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GARS Reports Ugly Q4/15

|Includes: Garrison Capital (GARS)

Garrison Capital's earnings releases are incomplete - but it also reports a good earnings supplemental - and that information is not yet available. GARS had a NII beat on a very low ball projection. The NAV fall is huge. Non-accrual assets jumped. TII tanked.

GARS Reports NII of $0.41/share compared to a Dividend of $0.35/quarter
What They Earned Garrison Capital reported for Q4-15 Total Investment Income (TII) of $11.480 million ($0.xx/share). Net Investment Income was $6.842 million ($0.41/share). The non-adjusted NII/TII ratio was 59.60%. The Net Increase in Net Assets Resulting from Operations was $10.267 million (-$0.62/share) - due to having $17.109 million in realized plus unrealized losses in the quarter. GARS's NAV per share was $13.98 compared to $14.92 last quarter. GARS - like BKCC - appears to have uneven incentive fee expenses. During Q4 GARS repurchased $3.3 million, or 251,185 shares, at a weighted average price of $13.19 per share and an average (11.7)% discount to net asset value - with this action adding approx. $0.02/share to NAV.

The Yahoo Finance consensus analyst projections:

Earnings Est Current Qtr.
Dec 15
Next Qtr.
Mar 16
Current Year
Dec 15
Next Year
Dec 16
Avg. Estimate 0.37 0.38 1.75 1.57
No. of Analysts 10.00 9.00 8.00 10.00
Low Estimate 0.35 0.34 1.73 1.41
High Estimate 0.41 0.43 1.79 1.83
Revenue Est Current Qtr.
Dec 15
Next Qtr.
Mar 16
Current Year
Dec 15
Next Year
Dec 16
Avg. Estimate 12.62M 12.94M 52.02M 54.06M
No. of Analysts 7 7 7 7
Low Estimate 12.28M 12.50M 49.20M 52.09M
High Estimate 13.04M 13.59M 52.90M 58.00M
Year Ago Sales 13.38M 13.48M 50.46M 52.02M

My incomplete GARS spreadsheets:

blank Q4-15 Q3-15 Q2-15 Q1-15 Q4-14 Q3-14 Q2-14 Q1-14 Q4-13 Q3-13 Q2-13 Q1-13

Interest income x 12.285 12.276 12.958   12.277 11.882 10.098 11.382 9.338 7.611 5.473
Other income x 0.921 0.875 0.521   0.875 0.965 0.336        

In 2014, other income (amendment and prepayment + acc. amort.) = $2,822,972 included with interest. In 2013, $1,146,057
  Q4-15 Q3-15 Q2-15 Q1-15 Q4-14 Q3-14 Q2-14 Q1-14 Q4-13 Q3-13 Q2-13 Q1-13

Realized Gains -0.373 -2.301 -8.521 -0.490 -0.192 1.198 0.800 8.897 -0.729 -5.690 0.585 -5.936
Unrealized Gains/share -16.736 -6.185 5.221 -4.220 -1.021 -2.378 2.280 -1.109 2.067 6.529 1.165 6.173
Total Gains -17.109 -8.485 -3.300 -4.710 -1.213 -1.180 3.080 7.788 1.338 0.839 1.750 0.236
Total Gains/share x -0.5063 -0.20 -0.28 -0.07 -0.07 0.18 0.46 0.08 0.06 0.13 0.02

Incentive Fees x -0.083 1.017 0.695 1.586 1.027 2.190 3.606        
GARS reports incentive fees on one line - it has an income and cap gain component. Incentive fees do not always correlate with cap gains.
  Q4-15 Q3-15 Q2-15 Q1-15 Q4-14 Q3-14 Q2-14 Q1-14 Q4-13 Q3-13 Q2-13 Q1-13

Total investment income 11.480 13.206 13.152 13.479 13.385 12.944 12.848 11.282 11.382 9.338 7.611 5.473
Net investment income 6.842 8.244 7.176 7.682 6.881 6.261 5.979 2.889 5.334 5.914 5.047 3.040
Investments @ fair value x 0.408 0.435 0.456 0.468 0.449 0.459 0.455 0.429 0.411 0.418 0.279
Wt Av Share Count x 16.759 16.759 16.759 16.759 16.759 16.759 16.759 16.759 14.672 13.611 10.499
TII/share x $0.7880 $0.7848 $0.8043 $0.7987 $0.7724 $0.7666 $0.6732 $0.6792 $0.6365 $0.5628 $0.5213
NII/share $0.41 $0.4919 $0.4282 $0.4584 $0.4106 $0.3736 $0.3568 $0.1724 $0.3183 $0.4031 $0.3708 $0.2895
NAV/share $13.98 $14.92 $15.29 $15.41 $15.58 $15.59 $15.64 $15.45 $15.16 15.11 15.06 15.67
Weighted Av Yield 10.8% 10.9% 11.0% 10.8% 10.5% 10.0% 10.4% 10.5% 9.82% 9.5% 8.8% 8.91%
Weighted Av Debt/EBITDA 3.6x 3.7x 3.7x 3.6x 3.6x 3.4x 3.5x 3.5x 3.6x 3.7x 3.8x  

NII/TII Ratio 59.60% 62.43% 54.56% 56.99% 51.41% 48.37% 46.54% 25.61% 46.86% 63.33% 66.31% 55.54%

NII/TII ratios improved in 2015 due to portfolio losses which shrank incentive fee charges from expenses. They improved for bad reasons.
In Q1-14 expenses of $8.393 million contained an atypical $3.606 million ($0.2152/share) in incentive fees which increased expenses.
2014 NII of .1724 + .3568 + .3736 + .4106 = 1.3134 compared to $1.31 shown at Yahoo. This explains the projection jump for 2015.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.