TICC

TICC Capital Corp. (TICC)

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TICC Capital (TICC)

2012 Earnings Call

March 12, 2013 10:00 am ET

Executives

Jonathan H. Cohen - Chief Executive Officer and Director

Bruce L. Rubin - Senior Vice President, Controller and Treasurer

Saul Barak Rosenthal - President and Chief Operating Officer

Patrick Francis Conroy - Chief Financial Officer, Principal Accounting Officer, Chief Compliance Officer and Secretary

Analysts

John Hecht - Stephens Inc., Research Division

Boris E. Pialloux - National Securities Corporation, Research Division

Mickey M. Schleien - Ladenburg Thalmann & Co. Inc., Research Division

Jonathan Bock - Wells Fargo Securities, LLC, Research Division

Presentation

Operator

Good morning, and welcome to the TICC Capital Corp. Year End 2012 Earnings Release and Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Jonathan Cohen, CEO. Please go ahead.

Jonathan H. Cohen

Thanks very much. Good morning. Welcome, everyone, to the TICC Capital Corp. Fourth Quarter 2012 Earnings Conference Call. I'm joined today by Saul Rosenthal, our President and Chief Operating Officer; Patrick Conroy, our Chief Financial Officer; and Bruce Rubin, our Controller and Treasurer. Bruce, could you open the call today with a discussion regarding forward-looking statements?

Bruce L. Rubin

Sure, Jonathan. Today’s call is being recorded. An audio replay of the conference call will be available for 30 days. Replay information is included in our press release that was released earlier this morning. Please note that this call is the property of TICC Capital Corp. Any unauthorized rebroadcast of this call, in any form, is strictly prohibited. I’d also like to call your attention to the customary disclosure in our press release this morning regarding forward-looking information.

Today’s conference call includes forward-looking statements and projections, and we ask that you refer to our most recent filings at the SEC for important factors that can cause actual results to differ materially from these projections. We do not undertake to update our forward-looking statements unless required to do so by law. To obtain copies of our latest SEC filings, please visit our website at www.ticc.com.

With that, I'll turn the presentation back to Jonathan.

Jonathan H. Cohen

Thanks, Bruce. For the fourth quarter, TICC reported core net investment income of approximately $0.25 per share and a core net increase in net assets resulting from operations of $0.36 per share. For the year ended December 31, 2012, we reported core net investment income of approximately $1.12 per share and a core net increase in net assets resulting from operations of approximately $1.94 per share. We currently anticipate that our 2012 dividend distributions will have been fully covered by our earnings, and therefore, represent no return of capital on a taxable basis.

At December 31, 2012, our net asset value per share stood at $9.90 compared with a net asset value at the end of the third quarter of $9.85. We reported total investment income of approximately $20.4 million for the fourth quarter of 2012, representing an increase of approximately $4.8 million from the third quarter. That increase was largely due to greater interest income and distributions from our CLO equity investments during the fourth quarter. We also recorded net realized capital gains of approximately $13.3 million and net unrealized depreciation of $8.6 million for the quarter, including the corresponding reversal of net unrealized depreciation associated with fourth quarter realization events.

Our fourth quarter GAAP net investment income was approximately $9.4 million or $0.23 per share, which includes the impact of a capital gains incentive fee accrual of approximately $949,000. Excluding the impact of that accrual, our core net investment income was approximately $10.3 million or $0.25 per share. On a GAAP basis, again, our net increase in net assets resulting from operations was $0.34 per share.

Our weighted average credit rating on a fair value basis was 2.1 at the end of the fourth quarter of 2012, representing improvement, compared with our credit rating of 2.2 at the end of the third quarter of 2012.

During the fourth quarter, we invested approximately $247 million of additional capital. In addition to the prior 3 quarters gross investment of approximately $248 million, we had a total deployment of approximately $495 million for 2012.

Looking back at the full year ended December 31, 2012, we raised gross proceeds of approximately $317 million associated with 2 equity capital raises, our CLO 2012-1 and our 2007 -- '17 convertible note offering.

For the quarter ended December 31, 2012, TICC recorded earned income from our investment portfolio as follows: approximately $7.8 million from our CLO equity investments and approximately $2.0 million from our CLO debt investments. Those are our BB positions.

At December 31, 2012, the weighted average yield of our debt investments was approximately 9.4% compared with 10.3% at December -- at September 30, 2012. I'd note that we currently have a single investment on nonaccrual status with the par amount of approximately $1.9 million and a fair value at December 31 of approximately $0.5 million.

The Board of Directors has declared a distribution of $0.29 per share for the first quarter of this year. That's payable on March 29 to shareholders of record as of March 22. With that, operator, we'd like to open the call for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question will come from John Hecht of Stephens.

John Hecht - Stephens Inc., Research Division

First of all, I wonder if you can characterize the timing of the investments during the quarter? Were these back-end weighted or was it fairly balanced throughout the quarter?

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