TICC

TICC Capital Corp. (TICC)

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TICC Capital (TICC)

Q4 2013 Earnings Conference Call

March 10 2014, 10:00 AM ET

Executives

Jonathan Cohen - Board Member and Chief Executive Officer

Saul Rosenthal - President and Chief Operating Officer

Patrick Conroy - Chief Financial Officer

Analysts

Kyle Joseph - Stephens

Ryan Lynch - KBW

Chris York - JMP Securities

Ron Jewsikow - Wells Fargo Securities

Presentation

Operator

Good morning, and welcome to the TICC Capital Corp. fourth quarter 2013 earnings conference call. (Operator Instructions) I would now like to turn the conference over to Jonathan Cohen. Please go ahead.

Jonathan Cohen

Thank you. Good morning and welcome, everyone, to the TICC Capital Corp's fourth quarter 2013 earnings conference call. I am joined today by Saul Rosenthal, our President and Chief Operating Officer; and Patrick Conroy, our Chief Financial Officer. Patrick, could you open the call today with the discussion regarding forward-looking statements?

Patrick Conroy

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 customer 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 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 it back to Jonathan.

Jonathan Cohen

Thanks, Patrick. As we noted in our press release this morning, TICC reported core net investment income of approximately $0.30 per share for the fourth quarter of 2013. We reported total investment income of approximately $30.5 million for the quarter, representing an increase of approximately $3 million over the third quarter of 2013. That increase was largely due to greater interest income and distributions from our CLO equity investments during the fourth quarter.

Our fourth quarter net investment income was approximately $16.9 million or $0.32 per share, which includes the impact of the capital gains incentive fee accrual reversal of approximately $700,000. Excluding the impact of that fee accrual reversal, our core net investment income was approximately $16.2 million or $0.30 per share.

We also recorded net unrealized depreciation of approximately $3.2 million and net realized capital losses of approximately $700,000 for the quarter. As a result of our net investment income and our unrealized and realized net losses, we had a net increase in net assets resulting from operations of approximately $13.1 million for the quarter.

At the same time, we believe that the credit quality of our portfolio remain stable. Our weighted average credit rating on a fair-value basis stood at 2.1 at the end of the fourth quarter of 2013, which remains the same when compared with the credit rating at the end of the third quarter of 2013. At December 31, 2013, net asset value per share stood at $9.85 compared with the net asset value at the end of the third quarter of $9.90.

During the fourth quarter of 2013, we made additional investments of approximately $85.2 million. The additional investments consisted of approximately $46 million in corporate loans, $35.3 million in CLO equity and $3.9 million in CLO debt.

It is worth noting that for the year ended December 31, 2013, we invested approximately $577.5 million, consisting of $397.2 million in corporate loans, $159.4 million in CLO equity and $20.9 million in CLO debt. For the fourth quarter, we received proceeds of approximately $92.2 million from repayments, sales and amortization payments on our debt investments.

For the quarter ended December 31, 2013, TICC recorded investment income from our portfolio as follows: approximately $13.5 million from our syndicated and bilateral investments, approximately $15.6 million from our CLO equity investments, approximately $600,000 from our CLO debt investments and approximately $800,000 from all other sources.

At December 31, 2013, the weighted average yield of our debt investments on a cost basis was approximately 8.7%, which remains same as the weighted average yield at September 30, 2013. At December 31, 2013, we held one investment on non-accrual status.

For the year ended December 31, 2013, we reported core net investment income of approximately $1.07 per share. We currently anticipate that our 2013 dividend distributions will be fully covered by our earnings and profits, and therefore is not expected to be a tax return of capital.

The company's Board of Directors has declared a distribution of $0.29 per share for the first quarter of this year, payable on March 31, 2014, to stockholders of record as of March 25. Additional information about our yearend performance, I believe is now currently posted to our website at www.ticc.com.

And with that, operator, we're happy to turn the call over for any questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Kyle Joseph of Stephens.

Kyle Joseph - Stephens

I was just hoping, if you could discuss which investment you added to non-accrual and tell us what's going on with that company?

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