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Triangle Capital Reports Slightly Ugly Q4/2016

|Includes: Triangle Capital (TCAP)

"What we have here is a failure to communicate". The analysts are projecting one thing - and TCAP is doing something different. That shows up in an NII projection that was not in line with a BDC that is de-risking their portfolio.

NII was a big miss. NII failed to cover the dividend - the recently reduced dividend. NAV fell again - and fell too much. The portfolio weighted average yield fell (will is good news in the long run). There was way too much in losses in the portfolio. The percentage of non-accruals fell - but you expect that when one takes a boat load of markdowns. I do see progress - but I see an ugly adjustment period.

TCAP also fails to report most Q4 numbers. It reports annual numbers.

The Yahoo projections:

  Current Qtr. (Mar 2017) Next Qtr. (Jun 2017) Current Year Next Year
No. of Analysts 10 10 11 2
Avg. Estimate 0.45 0.46 1.89 2.08
Low Estimate 0.42 0.44 1.84 2.05
High Estimate 0.47 0.48 1.95 2.10
Year Ago EPS 0.29 0.49 1.62 1.89
Revenue Estimate Current Qtr. (Mar 2017) Next Qtr. (Jun 2017) Current Year Next Year
No. of Analysts 8 8 9 2
Avg. Estimate 30.34M 31.4M 128.87M 153.35M
Low Estimate 29.44M 29.84M 126M 153M
High Estimate 31.55M 32.71M 135M 153.7M
Year Ago Sales 26.66M 28.42M 113.68M 128.87M
Sales Growth (year/est) 13.80% 10.50% 13.40% 19.00%

My spreadsheets:

  Q4-16 Q3-16 Q2-16 Q1-16 Q4-15 Q3-15 Q2-15 Q1-15 Q4-14 Q3-14 Q2-14 Q1-14 Q4-13  
Realized & Unrealized Gains 4 -7.951 -9.652 2.825 -1.039 -2.597 -12.542 -15.475 -24.106 10.123 -1.074   5.906
Realized & Unrealized Gains/share 4 -0.2086 -0.2874 0.845 -0.0312 -0.0781 -0.3789 -0.5197 -0.7926 0.3627 -0.0386   0.2138
Non-Accrual Assets as a Percentage of Total Portfolio
Quarter at Cost at Fair Value
Q4-16 3.5% 1.5%
Q3-16 3.9% 2.1%
Q2-16 5.6% 2.2%
Q1-16 3.6% 0.9%
Q4-15 2.0% 0.7%
Q3-15 2.0% 0.7%
Q2-15 3.1% 1.6%
Q1-15 6.1% 2.7%
Q4-14 5.8% 3.0%
Q3-14 8.3% 3.8%
  Q4-16 Q3-16 Q2-16 Q1-16 Q4-15 Q3-15 Q2-15 Q1-15 Q4-14 Q3-14 Q2-14 Q1-14 Q4-13
Interest income x 20.955 21.110 21.761 x 22.595 21.232 21.150 x 21.058 17.494 20.230 x
Dividend income x 0.412 0.651 -1.087 x 0.582 0.327 1.845 x 0.970 0.996 x x
Fee income x 2.015 2.779 2.034 x 3.746 2.435 3.834 x 1.339 2.247 x x
PIK income x 3.896 3.826 3.911 x 3.862 3.764 3.897 x 3.756 4.147 3.734 x
Interest on cash x 0.135 0.055 0.037 x 0.058 0.067 0.053 x 0.062 0.057 0.075 x
Total investment income 31.190 27.412 28.422 26.656 31.839 30.843 27.825 30.780 30.657 24.876 24.940 24.039 21.991
TCAP began the separation of dividend and fee income from interest income in Q2-15

How do you have negative dividend income? The negative in Q1-16 dividend income includes a negative true-up adjustment of $1.3 million related to a portfolio company distribution that was received in 2015. In 2015, Triangle received information that indicated the tax character of the distribution was 100% dividend income, but received updated information in 2016 indicating that a majority of the distribution was a return of capital, which necessitated the adjustment.

  Q4-16 Q3-16 Q2-16 Q1-16 Q4-15 Q3-15 Q2-15 Q1-15 Q4-14 Q3-14 Q2-14 Q1-14 Q4-13
Total investment income 31.190 27.412 28.422 26.656 31.839 30.843 27.825 30.780 30.657 24.876 24.940 24.039 21.991
Net investment income 17.109 15.831 16.339 9.598 19.176 18.518 16.166 17.769 18.098 15.417 14.658 13.843 13.244
Investments @ fair value 1.038 0.948 0.931 0.940 0.977 0.968 0.885 0.877 0.887 0.842 0.736 0.690 0.664
Wt Av Share Count 40.401 38.115 33.548 33.480 33.348 33.275 33.235 33.099 32.950 30.412 27.910 27.805 27.697
TII/share $0.7720 $0.7192 $0.8472 $0.7962 $0.9547 $0.9269 $0.8372 $0.9299 $0.9304 $0.8180 $0.8936 $0.8646 $0.7940
NII/share $0.4235 $0.4153 $0.4870 $0.2867 $0.5750 $0.5565 $0.4864 $0.5368 $0.5493 $0.5069 $0.5252 $0.4979 $0.4782
NAV/share $15.13 $15.33 $14.82 $15.02 $15.23 $15.48 $15.47 $15.64 $16.11 $16.64 $15.95 $15.72 $16.10
Wt Av Yield 11.7% 12.3% 12.3% 12.3% 12.2% 12.3% 12.6% 12.8% 13.0% 13.2% 13.8% 13.9% 14.1%
  Q4-16 Q3-16 Q2-16 Q1-16 Q4-15 Q3-15 Q2-15 Q1-15 Q4-14 Q3-14 Q2-14 Q1-14
Credit Facility 127.011 91.428 152.070 128.109 131.257 120.677 88.758 20.323 62.620 10.755 31.256 10.861
Notes 162.755 162.599 162.444 162.292 162.142 161.995 161.850 229.426 145.646 149.500 149.500 149.500
SBA Debentures 245.390 245.163 244.938 213.070 220.649 220.413 220.172 219.933 219.697 224.732 193.376 193.330
Total Debt 535.156 499.190 559.452 503.471 514.048 503.085 470.780          

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