8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): November 10, 2021

 

 

Crescent Capital BDC, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Maryland   814-01132   47-3162282

(State or Other Jurisdiction of

Incorporation or Organization)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

11100 Santa Monica Blvd., Suite 2000,

Los Angeles, CA

  90025
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s Telephone Number, Including Area Code: (310) 235-5900

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Securities registered pursuant to 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

 

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock, $0.001 parvalue per share   CCAP   The Nasdaq Stock Market LLC
Common Stock, par value $0.001 per share
(Title of class)

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 


Item 2.02.

Results of Operations and Financial Condition.

On November 10, 2021, the Registrant issued a press release announcing its financial results for the quarter ended September 30, 2021. The text of the press release is included as Exhibit 99.1 to this Form 8-K.

The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

 

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit

Number

  

Description

99.1    Press Release, dated November 10, 2021

 

2


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.

 

    CRESCENT CAPITAL, BDC, INC.
Date: November 10, 2021     By:   /s/ Gerhard Lombard
    Name:   Gerhard Lombard
    Title:   Chief Financial Officer
EX-99.1

Exhibit 99.1

 

LOGO

Crescent Capital BDC, Inc. Reports Third Quarter 2021 Financial Results;

Declares a Fourth Quarter 2021 Regular Dividend of $0.41 per Share and a Special Dividend of $0.05 per Share

LOS ANGELES, November 10, 2021 — Crescent Capital BDC, Inc. (“Crescent BDC” or “Company”) (NASDAQ: CCAP) today reported net investment income of $12.7 million, or $0.45 per share, and Adjusted Net Investment Income of $13.5 million, or $0.48 per share,1 for the quarter ended September 30, 2021. Reported net asset value per share was $21.16 at September 30, 2021 as compared to $20.98 at June 30, 2021.

The Company announced that its Board of Directors declared the following cash dividends on November 5, 2021:

 

Cash Dividend Type

  

Record Date

       

Payment Date

        Amount Per Share  

Regular

   December 31, 2021       January 17, 2022       $ 0.41  

Special

   December 3, 2021       December 15, 2021       $ 0.05  

Special

   March 4, 2022       March 15, 2022       $ 0.05  

Special

   June 3, 2022       June 15, 2022       $ 0.05  

Special

   September 2, 2022       September 15, 2022       $ 0.05  

Selected Financial Highlights

($ in millions, except per share amounts)

 

     As of and for the Three Months Ended  
   September 30, 2021     June 30, 2021     September 30, 2020  

Investments, at fair value

   $ 1,138.6     $ 1,095.0     $ 961.1  

Total assets

   $ 1,183.2     $ 1,128.5     $ 980.5  

Total net assets

   $ 596.2     $ 591.0     $ 537.1  

Net asset value per share

   $ 21.16     $ 20.98     $ 19.07  
      

Investment income

   $ 25.5     $ 23.8     $ 18.7  

Net investment income

   $ 12.7     $ 11.0     $ 12.2  

Net realized gains (losses), net of taxes

   $ 27.9     $ 2.2     $ (0.5

Net change in unrealized gains (losses), net of taxes

   $ (23.9   $ 19.4     $ 26.6  

Net increase (decrease) in net assets resulting from operations

   $ 16.7     $ 32.6     $ 38.3  
      

Net investment income per share

   $ 0.45     $ 0.39     $ 0.43  

Net realized gains (losses) per share, net of taxes

   $ 0.99     $ 0.08     $ (0.02

Net change in unrealized gains (losses) per share, net of taxes

   $ (0.85   $ 0.69     $ 0.95  

Net increase (decrease) in net assets resulting from operations per share

   $ 0.59     $ 1.16     $ 1.36  

Distributions paid per share

   $ 0.41     $ 0.41     $ 0.41  
      

Non-GAAP Financial Measures1:

      

Adjusted net investment income

   $ 13.5     $ 14.8     $ 12.2  

Adjusted net investment income per share

   $ 0.48     $ 0.53     $ 0.43  
      

Weighted average yield on income producing securities (at cost)2

     7.6     7.8     7.9

Percentage of debt investments at floating rates

     99.7     99.6     98.0


LOGO

Portfolio & Investment Activity

As of September 30, 2021 and June 30, 2021, the Company had investments in 132 and 130 portfolio companies with an aggregate fair value of $1,138.6 and $1,095.0 million, respectively. The portfolio at fair value was comprised of the following asset types:

Portfolio Asset Types:

 

     As of  
$ in millions    September 30, 2021     June 30, 2021  

Investment Type

   Fair Value      Percentage     Fair Value      Percentage  

Senior secured first lien

   $ 349.8        30.7   $ 371.1        32.6

Unitranche first lien3

     597.0        52.4       493.7        45.0  

Unitranche first lien - last out3

     13.5        1.2       13.9        1.3  

Senior secured second lien

     56.4        5.0       65.3        6.0  

Unsecured debt

     5.4        0.5       5.5        0.5  

Equity & other

     57.9        5.1       89.9        8.2  

LLC/LP equity interests

     58.6        5.1       55.6        5.1  
  

 

 

    

 

 

   

 

 

    

 

 

 

Total investments

   $ 1,138.6        100.0   $ 1,095.0        100.0

For the quarter ended September 30, 2021, the Company invested $158.5 million across 12 new portfolio companies, 10 existing portfolio companies and several follow-on revolver and delayed draw fundings. For this period, the Company had $122.8 million in aggregate exits, sales and repayments.

For the quarter ended June 30, 2021, the Company invested $121.0 million across 11 new portfolio companies, 13 existing portfolio companies and several follow-on revolver and delayed draw fundings. For this period, the Company had $109.6 million in aggregate exits, sales and repayments.

Results of Operations

For the quarter ended September 30, 2021 and June 30, 2021, investment income totaled $25.5 million and $23.8 million, respectively. The increase was primarily driven by interest income, as organic net deployment drove an increase in the size of the Company’s income-producing investment portfolio and paydown activity led to higher accelerated accretion of OID.

For the quarter ended September 30, 2021 and June 30, 2021, total expenses, including income and excise taxes, totaled $12.8 million, respectively.

Liquidity and Capital Resources

As of September 30, 2021, the Company had $19.5 million in cash and cash equivalents and restricted cash and $173.1 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 as of September 30, 2021 was 3.32%.

The Company’s debt to equity ratio was 0.94x as of September 30, 2021.

Non-GAAP Financial Measures

On a supplemental basis, the Company is disclosing Adjusted Net Investment Income and Adjusted Net Investment Income per share, each of which is a financial measure that is calculated and presented on a basis of methodology other than in accordance with U.S. GAAP (“non-GAAP”). Adjusted Net Investment Income represents net investment income, excluding capital gains incentive fees. We use this non-GAAP financial measure internally to analyze and evaluate financial results and performance and believe that this non-GAAP financial measure is useful to investors as an additional tool to evaluate ongoing results and trends without giving effect to capital gains incentive fees. The Company’s investment advisory agreement provides that a capital gains-based incentive fee is determined and paid annually with respect to realized capital gains (but not unrealized capital appreciation) to the extent such realized capital gains exceed realized capital losses and unrealized capital depreciation on a cumulative basis. We believe that Adjusted Net Investment Income is a useful performance measure because it reflects the net investment income produced on the Company’s investments during a period without giving effect to any changes in the value of such investments and any related capital gains incentive fees between periods. The presentation of Adjusted Net Investment Income is not intended to be a substitute for financial results prepared in accordance with GAAP and should not be considered in isolation.


LOGO

The following table provides an unaudited reconciliation of net investment income (the most comparable U.S. GAAP measure) to Adjusted Net Investment Income for the periods presented:

 

     For the three months ended September 30,      For the nine months ended September 30,  
     2021      2020      2021      2020  

$ in millions, except per share data

   Amount      Per Share      Amount      Per Share      Amount      Per Share      Amount      Per Share  

Net investment income

   $ 12.7      $ 0.45      $ 12.2      $ 0.43      $ 35.1      $ 1.25      $ 36.7      $ 1.33  

Capital gains based incentive fee

     0.8        0.03        —          —          6.2        0.22        —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net investment income

   $ 13.5      $ 0.48      $ 12.2      $ 0.43      $ 41.3      $ 1.47      $ 36.7      $ 1.33  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Conference Call

The Company will host a webcast/conference call on Thursday, November 11, 2021 at 12:00 p.m. (Eastern Time) to discuss its financial results for the quarter ended September 30, 2021. 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: 6937369

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

Note: Numbers may not sum due to rounding.

 

  1)

See “Non-GAAP Financial Measures” above for a description of this non-GAAP measure and a reconciliation from net investment income to Adjusted Net Investment Income. The Company’s management uses this non-GAAP financial measure internally to analyze and evaluate financial results and performance and believes that this non-GAAP financial measure is useful to investors as an additional tool to evaluate ongoing results and trends for the Company without giving effect to capital gains incentive fees. The presentation of Adjusted Net Investment Income is not intended to be a substitute for financial results prepared in accordance with GAAP and should not be considered in isolation.

 

  2)

Yield excludes investments on non-accrual status.

 

  3)

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
September 30, 2021
(Unaudited)
     As of
December 31, 2020
 

Assets

     

Investments, at fair value

     

Non-controlled non-affiliated (cost of $1,030,512 and $920,693, respectively)

   $ 1,047,087      $ 923,912  

Non-controlled affiliated (cost of $42,997 and $50,431, respectively)

     51,336        71,354  

Controlled (cost of $40,000 and $40,000, respectively)

     40,207        38,735  

Cash and cash equivalents

     6,467        1,896  

Restricted cash and cash equivalents

     13,027        12,953  

Receivable for investments sold

     15,302        6  

Interest and dividend receivable

     7,581        3,859  

Unrealized appreciation on foreign currency forward contracts

     1,915        264  

Deferred tax assets

     54        630  

Other assets

     210        543  
  

 

 

    

 

 

 

Total assets

   $ 1,183,186      $ 1,054,152  
  

 

 

    

 

 

 

Liabilities

     

Debt (net of deferred financing costs of $4,830 and $4,600, respectively)

   $ 557,071      $ 471,932  

Distributions payable

     11,549        11,549  

Incentive fees payable

     7,882        —    

Interest and other debt financing costs payable

     3,503        3,923  

Management fees payable

     3,055        1,867  

Deferred tax liabilities

     1,079        1,324  

Unrealized depreciation on foreign currency forward contracts

     587        896  

Directors’ fees payable

     127        98  

Accrued expenses and other liabilities

     2,181        2,563  
  

 

 

    

 

 

 

Total liabilities

   $ 587,034      $ 494,152  
  

 

 

    

 

 

 

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 shares issued and outstanding, respectively)

     28        28  

Paid-in capital in excess of par value

     594,658        594,658  

Accumulated earnings (loss)

     1,466        (34,686
  

 

 

    

 

 

 

Total Net Assets

   $ 596,152      $ 560,000  
  

 

 

    

 

 

 

Total Liabilities and Net Assets

   $ 1,183,186      $ 1,054,152  
  

 

 

    

 

 

 

Net asset value per share

   $ 21.16      $ 19.88  


Crescent Capital BDC, Inc.

Consolidated Statements of Operations

(in thousands except share and per share data)

(Unaudited)

 

     For the three months ended September 30,     For the nine months ended September 30,  
     2021     2020     2021     2020  

Investment Income:

        

From non-controlled non-affiliated investments:

        

Interest income

   $ 22,232     $ 16,132     $ 60,570     $ 48,424  

Paid-in-kind interest

     184       501       966       1,747  

Dividend income

     1,373       7       1,427       182  

Other income

     254       —         577       1,060  

From non-controlled affiliated investments:

        

Interest income

     305       338       904       1,009  

Paid-in-kind interest

     139       485       1,168       970  

Dividend income

     291       511       2,134       1,940  

From controlled investments:

 

     

Dividend income

     700       700       2,100       1,500  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

     25,478       18,674       69,846       56,832  
  

 

 

   

 

 

   

 

 

   

 

 

 

Expenses:

 

     

Interest and other debt financing costs

     5,695       3,504       14,482       11,484  

Management fees

     3,531       2,909       10,082       8,327  

Income based incentive fees

     2,663       2,136       7,528       6,335  

Capital gains based incentive fees

     757       —         6,150       —    

Professional fees

     522       354       1,516       1,060  

Directors’ fees

     127       100       361       339  

Other general and administrative expenses

     692       631       2,076       1,852  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     13,987       9,634       42,195       29,397  

Management fee waiver

     (476     (1,163     (3,096     (3,427

Income based incentive fees waiver

     (931     (2,136     (5,796     (6,335
  

 

 

   

 

 

   

 

 

   

 

 

 

Net expenses

     12,580       6,335       33,303       19,635  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income before taxes

     12,898       12,339       36,543       37,197  

Income and excise taxes

     170       131       1,403       480  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

     12,728       12,208       35,140       36,717  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gains (losses) on investments:

 

     

Net realized gain/(loss) on:

 

     

Non-controlled non-affiliated investments

     280       2       4,497       (1,021

Non-controlled affiliated investments

     27,513       (526     27,513       (526

Foreign currency transactions

     80       6       359       (155

Foreign currency forward contracts

     (56     —         (193     —    

Net change in unrealized appreciation (depreciation) on:

 

     

Non-controlled non-affiliated investments and foreign currency translation

     2,897       19,051       13,336       (20,274

Non-controlled affiliated investments

     (28,198     5,694       (12,583     14,086  

Controlled investments

     302       3,416       1,472       (5,513

Foreign currency forward contracts

     1,523       (1,349     1,959       623  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gains (losses) on investments

     4,341       26,294       36,360       (12,780
  

 

 

   

 

 

   

 

 

   

 

 

 

Realized loss on asset acquisition

     —         —         —         (3,825

Net realized and unrealized gains (losses) on investments and asset acquisition

     4,341       26,294       36,360       (16,605

Benefit (provision) for taxes on realized gain on investments

     2       —         (370     —    

Benefit (provision) for taxes on unrealized appreciation (depreciation) on investments

     (392     (161     (332     101  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

   $ 16,679     $ 38,341     $ 70,798     $ 20,213  
  

 

 

   

 

 

   

 

 

   

 

 

 

Per Common Share Data:

 

     

Net increase (decrease) in net assets resulting from operations per share (basic and diluted):

   $ 0.59     $ 1.36     $ 2.51     $ 0.73  

Net investment income per share (basic and diluted):

   $ 0.45     $ 0.43     $ 1.25     $ 1.33  

Weighted average shares outstanding (basic and diluted):

     28,167,360       28,167,360       28,167,360       27,518,708  


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”). Crescent BDC is externally managed by Crescent Cap Advisors, LLC, a subsidiary of Crescent. 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 is a global credit investment manager with over $35 billion of assets under management. For 30 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 is headquartered in Los Angeles with offices in New York, Boston, and London and more than 190 employees globally. For more information about Crescent, 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, 2020 and quarterly report on Form 10-Q for the quarter ended September 30, 2021, 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, 2020, which Crescent BDC filed with the U.S. Securities and Exchange Commission (the SEC) on February 24, 2021, Crescent BDC’s quarterly report on Form 10-Q for the quarter ended September 30, 2021, which Crescent BDC filed with the SEC on November 10, 2021, 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, 2020, Crescent BDC’s quarterly reports on Form 10-Q 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.