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CPTA Reports Moderately Bad Q1-17

|Includes: Capitala Finance Corp (CPTA)

The NAV has (hyperbole) always been dropping - and that continues. The NII has (hyperbole) always been dropping - and that continues. The NII was projected (by all of the analysts) to have a significant drop. It did. Every NII projection was on target. None of the TII projections were on target. (Strange thing.) CPTA is high PWAY - and has the track record that would support the perception of anyone with an anti-High PWAY bias.

Earnings Estimate from Yahoo Finance:

  Current Qtr. (Mar 2017) Next Qtr. (Jun 2017) Current Year (2017) Next Year (2018)
No. of Analysts 9 9 9 7
Avg. Estimate 0.39 0.40 1.62 1.67
Low Estimate 0.39 0.39 1.59 1.60
High Estimate 0.39 0.41 1.65 1.71
Year Ago EPS 0.47 0.47 1.84 1.62
Revenue Estimate Current Qtr. (Mar 2017) Next Qtr. (Jun 2017) Current Year (2017) Next Year (2018)
No. of Analysts 8 8 9 6
Avg. Estimate 16.06M 16.27M 65.79M 68.43M
Low Estimate 15.29M 15.74M 63.7M 66M
High Estimate 16.6M 16.7M 68M 71.6M
Year Ago Sales 17.45M 16.99M 68.31M 65.79M

What They Own As of March 31, 2017, our portfolio consisted of 51 companies with a fair market value of $532.5 million and a cost basis of $509.3 million. First lien debt investments represented 44.3% of the portfolio, second lien debt investments represented 11.4% of the portfolio, subordinated debt investments represented 25.5% of the portfolio, and equity/warrant investments represented 18.8% of the portfolio, based on fair values at March 31, 2017. On a cost basis, equity investments comprised 10.5% of the portfolio at March 31, 2017. The debt portfolio has a weighted average yield of 13.2% at March 31, 2017. At March 31, 2017, we had debt investments in three portfolio companies on non-accrual status with a fair value and cost basis of $18.7 million and $30.7 million, respectively.

As of December 31, 2016, CPTA's portfolio consisted of 53 companies with a fair market value of $541.6 million and a cost basis of $513.8 million. First lien debt investments represented 41.8% of the portfolio, second lien debt investments represented 13.2% of the portfolio, subordinated debt investments represented 27.8% of the portfolio, and equity/warrant investments represented 17.2% of the portfolio, based on fair values at December 31, 2016. On a cost basis, equity investments comprised 8.9% of the portfolio at December 31, 2016. At December 31, 2016, we had debt investments in three portfolio companies on non-accrual status with a fair value and cost basis of $17.4 million and $29.5 million, respectively. Non-accrual loans, on a fair value and cost basis, represent 3.2% and 5.7%, respectively, of the portfolio at December 31, 2016.

  Q1-17 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 and Unrealized Gains -1.310 1.350 -9.454 -174 -11.610 -16.324 +171 -375 +5,050 -16,248 -3,233 +578 -4,503
Realized and Unrealized Gains/share -0.0825 0.0852 -0.5972 -.0110 -.7355 -1.0345 +.0106 -.0235 +.3892 -1.2524 -.2492 +.0446 -.3471
  Q1-17 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 14.815 16.514 17.357 16.991 17.449 16.547 18.304 15.084 14.041 12.274 11.167 12.526 12.374 7.967
Net investment income 6.191 6.747 7.441 7.431 7.421 7.407 7.787 5.317 4.817 5.067 3.544 5.634 5.721 6.100
Investments @ fair value 0.532 0.542 0.504 0.595 0.600 0.592 0.588 0.565 0.519 0.480 0.445 0.406 391.181 0.365
Wt Av Share Count 15.874 15.853 15.830 15.807 15.786 15.780 16.089 15.958 12.974 12.974 12.974 12.974 12.974 12.974
TII/share $0.9333 $1.0417 $1.0965 $1.0749 $1.1053 $1.0486 $1.1377 $0.9452 $1.0822 $0.9460 $0.8607 $0.9655 $0.9538 $0.6141
NII/share $0.3900 $0.4256 $0.4701 $0.4702 $0.4701 $0.4694 $0.4840 $0.3332 $0.3713 $0.3905 $0.2732 $0.4343 $0.4410 $0.4702
Dividend/share $0.39 $0.39 $0.4701 $0.4701 $0.4701 $0.4701 $0.6201 $0.6201 $0.6201 $0.4701 $0.47 $0.47 $0.47 $0.47
NAV/share $15.71 $15.79 $15.68 $16.28 $16.29 $17.04 $18.04 $17.95 $18.35 $18.56 $19.89 $20.34 $20.33 $20.71
Wt Av Yield 13.20% 13.20% 12.70% 12.50% 12.40% 12.1% 12.6% 11.27% 11.27% 11.60% 11.95% 12.0% 10.44% 10.17%
NII/TII 41.8% 40.8% 42.9% 43.7% 42.5% 44.8% 42.5% 35.3% 34.3% 41.3% 31.7% 45.0% 46.2% 76.6%
Non-performing loans at fair value 18.700 17.374 9.547 8.989 12.745 28.010 10.944 10.530 0 0 7.822 5.560 5.600
PIK Non-performing loans at fair   0 0 0 0 0 9.730 5.740 10.500 10.573 0 0 0
In Q3-16, the 2 loans on non-accrual both had a cash and PIK component. Total non-accruals are $9.547 million
Portfolio net leverage   4.2x 3.8x 3.3x 3.8x 3.8x 3.9x 3.8x 3.4x 3.7x 4.1x 3.7x 3.6x 3.7x
  Q1-17 Q4-16 Q3-16 Q2-16 Q1-16 Q4-15 Q3-15 Q2-15 Q1-15 Q4-14 Q3-14 Q2-14 Q1-14
Debt 321.977 321.443 314.983 356.942 361.554 361.856 303.890 308.783 320.638 308.540 305.638 305.638 192.200
Debt/share 20.2833 20.2765 19.8979 22.5813 22.9035 22.9313 18.8881 19.3497 24.7139 23.7814 23.5577 23.5577 14.8142
Debt/share to NAV 129.11% 128.41% 126.90% 138.70% 140.60% 134.57% 104.70% 107.80% 134.68% 128.13% 118.44% 115.82% 72.87%
Interest expense 4.653 4.772 4.938 5.029 5.023 4.896 4.809 4.681 4.637 4.505 4.268 2.401 2.199
Interest expense/share 0.2931 0.3010 0.3119 0.3181 0.3182 0.3103 0.2989 0.2933 0.3574 0.3472 0.3290 0.1850 0.1695
Interest expense/TII 31.40% 28.90% 28.45% 29.60% 28.79% 29.59% 26.27% 31.03% 33.02% 36.70% 38.22% 19.17% 17.77%
Annualized Int exp/Debt 5.78% 5.94% 6.27% 5.63% 5.56% 5.41% 6.33% 6.06% 5.87% 5.84% 5.58% 3.14% 4.58%
PWAY - Int exp/Debt 742 bps 726 bps 643 bps 627 bps 794 bps 669 bps 627 bps 521 bps 540 bps 576 bps 637 bps 886 bps 586 bps
At end of Q4-16, CPTA had $170.7 million in SBA debt @ 3.29% cost; $113.4 million in notes payable @ 7.125% and $44.0 million credit facility @ LIBOR + 300

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