description | Fair Value | Percentage of Total | |||
First lien senior secured debt | $ | 233.7 | 69.2 | % | |
Investment in Logan JV | 68.1 | 20.2 | % | ||
Second lien debt | 22.1 | 6.5 | % | ||
Subordinated debt | 5.8 | 1.7 | % | ||
Equity investments | 5.1 | 1.5 | % | ||
Investments in funds | 2.9 | 0.9 | % | ||
Total investments | $ | 337.7 | 100.0 | % | |
As of December 31, 2020, the weighted average yield of the debt and income-producing securities, including the Logan JV, LLC (the “Logan JV”), in the investment portfolio at their current cost basis was 7.1 percent. As of December 31, 2020, First Eagle Alternative Capital BDC had loans on non-accrual status with an aggregate amortized cost of
This compares to the portfolio as of December 31, 2019, which had a fair value of
Description | Fair Value | Percentage of Total | |||
First lien senior secured debt | $ | 263.6 | 68.7 | % | |
Investment in Logan JV | 83.4 | 21.7 | % | ||
Equity investments | 21.5 | 5.6 | % | ||
Second lien debt | 12.0 | 3.1 | % | ||
Investments in funds | 3.6 | 0.9 | % | ||
Total investments | $ | 384.1 | 100.0 | % | |
As of December 31, 2019, the weighted average yield of the debt and income-producing securities, including the Company’s investment in Logan JV, LLC (the “Logan JV”), in the investment portfolio at their cost basis was 8.7 percent. As of December 31, 2019, First Eagle Alternative Capital BDC had loans on non-accrual status with an aggregate amortized cost of
RESULTS OF OPERATIONS
Investment income
A breakdown of investment income for the three months ended December 31, 2020 and 2019 is presented below ($ in millions):
Three months ended Dec. 31, | |||||
2020 | 2019 | ||||
Interest income on debt securities | |||||
Cash interest | $ | 4.4 | $ | 6.0 | |
PIK interest | 0.3 | 0.5 | |||
Prepayment premiums | 0.1 | — | |||
Net accretion of discounts and other fees | 0.3 | 0.3 | |||
Total interest on debt securities | 5.1 | 6.8 | |||
Dividend income | 2.2 | 3.0 | |||
Interest income on other income-producing securities | — | — | |||
Other income and fees | 0.2 | 0.3 | |||
Total investment income | $ | 7.5 | $ | 10.1 | |
The decrease in investment income between periods was primarily due to contraction in the Company’s overall investment portfolio since December 31, 2019, coupled with declining LIBOR rates, which led to lower interest income. Additionally, dividend income decreased due to a smaller Logan JV portfolio.
A breakdown of investment income for the years ended December 31, 2020 and 2019 is presented below ($ in millions):
Years ended Dec. 31, | ||||||
2020 | 2019 | |||||
Interest income on debt securities | ||||||
Cash interest | $ | 17.0 | $ | 30.6 | ||
PIK interest | 1.1 | 2.4 | ||||
Prepayment premiums | 0.1 | 0.4 | ||||
Net accretion of discounts and other fees | 0.9 | 1.2 | ||||
Total interest on debt securities | 19.1 | 34.6 | ||||
Dividend income | 10.0 | 14.1 | ||||
Interest income on other income-producing securities | — | 0.3 | ||||
Other income and fees | 0.7 | 3.5 | ||||
Total investment income | $ | 29.8 | $ | 52.5 | ||
The decrease in investment income between periods was primarily due to contraction in the Company’s overall investment portfolio and declining LIBOR rates since December 31, 2019. Additionally, dividend income decreased due to a smaller Logan JV portfolio and the sale of Copperweld Bimetallics LLC in September 2019. Other income and fees declined during the period due to lower one-time fees.
Expenses
A breakdown of expenses for the three months ended December 31, 2020 and 2019 is presented below ($ in millions):
Three months ended Dec. 31, | |||||||
2020 | 2019 | ||||||
Expenses | |||||||
Interest and fees on borrowings | $ | 3.0 | $ | 3.1 | |||
Base management fees | 0.9 | 1.1 | |||||
Incentive fees | — | (0.1 | ) | ||||
Other expenses | 0.9 | 0.7 | |||||
Administrator expenses | 0.3 | 0.3 | |||||
Total expenses | 5.1 | 5.1 | |||||
Management fee waiver | (0.9 | ) | — | ||||
Total expenses, net of fee waivers | 4.2 | 5.1 | |||||
Income tax provision, excise and other taxes | — | 0.1 | |||||
Total expenses after taxes | $ | 4.2 | $ | 5.2 | |||
The decrease in expenses for the respective periods was driven by the Advisor’s waiver of its base management fees during the three months ended December 31, 2020.
A breakdown of expenses for the years ended December 31, 2020 and 2019 is presented below ($ in millions):
Years ended Dec. 31, | |||||||
2020 | 2019 | ||||||
Expenses | |||||||
Interest and fees on borrowings | $ | 12.3 | $ | 14.1 | |||
Base management fees | 3.7 | 6.0 | |||||
Incentive fees | (0.4 | ) | (0.1 | ) | |||
Other expenses | 3.9 | 3.7 | |||||
Administrator expenses | 1.1 | 1.5 | |||||
Total expenses | 20.6 | 25.2 | |||||
Management fee waiver | (1.8 | ) | (0.5 | ) | |||
Total expenses, net of fee waivers | 18.8 | 24.7 | |||||
Income tax provision, excise and other taxes | 0.1 | 0.4 | |||||
Total expenses after taxes | $ | 18.9 | $ | 25.1 | |||
The decrease in expenses from 2019 to 2020 was primarily due to lower net base management fees due to portfolio contract, as well as the effect of the Advisor’s waiver of base management fees beginning in the third quarter of 2020. Additionally, interest and fees on borrowing decreased due to a reduction in borrowings outstanding, and a decrease in LIBOR and lower fees resulting from a reduction in credit facility size.
Net investment income
Net investment income totaled
Net investment income totaled
The decrease in net investment income for the respective periods is primarily attributable to a decrease in interest income on debt and other income-producing investments due to portfolio contraction, and decrease in LIBOR, partially offset by lower borrowing costs, incentive and net base management fees (net of waivers).
Net realized gains and losses on investments, net of income tax provision
For the three months ended December 31, 2020, the Company recognized a net realized gain on portfolio investments of
For the year ended December 31, 2020, the Company recognized a net realized loss on portfolio investments of
Net change in unrealized appreciation (depreciation) on investments
For the three months ended December 31, 2020 and 2019, the Company’s investment portfolio had a net change in unrealized depreciation of
The net change in unrealized depreciation on investments was primarily the result of the performance of certain portfolio investments, including certain control investments, partially offset by the reversal of prior period unrealized depreciation upon the realization of certain investments.
Change in net assets resulting from operations
The net increase (decrease) in net assets resulting from operations totaled
The net decrease in net assets resulting from operations totaled
The decrease in net assets resulting from operations for the respective periods is primarily due to lower interest income as a result of portfolio contraction and declining LIBOR rates resulting in reduced coupon rates, and the increase of realized and unrealized losses in the portfolio, partially offset by lower interest and fees on borrowings, base management and incentive fees.
FINANCIAL CONDITION, INCLUDING LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2020, the Company had cash of
As of December 31, 2020, the Company had
For the year ended December 31, 2020, the Company’s operating activities provided cash of
For the year ended December 31, 2019, the Company’s operating activities provided cash of
RECENT DEVELOPMENTS
From January 1, 2021 through March 4, 2021, First Eagle Alternative Credit BDC made two follow-on investments totaling
On March 2, 2021, the Board declared a dividend of
CONFERENCE CALL
First Eagle Alternative Capital BDC will host a conference call to discuss these results and its business outlook on March 5, 2021, at 9:30 a.m. Eastern Time.
For those wishing to participate by telephone, please dial (877) 375-9141 (domestic) or (253) 237-1151 (international). Use passcode 1894272. The Company will also broadcast the conference call live via the Investor Relations section of its website at www.FEACBDC.com. Starting approximately two hours after the conclusion of the call, a replay will be available through March 15, 2021, by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) and entering passcode 1894272. The replay will also be available on the Company’s website.
AVAILABLE INFORMATION
First Eagle Alternative Capital BDC’s filings with the Securities and Exchange Commission, press releases, earnings releases, investor presentation and other financial information are available on its website at www.FEACBDC.com.
FIRST EAGLE ALTERNATIVE CAPITAL BDC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except per share data)
December 31, 2020 | December 31, 2019 | ||||||
Assets: | |||||||
Investments at fair value: | |||||||
Non-controlled, non-affiliated investments (cost of | $ | 243,855 | $ | 242,189 | |||
Controlled investments (cost of | 93,826 | 141,932 | |||||
Non-controlled, affiliated investments (cost of | 1 | 4 | |||||
Cash | 7,615 | 5,890 | |||||
Escrows and other receivables | 3,508 | 12,353 | |||||
Interest, dividends, and fees receivable | 2,659 | 4,623 | |||||
Deferred tax assets | 2,222 | 2,267 | |||||
Deferred financing costs | 1,757 | 1,619 | |||||
Distributions receivable | 97 | 327 | |||||
Prepaid expenses and other assets | 628 | 296 | |||||
Deferred offering costs | 180 | 206 | |||||
Due from affiliate | 85 | 192 | |||||
Total assets | $ | 356,433 | $ | 411,898 | |||
Liabilities: | |||||||
Loans payable | $ | 57,661 | $ | 66,161 | |||
Notes payable ( | 109,675 | 108,866 | |||||
Accrued expenses and other liabilities | 1,924 | 3,434 | |||||
Deferred tax liability | 1,673 | 1,927 | |||||
Base management fees payable | — | 1,103 | |||||
Accrued incentive fees | 156 | 568 | |||||
Accrued interest and fees | 149 | 384 | |||||
Total liabilities | 171,238 | 182,443 | |||||
Commitments and contingencies | |||||||
Net Assets: | |||||||
Common stock, par value $.001 per share, 100,000 common shares authorized, 30,109 and 30,022 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively | 30 | 30 | |||||
Paid-in capital in excess of par | 418,379 | 415,596 | |||||
Accumulated deficit | (233,214 | ) | (186,171 | ) | |||
Total net assets | $ | 185,195 | $ | 229,455 | |||
Total liabilities and net assets | $ | 356,433 | $ | 411,898 | |||
Net asset value per share attributable to First Eagle Alternative Capital BDC, Inc. | $ | 6.15 | $ | 7.64 | |||
FIRST EAGLE ALTERNATIVE CAPITAL BDC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
For the years ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Investment Income: | ||||||||||||
From non-controlled, non-affiliated investments: | ||||||||||||
Cash interest income | $ | 18,090 | $ | 28,609 | $ | 44,959 | ||||||
PIK interest income | 1,071 | 848 | 453 | |||||||||
Dividend income | — | — | 33 | |||||||||
Other income | 347 | 2,708 | 914 | |||||||||
From non-controlled, affiliated investments: | ||||||||||||
Cash interest income | — | 57 | 782 | |||||||||
PIK interest income | — | — | 907 | |||||||||
Other income | 217 | 572 | 1,044 | |||||||||
From controlled investments: | ||||||||||||
Cash interest income | (81 | ) | 3,921 | 4,535 | ||||||||
PIK interest income | — | 1,553 | 930 | |||||||||
Dividend income | 9,972 | 14,079 | 12,128 | |||||||||
Other income | 150 | 147 | 257 | |||||||||
Total investment income | 29,766 | 52,494 | 66,942 | |||||||||
Expenses: | ||||||||||||
Interest and fees on borrowings | 10,159 | 12,412 | 14,498 | |||||||||
Base management fees | 3,719 | 6,043 | 9,006 | |||||||||
Incentive fees | (411 | ) | (109 | ) | 1,696 | |||||||
Administrator expenses | 1,139 | 1,498 | 2,083 | |||||||||
Other general and administrative expenses | 1,643 | 1,422 | 1,742 | |||||||||
Amortization of deferred financing costs | 2,116 | 1,716 | 2,232 | |||||||||
Professional fees | 1,560 | 1,552 | 1,505 | |||||||||
Directors' fees | 718 | 702 | 742 | |||||||||
Total expenses | 20,643 | 25,236 | 33,504 | |||||||||
Incentive fee waiver | — | — | (1,741 | ) | ||||||||
Management fee waiver | (1,819 | ) | (525 | ) | — | |||||||
Total expenses, net of fee waivers | 18,824 | 24,711 | 31,763 | |||||||||
Income tax provision, excise and other taxes | 97 | 418 | 355 | |||||||||
Net investment income | 10,845 | 27,365 | 34,824 | |||||||||
Realized (Loss) Gain and Change in Unrealized (Depreciation) Appreciation on Investments: | ||||||||||||
Net realized (loss) gain on investments: | ||||||||||||
Non-controlled, non-affiliated investments | (27,949 | ) | (31,608 | ) | (37,784 | ) | ||||||
Non-controlled, affiliated investments | (2,534 | ) | (24,652 | ) | — | |||||||
Controlled investments | (13,692 | ) | 16,714 | 5,424 | ||||||||
Foreign currency transactions | — | (189 | ) | (205 | ) | |||||||
Net realized loss on investments | (44,175 | ) | (39,735 | ) | (32,565 | ) | ||||||
Net change in unrealized (depreciation) appreciation on investments: | ||||||||||||
Non-controlled, non-affiliated investments | 14,182 | (1,609 | ) | 15,220 | ||||||||
Non-controlled, affiliated investments | (2 | ) | 12,751 | (12,750 | ) | |||||||
Controlled investments | (17,709 | ) | (23,245 | ) | (16,077 | ) | ||||||
Translation of assets and liabilities in foreign currencies | — | (391 | ) | 1,736 | ||||||||
Net change in unrealized (depreciation) on investments | (3,529 | ) | (12,494 | ) | (11,871 | ) | ||||||
Net change in unrealized (depreciation) attributable to non-controlling interests | — | — | (703 | ) | ||||||||
Net realized and unrealized loss from investments | (47,704 | ) | (52,229 | ) | (45,139 | ) | ||||||
Benefit (provision) for taxes on unrealized gain/loss on investments | 209 | 254 | (284 | ) | ||||||||
Net decrease in net assets resulting from operations | $ | (36,650 | ) | $ | (24,610 | ) | $ | (10,599 | ) | |||
Net investment income per common share: | ||||||||||||
Basic and diluted | $ | 0.35 | $ | 0.87 | $ | 1.07 | ||||||
Net decrease in net assets resulting from operations per common share: | ||||||||||||
Basic and diluted | $ | (1.17 | ) | $ | (0.79 | ) | $ | (0.32 | ) | |||
Weighted average shares of common stock outstanding: | ||||||||||||
Basic and diluted | 31,342 | 31,313 | 32,634 | |||||||||
About First Eagle Alternative Capital BDC, Inc.
First Eagle Alternative Capital BDC, Inc. (NASDAQ: FCRD) is a closed-end management investment company that has elected to be treated as a business development company under the 1940 Act. The Company’s investment objective is to generate both current income and capital appreciation, primarily through investments in privately negotiated debt and equity securities of middle market companies. The Company is a direct lender to middle market companies and invests primarily in directly originated first lien senior secured loans, including unitranche investments. In certain instances, the Company also makes second lien secured loans and subordinated or mezzanine, debt investments, which may include an associated equity component such as warrants, preferred stock or other similar securities and direct equity co-investments. The Company targets investments primarily in middle market companies with annual EBITDA generally between
Forward-Looking Statements
Statements made in this press release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements reflect various assumptions by the Company concerning anticipated results and are not guarantees of future performance. These statements can be identified by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” ”should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. These statements include but are not limited to, projected financial performance, expected development of the business, anticipated share repurchases or lack thereof, plans and expectations about future investments, plans and expectations concerning future offerings by the Company, including any tender offers, anticipated dividends and the future liquidity of the company. The accuracy of such statements involves known and unknown risks, uncertainties and other factors that, in some ways, are beyond management’s control, including the risk factors described from time to time in filings by the Company with the Securities and Exchange Commission (the “SEC”). Such factors include: the introduction, withdrawal, success and timing of business initiatives and strategies; changes in political, economic or industry conditions, the impact of COVID-19 and the availability of effective vaccines, the interest rate environment or financial and capital markets, which could result in changes in the value of our assets; the relative and absolute investment performance and operations of our investment adviser; the impact of increased competition; the impact of future acquisitions and divestitures; the unfavorable resolution of legal proceedings; our business prospects and the prospects of our portfolio companies; the impact, extent and timing of technological changes and the adequacy of intellectual property protection; the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to us or the Advisor; the ability of the Advisor to identify suitable investments for us and to monitor and administer our investments; our contractual arrangements and relationships with third parties; any future financings by us; the ability of the Advisor to attract and retain highly talented professionals; fluctuations in foreign currency exchange rates; the impact of changes to tax legislation and, generally, our tax position; our ability to exit a control investment in a timely manner; and the ability to fund Logan JV’s unfunded commitments to the extent approved by each member of the Logan JV investment committee.
The Company undertakes no duty to update any forward-looking statements made herein. All forward-looking statements speak only as of the date of this press release.
Additional Information and Where to Find It
This press release is for informational purposes only, is not a recommendation to buy or sell any securities of First Eagle Alternative Capital BDC, Inc., and does not constitute an offer to buy or the solicitation to sell any securities of First Eagle Alternative Capital BDC, Inc.
Investor Contact:
First Eagle Alternative Credit, LLC
Michael Herzig
(212) 829-101
michael.herzig@feim.com
Media Contact:
Stanton Public Relations and Marketing, LLC
Kenneth Mintz
(516) 468-8019
kmintz@stantonprm.com
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