TCG BDC, Inc. Announces Fourth Quarter 2020 Financial Results and Declares First Quarter 2021 Regular Dividend of $0.32 Per Common Share and Supplemental Dividend of $0.05 per Common Share
NEW YORK, Feb. 23, 2021 (GLOBE NEWSWIRE) — TCG BDC, Inc. (together with its consolidated subsidiaries, “we,” “us,” “our,” “TCG BDC” or the “Company”) (NASDAQ: CGBD) today announced its financial results for its fourth quarter ended December 31, 2020.
Linda Pace, TCG BDC’s Chief Executive Officer said, “New deal activity in the 4th quarter was robust, as M&A demand accelerated post-Labor Day. Continuing strong portfolio performance, paired with our proactive balance sheet management actions in 2020, positioned us well to participate actively in this attractive originations environment. We enter 2021 with confidence in our ability to deliver sustainable yield and continued positive credit migration as the cycle progresses.”Selected Financial Highlights
Fourth Quarter 2020 Highlights
(dollar amounts in thousands, except per share data)Net investment income for the three month period ended December 31, 2020 was $21,044, or $0.38 per common share, net of the preferred dividend, as compared to $21,234, or $0.36 per common share, net of the preferred dividend, for the three month period ended September 30, 2020;Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments and non-investment assets and liabilities for the three month period ended December 31, 2020 was $16,254, or $0.28 per share, as compared to $12,374, or $0.22 per share, for the three month period ended September 30, 2020;Net increase (decrease) in net assets resulting from operations for the three month period ended December 31, 2020 was $38,163, or $0.66 per share, as compared to $33,608, or $0.58 per common share, for the three month period ended September 30, 2020;On December 8, 2020, the Company issued $75,000 in aggregate principal amount of 4.500% Senior Unsecured Notes due December 31, 2024;During the three month period ended December 31, 2020, the Company repurchased and extinguished 1.0 million shares of the Company’s common stock pursuant to the Company’s previously announced $150 million stock repurchase program at an average cost of $10.85 per share, or $11.3 million in the aggregate, resulting in accretion to net assets per share of $0.08; andOn February 22, 2021, the Board of Directors declared a regular quarterly dividend of $0.32 plus a supplemental dividend of $0.05, which is payable on April 16, 2021 to stockholders of record on March 31, 2021.Portfolio and Investment Activity
(dollar amounts in thousands, except per share data, unless otherwise noted)As of December 31, 2020, the fair value of our investments was approximately $1,825,749, comprised of 160 investments in 117 portfolio companies/investment funds across 27 industries with 63 sponsors. This compares to the Company’s portfolio as of September 30, 2020, as of which date the fair value of our investments was approximately $1,948,173, comprised of 146 investments in 114 portfolio companies/investment funds across 28 industries with 63 sponsors.As of December 31, 2020 and September 30, 2020, investments consisted of the following:The following table shows our investment activity for the three month period ended December 31, 2020:Overall, total investments at fair value decreased by 6.3%, or $122,424, during the three month period ended December 31, 2020 after factoring in repayments and sales, net fundings on revolvers and delayed draws and net change in unrealized appreciation (depreciation).As of December 31, 2020, the weighted average yields for our first and second lien debt investments on an amortized cost basis were 7.21% and 9.15%, respectively, with a total weighted average yield of 8.12%. Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of December 31, 2020. As of December 31, 2020, on a fair value basis, approximately 0.9% of our debt investments bear interest at a fixed rate and approximately 99.1% of our debt investments bear interest at a floating rate, which primarily are subject to interest rate floors.Total investments at fair value held by Middle Market Credit Fund, LLC (“Credit Fund”), which is not consolidated with the Company, decreased by 18.2%, or $235,031, during the three month period ended December 31, 2020 after factoring in repayments, sales, net fundings on revolvers and delayed draws and net change in unrealized appreciation (depreciation). As of December 31, 2020, Credit Fund had total investments at fair value of $1,056,381, which comprised 97.5% of first lien senior secured loans, 2.3% of second lien senior secured loans at fair value, 0.2% of equity investments at fair value. As of December 31, 2020, on a fair value basis, approximately 2.3% of Credit Fund’s debt investments bear interest at a fixed rate and approximately 97.7% of Credit Fund’s debt investments bear interest at a floating rate, which primarily are subject to interest rate floors.Middle Market Credit Fund II, LLC (“Credit Fund II”) was formed on November 3, 2020 as a joint venture with Cliffwater Direct Lending Fund and is not consolidated with the Company. Credit Fund II’s initial portfolio of $250 million in aggregate principal balance was contributed by the Company. As of December 31, 2020, Credit Fund II had total investments at fair value of $246,421, which comprised 90.1% of first lien senior secured loans and 9.9% of second lien senior secured loans at fair value. As of December 31, 2020, on a fair value basis, approximately 0.9% of Credit Fund II’s debt investments bear interest at a fixed rate and approximately 99.1% of Credit Fund II’s debt investments bear interest at a floating rate, which primarily are subject to interest rate floors.As part of the monitoring process, our Investment Adviser has developed risk policies pursuant to which it regularly assesses the risk profile of each of our debt investments and rates each of them based on the following categories, which we refer to as “Internal Risk Ratings”:Internal Risk Ratings DefinitionsOur Investment Adviser’s risk rating model is based on evaluating portfolio company performance in comparison to the base case when considering certain credit metrics including, but not limited to, adjusted EBITDA and net senior leverage as well as specific events including, but not limited to, default and impairment.Our Investment Adviser monitors and, when appropriate, changes the investment ratings assigned to each debt investment in our portfolio. Our Investment Adviser reviews our investment ratings in connection with our quarterly valuation process. The following table summarizes the Internal Risk Ratings of our debt portfolio as of December 31, 2020 and September 30, 2020:As of December 31, 2020 and September 30, 2020, the weighted average Internal Risk Rating of our debt investment portfolio was 2.4 and 2.3, respectively.Consolidated Results of Operations
(dollar amounts in thousands, except per share data)Total investment income for the three month periods ended December 31, 2020 and September 30, 2020 was $43,514 and $42,784, respectively. This $730 net increase was primarily due to an increase in income recognized from OID accretion from prepayments, higher fee income, and an increase in total dividends from the credit funds. This was partially offset by lower interest income from a lower weighted average principal, which was primarily due to the contribution of assets to Credit Fund II.Total expenses for the three month periods ended December 31, 2020 and September 30, 2020 were $21,605 and $21,550, respectively, a net increase of $55.During the three month period ended December 31, 2020, the Company recorded a net realized and unrealized depreciation gain of $16,254. This was primarily driven by continued tightening of market yields resulting in increases in fair value, as well as the successful exit of our investment in Hydrofarm at par.Liquidity and Capital Resources
(dollar amounts in thousands, except per share data)As of December 31, 2020, the Company had cash and cash equivalents of $68,419, notes payable and senior unsecured notes (before debt issuance costs) of $449,200 and $190,000, respectively, and secured borrowings outstanding of $347,949. As of December 31, 2020, the Company had $340,051 of remaining unfunded commitments and $207,365 available for additional borrowings under its revolving credit facility, subject to leverage and borrowing base restrictions. During the three months ended December 31, 2020, the Company repaid all amounts outstanding under the revolving credit facility of its wholly owned subsidiary, and the facility was terminated.DividendOn February 22, 2021, the Board of Directors declared a regular quarterly dividend of $0.32 plus a supplemental dividend of $0.05, which is payable on April 16, 2021 to stockholders of record on March 31, 2021.On December 31, 2020, the Company declared and paid a dividend on the Preferred Stock for the period from October 1, 2020 to December 31, 2020 in the amount of $0.438 per Preferred Share to the holder of record on December 31, 2020.Conference CallThe Company will host a conference call at 11:00 a.m. EST on Wednesday, February 24, 2021 to discuss these quarterly financial results. The call and webcast will be available on the TCG BDC website at tcgbdc.com. The call may be accessed by dialing +1 (866) 394-4623 (U.S.) or +1 (409) 350-3158 (international) and referencing “TCG BDC Financial Results Call.” The conference call will be webcast simultaneously via a link on TCG BDC’s website and an archived replay of the webcast also will be available on the website soon after the live call for 21 days.TCG BDC, INC.
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(dollar amounts in thousands, except per share data)TCG BDC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollar amounts in thousands, except per share data)
(unaudited)About TCG BDC, Inc.Web: tcgbdc.comContacts:
Linda Pace, TCG BDC’s Chief Executive Officer said, “New deal activity in the 4th quarter was robust, as M&A demand accelerated post-Labor Day. Continuing strong portfolio performance, paired with our proactive balance sheet management actions in 2020, positioned us well to participate actively in this attractive originations environment. We enter 2021 with confidence in our ability to deliver sustainable yield and continued positive credit migration as the cycle progresses.”Selected Financial Highlights
Fourth Quarter 2020 Highlights
(dollar amounts in thousands, except per share data)Net investment income for the three month period ended December 31, 2020 was $21,044, or $0.38 per common share, net of the preferred dividend, as compared to $21,234, or $0.36 per common share, net of the preferred dividend, for the three month period ended September 30, 2020;Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments and non-investment assets and liabilities for the three month period ended December 31, 2020 was $16,254, or $0.28 per share, as compared to $12,374, or $0.22 per share, for the three month period ended September 30, 2020;Net increase (decrease) in net assets resulting from operations for the three month period ended December 31, 2020 was $38,163, or $0.66 per share, as compared to $33,608, or $0.58 per common share, for the three month period ended September 30, 2020;On December 8, 2020, the Company issued $75,000 in aggregate principal amount of 4.500% Senior Unsecured Notes due December 31, 2024;During the three month period ended December 31, 2020, the Company repurchased and extinguished 1.0 million shares of the Company’s common stock pursuant to the Company’s previously announced $150 million stock repurchase program at an average cost of $10.85 per share, or $11.3 million in the aggregate, resulting in accretion to net assets per share of $0.08; andOn February 22, 2021, the Board of Directors declared a regular quarterly dividend of $0.32 plus a supplemental dividend of $0.05, which is payable on April 16, 2021 to stockholders of record on March 31, 2021.Portfolio and Investment Activity
(dollar amounts in thousands, except per share data, unless otherwise noted)As of December 31, 2020, the fair value of our investments was approximately $1,825,749, comprised of 160 investments in 117 portfolio companies/investment funds across 27 industries with 63 sponsors. This compares to the Company’s portfolio as of September 30, 2020, as of which date the fair value of our investments was approximately $1,948,173, comprised of 146 investments in 114 portfolio companies/investment funds across 28 industries with 63 sponsors.As of December 31, 2020 and September 30, 2020, investments consisted of the following:The following table shows our investment activity for the three month period ended December 31, 2020:Overall, total investments at fair value decreased by 6.3%, or $122,424, during the three month period ended December 31, 2020 after factoring in repayments and sales, net fundings on revolvers and delayed draws and net change in unrealized appreciation (depreciation).As of December 31, 2020, the weighted average yields for our first and second lien debt investments on an amortized cost basis were 7.21% and 9.15%, respectively, with a total weighted average yield of 8.12%. Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of December 31, 2020. As of December 31, 2020, on a fair value basis, approximately 0.9% of our debt investments bear interest at a fixed rate and approximately 99.1% of our debt investments bear interest at a floating rate, which primarily are subject to interest rate floors.Total investments at fair value held by Middle Market Credit Fund, LLC (“Credit Fund”), which is not consolidated with the Company, decreased by 18.2%, or $235,031, during the three month period ended December 31, 2020 after factoring in repayments, sales, net fundings on revolvers and delayed draws and net change in unrealized appreciation (depreciation). As of December 31, 2020, Credit Fund had total investments at fair value of $1,056,381, which comprised 97.5% of first lien senior secured loans, 2.3% of second lien senior secured loans at fair value, 0.2% of equity investments at fair value. As of December 31, 2020, on a fair value basis, approximately 2.3% of Credit Fund’s debt investments bear interest at a fixed rate and approximately 97.7% of Credit Fund’s debt investments bear interest at a floating rate, which primarily are subject to interest rate floors.Middle Market Credit Fund II, LLC (“Credit Fund II”) was formed on November 3, 2020 as a joint venture with Cliffwater Direct Lending Fund and is not consolidated with the Company. Credit Fund II’s initial portfolio of $250 million in aggregate principal balance was contributed by the Company. As of December 31, 2020, Credit Fund II had total investments at fair value of $246,421, which comprised 90.1% of first lien senior secured loans and 9.9% of second lien senior secured loans at fair value. As of December 31, 2020, on a fair value basis, approximately 0.9% of Credit Fund II’s debt investments bear interest at a fixed rate and approximately 99.1% of Credit Fund II’s debt investments bear interest at a floating rate, which primarily are subject to interest rate floors.As part of the monitoring process, our Investment Adviser has developed risk policies pursuant to which it regularly assesses the risk profile of each of our debt investments and rates each of them based on the following categories, which we refer to as “Internal Risk Ratings”:Internal Risk Ratings DefinitionsOur Investment Adviser’s risk rating model is based on evaluating portfolio company performance in comparison to the base case when considering certain credit metrics including, but not limited to, adjusted EBITDA and net senior leverage as well as specific events including, but not limited to, default and impairment.Our Investment Adviser monitors and, when appropriate, changes the investment ratings assigned to each debt investment in our portfolio. Our Investment Adviser reviews our investment ratings in connection with our quarterly valuation process. The following table summarizes the Internal Risk Ratings of our debt portfolio as of December 31, 2020 and September 30, 2020:As of December 31, 2020 and September 30, 2020, the weighted average Internal Risk Rating of our debt investment portfolio was 2.4 and 2.3, respectively.Consolidated Results of Operations
(dollar amounts in thousands, except per share data)Total investment income for the three month periods ended December 31, 2020 and September 30, 2020 was $43,514 and $42,784, respectively. This $730 net increase was primarily due to an increase in income recognized from OID accretion from prepayments, higher fee income, and an increase in total dividends from the credit funds. This was partially offset by lower interest income from a lower weighted average principal, which was primarily due to the contribution of assets to Credit Fund II.Total expenses for the three month periods ended December 31, 2020 and September 30, 2020 were $21,605 and $21,550, respectively, a net increase of $55.During the three month period ended December 31, 2020, the Company recorded a net realized and unrealized depreciation gain of $16,254. This was primarily driven by continued tightening of market yields resulting in increases in fair value, as well as the successful exit of our investment in Hydrofarm at par.Liquidity and Capital Resources
(dollar amounts in thousands, except per share data)As of December 31, 2020, the Company had cash and cash equivalents of $68,419, notes payable and senior unsecured notes (before debt issuance costs) of $449,200 and $190,000, respectively, and secured borrowings outstanding of $347,949. As of December 31, 2020, the Company had $340,051 of remaining unfunded commitments and $207,365 available for additional borrowings under its revolving credit facility, subject to leverage and borrowing base restrictions. During the three months ended December 31, 2020, the Company repaid all amounts outstanding under the revolving credit facility of its wholly owned subsidiary, and the facility was terminated.DividendOn February 22, 2021, the Board of Directors declared a regular quarterly dividend of $0.32 plus a supplemental dividend of $0.05, which is payable on April 16, 2021 to stockholders of record on March 31, 2021.On December 31, 2020, the Company declared and paid a dividend on the Preferred Stock for the period from October 1, 2020 to December 31, 2020 in the amount of $0.438 per Preferred Share to the holder of record on December 31, 2020.Conference CallThe Company will host a conference call at 11:00 a.m. EST on Wednesday, February 24, 2021 to discuss these quarterly financial results. The call and webcast will be available on the TCG BDC website at tcgbdc.com. The call may be accessed by dialing +1 (866) 394-4623 (U.S.) or +1 (409) 350-3158 (international) and referencing “TCG BDC Financial Results Call.” The conference call will be webcast simultaneously via a link on TCG BDC’s website and an archived replay of the webcast also will be available on the website soon after the live call for 21 days.TCG BDC, INC.
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(dollar amounts in thousands, except per share data)TCG BDC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollar amounts in thousands, except per share data)
(unaudited)About TCG BDC, Inc.Web: tcgbdc.comContacts:
