THL Credit, Inc. (NASDAQ:TCRD) Q1 2019 Earnings Conference Call - Final Transcript
May 10, 2019 • 10:30 am ET
Terrence William Olson
31st. The weighted average yields of the debt and income producing portfolio, including Logan, was 9.9%, down from 10.7% last quarter, reflecting the LAI non-accrual. 97% of the debt portfolio is in floating rate loans as of quarter end.
Moving on to the financials for the first quarter. As Chris mentioned, the net investment income of $0.21 per share included a one-time expense of $0.01 related to a downsizing of our credit facility. Excluding this one-time item, our core earnings were at $0.22, exceeding our dividend.
Looking at some of the components of our $14.2 million of investment income this quarter, interest income decreased from $12 million in Q4 to $9.8 million in Q1, this largely due to the new non-accrual and the fact that we had no prepayment income this quarter and minimal income generated from the amortization of upfront fees due to less repayment activity. This quarter's level of prepayment activity is not typical. Additionally, in setting our $0.21 per share dividend last quarter, we took into consideration this quarter's expected investment income level and the risk of a decreased earnings par in the portfolio due to yield compression and credit performance. And as Chris mentioned, the lower base management fee beginning in Q2 will contribute an additional $0.02.
Dividend income increased from $3.4 million in Q4 to $3.7 million in Q1 as a result of the increased dividends from C&K and Copperweld. As Chris mentioned, this was offset by a slightly lower Logan dividend, largely driven by timing of the deployment and less repayment activity. The increase in other income for the quarter -- quarter-over-quarter was largely related to additional amendment fees.
On the expense side, total expenses for the quarter were $7.5 million compared to $8.4 million in Q4. The decrease was primarily due to lower interest and fees on borrowings as there were higher accelerated deferred financing costs in Q4 related to the redemption of our 2021 notes. Unrealized depreciation during the quarter, which drove the NAV decline, was largely related to LAI and was offset by a markup -- by markups of Copperweld and several other positions in the portfolio.
The net realized loss of $2 million in Q1 was primarily related to our realization of our investment in Alex brands in Q1. This was offset by an equal change in unrealized depreciations, so no book value impact in Q1. We also recognized an incremental loss on our remaining Aerosoles exposure. From a leverage and liquidity perspective, leverage levels increased to 0.8 times at March 31st, but fell to 0.73 times with the repayment of Hart in early April. In an effort to reduce our cost of capital and lower expenses, we reduced the size of our $275 million revolver in March to $190 million to better align with the size of the portfolio. We anticipate this will save approximately $425,000 per year on unused fees.
With that, I will turn the call over to the operator to start the Q&A session.