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TICC Capital (TICC)
Q2 2013 Earnings Call
August 06, 2013 10:00 am ET
Jonathan H. Cohen - Chief Executive Officer, Director and Member of Investment Committee
Bruce L. Rubin - Senior Vice President, Controller and Treasurer
Patrick Francis Conroy - Chief Financial Officer, Chief Compliance Officer, Principal Accounting Officer and Corporate Secretary
Saul Barak Rosenthal - President, Chief Operating Officer and Member of Investment Committee
Mickey M. Schleien - Ladenburg Thalmann & Co. Inc., Research Division
John Hecht - Stephens Inc., Research Division
Greg M. Mason - Keefe, Bruyette, & Woods, Inc., Research Division
Christopher York - JMP Securities LLC, Research Division
Boris E. Pialloux - National Securities Corporation, Research Division
Previous Statements by TICC
» TICC Capital Management Discusses Q1 2013 Results - Earnings Call Transcript
» TICC Capital Management Discusses Q4 2012 Results - Earnings Call Transcript
» TICC Capital's CEO Discusses Q3 2012 Results - Earnings Call Transcript
Jonathan H. Cohen
Thanks very much. Good morning. Welcome, everyone, to the TICC Capital Corp. Second Quarter 2013 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 a 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 could cause actual results to differ materially from those 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, www.ticc.com
With that, I'll turn the call back to Jonathan.
Jonathan H. Cohen
Thanks, Bruce. As we noted in our press release this morning, TICC reported core net investment income of approximately $0.25 per share for the second quarter. We reported total investment income of approximately $25.4 million for the second quarter of 2013, representing an increase of approximately $3.7 million over the first quarter. That increase was largely due to greater interest income and distributions from our CLO equity investments during the second quarter.
Our second quarter net investment income was approximately $16 million or $0.30 per share, which includes the impact of the capital gains inventive fee accrual reduction of approximately $2.9 million. Excluding the impact of that accrual reduction, our core net investment income was approximately $13.1 million or $0.25 per share.
We also recorded net unrealized depreciation of approximately $16.4 million and net realized capital gains of approximately $1.9 million for the quarter. As a result of those realized and unrealized gains and losses, we had a net increase in net assets resulting from operations of approximately $1.5 million for the quarter. At the same time, we believe that the credit quality of our portfolio remains stable. Our weighted average credit rating on a fair value basis stood at 2.2 at the end of the second quarter of 2013, compared to 2.1 at the end of the first quarter of 2013.
At June 30, 2013, net asset values stood -- per share stood at $9.75 compared with the net asset value at the end of the first quarter of $10.02 per share. During the second quarter of 2013, we made additional investments of approximately $190.8 million. The additional investments consisted of approximately $165.4 million in corporate securities, $19.1 million in CLO equity and $6.3 million in CLO debt. It's worth noting that this quarter's activities follow a very active first quarter during which we invested approximately $216.5 million, consisting of $123.6 million in corporate securities, $87.8 million in CLO equity and $5.1 million in CLO debt. For the second quarter, we received proceeds of approximately $103.5 million from repayments, sales and amortization payments on our debt investments.
For the quarter ended June 30, 2013, TICC recorded earned income from our investment portfolio as follows: approximately $11.7 million from our syndicated and bilateral investments; approximately $10.7 million from our CLO equity investments; approximately $1.0 million from our CLO debt investments; and approximately $2.0 million from fee income. At June 30, 2013, the weighted average yield of our debt investments was approximately 8.5%, compared with 9.2% at March 31, 2013. We note that much of that reduction yield was attributable to the significantly lower cost of capital we are now enjoying by virtue of the recent expansion of our CLO debt financings. Those financing vehicles require us, in order to maintain compliance with their respective indenture structures, to hold debt securities that meet certain characteristics and which typically carry lower yields.
I'd note that we currently have a single investment on nonaccrual status with a par value of approximately $22.7 million, a fair value of approximately $8.0 million and a cost value of $10.3 million. The majority of this investment was purchased during the first quarter of 2013 at a price of 32% of par. While we do not generally focus on distressed debt investments, we have been and remain open to those opportunities where the potential for highly attractive risk-adjusted returns exists.