Capitala Finance Corp. (NASDAQ:CPTA) Q1 2020 Earnings Conference Call - Final Transcript

May 05, 2020 • 08:30 am ET


Capitala Finance Corp. (NASDAQ:CPTA) Q1 2020 Earnings Conference Call - Final Transcript


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At this time, I would like to welcome everyone to the Capitala Finance Corp.'s conference call for the quarter ended March 31, 2020. [Operator Instructions] Today's call is being recorded and will be available for replay approximately three hours after the conclusion of the call on the Company's website at under the Investor Relations section.

The host for today's call are Capitala Finance Corp.'s Chairman and Chief Executive Officer, Joe Alala; and Chief Financial Officer and Chief Operating Officer, Steve Arnall. Capitala Finance Corp. issued a press release on May 4, 2020, with details of the Company's quarterly financial and operating results. A copy of the press release is available on the Company's website.

Please note that this call contains forward-looking statements that provide information and other historical information, including statements regarding the Company's goals, beliefs, strategies, future operating results and cash flows. Although the Company's beliefs in these statements are reasonable, actual results could differ materially from those projected in the forward-looking statements.

These statements are based on various underlying assumptions and are subject to numerous uncertainties and risks, including those disclosed under the sections titled Risk Factors and Forward-looking Statements in the Company's quarterly report on Form 10-Q. Capitala undertakes no obligation to update or revise any forward-looking statements.

At this time, I would like to turn the meeting over to Joe Alala.

Joseph B. Alala

Thank you, operator. Good morning, everyone, and thank you for joining us today. First, I hope you and your families are safe and healthy. The well-being of our team is of the utmost importance to us.

Having the technology platform to allow us to work from home has enabled our team to comply with all the stay-in-home pandemic policies without impacting our firm's ability to focus on our investment portfolio and operations.

Our net asset value declined by $2.87 per share during the quarter. Of this amount, $1.18 or 41.1% is related to unrealized depreciation on equity investments. We ended 2019 with no non accrual loans. We now have eight debt investments on the non accrual status driven by the shutdown in the economy. Our seasoned team of portfolio management professionals is managing the status of all investments on a daily basis.

Based on uncertainty related to the future net investment income, we have decided to suspend our distributions effective for the second quarter of 2020. This was a difficult decision but ultimately, the right one until we can better project cash flows related to interest and principal payments from our portfolio investments. We are committed to retaining our status as a registered investment company and will make the necessary distributions to shareholders as required during 2020.

We are pleased to announce that the Small Business Administration has issued us a green light, allowing the application process to proceed for Capitala SBIC Fund VII, which will be a wholly owned subsidiary of Capitala Finance Corp. By lowering our cost of capital and accessing additional capital through the addition of another SBIC fund, we are able