NEW YORK, Feb. 06, 2019 (GLOBE NEWSWIRE) — CM Finance Inc (NASDAQ: CMFN) (“CMFN” or “the Company”) announced its financial results for its fiscal second quarter ended December 31, 2018.
HIGHLIGHTS
- CMFN made investments in nine portfolio companies with a total cost of $50.1mm. The weighted average yield of debt investments made in the quarter was 10.77%
- Eight investments were fully realized, and one investment had a significant partial realization. Realizations during the quarter had a weighted average internal rate of return (“IRR”) of 12.21%
- The weighted average yield on debt investments, at cost, increased 18 basis points to 11.08% compared to 10.90% as of September 30, 2018
- Net asset value (“NAV”) per share decreased by 7.41% to $11.49, compared to $12.41 as of September 30, 2018
| Portfolio results, as of December 31, 2018: | ||
| Total assets | $302.0mm | |
| Investment portfolio, at fair value | $283.3mm | |
| Net assets | $156.4mm | |
| Weighted average yield on debt investments, at cost | 11.08% | |
| Net asset value per share | $11.49 | |
| Portfolio activity in the current quarter: | ||
| Number of new investments | 14 | |
| Total capital invested | $50.1mm | |
| Proceeds from repayments, sales, and amortization | $84.5mm | |
| Number of portfolio companies, end of period | 29 | |
| Net investment income (NII) | $3.7mm | |
| Net investment income per share | $0.25 | |
| Net decrease in net assets from operations | $9.4mm | |
| Net decrease in net assets from operations per share | $0.69 | |
| Quarterly per share distribution paid on October 5, 2018 | $0.25 |
Mr. Michael C. Mauer, the Company’s Chief Executive Officer, said, “While the fair value of the portfolio declined during the quarter, we believe that we take a prudent and conservative approach to both investing and valuing our portfolio and we see significant opportunity as we look forward in 2019. We have fully written down our positions in Trident USA Health Services, LLC, and have no other positions on non-accrual today. Our team continues to reposition our portfolio, currently emphasizing senior secured positions, building a diversified, resilient portfolio that will perform throughout the cycle. We are very happy with the progress we have made.”
On February 5, 2019, the Company’s Board of Directors declared a distribution for the quarter ending March 31, 2019 of $0.25 per share, payable on April 4, 2019, to shareholders of record as of March 15, 2019. This represents a 12.5% yield on the Company’s $8.00 share price as of the close on February 5, 2018. Distributions may include net investment income, capital gains and/or return of capital; however, the Company does not expect the distribution to be comprised of a return of capital. The tax status of distributions will be determined at the end of the taxable year.
Portfolio and Investment Activities
During the quarter, the Company made investments in nine portfolio companies. These investments totaled $50.1mm at cost and were made at a weighted average yield of 10.77%. The Company also realized $84.5mm of repayments, sales, and amortization, primarily related to the repayments of American Gaming Systems Inc., Montrose Environmental Group, Inc., FPC Holdings, Inc, and Hostway Corp. Additionally, we had a partial realization of our investments in U.S. Well Services, LLC, including the full realization of our position in U.S. Well Services, LLC’s revolving credit facility. Realized and unrealized gains and losses accounted for a decrease in the Company’s net investments of approximately $13.1mm, or $0.96 per share. The total net decrease in net assets resulting from operations for the quarter was $9.4mm, or $0.69 per share.
As of December 31, 2018, the Company’s investment portfolio consisted of investments in 29 portfolio companies, of which 63.7% were first lien investments, 31.7% were second lien investments, 4.1% were unitranche loans, and 0.5% were in equities, warrants and other positions. The Company’s debt portfolio consisted of 94.4% floating rate investments and 5.2% fixed rate investments. As of December 31, 2018, the Company had one investment on non-accrual status, Trident USA Health Services, LLC.
Capital Resources
As of December 31, 2018, the Company had $6.2mm in cash, $6.0mm in restricted cash and $50.0mm of capacity under its revolving credit facility with UBS AG, London Branch.
Share Repurchases
During the quarter, the Company repurchased 30,999 shares of common stock on the open market for $257,336 (including commissions).
Subsequent Events
Subsequent to December 31, 2018 and through February 5, 2019, we invested $23.4 million in new and existing portfolio companies, and received repayment or sales proceeds of $29.0 million
| CM Finance Inc and Subsidiaries | |||||||
| Consolidated Statements of Assets and Liabilities | |||||||
| December 31, 2018 | June 30, 2018 | ||||||
| Assets | |||||||
| Non-controlled, non-affiliated investments, at fair value (amortized cost of $307,290,045 and $ 302,647,282, respectively) | $ | 283,335,302 | $ | 293,592,013 | |||
| Derivatives, at fair value (cost of $0 and $0, respectively) | 94,380 | 229,918 | |||||
| Cash | 6,197,259 | 5,620,441 | |||||
| Cash, restricted | 5,981,651 | 2,706,273 | |||||
| Receivable for investments sold | 397,146 | 7,751,875 | |||||
| Interest receivable | 3,282,163 | 4,011,450 | |||||
| Deferred offering costs | 121,922 | 121,922 | |||||
| Other receivables | 2,515,625 | 245,550 | |||||
| Prepaid expenses and other assets | 58,954 | 255,139 | |||||
| Total Assets | $ | 301,984,402 | $ | 314,534,581 | |||
| Liabilities | |||||||
| Notes payable: | |||||||
| Term loan | $ | 102,000,000 | $ | 102,000,000 | |||
| Revolving credit facility | – | 17,823,000 | |||||
| Baby bonds payable: | 34,500,000 | – | |||||
| Deferred debt issuance costs | (2,494,517 | ) | (1,953,771 | ) | |||
| Notes payable, net | 134,005,483 | 117,869,229 | |||||
| Payable for investments purchased | 2,985,000 | 12,569,450 | |||||
| Dividend payable | 3,410,713 | 3,417,848 | |||||
| Deferred financing costs payable | 1,037,000 | 2,071,167 | |||||
| Income-based incentive fees payable | 1,566,513 | 2,294,678 | |||||
| Base management fees payable | 1,405,297 | 1,319,853 | |||||
| Accrued provision for taxes | – | 2,579,337 | |||||
| Derivatives, at fair value (cost $0 and $0, respectively) | 94,380 | 229,918 | |||||
| Interest payable | 845,566 | 303,153 | |||||
| Directors’ fees payable | 93,448 | 99,296 | |||||
| Accrued expenses and other liabilities | 104,694 | 257,986 | |||||
| Total Liabilities | 145,548,094 | 143,011,915 | |||||
| Commitments and Contingencies (Note 6) | |||||||
| Net Assets | |||||||
| Common stock, par value $0.001 per share (100,000,000 shares authorized, 13,613,116 and 13,649,504 shares issued and outstanding, respectively) | 13,613 | 13,649 | |||||
| Additional paid-in capital | 198,392,175 | 198,700,999 | |||||
| Accumulated net realized loss | (21,270,472 | ) | (21,087,280 | ) | |||
| Undistributed (distributions in excess of) net investment income | 3,255,732 | 2,950,567 | |||||
| Net unrealized depreciation on investments | (23,954,740 | ) | (9,055,269 | ) | |||
| Total Net Assets | 156,436,308 | 171,522,666 | |||||
| Total Liabilities and Net Assets | $ | 301,984,402 | $ | 314,534,581 | |||
| Net Asset Value Per Share | $ | 11.49 | $ | 12.57 | |||
| See notes to unaudited consolidated financial statements. | |||||||
| CM Finance Inc and Subsidiaries | ||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||
| For the three months ended December 31, |
For the six months ended December 31, |
|||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||
| Investment Income: | ||||||||||||||
| Interest income | $ | 8,481,251 | $ | 7,538,152 | $ | 16,136,091 | $ | 13,964,204 | ||||||
| Payment in-kind interest income | 540,308 | 722,039 | 953,928 | 1,014,517 | ||||||||||
| Dividend income | – | – | 31,275 | – | ||||||||||
| Payment in-kind dividend income | – | 189,583 | – | 189,583 | ||||||||||
| Other fee income | 277,365 | – | 432,520 | 9,879 | ||||||||||
| Total investment income | 9,298,924 | 8,449,774 | 17,553,814 | 15,178,183 | ||||||||||
| Expenses: | ||||||||||||||
| Interest expense | 2,156,537 | 1,601,261 | 4,421,394 | 3,039,090 | ||||||||||
| Base management fees | 1,405,297 | 1,161,353 | 2,757,152 | 2,315,233 | ||||||||||
| Income-based incentive fees | 753,721 | 921,782 | 874,042 | 906,758 | ||||||||||
| Provision for tax expense | 12,946 | – | 12,946 | – | ||||||||||
| Professional fees | 233,528 | 236,024 | 466,328 | 445,064 | ||||||||||
| Allocation of administrative costs from advisor | 341,633 | 184,561 | 679,696 | 311,790 | ||||||||||
| Amortization of deferred debt issuance costs | 195,377 | 179,514 | 390,754 | 304,716 | ||||||||||
| Insurance expense | 84,440 | 85,225 | 168,880 | 205,439 | ||||||||||
| Directors’ fees | 101,250 | 99,000 | 202,500 | 198,667 | ||||||||||
| Custodian and administrator fees | 7,500 | 113,443 | 15,000 | 170,451 | ||||||||||
| Offering expense | 51,750 | – | 103,500 | 186,513 | ||||||||||
| Other expenses | 236,033 | 180,482 | 355,214 | 391,158 | ||||||||||
| Total expenses | 5,580,012 | 4,762,645 | 10,447,406 | 8,474,879 | ||||||||||
| Waiver of income-based incentive fees | – | – | (22,000 | ) | – | |||||||||
| Net expenses | 5,580,012 | 4,762,645 | 10,425,406 | 8,474,879 | ||||||||||
| Net investment income | 3,718,912 | 3,687,129 | 7,128,408 | 6,703,304 | ||||||||||
| Net realized and unrealized gain/(loss) on investments: | ||||||||||||||
| Net realized gain (loss) from investments | 75,000 | – | (183,192 | ) | (7,380,690 | ) | ||||||||
| Net change in unrealized appreciation (depreciation) in value of investments | (13,176,208 | ) | 1,172,018 | (14,899,471 | ) | 8,672,249 | ||||||||
| Total realized and unrealized gain (loss) on investments | (13,101,208 | ) | 1,172,018 | (15,082,663 | ) | 1,291,559 | ||||||||
| Net increase (decrease) in net assets resulting from operations | ||||||||||||||
| $ | (9,382,296 | ) | $ | 4,859,147 | $ | (7,954,255 | ) | $ | 7,994,863 | |||||
| Basic and diluted: | ||||||||||||||
| Net investment income per share | $ | 0.27 | $ | 0.27 | $ | 0.52 | $ | 0.49 | ||||||
| Earnings per share | $ | (0.69 | ) | $ | 0.35 | $ | (0.58 | ) | $ | 0.58 | ||||
| Weighted average shares of common stock outstanding | 13,638,869 | 13,690,480 | 13,644,483 | 13,690,182 | ||||||||||
| Distributions paid per common share | $ | 0.25 | $ | 0.25 | $ | 0.50 | $ | 0.50 | ||||||
| See notes to unaudited consolidated financial statements. | ||||||||||||||
About CM Finance Inc
The Company is an externally-managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940. The Company’s investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation through debt and related equity investments by targeting investment opportunities with favorable risk-adjusted returns. The Company seeks to invest primarily in middle-market companies that have annual revenues of at least $50mm and earnings before interest, taxes, depreciation and amortization of at least $15mm. The Company’s investment activities are managed by its investment adviser, CM Investment Partners LLC. To learn more about CM Finance Inc, please visit www.cmfn-inc.com.
Forward-Looking Statements
Statements included herein may contain “forward-looking statements,” which relate to future performance or financial condition. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of assumptions, risks and uncertainties, which change over time. Actual results may differ materially from those anticipated in any forward-looking statements as a result of a number of factors, including those described from time to time in filings by the Company with the Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein except as required by law. All forward-looking statements speak only as of the date of this press release.
Contacts
CM Finance Inc
Investor Relations
Email: investorrelations@cmipllc.com
Phone: 212-257-5199