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Crescent Capital BDC, Inc. Reports Third Quarter 2020 Financial Results; Declares a Fourth Quarter 2020 Regular Dividend of $0.41 per Share

Nov 4, 2020 at 4:10 PM EST

LOS ANGELES, Nov. 04, 2020 (GLOBE NEWSWIRE) -- Crescent Capital BDC, Inc. (“Crescent BDC” or “Company”) (NASDAQ: CCAP) today reported net investment income of $12.2 million, or $0.43 per share, and a net increase in net assets resulting from operations of $38.3 million, or $1.36 per share, for the third quarter ended September 30, 2020. Reported net asset value per share was $19.07 at September 30, 2020 as compared to $18.12 at June 30, 2020.

The increase in net asset value for the third quarter was primarily driven by unrealized gains from the impact of credit spread tightening relative to the end of the second quarter.

Declaration of Regular Dividend for Fourth Quarter 2020

The Company announced that its Board of Directors has declared a fourth quarter 2020 dividend of $0.41 per share, which will be paid on or around January 15, 2021 to stockholders of record as of the close of business on December 31, 2020.

Selected Financial Highlights
($ in millions, except per share amounts. Unaudited.)
 
 As of
 September 30,
2020
 June 30,
2020
 September 30,
2019
Investments, at fair value$961.1  $895.2  $692.3 
Total assets$980.5  $926.3  $716.9 
Total net assets$537.1  $510.3  $380.8 
Net asset value per share$19.07  $18.12  $19.48 
         
Weighted average yield on income producing securities (at cost)1 7.9%  7.9%  8.1%
Percentage of debt investments at floating rates 98.0%  96.9%  97.7%
         


 Three Months Ended
 September 30, 2020 June 30, 2020
 Total Amount Per Share Total Amount Per Share
Total investment income$18.7  $0.66  $19.3  $0.69 
Net investment income$12.2  $0.43  $13.0  $0.46 
Net realized gains (losses)$(0.5) $(0.02) $(1.1) $(0.04)
Net unrealized gains (losses), net of taxes$26.6  $0.95  $44.5  $1.59 
Net increase (decrease) in net assets resulting from operations$38.3  $1.36  $56.4  $2.00 
Dividend distributions per share   $0.41     $0.41 

Portfolio & Investing Activity

As of September 30, 2020 and June 30, 2020, the Company had investments in 128 and 124 portfolio companies with an aggregate fair value of $961.1 million and $895.2 million, respectively. The portfolio at fair value was comprised of the following asset types:

  As of
$ in millions September 30, 2020 June 30, 2020
Investment Type Fair Value Percentage Fair Value Percentage
Senior secured first lien $375.5  39.1% $361.7  40.4%
Unitranche first lien2  362.0  37.7%  307.2  34.3%
Unitranche first lien - last out2  15.0  1.5%  14.4  1.6%
Senior secured second lien  99.3  10.3%  106.7  11.9%
Unsecured debt  2.2  0.2%  8.7  1.0%
Equity & other  53.6  5.6%  45.0  5.0%
LLC/LP equity interests  53.5  5.6%  51.5  5.8%
Total investments  $961.1  100.0% $895.2  100.0%

For the three months ended September 30, 2020, the Company invested $84.1 million across six new portfolio companies, two existing portfolio companies and several follow-on revolver and delayed draw fundings. For this period, the Company had $47.7 million in aggregate exits, sales and repayments.

For the three months ended June 30, 2020, the Company invested $26.4 million into one new portfolio company, one refinancing and several follow-on revolver and delayed draw fundings. For this period, the Company had $60.4 million in aggregate exits, sales and repayments.

Results of Operations for the Three Months Ended September 30, 2020

Total investment income for the three months ended September 30, 2020 and June 30, 2020 was $18.7 million and $19.3 million, respectively. The decrease in investment income was primarily driven by a decrease in non-recurring other income. The $18.7 million of total investment income was comprised of $16.5 million from interest income, $1.2 million from dividend income and $1.0 million for other and payment-in-kind income.

Total net expenses, including income and excise taxes, increased to $6.5 million for the three months ended September 30, 2020 from $6.4 million for the three months ended June 30, 2020. The increase was primarily due to an increase in management fees and other general and administrative expenses resulting from the growth in the Company’s aggregate portfolio fair value offset by lower borrowing costs due to a decrease in LIBOR.

Liquidity and Capital Resources

As of September 30, 2020, the Company had $11.6 million in cash and cash equivalents and restricted cash and $189.5 million of undrawn capacity on its credit facilities, subject to borrowing base and other limitations. The weighted average interest rate on the Company’s debt outstanding was 3.1%.

The Company’s debt to equity ratio was 0.79x as of September 30, 2020.

Recent Developments

On October 21, 2020, Crescent Capital Group LP ("Crescent"), parent of the Company's investment adviser (the "Adviser"), entered into a definitive agreement with Sun Life Financial Inc. (together with its subsidiaries and joint ventures, "Sun Life") under which Sun Life will acquire a majority economic interest in Crescent. The consummation of the transaction is expected to occur in late 2020 and the same Crescent team that has been responsible for the investment operations of the Company prior to the transaction will continue to focus on executing the same investment strategies and process.

On October 28, 2020, the Company drew the remaining $25 million of its 5.95% senior unsecured notes due July 30, 2023.

Conference Call

The Company will host a webcast/conference call on Thursday, November 5, 2020 at 12:00 p.m. (Eastern Time) to discuss its quarter ended September 30, 2020 financial results. Please visit Crescent BDC’s webcast link located on the Events & Presentations page of the Investor Relations section of Crescent BDC’s website for a slide presentation that complements the earnings conference call.

All interested parties are invited to participate via telephone or the live webcast, which will be hosted on a webcast link located on the Events & Presentations page of the Investor Resources section of Crescent BDC’s website at www.crescentbdc.com. 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: (855) 982-6679
International: (614) 999-9468
Conference ID: 4975465

All callers will need to enter the Conference ID followed by the # sign and reference "Crescent BDC" once connected with the operator. An archived replay will be available via a webcast link located on the Investor Relations section of Crescent BDC's website.

Endnotes

1)   Yield excludes investments on non-accrual status.

2)   Unitranche loans are first lien loans that may extend deeper in a company’s capital structure than traditional first lien debt and may provide for a waterfall of cash flow priority among different lenders in the unitranche loan. In certain instances, the Company may find another lender to provide the “first out” portion of such loan and retain the “last out” portion of such loan, in which case, the “first out” portion of the loan would generally receive priority with respect to payment of principal, interest and any other amounts due thereunder over the “last out” portion that the Company would continue to hold. In exchange for the greater risk of loss, the “last out” portion earns a higher interest rate.


 
Crescent Capital BDC, Inc.
Consolidated Statements of Assets and Liabilities
(in thousands except share and per share data)
      
 As of As of
 September 30, 2020 December 31,
 (Unaudited) 2019
Assets     
Investments, at fair value     
Non-controlled non-affiliated (cost of $904,002 and $675,329, respectively)$879,491  $671,582 
Non-controlled affiliated (cost of $32,308 and $19,766, respectively) 47,631   20,507 
Controlled (cost of $39,000 and $34,000, respectively) 33,929   34,442 
Cash and cash equivalents 3,047   4,576 
Restricted cash and cash equivalents 8,522   8,851 
Interest receivable 3,602   2,832 
Unrealized appreciation on foreign currency forward contracts 1,835   758 
Receivable for investments sold 1,070   160 
Deferred tax assets 776   421 
Other assets 632   3,046 
Total assets$980,535  $747,175 
 
Liabilities
Debt (net of deferred financing costs of $4,645 and $3,431, respectively)$422,237  $322,010 
Distributions payable 11,549   8,554 
Interest and other debt financing costs payable 3,093   3,545 
Accrued expenses and other liabilities 3,067   3,788 
Management fees payable 1,746   1,343 
Deferred tax liabilities 1,133   879 
Unrealized depreciation on foreign currency forward contracts 520   65 
Directors' fees payable 100   74 
Total liabilities $443,445  $340,258 
 
Net Assets     
Preferred stock, par value $0.001 per share (10,000 shares authorized, zero outstanding, respectively)$  $ 
Common stock, par value $0.001 per share (200,000,000 shares authorized, 28,167,360 and 20,862,314 shares issued and outstanding, respectively) 28   21 
Paid-in capital in excess of par value 558,913   414,293 
Accumulated loss (21,851)  (7,397)
Total Net Assets$537,090  $406,917 
Total Liabilities and Net Assets$980,535  $747,175 
Net asset value per share$19.07  $19.50 
 


 

Crescent Capital BDC, Inc.
Consolidated Statements of Operations
(in thousands except share and per share data)
(Unaudited)
                
 For the three months ended For the six months ended
 September 30, September 30,
 2020 2019 2020 2019
Investment Income:               
From non-controlled non-affiliated investments:               
Interest income$16,132  $12,385  $48,424  $33,402 
Paid-in-kind interest 501   112   1,747   449 
Dividend income 518   705   2,122   1,636 
Other income    87   1,060   686 
From non-controlled affiliated investments:      
Interest income 338   337   1,009   877 
Paid-in-kind interest 485      970    
Dividend income    310      310 
From controlled investments:      
Dividend income 700   900   1,500   1,450 
Total investment income 18,674   14,836   56,832   38,810 
       
Expenses:      
Interest and other debt financing costs 3,504   3,524   11,484   9,506 
Management fees 2,909   2,517   8,327   6,567 
Incentive fees 2,136   1,375   6,335   3,506 
Professional fees 354   202   1,060   587 
Directors' fees 100   73   339   218 
Organization expenses    45      136 
Other general and administrative expenses 631   567   1,852   1,624 
Total expenses 9,634   8,303   29,397   22,144 
Management fee waiver (1,163)  (1,268)  (3,427)  (3,215)
Incentive fee waiver (2,136)  (1,375)  (6,335)  (3,506)
Net expenses 6,335   5,660   19,635   15,423 
Net investment income before taxes 12,339   9,176   37,197   23,387 
Income and excise taxes 131   8   480   14 
Net investment income  12,208   9,168   36,717   23,373 
       
Net realized and unrealized gains (losses) on investments:      
Net realized gain/(loss) on:      
Non-controlled non-affiliated investments 2   (66)  (1,021)  (987)
Non-controlled affiliated investments (526)     (526)   
Foreign currency transactions 6   42   (155)  531 
Net change in unrealized appreciation (depreciation) on:      
Non-controlled non-affiliated investments and foreign currency translation 18,530   (7,617)  (20,770)  (3,731)
Non-controlled affiliated investments 6,215   (24  14,582   600
 
Controlled investments 3,416   45   (5,513)  (667)
Foreign currency forward contracts (1,349)  1,205   623   1,487 
Net realized and unrealized gains (losses) on investments 26,294   (6,415)  (12,780)  (2,767)
Realized loss on asset acquisition       (3,825)   
Net realized and unrealized gains (losses) on investments and asset acquisition 26,294   (6,415)  (16,605)  (2,767)
Benefit (provision) for taxes on unrealized appreciation (depreciation) on investments (161)  (25)  101   (505)
Net increase (decrease) in net assets resulting from operations$38,341  $2,728  $20,213  $20,101 
       
Per Common Share Data:      
Net increase (decrease) in net assets resulting from operations per share (basic and diluted):$1.36  $0.15  $0.73  $1.23 
Net investment income per share (basic and diluted):$0.43  $0.49  $1.33  $1.43 
Weighted average shares outstanding (basic and diluted): 28,167,360   18,810,099   27,518,708   16,341,911 
            


About Crescent BDC

Crescent BDC is a business development company that seeks to maximize the total return of its stockholders in the form of current income and capital appreciation by providing capital solutions to middle market companies with sound business fundamentals and strong growth prospects. Crescent BDC utilizes the extensive experience, origination capabilities and disciplined investment process of Crescent Capital Group LP (“Crescent Capital”).  Crescent BDC is externally managed by Crescent Cap Advisors, LLC, a subsidiary of Crescent Capital. Crescent BDC has elected to be regulated as a business development company under the Investment Company Act of 1940. For more information about Crescent BDC, visit www.crescentbdc.com. However, the contents of such website are not and should not be deemed to be incorporated by reference herein.

About Crescent Capital Group

Crescent Capital is a global credit investment manager with approximately $29 billion of assets under management. For over 25 years, the firm has focused on below investment grade credit through strategies that invest in marketable and privately-originated debt securities including senior bank loans, high yield bonds, as well as private senior, unitranche, and junior debt securities. Crescent Capital is headquartered in Los Angeles with offices in New York, Boston, and London and more than 180 employees globally. For more information about Crescent Capital, visit www.crescentcap.com. However, the contents of such website are not and should not be deemed to be incorporated by reference herein.

Contact:

Daniel McMahon
daniel.mcmahon@crescentcap.com
212-364-0149

Forward-Looking Statements

This press release, and other statements that Crescent BDC may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to Crescent BDC’s future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” or similar expressions.

Crescent BDC cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which may change over time. Forward-looking statements speak only as of the date they are made, and Crescent BDC assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.

In addition to factors previously disclosed in Crescent BDC’s SEC reports and those identified elsewhere in this press release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (1) our future operating results; (2) our business prospects and the prospects of our portfolio companies; (3) the impact of investments that we expect to make; (4) our contractual arrangements and relationships with third parties; (5) the dependence of our future success on the general economy and its impact on the industries in which we invest; (6) the financial condition of and ability of our current and prospective portfolio companies to achieve their objectives; (7) our expected financings and investments; (8) the adequacy of our cash resources and working capital, including our ability to obtain continued financing on favorable terms; (9) the timing of cash flows, if any, from the operations of our portfolio companies; (10) the impact of increased competition; (11) the ability of our investment adviser to locate suitable investments for us and to monitor and administer our investments; (12) potential conflicts of interest in the allocation of opportunities between us and other investment funds managed by our investment adviser or its affiliates; (13) the ability of our investment adviser to attract and retain highly talented professionals; (14) changes in law and policy accompanying the new administration and uncertainty pending any such changes; (15) increased geopolitical unrest, terrorist attacks or acts of war, which may adversely affect the general economy, domestic and local financial and capital markets, or the specific industries of our portfolio companies; (16) changes and volatility in political, economic or industry conditions, the interest rate environment, foreign exchange rates or financial and capital markets; (17) the unfavorable resolution of legal proceedings; and (18) the impact of changes to tax legislation and, generally, our tax position.

Crescent BDC’s Annual Report on Form 10-K for the year ended December 31, 2019 and quarterly report on Form 10-Q for the quarter ended September 30, 2020, each filed with the SEC, identify additional factors that can affect forward-looking statements.

Other Information

The information in this press release is summary information only and should be read in conjunction with Crescent BDC’s annual report on Form 10-K for the year ended December 31, 2019, which Crescent BDC filed with the U.S. Securities and Exchange Commission (the SEC) on March 4, 2020, Crescent BDC’s quarterly report on Form 10-Q for the quarter ended September 30, 2020, which Crescent BDC filed with the SEC on November 4, 2020, as well as Crescent BDC’s other reports filed with the SEC. A copy of Crescent BDC’s annual report on Form 10-K for the year ended December 31, 2019, Crescent BDC’s quarterly report on Form 10-Q for the quarter ended September 30, 2020 and Crescent BDC’s other reports filed with the SEC can be found on Crescent BDC’s website at www.crescentbdc.com and the SEC’s website at www.sec.gov.