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Fidus Investment Corporation Announces Quarterly Dividend
Increase to $0.38 Per Share and Second Quarter 2012 Financial
Results
GlobeNewswire
2012-08-03
EVANSTON, Ill., Aug. 2, 2012 (GLOBE NEWSWIRE) -- Fidus Investment
Corporation (Nasdaq:FDUS) ("Fidus" or the "Company") today announced
its financial results for the second quarter of 2012 ended June 30,
2012. Fidus provides customized debt and equity financing solutions
primarily to lower middle market companies based in the United States.
Second Quarter 2012 Financial Highlights
-- Net asset value of $141.6 million, or $15.02 per share, at June 30, 2012
-- Weighted average yield on debt investments as of June 30, 2012 was 15.5%
-- Total investment income of $7.6 million
-- Net investment income of $3.4 million, or $0.36 per share
-- Net increase in net assets resulting from operations of $4.2 million, or
$0.45 per share
-- Originated $16.4 million of investments
-- Paid quarterly distribution of $0.36 per share on June 27, 2012
Management Commentary
"Market activity grew more robust as the second quarter progressed,"
said Edward Ross, Chief Executive Officer of Fidus Investment
Corporation. "We invested in two new portfolio companies late in June
and another soon after the quarter end that are expected to have a
positive financial impact on third quarter earnings. Reflecting this
outlook, the Board of Directors has increased the quarterly
distribution to $0.38 per share for the third quarter, up $0.02 per
share from the second quarter distribution. We believe we are well
positioned to continue covering our dividend from earnings on a long
term basis.
"Demand for custom-tailored debt and equity financing solutions in the
lower middle market remains strong, giving us ample investment
opportunities to evaluate," continued Mr. Ross. "We remain highly
selective, primarily focused on companies that operate in industries
that we know well, that generate excess free cash flow for debt
service, and have positive outlooks. Our aim is to continue building a
portfolio of stable companies that we believe will perform well over
the long term."
Second Quarter 2012 Financial Results
In June 2011, Fidus closed its initial public offering (the "Offering")
and associated formation transactions. The comparable period for the
second quarter of 2011 consisted of only 10 days of operations as a
publicly traded company, from June 20, 2011 to June 30, 2011, and is
therefore not fully comparable to the second quarter of 2012 ended June
30, 2012.
Total investment income was $7.6 million in the three months ended June
30, 2012, an increase of $2.3 million, or 43.4%, over the $5.3 million
of total investment income for the three months ended June 30, 2011.
This increase was primarily attributable to higher average levels of
outstanding debt investments in the three months ended June 30, 2012
compared to the prior year period.
Total expenses were $4.3 million, an increase of $2.1 million or 98.5%,
over the $2.2 million of total expenses for the three months ended June
30, 2011. The increase in total expenses was attributable to an
increase in all expense categories, including $1.0 million incentive
fee under the new Investment Advisory and Administration Agreements,
higher interest expense due to higher average outstanding balances of
SBA debentures during the most recent quarter and higher costs
associated with being a publicly-traded company.
Net investment income for the three months ended June 30, 2012 was $3.4
million, or $0.36 per share, compared to $3.2 million, or $0.33 per
share, for the corresponding period in 2011.
Total realized loss for the three months ended June 30, 2012 and the
corresponding period in 2011 was zero. Net unrealized appreciation of
$0.8 million in the second quarter ended June 30, 2012, was comprised
of $1.4 million of net unrealized appreciation on equity investments,
partially offset by $0.6 million of net unrealized depreciation on debt
investments. During the three months ended June 30, 2011, Fidus
recorded net unrealized appreciation of $1.4 million. This consisted of
$2.1 million of net unrealized appreciation on equity investments,
partially offset by $0.6 million of net unrealized depreciation on debt
investments.
As a result of the events described above, net increase in net assets
resulting from operations was $4.2 million in the three months ended
June 30, 2012, or $0.45 per share, compared with a net increase in net
assets of $4.6 million, or $0.49 per share, in the second quarter of
2011.
Portfolio and Investment Activities
As of June 30, 2012, we had debt and equity investments in 27 portfolio
companies with a total fair value of $234.1 million, or approximately
106% of cost basis. During the three months ended June 30, 2012, Fidus
made investments of $16.4 million in two new and three existing
portfolio companies and received a partial loan repayment totaling $1.6
million. As of June 30, 2012, the weighted average yield on debt
investments was 15.5%.
Second quarter 2012 investment activity included the following new
portfolio company investments:
-- Lightning Diversion Systems, LLC -- Fidus invested $9.0 million of
senior debt and equity in Lightning Diversion Systems, a leading
provider of aerospace related lightning protection devices.
-- Convergent Resources, Inc. -- Fidus invested $5.5 million of
subordinated debt in Convergent Resources, a leading provider of revenue
cycle management, commercial collection and customer care outsourcing
services to a variety of end markets, including the telecommunications,
utility and healthcare industries.
Investment activity subsequent to quarter end included the following
new portfolio company:
-- On July 10, 2012, the Company purchased $7.5 million of subordinated
notes and warrants in S.B. Restaurant Co., doing business as Elephant
Bar Restaurants, a California-based owner and operator of full service,
casual dining restaurants.
Liquidity and Capital Resources
At June 30, 2012, the Company had $27.6 million in cash and cash
equivalents, including remaining proceeds from the Offering, and $121.3
million in SBA debentures outstanding. The SBA debentures have an
annual weighted average interest rate of 4.8% as of June 30, 2012. As
of June 30, 2012, SBA commitments totaling $150.0 million have been
received, of which $28.8 million were unfunded.
The Company is pleased to announce that on July 30, 2012, it received a
"Green Light" letter from the SBA, inviting Fidus to proceed with an
application for a second small business investment company license. If
approved, the additional license will provide the Company with an
incremental source of attractive long-term debt capital. Fidus has
received no assurance or indication from the SBA that it will receive a
second license, or of the timeframe in which it would receive a
license, should one ultimately be granted.
Increased Third Quarter 2012 Dividend to $0.38 Per Share
The Company announced today that its Board of Directors has increased
the Company's quarterly dividend to $0.38 per share for third quarter
2012, representing an increase of 18.8% over the third quarter of 2011.
The Company's dividend will be payable on September 25, 2012 to
stockholders of record as of September 11, 2012.
When declaring dividends, the Company's Board of Directors reviews
estimates of taxable income available for distribution, which differs
from consolidated income under generally accepted accounting principles
due to (i) changes in unrealized appreciation and depreciation, (ii)
temporary and permanent differences in income and expense recognition,
and (iii) the amount of undistributed taxable income carried over from
a given year for distribution in the following year. The final
determination of 2012 taxable income, as well as the tax attributes for
2012 dividends, will be made after the close of the 2012 tax year. The
final tax attributes for 2012 dividends will generally include ordinary
taxable income but may also include capital gains, qualified dividends
and return of capital.
Fidus has adopted a dividend reinvestment plan ("DRIP") that provides
for reinvestment of dividends on behalf of its stockholders, unless a
stockholder elects to receive cash. As a result, when the Company
declares a cash dividend, stockholders who have not "opted out" of the
DRIP at least three days prior to the dividend payment date will have
their cash dividends automatically reinvested in additional shares of
the Company's common stock. Those stockholders whose shares are held by
a broker or other financial intermediary may receive dividends in cash
by notifying their broker or other financial intermediary of their
election.
Second Quarter 2012 Financial Results Conference Call
Management will host a conference call to discuss the operating and
financial results at 9:00am EDT on Friday, August 3, 2012. To
participate in the conference call, please dial (877) 810-3368
approximately 10 minutes prior to the call. International callers
should dial (914) 495-8561. Please reference conference ID # 12371875.
A live webcast of the conference call will be available at
http://investor.fdus.com/events.cfm. Please access the website 15
minutes prior to the start of the call to download and install any
necessary audio software.
A telephone replay of the conference call will be available from
12:00pm EDT on August 3, 2012 until 11:59pm EDT on September 3, 2012
and may be accessed by calling (855) 859-2056 (domestic dial-in) or
(404) 537-3406 (international dial-in) and reference conference ID #
12371875. An archived replay of the conference call will also be
available in the investor relations section of the company's website.
For a more detailed discussion of the financial and other information
included in this press release, please also refer to the Company's Form
10-Q for the quarterly period ended June 30, 2012 to be filed with the
Securities and Exchange Commission (www.sec.gov) on August 2, 2012.
ABOUT FIDUS INVESTMENT CORPORATION
Fidus Investment Corporation provides customized debt and equity
financing solutions to lower middle market companies, which management
generally defines as U.S. based companies with revenues between $10.0
million and $150.0 million. Fidus's investment objective is to provide
attractive risk-adjusted returns by generating both current income from
debt investments and capital appreciation from equity related
investments. Fidus seeks to partner with business owners, management
teams and financial sponsors by providing customized financing for
change of ownership transactions, recapitalizations, strategic
acquisitions, business expansion and other growth initiatives.
Fidus is an externally managed, closed-end, non-diversified management
investment company that has elected to be treated as a business
development company under the Investment Company Act of 1940, as
amended. In addition, for tax purposes, Fidus intends to elect to be
treated as a regulated investment company, or RIC, under Subchapter M
of the Internal Revenue Code of 1986, as amended, or the Code. Fidus
was formed in February 2011 to continue and expand the business of
Fidus Mezzanine Capital, L.P., which commenced operations in May 2007
and is licensed by the US Small Business Administration as a small
business investment company (SBIC).
The Fidus Investment Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=13927
FORWARD-LOOKING STATEMENTS
This press release may contain certain forward-looking statements. Any
such statements, other than statements of historical fact, are likely
to be affected by other unknowable future events and conditions,
including elements of the future that are or are not under Fidus's
control, and that Fidus may or may not have considered; accordingly,
such statements cannot be guarantees or assurances of any aspect of
future performance. Actual developments and results are highly likely
to vary materially from these estimates and projections of the future
as a result of a number of factors, including those described from time
to time in Fidus's filings with the Securities and Exchange Commission.
Such statements speak only as of the time when made, and Fidus
undertakes no obligation to update any such statement now or in the
future.
FIDUS INVESTMENT CORPORATION
Consolidated Statements of Assets and Liabilities
June 30, December 31,
2012
(unaudited) 2011
------------ ------------
ASSETS
Investments, at fair value
Control investments (cost:
$20,420,177 and $19,916,617,
respectively) $29,844,891 $28,598,962
Affiliate investments (cost:
$51,531,946 and $49,913,338,
respectively) 50,132,504 50,058,243
Non-control/non-affiliate
investments (cost:
$149,151,373 and
$122,709,976, respectively) 154,077,960 126,088,167
------------ ------------
Total investments, at fair
value (cost: $221,103,496 and
$192,539,931, respectively) 234,055,355 204,745,372
Cash and cash equivalents 27,630,427 39,058,516
Interest receivable 2,057,290 1,686,851
Deferred financing costs (net of
accumulated amortization of
$1,346,073 and $1,134,767,
respectively) 3,094,240 2,687,233
Prepaid expenses and other
assets 667,818 465,171
------------ ------------
Total assets 267,505,130 248,643,143
============ ============
LIABILITIES
SBA debentures 121,250,000 104,000,000
Accrued interest payable 1,918,767 1,718,989
Due to affiliates 2,441,474 2,162,160
Accounts payable and other
liabilities 293,671 279,849
------------ ------------
Total liabilities 125,903,912 108,160,998
------------ ------------
Net Assets $141,601,218 $140,482,145
============ ============
ANALYSIS OF NET ASSETS
Common stock, $0.001 par value
(100,000,000 shares authorized,
9,427,021 shares issued and
outstanding) $9,427 $9,427
Additional paid-in capital 138,648,226 138,648,226
Undistributed net investment
income 794,702 422,049
Accumulated net realized loss on
investments (481,937) (481,937)
Accumulated net unrealized
appreciation on investments 2,630,800 1,884,380
------------ ------------
Total net assets $141,601,218 $140,482,145
============ ============
Net asset value per share $15.02 $14.90
============ ============
FIDUS INVESTMENT CORPORATION
Consolidated Statements of Operations (unaudited)
Three Months Ended Six Months Ended June
June 30, 30,
---------------------- ------------------------
2012 2011 2012 2011
---------- ---------- ---------- ------------
Investment Income:
Interest and fee income
Control investments $729,586 $853,890 $1,449,614 $1,673,388
Affiliate investments 1,779,768 1,057,828 3,561,344 1,924,688
Non-control/non-affiliate
investments 4,903,174 3,271,050 9,819,658 6,246,134
---------- ---------- ---------- ------------
Total interest and fee income 7,412,528 5,182,768 14,830,616 9,844,210
Dividend income
Control investments -- 120,300 -- 236,376
Affiliate investments 30,454 -- 60,858 --
Non-control/non-affiliate
investments 151,426 -- 271,928 --
---------- ---------- ---------- ------------
Total dividend income 181,880 120,300 332,786 236,376
Interest on idle funds and
other income 34,130 16,219 61,617 32,464
---------- ---------- ---------- ------------
Total investment income 7,628,538 5,319,287 15,225,019 10,113,050
---------- ---------- ---------- ------------
Expenses:
Interest expense 1,569,250 1,394,767 3,011,864 2,719,052
Base management fee 1,005,306 999,190 1,944,714 2,035,403
Less: management fee offset -- (430,208) -- (430,208)
Incentive fee 1,045,933 -- 1,923,416 --
Administrative service expenses 223,766 22,173 453,142 22,173
Professional fees 156,121 90,677 413,152 170,350
Other general and
administrative expenses 285,454 82,759 501,817 106,121
---------- ---------- ---------- ------------
Total expenses 4,285,830 2,159,358 8,248,105 4,622,891
---------- ---------- ---------- ------------
Net investment income before
income taxes 3,342,708 3,159,929 6,976,914 5,490,159
Income tax expense (benefit) (8,275) -- 5,346 --
---------- ---------- ---------- ------------
Net investment income 3,350,983 3,159,929 6,971,568 5,490,159
---------- ---------- ---------- ------------
Net realized and unrealized gains
(losses) on investments:
Realized loss on
non-control/non-affiliate
investments -- -- -- (7,935,430))
Net change in unrealized
appreciation on investments 848,374 1,437,313 746,420 10,385,661)
---------- ---------- ---------- ------------
Net gain on investments 848,374 1,437,313 746,420 2,450,231
---------- ---------- ---------- ------------
Net increase in net assets from
operations $4,199,357 $4,597,242 $7,717,988 $7,940,390
========== ========== ========== ============
Per common share data: (1)
Net investment income per
share-basic and diluted $0.36 $0.33 $0.74 $0.58
========== ========== ========== ============
Net increase in net assets
resulting from operations per
share-basic and diluted $0.45 $0.49 $0.82 $0.84
========== ========== ========== ============
Dividends paid per share $0.36 n/a $0.70 n/a
========== ========== ========== ============
Weighted average number of shares
outstanding- basic and diluted 9,427,021 9,427,021 9,427,021 9,427,021
========== ========== ========== ============
(1) The weighted average shares outstanding for the three and six months ended
June 30, 2011, are based on the assumption that the number of shares issued in the
Formation Transactions and Offering (including the over-allotment) in June and
July 2011 (9,427,021 shares of common stock) had been issued on January 1, 2011.
CONTACT: Company Contact:
Edward H. Ross
Chief Executive Officer
Fidus Investment Corporation
(847) 859-3940
Investor Relations Contact:
Stephanie Prince/Jody Burfening
LHA
(212) 838-3777
sprince@lhai.com
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