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): May 9, 2022

 

 

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 May 9, 2022, the Registrant issued a press release announcing its financial results for the quarter ended March 31, 2022. 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 May 9, 2022

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: May 9, 2022     By:   /s/ Gerhard Lombard
    Name:   Gerhard Lombard
    Title:   Chief Financial Officer
EX-99.1

Exhibit 99.1

 

LOGO

Crescent Capital BDC, Inc. Reports First Quarter 2022 Financial Results;

Declares a Second Quarter 2022 Regular Dividend of $0.41 per Share

LOS ANGELES, May 9, 2022 — Crescent Capital BDC, Inc. (“Crescent BDC” or “Company”) (NASDAQ: CCAP) today reported net investment income of $12.1 million, or $0.39 per share, and Adjusted Net Investment Income of $12.9 million, or $0.42 per share1 for the quarter ended March 31, 2022. Reported net asset value per share was $21.18 as of March 31, 2022 as compared to $21.12 as of December 31, 2021.

The Company announced that its Board of Directors declared a regular cash dividend for the second quarter of 2022 of $0.41 per share, which will be paid on July 15, 2022 to stockholders of record as of June 30, 2022. Additionally, the third in a series of four previously declared $0.05 per share special cash dividends will be paid on June 15, 2022 to stockholders of record as of June 3, 2022.

Selected Financial Highlights

($ in millions, except per share amounts)

 

     As of and for the Three Months Ended  
   March 31, 2022     December 31, 2021     March 31, 2021  

Investments, at fair value

   $ 1,288.6     $ 1,270.4     $ 1,057.6  

Total assets

   $ 1,317.5     $ 1,317.8     $ 1,076.8  

Total net assets

   $ 654.3     $ 652.3     $ 570.0  

Net asset value per share

   $ 21.18     $ 21.12     $ 20.24  
      

Investment income

   $ 26.4     $ 24.1     $ 20.6  

Net investment income

   $ 12.1     $ 12.5     $ 11.4  

Net realized gains (losses), net of taxes

   $ 8.4     $ (0.4   $ 1.8  

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

   $ (4.3   $ 0.7     $ 8.3  

Net increase (decrease) in net assets resulting from operations

   $ 16.2     $ 12.8     $ 21.5  
      

Net investment income per share

   $ 0.39     $ 0.42     $ 0.41  

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

   $ 0.27     $ (0.01   $ 0.06  

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

   $ (0.14   $ 0.02     $ 0.30  

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

   $ 0.52     $ 0.44     $ 0.76  

Regular distributions paid per share

   $ 0.41     $ 0.41     $ 0.41  

Special distributions paid per share

   $ 0.05       0.05       —    
      

Non-GAAP Financial Measures1:

      

Adjusted net investment income

   $ 12.9     $ 12.7     $ 13.0  

Adjusted net investment income per share

   $ 0.42     $ 0.43     $ 0.46  
      

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

     7.5     7.5     7.9

Percentage of debt investments at floating rates

     98.8     98.5     98.4


LOGO

 

Portfolio & Investment Activity

As of March 31, 2022 and December 31, 2021, the Company had investments in 130 and 134 portfolio companies with an aggregate fair value of $1,288.6 and $1,270.4 million, respectively. The portfolio at fair value was comprised of the following asset types:

Portfolio Asset Types:

 

     As of  
$ in millions    March 31, 2022     December 31, 2021  

Investment Type

   Fair Value      Percentage     Fair Value      Percentage  

Senior secured first lien

   $ 322.8        25.1   $ 329.9        26.0

Unitranche first lien3

     778.5        60.4       731.0        57.5  

Unitranche first lien—last out3

     11.6        0.9       13.7        1.1  

Senior secured second lien

     62.4        4.8       72.7        5.7  

Unsecured debt

     3.9        0.3       5.6        0.4  

Equity & other

     52.3        4.1       59.5        4.7  

LLC/LP equity interests

     57.1        4.4       58.0        4.6  
  

 

 

    

 

 

   

 

 

    

 

 

 

Total investments

   $ 1,288.6        100.0   $ 1,270.4        100.0

For the quarter ended March 31, 2022, the Company invested $60.0 million across 2 new portfolio companies, 5 existing portfolio companies and several follow-on revolver and delayed draw fundings. For this period, the Company had $49.6 million in aggregate exits, sales and repayments.

For the quarter ended December 31, 2021, the Company invested $279.7 million across 17 new portfolio companies, 14 existing portfolio companies and several follow-on revolver and delayed draw fundings. For this period, the Company had $151.7 million in aggregate exits, sales and repayments.

Results of Operations

For the three months ended March 31, 2022 and 2021, total investment income totaled $26.4 million and $20.6 million, respectively. The increase was primarily driven by interest income, which includes amortization of upfront fees, as organic net deployment drove an increase in the size of the Company’s income-producing investment portfolio.

For the three months ended March 31, 2022 and 2021, total net expenses, including income and excise taxes, totaled $14.3 million and $9.1 million, respectively. The increase was primarily driven by the expiration of the income based incentive fee and management fee waivers, which went into effect on July 31, 2021.

Liquidity and Capital Resources

As of March 31, 2022, the Company had $18.2 million in cash and cash equivalents and restricted cash and $249.2 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 March 31, 2022 was 3.46%.

The Company’s debt to equity ratio was 0.97x as of March 31, 2022.

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  
     March 31, 2022      December 31, 2021      March 31, 2021  

$ in millions, except per share data

   Amount      Per Share      Amount      Per Share      Amount      Per Share  

Net investment income

   $ 12.1      $ 0.39      $ 12.5      $ 0.42      $ 11.4      $ 0.41  

Capital gains based incentive fee

     0.8        0.03        0.2        0.01        1.6        0.05  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net investment income

   $ 12.9      $ 0.42      $ 12.7      $ 0.43      $ 13.0      $ 0.46  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Conference Call

The Company will host a webcast/conference call on Tuesday, May 10, 2022 at 12:00 p.m. (Eastern Time) to discuss its financial results for the quarter ended March 31, 2022. 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: 9787085

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
March 31,
2022 (Unaudited)
    As of
December 31,
2021
 

Assets

    

Investments, at fair value

    

Non-controlled non-affiliated (cost of $1,179,753 and $1,150,173, respectively)

   $ 1,194,625     $ 1,165,897  

Non-controlled affiliated (cost of $34,915 and $41,242, respectively)

     42,297       51,701  

Controlled (cost of $53,010 and $53,431, respectively)

     51,679       52,768  

Cash and cash equivalents

     7,315       10,069  

Restricted cash and cash equivalents

     10,874       13,457  

Receivable for investments sold

     636       14,871  

Interest and dividend receivable

     6,715       6,763  

Unrealized appreciation on foreign currency forward contracts

     2,757       2,115  

Deferred tax assets

     44       42  

Other assets

     535       126  
  

 

 

   

 

 

 

Total assets

   $ 1,317,477     $ 1,317,809  
  

 

 

   

 

 

 

Liabilities

    

Debt (net of deferred financing costs of $6,689 and $6,897, respectively)

   $ 629,130     $ 631,040  

Distributions payable

     12,664       12,664  

Incentive fees payable

     9,719       6,924  

Interest and other debt financing costs payable

     3,337       5,513  

Management fees payable

     3,959       3,830  

Deferred tax liabilities

     762       956  

Unrealized depreciation on foreign currency forward contracts

     1,178       631  

Directors’ fees payable

     117       114  

Accrued expenses and other liabilities

     2,325       3,852  
  

 

 

   

 

 

 

Total liabilities

   $ 663,191     $ 665,524  
  

 

 

   

 

 

 

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, 30,887,360 shares issued and outstanding, respectively)

     31       31  

Paid-in capital in excess of par value

     666,162       666,162  

Accumulated earnings (loss)

     (11,907     (13,908
  

 

 

   

 

 

 

Total Net Assets

   $ 654,286     $ 652,285  
  

 

 

   

 

 

 

Total Liabilities and Net Assets

   $ 1,317,477     $ 1,317,809  
  

 

 

   

 

 

 

Net asset value per share

   $ 21.18     $ 21.12  


Crescent Capital BDC, Inc.

Consolidated Statements of Operations

(in thousands except share and per share data)

(Unaudited)

 

     For the three months ended March 31,  
     2022     2021  

Investment Income:

 

 

From non-controlled non-affiliated investments:

 

 

Interest income

   $ 20,951     $ 18,087  

Paid-in-kind interest

     315       368  

Dividend income

     9       516  

Other income

     89       92  

From non-controlled affiliated investments:

 

 

Interest income

     348       308  

Paid-in-kind interest

     2,039       500  

Dividend income

     2,274       —    

From controlled investments:

 

 

Interest income

     182       —    

Paid-in-kind interest

     174       —    

Dividend income

     —         700  
  

 

 

   

 

 

 

Total investment income

     26,381       20,571  
  

 

 

   

 

 

 

Expenses:

 

 

Interest and other debt financing costs

     5,471       4,194  

Management fees

     4,015       3,207  

Income based incentive fees

     2,718       2,277  

Capital gains based incentive fees

     721       1,577  

Professional fees

     452       497  

Directors’ fees

     117       119  

Other general and administrative expenses

     696       692  
  

 

 

   

 

 

 

Total expenses

     14,190       12,563  

Management fees waiver

     (56     (1,283

Income based incentive fees waiver

     (44     (2,277
  

 

 

   

 

 

 

Net expenses

     14,090       9,003  
  

 

 

   

 

 

 

Net investment income before taxes

     12,291       11,568  

Income and excise taxes

     154       130  
  

 

 

   

 

 

 

Net investment income

     12,137       11,438  
  

 

 

   

 

 

 

Net realized and unrealized gains (losses) on investments:

 

 

Net realized gain/(loss) on:

 

 

Non-controlled non-affiliated investments

     1,306       1,746  

Non-controlled affiliated investments

     7,113       —    

Foreign currency transactions

     153       9  

Foreign currency forward contracts

     24       —    

Net change in unrealized appreciation (depreciation) on:

 

 

Non-controlled non-affiliated investments and foreign currency translation

     (853     7,509  

Non-controlled affiliated investments

     (3,077     (321

Controlled investments

     (668     609  

Foreign currency forward contracts

     95       695  
  

 

 

   

 

 

 

Net realized and unrealized gains (losses) on investments

     4,093       10,247  
  

 

 

   

 

 

 

Benefit (provision) for taxes on realized gain on investments

     (217     —    

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

     196       (149
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

   $ 16,209     $ 21,536  
  

 

 

   

 

 

 

Per Common Share Data:

 

 

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

   $ 0.52     $ 0.76  

Net investment income per share (basic and diluted):

   $ 0.39     $ 0.41  

Weighted average shares outstanding (basic and diluted):

     30,887,360       28,167,360  


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 $38 billion of assets under management. For over 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, 2021 and quarterly report on Form 10-Q for the quarter ended March 31, 2022, 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, 2021, which Crescent BDC filed with the U.S. Securities and Exchange Commission (the SEC) on February 23, 2022, Crescent BDC’s quarterly report on Form 10-Q for the quarter ended March 31, 2022, which Crescent BDC filed with the SEC on May 9, 2022, 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, 2021, 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.