PRESS RELEASE

Intraday stock price graph
  • 3 mo.
  • 6 mo.
  • 1 yr.

Copyright West LLC. Minimum 15 minutes delayed.

Press Release

<< Back
Aug 7, 2019
Sutter Rock Capital Corp. Reports Second Quarter 2019 Financial Results

Net Asset Value of $10.75 per Share as of June 30, 2019

Board of Directors Approves Additional $5.0 Million for Share Repurchase Program; Bringing Share Repurchase Program Total to $25.0 Million

SAN FRANCISCO, Aug. 07, 2019 (GLOBE NEWSWIRE) -- Sutter Rock Capital Corp. (“Sutter Rock” or the “Company”) (Nasdaq:SSSS) today announced financial results for the quarter ended June 30, 2019.  Net assets totaled approximately $211.1 million, or $10.75 per share, at June 30, 2019, as compared to $9.89 per share at December 31, 2018 and $10.46 per share at June 30, 2018.

“Our portfolio companies continue to demonstrate strong operating fundamentals and we are excited about their positioning in their respective markets,” said Mark Klein, President and Chief Executive Officer of Sutter Rock. “We believe that our portfolio is undervalued and as such we have increased our share repurchase program to $25.0 million.”

“Additionally, we are pleased to announce we have committed to invest in GreenAcreage Real Estate Corp.,” Klein continued, “We believe the unique dynamics in the cannabis space have created a compelling opportunity for cannabis-based real estate investment trusts.”

Investment Portfolio as of June 30, 2019

At June 30, 2019, Sutter Rock held positions in 24 portfolio companies with an aggregate fair value of approximately $183.4 million.  As a result of the Company’s continued strategy to increase the size of its investments in individual portfolio companies, Sutter Rock has consolidated its investment portfolio around its top positions. The Company’s top five portfolio company investments accounted for approximately 60% of the total portfolio at fair value as of June 30, 2019 and for approximately 90% of Sutter Rock’s market capitalization as of August 6, 2019.

Top Five Investments as of June 30, 2019

  $ in millions Fair Value   % of Total Portfolio  
  Palantir Technologies, Inc. $ 30.7   16.7 %  
  Coursera, Inc.   30.6   16.7    
  Lyft, Inc.   19.0   10.4    
  Course Hero, Inc.   18.8   10.2    
  Nextdoor.com, Inc.   11.0   6.0    
  Total (rounded) $ 110.1   60.0 %  


Second Quarter 2019 Investment Portfolio Activity

During the three months ended June 30, 2019, Sutter Rock exited investments in the following portfolio companies:

  Portfolio Company Shares Sold Average Net
Share Price (1)
Net Proceeds
 (in millions)
Realized Gain/(Loss)
(in millions)
 
  Spotify Technology S.A. 150,360 $137.51 $20.7 $14.3  
  Dropbox, Inc. 437,460 $24.06 $10.5 $4.3  
  Knewton, Inc.(2) 375,985 $– $0.1 $(5.1)  

__________________

(1)  The average net share price is the net share price realized after deducting all commissions and fees on the sale(s), if applicable.
(2)  Exit of Knewton includes an 8% Convertible Promissory Note with a principal value of $0.1 million.

Subsequent to quarter-end, through August 6, 2019, Sutter Rock exited investments in the following portfolio companies:

  Portfolio Company Shares Sold Average Net
Share Price (1)
Net Proceeds
(in millions)
Realized Gain
(in millions)
 
  Dropbox, Inc. 55,000 $26.08 $1.4 $0.5  

__________________

(1)  The average net share price is the net share price realized after deducting all commissions and fees on the sale(s), if applicable.

Subsequent to quarter-end, through August 6, 2019, Sutter Rock has committed to make the following new and follow-on investments:

  Portfolio Company Investment Anticipated
Transaction Date
Investment
(in millions)
 
  GreenAcreage Real Estate Corp. Common Stock 8/13/2019 $7.5  
  Aspiration, Inc. Convertible Note 8/9/2019 $0.3  


Second Quarter 2019 Financial Results

  Quarter Ended
June 30, 2019
Quarter Ended
June 30, 2018
$ in millions per share $ in millions  per share
         
Net investment loss ($2.8) ($0.14) ($5.4) ($0.26)
         
Net realized gain on investments 13.6 0.69 3.4 0.16
         
Net change in unrealized appreciation/(depreciation) of investments (12.4) (0.63) 9.9 0.47
         
Benefit from taxes on unrealized depreciation of investments 1.0 0.05 1.0 0.05
         
Net change in net assets resulting from operations(1) ($0.7) ($0.03) $8.8 $0.42
         
Repurchase of common stock(2) (0.7) 0.03 (2.2) 0.05
         
Increase/(decrease) in net asset value(1) ($1.4) $0.00 $6.7 $0.47

__________________

(1)  Total may not sum due to rounding.

(2)  During the quarters ended June 30, 2019 and 2018, the Company repurchased 115,801 and 315,625 shares of Sutter Rock Capital Corp. common stock for approximately $0.7 million and $2.2 million in cash, respectively. The use of cash in connection with the repurchases decreased net asset value as of period end; however, the reduction in shares outstanding as of period end resulted in no change in the net asset value per share.

Weighted-average common basic shares outstanding were approximately 19.8 million and 21.0 million for the quarters ended June 30, 2019 and 2018, respectively.

Sutter Rock’s liquid assets were approximately $84.4 million as of June 30, 2019, consisting of approximately $54.4 million of cash and $30.0 million of public securities, $19.0 million of which is subject to sales restrictions.

During the quarter ended June 30, 2019, Sutter Rock did not have any borrowings outstanding under its existing $12.0 million credit facility.  The credit facility matured on May 31, 2019 and Sutter Rock is nearing completion of negotiations for a new line of credit with more favorable terms; although, there can be no assurances or guarantees regarding the outcome of such negotiations.

Share Repurchase Program

Under the publicly announced share repurchase program, as of June 30, 2019, the Company has repurchased 2,534,157 shares of its common stock for approximately $15.9 million since the share repurchase program was announced in August 2017.

On August 5, 2019, the Board of Directors authorized a $5.0 million expansion of the share repurchase program to $25.0 million. The dollar value of shares that may yet be purchased by the Company under the share repurchase program is approximately $9.1 million.

Conference Call and Webcast

Management will hold a conference call and webcast for investors today at 2:00 p.m. PT (5:00 p.m. ET).  The conference call access number for U.S. participants is 800-367-2403, and the conference call access number for participants outside the U.S. is +1 334-777-6978.  The conference ID number for both access numbers is 4572363.  Additionally, interested parties can access a live webcast of the call from Sutter Rock Capital's website at http://www.sutterrock.com.  An archived replay of the webcast will also be available for 12 months following the live presentation.

A replay of the conference call may be accessed until 5:00 p.m. PT (8:00 p.m. ET) on August 14, 2019 by dialing 888-203-1112 (U.S.) or +1 719-457-0820 (International) and using conference ID number 4572363.

About Sutter Rock Capital Corp.                                                                                 

Sutter Rock Capital Corp. (Nasdaq:SSSS) is a publicly traded investment fund that seeks to invest in high-growth, venture-backed private companies. The fund seeks to create a portfolio of high-growth emerging private companies via a repeatable and disciplined investment approach, as well as to provide investors with access to such companies through its publicly traded common stock. Sutter Rock Capital is headquartered in San Francisco, CA. www.sutterrock.com

Forward-Looking Statements

Statements included herein may constitute “forward-looking statements,” which relate to future events or our future performance or financial condition. These statements are not guarantees of our future performance, condition or results of operations and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in our filings with the SEC. Sutter Rock Capital Corp. undertakes no duty to update any forward-looking statements made herein, unless required to do so by law.

Contact

Sutter Rock Capital Corp.
(650) 235-4769
IR@sutterrock.com


SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)

June 30,
 2019
  December 31,
 2018
ASSETS  
Investments at fair value:  
Non-controlled/non-affiliate investments (cost of $94,545,251 and $105,869,607, respectively) $ 169,015,959     $ 170,067,233  
Non-controlled/affiliate investments (cost of $29,999,703 and $42,333,854, respectively) 1,400,349     5,931,863  
Controlled investments (cost of $22,963,375 and $22,960,942, respectively) 12,998,814     22,816,733  
Total Portfolio Investments 183,415,122     198,815,829  
Investments in U.S. Treasury bills (cost of $99,979,000 and $99,982,067, respectively) 99,995,000     99,994,000  
Total Investments (cost of $247,487,329 and $271,146,470, respectively) 283,410,122     298,809,829  
Cash 54,418,254     28,184,163  
Proceeds receivable 51,511      
Escrow proceeds receivable 2,074,820     2,494,582  
Interest and dividends receivable 426,995     255,670  
Deferred financing costs     267,541  
Prepaid expenses and other assets(3) 1,502,921     207,769  
Total Assets 341,884,623     330,219,554  
LIABILITIES  
Accounts payable and accrued expenses(3) 2,189,367     490,687  
Accrued incentive fees, net of waiver of incentive fees(1)     4,660,472  
Accrued management fees, net of waiver of management fees(1)     415,056  
Accrued interest payable 475,000     475,000  
Payable for securities purchased 89,477,652     89,480,103  
Deferred tax liability     885,566  
4.75% Convertible Senior Notes due March 28, 2023(2) 38,617,556     38,434,511  
Total Liabilities 130,759,575     134,841,395  
       
Net Assets $ 211,125,048     $ 195,378,159  
NET ASSETS  
Common stock, par value $0.01 per share (100,000,000 authorized; 19,646,846 and 19,762,647 issued and outstanding, respectively) $ 196,468     $ 197,626  
Paid-in capital in excess of par 191,586,438     192,322,399  
Accumulated net investment loss (18,413,823 )   (16,228,294 )
Accumulated net realized gain/(loss) on investments 1,833,175     (7,691,365 )
Accumulated net unrealized appreciation of investments 35,922,790     26,777,793  
Net Assets $ 211,125,048     $ 195,378,159  
Net Asset Value Per Share $ 10.75     $ 9.89  

__________________________________________________

(1)   This balance references a related-party transaction.
(2)   As of June 30, 2019 and December 31, 2018, the 4.75% Convertible Senior Notes due March 28, 2023 had a face value of $40,000,000.
(3)   This balance includes a right of use asset and corresponding operating lease liability, respectively.


SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Three Months Ended June 30   Six Months Ended June 30
  2019   2018   2019   2018
INVESTMENT INCOME          
Non-controlled/non-affiliate investments:          
Interest income $ 198,175     $ 8,932     $ 336,672     $ 10,612  
Non-controlled/affiliate investments:          
Interest income 60,127     221,813     119,593     455,895  
Controlled investments:          
Interest income 29,650     11,328     58,937     24,901  
Dividend income 200,000     350,000     200,000     350,000  
Total Investment Income 487,952     592,073     715,202     841,408  
OPERATING EXPENSES          
Management fees(1)     1,286,066     848,723     2,609,642  
Incentive fees/(Reversal of Incentive fee accrual)(1)     2,588,085     (4,660,472 )   4,059,419  
Costs incurred under Administration Agreement(1)     397,113     306,084     821,258  
Directors’ fees 86,250     86,250     172,500     172,500  
Professional fees 1,310,028     326,798     3,371,950     666,696  
Interest expense 600,205     1,473,695     1,204,373     2,613,758  
Compensation expense 469,944         632,108      
Income tax expense 29,949     26,229     33,712     148,499  
Other expenses 796,807     160,036     991,753     649,306  
Total Operating Expenses 3,293,183     6,344,272     2,900,731     11,741,078  
Management fee waiver(1)     (335,403 )       (490,347 )
Incentive fee waiver(1)             (5,000,000 )
Total operating expenses, net of waiver of management and incentive fees 3,293,183     6,008,869     2,900,731     6,250,731  
Net Investment Loss (2,805,231 )   (5,416,796 )   (2,185,529 )   (5,409,323 )
Realized Gains/(Losses) on Investments:      
Non-controlled/non-affiliated investments 13,590,233     3,363,333     21,859,371     2,587,288  
Non-controlled/affiliate investments         (12,334,831 )   (680 )
Controlled investments              
Net Realized Gain on Investments 13,590,233     3,363,333     9,524,540     2,586,608  
Realized loss on partial repurchase of 5.25% Convertible Senior Notes due 2018             (397,846 )
Change in Unrealized Appreciation/(Depreciation) of Investments:            
Non-controlled/non-affiliated investments (6,751,196 )   10,555,021     10,277,147     20,409,685  
Non-controlled/affiliate investments (1,220,012 )   (952,635 )   7,802,636     (8,628,965 )
Controlled investments (4,469,112 )   270,209     (9,820,352 )   6,225,269  
Net Change in Unrealized Appreciation/(Depreciation) of Investments (12,440,320 )   9,872,595     8,259,431     18,005,989  
Benefit from taxes on unrealized depreciation of investments 979,713     1,010,871     885,566     1,010,871  
Net Change in Net Assets Resulting from Operations $ (675,605 )   $ 8,830,003     $ 16,484,008     $ 15,796,299  
Net Change in Net Assets Resulting from Operations per Common Share:            
Basic $ (0.03 )   $ 0.42     $ 0.84     $ 0.75  
Diluted(2) $ (0.03 )   $ 0.35     $ 0.75     $ 0.66  
Weighted-Average Common Shares Outstanding      
Basic 19,719,706     20,968,850     19,741,058     21,059,254  
Diluted(2) 19,719,706     28,866,674     23,472,402     28,866,674  

____________________________________________________________________________________________________________________________

(1)   This balance references a related-party transaction.
(2)   For the three months ended June 30, 2019, 3,731,344 potentially dilutive common shares were excluded because the effect of these shares would have been anti-dilutive. For the six months ended June 30, 2019 and the three and six months ended June 30, 2018, 0 potentially dilutive common shares were excluded.


SUTTER ROCK CAPITAL CORP. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS (UNAUDITED)

  Three Months Ended June 30,   Six Months Ended June 30,
    2019   2018   2019   2018
Per Basic Share Data                
Net asset value at beginning of the period   $ 10.75     $ 9.99     $ 9.89     $ 9.64  
Net investment loss(1)   (0.14 )   (0.26 )   (0.11 )   (0.26 )
Net realized gain on investments(1)   0.69     0.16     0.48     0.12  
Realized loss on partial repurchase of 5.25% Convertible Senior Notes due 2018(1)               (0.02 )
Net change in unrealized appreciation/(depreciation) of investments(1)   (0.63 )   0.47     0.42     0.86  
Benefits from taxes on unrealized depreciation of investments(1)   0.05     0.05     0.05     0.05  
Repurchase of common stock(1)   0.03     0.05     0.02     0.07  
Net asset value at end of period   $ 10.75     $ 10.46     $ 10.75     $ 10.46  
Per share market value at end of period   $ 6.40     $ 6.86     $ 6.40     $ 6.86  
Total return based on market value(2)   (15.57 )%   (9.02 )%   22.61 %   25.87 %
Total return based on net asset value(2)   %   4.69 %   8.70 %   8.53 %
Shares outstanding at end of period   19,646,846     20,750,913     19,646,846     20,750,913  
Ratios/Supplemental Data:                          
Net assets at end of period   $ 211,125,048     $ 217,148,613     $ 211,125,048     $ 217,148,613  
Average net assets   $ 211,244,233     $ 210,027,033     $ 203,070,126     $ 207,058,773  
Ratio of gross operating expenses to average net assets(3)   5.14 %   12.25 %   4.66 %   11.15 %
Ratio of incentive fee waiver to average net assets   %   %   %   (2.41 )%
Ratio of management fee waiver to average net assets   %   (0.65 )%   %   (0.48 )%
Ratio of income tax provision to average net assets   (0.46 )%   %   (0.44 )%   %
Ratio of net operating expenses to average net assets(3)   4.68 %   11.60 %   4.23 %   8.26 %
Ratio of net investment loss to average net assets(3)   (5.39 )%   (10.46 )%   (2.18 )%   (5.30 )%
Portfolio Turnover Ratio   %   0.05 %   5.04 %   0.10 %

__________________

(1)   Based on weighted-average number of shares outstanding for the relevant period.

(2)   Total return based on market value is based on the change in market price per share between the opening and ending market values per share in the year. Total return based on net asset value is based upon the change in net asset value per share between the opening and ending net asset values per share.

(3)   Financial Highlights for periods of less than one year are annualized and the ratios of operating expenses to average net assets and net investment loss to average net assets are adjusted accordingly. Non-recurring expenses, including the $5.0 million accrued incentive fee forfeiture pursuant to the Waiver Agreement, are not annualized. For the three and six months ended June 30, 2019, the Company excluded $617,536 and $(1,769,820) of non-recurring expenses and did not annualize the income tax provision.  For three and six months ended June 30, 2018, the Company excluded $0 and $352,667 of non-recurring expenses and did not annualize the incentive fee waiver. Because the ratios are calculated for the Company’s common stock taken as a whole, an individual investor’s ratios may vary from these ratios.

 

SUTTER_LOGO.png

Source: Sutter Rock Capital Corp.