CMFN - CM Finance Inc Reports Results for its Fiscal First Quarter Ended September 30 2018
NEW YORK, Nov. 07, 2018 (GLOBE NEWSWIRE) -- CM Finance Inc (NASDAQ: CMFN) (“CMFN” or “the Company”) announced its financial results for its fiscal first quarter ended September 30, 2018.
HIGHLIGHTS
- CMFN made thirteen new investments in seven portfolio companies during the quarter with a total cost of $53.7mm. The weighted average yield of debt investments made in the quarter was 9.24%
- Four investments were realized during the quarter, two fully realized and two partially realized, with a weighted average internal rate of return (“IRR”) of 11.76%
- The weighted average yield on debt investments, at cost, decreased to 10.90%, a decrease of 29 basis points compared to 11.19% as of June 30, 2018
- Net asset value (“NAV”) per share decreased by 1.27% to $12.41, compared to $12.57 as of June 30, 2018
| Portfolio results, as of September 30, 2018: |
| Total assets |
| $341.4mm |
| Investment portfolio, at fair value |
| $330.7mm |
| Net assets |
| $169.4mm |
| Weighted average yield on debt investments, at cost |
| 10.90% |
| Net asset value per share |
| $12.41 |
| Portfolio activity in the current quarter: |
| Number of new investments |
| 13 |
| Total capital invested |
| $53.7mm |
| Proceeds from repayments, sales, and amortization |
| $14.4mm |
| Number of portfolio companies, end of period |
| 30 |
| Net investment income (NII) |
| $3.4mm |
| Net investment income per share |
| $0.25 |
| Net increase in net assets from operations |
| $1.4mm |
| Net increase in net assets from operations per share |
| $0.10 |
| Quarterly per share distribution paid on October 5, 2018 |
| $0.25 |
Mr. Michael C. Mauer, the Company’s Chief Executive Officer, said “We made significant progress in diversifying our portfolio this quarter, increasing our portfolio company count to 30 while decreasing our average position size. We also made an active decision to invest in first lien loans, increase the percentage of our portfolio invested in first lien from 52.1% to 61.5%. In a challenging technical environment, we believe taking a conservative approach to risk is prudent.”
On November 6, 2018, the Company’s Board of Directors declared a distribution for the quarter ending December 31, 2018 of $0.25 per share, payable on January 3, 2019, to shareholders of record as of December 14, 2018. This represents a 12.42% yield on the Company’s $8.05 share price as of the close on November 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 seven portfolio companies. These investments totaled $53.7.mm at cost and were made at a weighted average yield of 9.24%. The Company also realized $14.4mm of repayments, sales, and amortization, primarily related to the sales of International Wire Group, Inc. and U.S. Lumber and the repayments of Intermedia Holdings, Inc and Zinc Acquisition Holdings, LP. Realized and unrealized gains accounted for a decrease in the Company’s net investments of approximately $2.0mm, or $0.15 per share. The total net increase in net assets resulting from operations for the quarter was $1.4mm, or $0.10 per share.
As of September 30 2018, the Company’s investment portfolio consisted of investments in 30 portfolio companies, of which 61.5% were first lien investments, 34.7% were second lien investments, less than 0.01% were in unsecured debt investments, 3.6% were unitranche loans, and 0.2% were in equities, warrants and other positions. The Company’s debt portfolio consisted of 98.2% floating rate investments and 1.8% fixed rate investments. As of September 30, 2018, the Company had no investments on non-accrual status.
Capital Resources
As of Septmeber 30, 2018, the Company had $2.7mm in cash, $1.4mm in restricted cash and $38.1mm of capacity under its revolving credit facility with UBS AG, London Branch.
Share Repurchases
During the quarter, the Company repurchased 11,215 shares of common stock on the open market for $101,195 (including commissions).
Subsequent Events
Subsequent to the three months ended September 30, 2018 through November 5, 2018, we invested $18.2 million in new and
existing portfolio companies and received repayment or sales proceeds of $46.4 million
| CM Finance Inc and Subsidiaries |
| Consolidated Statements of Assets and Liabilities |
| September 30, 2018 |
| (Unaudited) |
| June 30, 2018 |
| Assets |
| Non-controlled, non-affiliated investments, at fair value (amortized cost of |
| $ |
| 330,694,472 |
| $ |
| 293,592,013 |
| $341,475,968 and $ 302,647,282, respectively) |
| Derivatives, at fair value (cost of $0 and $0, respectively) |
| 878,000 |
| 229,918 |
| Cash |
| 2,674,298 |
| 5,620,441 |
| Cash, restricted |
| 1,448,718 |
| 2,706,273 |
| Receivable for investments sold |
| 1,904,507 |
| 7,751,875 |
| Interest receivable |
| 3,562,036 |
| 4,011,450 |
| Deferred offering costs |
| 121,922 |
| 121,922 |
| Other receivables |
| - |
| 245,550 |
| Prepaid expenses and other assets |
| 160,451 |
| 255,139 |
| Total Assets |
| $ |
| 341,444,404 |
| $ |
| 314,534,581 |
| Liabilities |
| Notes payable: |
| Term loan |
| $ |
| 102,000,000 |
| $ |
| 102,000,000 |
| Revolving credit facility |
| 11,843,470 |
| 17,823,000 |
| Baby bonds payable: |
| 34,500,000 |
| - |
| Deferred debt issuance costs |
| (2,741,644 |
| ) |
| (1,953,771 |
| ) |
| Notes payable, net |
| 145,601,826 |
| 117,869,229 |
| Payable for investments purchased |
| 15,159,326 |
| 12,569,450 |
| Dividend payable |
| 3,412,531 |
| 3,417,848 |
| Deferred financing costs payable |
| 2,071,167 |
| 2,071,167 |
| Income-based incentive fees payable |
| 2,409,291 |
| 2,294,678 |
| Base management fees payable |
| 1,351,855 |
| 1,319,853 |
| Accrued provision for taxes |
| - |
| 2,579,337 |
| Derivatives, at fair value (cost $0 and $0, respectively) |
| 878,000 |
| 229,918 |
| Interest payable |
| 863,539 |
| 303,153 |
| Directors' fees payable |
| 97,673 |
| 99,296 |
| Accrued expenses and other liabilities |
| 104,339 |
| 257,986 |
| Total Liabilities |
| 171,949,547 |
| 143,011,915 |
| Commitments and Contingencies (Note 6) |
| Net Assets |
| Common stock, par value $0.001 per share (100,000,000 shares authorized, |
| 13,650,124 and 13,649,504 shares issued and outstanding, respectively) |
| 13,650 |
| 13,649 |
| Additional paid-in capital |
| 198,706,416 |
| 198,700,999 |
| Accumulated net realized loss |
| (21,345,472 |
| ) |
| (21,087,280 |
| ) |
| Undistributed (distributions in excess of) net investment income |
| 2,947,532 |
| 2,950,567 |
| Net unrealized depreciation on investments |
| (10,778,532 |
| ) |
| (9,055,269 |
| ) |
| Less Treasury Stock |
| (101,195 |
| ) |
| - |
| Total Net Assets |
| 169,442,399 |
| 171,522,666 |
| Total Liabilities and Net Assets |
| $ |
| 341,391,946 |
| $ |
| 314,534,581 |
| Net Asset Value Per Share |
| $ |
| 12.41 |
| $ |
| 12.57 |
| See notes to unaudited consolidated financial statements. |
| CM Finance Inc and Subsidiaries |
| Consolidated Statements of Operations (Unaudited) |
| For the three months ended September 30, |
| 2018 |
| 2017 |
| Investment Income: |
| Interest income |
| $ |
| 7,654,840 |
| $ |
| 6,426,053 |
| Payment in-kind interest income |
| 413,620 |
| 292,478 |
| Dividend income |
| 31,275 |
| - |
| Payment in-kind dividend income |
| - |
| - |
| Other fee income |
| 155,155 |
| 9,879 |
| Total investment income |
| 8,254,890 |
| 6,728,410 |
| Expenses: |
| Interest expense |
| 2,264,857 |
| 1,437,829 |
| Base management fees |
| 1,351,855 |
| 1,153,880 |
| Income-based incentive fees |
| 120,321 |
| - |
| Provision for tax expense |
| - |
| - |
| Professional fees |
| 232,800 |
| 209,041 |
| Allocation of administrative costs from advisor |
| 338,063 |
| 127,229 |
| Amortization of deferred debt issuance costs |
| 195,377 |
| 125,202 |
| Insurance expense |
| 84,440 |
| 85,225 |
| Directors' fees |
| 101,250 |
| 99,667 |
| Custodian and administrator fees |
| 7,500 |
| 91,996 |
| Offering expense |
| 51,750 |
| 186,513 |
| Other expenses |
| 119,181 |
| 195,652 |
| Total expenses |
| 4,867,394 |
| 3,712,234 |
| Waiver of income-based incentive fees |
| (22,000 |
| ) |
| - |
| Net expenses |
| 4,845,394 |
| 3,712,234 |
| Net investment income |
| 3,409,496 |
| 3,016,176 |
| Net realized and unrealized gain/(loss) on investments: |
| Net realized loss from investments |
| (258,192 |
| ) |
| (7,380,690 |
| ) |
| Net change in unrealized appreciation (depreciation) in value of investments |
| (1,723,263 |
| ) |
| 7,500,231 |
| Total realized and unrealized gain on investments |
| (1,981,455 |
| ) |
| 119,541 |
| Net increase (decrease) in net assets resulting from operations |
| $ |
| 1,428,041 |
| $ |
| 3,135,717 |
| Basic and diluted: |
| Net investment income per share |
| $ |
| 0.25 |
| $ |
| 0.22 |
| Earnings (loss) per share |
| $ |
| 0.10 |
| $ |
| 0.23 |
| Weighted average shares of common stock outstanding |
| 13,650,097 |
| 13,689,885 |
| Distributions paid per common share |
| $ |
| 0.25 |
| $ |
| 0.25 |
| 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