The global economy is constantly changing and evolving, as new industries and business models emerge and existing ones are disrupted. In this dynamic environment, investors need to keep an eye on which sectors are thriving and which are not. As investors look for ways to gain exposure to the commercial services sector, there are plenty […]]]>The global economy is constantly changing and evolving, as new industries and business models emerge and existing ones are disrupted. In this dynamic environment, investors need to keep an eye on which sectors are thriving and which are not. As investors look for ways to gain exposure to the commercial services sector, there are plenty of options available to them. Companies in these industries typically provide a supporting service or product directly to consumers or businesses. They could be broadly categorized as niche services such as accounting or technology consulting firms, generalist services such as janitorial services or legal services, personal services such as beauty salons or spa operators , and business services such as travel agencies or document management companies. Here are the four best trading services stocks to buy right now.
What to look for in a business services company?
In addition to having strong earnings and cash flow, business services companies should also have a leading market position, healthy revenue growth, and high barriers to entry. These companies should also be able to increase their prices when demand increases and/or costs increase, and/or they should be able to invest more in research and development to further differentiate themselves. Investors should also consider whether the company is well positioned to benefit from the ongoing transition to service-oriented economies. Finally, listed commercial services stocks should have a low level of indebtedness and an overall solid financial situation.
fedex
Global logistics and transportation company FedEx has expanded its services to include e-commerce fulfillment, healthcare logistics and other areas. It is also present in all major geographies, including a particularly large presence in Asia-Pacific. The company invests in new technologies, such as automation, robotics and artificial intelligence, to improve its operations. FedEx is benefiting from strong e-commerce demand and robust global commerce, and its investments should help it improve its long-term profitability.
Autodesk
Autodesk is a design software company that helps engineers, architects, and designers create their products. The company’s flagship product is AutoCAD, used by architects and engineers to design buildings and machinery. Autodesk’s offerings also include 3D modeling and simulation software, cloud-based software, and manufacturing software. The company has invested in new markets, such as the construction and healthcare sectors, and has also partnered with other companies to expand its offering. Autodesk’s profitability is up and its balance sheet is strong, with very little debt.
HP Company
HP Enterprise is a commercial computing and technology company that provides a wide range of hardware, software and services to customers in many different industries. HP Enterprise offers a wide range of products including servers, PCs, printers and networking equipment. The company has focused on its hybrid cloud business and recently acquired Red Hat, a leading software company, to expand its presence in the cloud computing space. HP Enterprise’s revenues have grown steadily and its balance sheet is strong with almost no debt.
Microsoft
Microsoft is a leading software and services company offering a wide range of products in a number of industries. In addition to its flagship Windows operating system, Microsoft also offers software products such as Office, as well as a host of cloud-based services and development tools. The company has invested in new areas and technologies, such as artificial intelligence, blockchain and augmented reality, to grow its business and stay competitive. Microsoft has a relatively large presence in emerging markets, such as Asia-Pacific, and its revenue has been steadily growing.
Conclusion
The global economy is constantly changing and evolving, as new industries and business models emerge and existing ones are disrupted. In this dynamic environment, investors need to keep an eye on which sectors are thriving and which are not. Companies in these industries typically provide a supporting service or product directly to consumers or businesses. They could be broadly categorized as niche services such as accounting or technology consulting firms, generalist services such as janitorial services or legal services, personal services such as beauty salons or spa operators , and business services such as travel agencies or document management companies. There are many different options for investing in the business services sector, so investors should keep an eye out for companies that are thriving in this space.
David Iben said it well when he said: “Volatility is not a risk that interests us. What matters to us is to avoid the permanent loss of capital. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when a company fails. Like many other companies Ebix, […]]]>David Iben said it well when he said: “Volatility is not a risk that interests us. What matters to us is to avoid the permanent loss of capital. It’s natural to consider a company’s balance sheet when looking at its riskiness, as debt is often involved when a company fails. Like many other companies Ebix, Inc. (NASDAQ:EBIX) uses debt. But does this debt worry shareholders?
When is debt a problem?
Debt and other liabilities become risky for a business when it cannot easily meet those obligations, either with free cash flow or by raising capital at an attractive price. An integral part of capitalism is the process of “creative destruction” where bankrupt companies are mercilessly liquidated by their bankers. However, a more common (but still costly) event is when a company has to issue stock at bargain prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, many companies use debt to finance their growth, without any negative consequences. When we look at debt levels, we first consider cash and debt levels, together.
Our analysis indicates that EBIX is potentially undervalued!
What is Ebix’s net debt?
As you can see below, Ebix had a debt of US$635.5 million in September 2022, compared to US$666.1 million the previous year. However, he also had $90.7 million in cash, so his net debt is $544.8 million.
A Look at Ebix’s Responsibilities
According to the last published balance sheet, Ebix had liabilities of $805.3 million maturing within 12 months and liabilities of $39.6 million maturing beyond 12 months. In return, it had $90.7 million in cash and $163.0 million in receivables due within 12 months. It therefore has liabilities totaling $591.2 million more than its cash and short-term receivables, combined.
This is a mountain of leverage compared to its market capitalization of US$619.6 million. If its lenders asked it to shore up its balance sheet, shareholders would likely face significant dilution.
In order to assess a company’s debt relative to its earnings, we calculate its net debt divided by its earnings before interest, taxes, depreciation and amortization (EBITDA) and its earnings before interest and taxes (EBIT) divided by its expenses. interest (its interest coverage). Thus, we consider debt to earnings with and without amortization and depreciation expense.
Ebix has a debt/EBITDA ratio of 3.9 and its EBIT covered its interest charges 2.5 times. Taken together, this implies that, while we wouldn’t like to see debt levels increase, we think he can manage his current leverage. Notably, Ebix’s EBIT has been pretty flat over the past year, which isn’t ideal given the leverage. There is no doubt that we learn the most about debt from the balance sheet. But ultimately, the company’s future profitability will decide whether Ebix can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free analyst earnings forecast report interesting.
Finally, a business needs free cash flow to pay off its debts; book profits are not enough. It is therefore worth checking how much of this EBIT is supported by free cash flow. Over the past three years, Ebix’s free cash flow amounted to 46% of its EBIT, less than expected. This low cash conversion makes debt management more difficult.
Our point of view
To be frank, Ebix’s level of total liabilities and its history of covering its interest charges by its EBIT makes us rather uncomfortable with its level of leverage. But at least its EBIT growth rate isn’t that bad. Looking at the balance sheet and taking all of these factors into account, we think debt makes Ebix stock a bit risky. Some people like that kind of risk, but we’re aware of the potential pitfalls, so we’d probably prefer it to take on less debt. There is no doubt that we learn the most about debt from the balance sheet. But at the end of the day, every business can contain risks that exist outside of the balance sheet. Be aware that Ebix displays 2 warning signs in our investment analysis and 1 of them makes us a little uncomfortable…
Of course, if you’re the type of investor who prefers to buy stocks without the burden of debt, then feel free to check out our exclusive list of cash-efficient growth stocks today.
Valuation is complex, but we help make it simple.
Find out if Ebix is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.
See the free analysis
Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
In response to our call for entries for this year’s Tech Champions project, nearly 300 submissions were received from FT readers, identifying European companies using technology to meet today’s business challenges. FT journalists reviewed them, researched the nominated companies and helped compile shortlists. We sought nominations in ten categories this year and replaced the ‘Hospitality’ […]]]>In response to our call for entries for this year’s Tech Champions project, nearly 300 submissions were received from FT readers, identifying European companies using technology to meet today’s business challenges.
FT journalists reviewed them, researched the nominated companies and helped compile shortlists.
We sought nominations in ten categories this year and replaced the ‘Hospitality’ sector – which featured in 2021 following the pandemic shutdowns – with ‘Energy’, which has been the focus of innovators’ attention this year :
For each sector category, a pre-selection of four or five companies was established and submitted to our jury for examination. The winners will be announced here, and in a magazine included with the FT newspaper, on November 21.
The Jury
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Kate McGinn, Analyst, Seedcamp — an investor in pan-European start-ups
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Clare Hickie, Chief Technology Officer Emea, Workday
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Malcolm Moore, Editor, FT Edit
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Matthew Vincent, Editor, FT Project Publishing
IT and software
Adaptive systems
Through the use of AI, smart sensors and radar, Adaptiv enables customers to map the use of their buildings and improve their energy efficiency.
Benivo
Benivo’s employee relocation management platform has enabled greater mobility for its clients’ staff when managing moves around the world.
carbon chain
CarbonChain’s AI-powered carbon accounting platform tracks emissions in global supply chains, giving logistics companies and financial institutions insight into the impact of their activities.
Kayros
By analyzing satellite images of the Earth, Kayrros helps spot climate and environmental trends and tracks energy sector activity, including pipeline leaks.
synthesized
The company’s digital experimentation platform enables scientists in fields as diverse as virology and climate science to test hypotheses faster and innovate.
Markets & Financial Services
ComplianceAdvantage
ComplyAdvantage Sanctions Tracking Technology Helped Banks and Financial Services Groups Comply with Rules on Transactions Involving Russia
Consulting in economics for the environment — EFTEC
EFTEC’s development of “natural capital accounting” translates businesses’ reliance on nature into an digestible balance sheet format, enabling proactive decision-making.
KPMG Climate IQ
Climate IQ is a platform for clients to assess their climate risk and make strategic decisions based on the likely impacts they face.
NovaFori
The B2B operator builds digital marketplace and auction platforms for its clients and embeds data science into every layer.
Plan A
The Berlin-based SaaS operator offers a platform for businesses to track their carbon footprint over time, report on that trend, and set targets to work towards the Paris Climate Agreement.
Professional services
Beamery
Beamery’s AI-powered platform removes bias from the recruitment process and can help clients combat high employee turnover by providing personalized plans for employee development.
Play. AI
By applying AI and blockchain technologies to talent attraction and retention processes, Gigged. AI helps minimize hiring costs and cut out middlemen.
KPMG
Through its ESG IQ platform, the company enables companies to have a holistic view of ESG performance and avoid greenwashing.
Nurola
Founded by a former headhunter, Nurole is transforming the way board-level talent is recruited, combining smart technology and years of expertise to find qualified, diverse candidates.
Risk Register
As the conflict in Ukraine strains supply chains, the Risk Ledger platform shows organizations how well protected their suppliers are.
Shipping and transport
Power Ceres
A leader in fuel cell technology and electrochemistry, Ceres’ green hydrogen solutions can reduce carbon emissions in the marine sector by up to 47%.
xChange Container
The company helps businesses navigate the complexities of international supply chains by tapping into a marketplace to source containers, pay for them, and simplify their movement.
Einride
Sweden-based Einride seeks to transform the global logistics industry and reduce its massive carbon footprint with autonomous, electric cargo fleets.
Ev.energy
Its vehicle charging software makes using an electric car cheaper and turns thousands of car batteries into storage assets.
Vector robotics
Vector aims to tackle the growing problem of wildfires by using autonomous, solar-powered drones to monitor hotspots, helping with the early detection and containment of wildfires.
Energy
Geosophy
The energy innovator’s geothermal temperature control offering has become increasingly attractive thanks to its strong green credentials and the rising cost of conventional alternatives.
HiiROC
The British start-up is developing a way to produce low-cost, zero-emission hydrogen, from micro to industrial scale.
Multiverse Computing
Quantum computing enables Multiverse to help customers in the energy sector predict future supply and demand, ensuring efficiency and a reduced carbon footprint.
Nyobolt
By revolutionizing the performance of lithium-ion batteries, Nybolt is transforming the use of electric vehicles, medical devices and robotics.
octopus energy
The utility company’s new scalable platform, Kraken, uses advanced data and machine learning to optimize energy assets, improve efficiency and reduce consumer costs.
Manufacturing
Coolbrook
The Finnish group’s Roto Dynamic Heater can achieve the extreme heat needed for chemical and steel processes using only renewable energy.
Building automation
With its patented brick-laying robot, the company aims to improve productivity and safety in the home construction industry.
Garden
The company uses optoelectronics and machine learning to monitor and track plant growth in indoor agriculture – growers can use these analytics to increase yield and nutrient density in crops.
Kebony
With its patented wood modification technology, Kebony makes it possible to use softwood where hardwood was once only suitable, helping to preserve hardwood forests as a carbon sink.
Spinnova
The Finnish textile innovator has developed a process by which any cellulosic raw material, such as food waste, can be sustainably converted into ready-to-spin textile fiber.
Health care
Kooth
The UK’s oldest digital mental health provider is drawing on its 20 years of experience to advance mental wellbeing during the cost of living crisis.
Lifting treatment
The home care platform enables caregivers to connect with users and provide personalized and seamless care; a 2022 government grant will allow Lifted to expand its offering.
London Borough of Newham, Connect for Health (Warwickshire) and the Young Offenders Institution, Cookham Wood, in collaboration with Thomson Screening
The contestants developed a digital solution allowing schools to quickly screen children for vision and hearing problems, identify trends and communicate with parents.
Oxehheath
The Oxford University spin-out has found a way to remotely monitor mental health patients via infrared detectors and alert nurses to those who need help.
ShiftPartner
Shift’s digital platform aims to ease NHS enrollment challenges by using AI and machine learning to better understand staffing needs.
Media
Disguise
Its extended reality software has enabled wider audiences to enjoy immersive concerts and events, even in the midst of a pandemic.
No isolation
Founded in 2015, No Isolation began developing “warm technology” to help sick children get into classrooms, long before remote learning became the norm. He now helps various groups reduce the risk of isolation.
Seen this
The company’s ad streaming solution enables brands to reduce the data needed to reach target audiences by 40%, an effective way to reduce energy consumption for carbon-conscious brands.
The garden
The London-based streaming platform was launched in the wake of the pandemic, offering interactive talks from experts in various fields, to facilitate the exchange of ideas.
Zero density
Delivering real-time visual effects to broadcast, live event and esports clients, Zero Density creates immersive stories across all types of media.
Detail
Flowering & Wild
Flower delivery pioneer Bloom & Wild leads the industry in sustainable practices – it can now calculate the environmental cost of a bouquet and reduce it over time.
KeyNest
As town centers return from lockdown-induced crises, KeyNest is enabling high street shops to take on a new role as ‘key concierges’ for Airbnb hosts.
Unlimited
The London-based company enables brand advocates to find work as customer service agents for the businesses they love.
Miracle
The Company’s enterprise marketplace platform enables sellers to quickly establish a broader online presence through a network of resellers.
satatland
The sustainable fashion company makes clothes from recyclable materials and rents them out, as an alternative to the buy-and-throw model.
Banking and Payments
Clim8 Invest
The London-based platform enables mass market access to bona fide green investment opportunities.
Stenn Technologies
Stenn has found a way to make trade credit available, via invoice financing, to the smallest businesses in more than 70 countries.
Wise
The digital payments group responded quickly to the Ukraine crisis to get money flowing for those fleeing the conflict and those left behind.
Nothing
Zilch’s buy now, pay later offer has found favor with those looking to spread the rising cost of energy bills over 6 weeks at zero interest rates.
Facephi Biometria (BME:FACE) First Half 2022 Results Main financial results Turnover: €9.72m (+98% compared to 1H 2021). Net loss: €1.07m (loss reduced by 37% compared to H1 2021). BME: FACE Earnings and Revenue Growth November 11, 2022 All figures shown in the table above are for the 12 month period (TTM) Facephi Biometria Revenue Outlook […]]]>Facephi Biometria (BME:FACE) First Half 2022 Results
Main financial results
- Turnover: €9.72m (+98% compared to 1H 2021).
- Net loss: €1.07m (loss reduced by 37% compared to H1 2021).
All figures shown in the table above are for the 12 month period (TTM)
Facephi Biometria Revenue Outlook
Going forward, revenue is expected to grow by an average of 15% per year over the next 3 years, compared to a growth forecast of 9.1% for the software industry in Europe.
Market performance in Spain.
Shares of the company are down 1.9% from a week ago.
Risk analysis
Before concluding, we discovered 4 warning signs for Facephi Biometria (1 is a little unpleasant!) which you should be aware of.
Valuation is complex, but we help make it simple.
Find out if Facephi Biometrics is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.
See the free analysis
Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
Persimmon’s Cautious Update Drowns Other Homebuilders 08.50 GMT – Persimmon’s cautious business update pushed a number of key UK homebuilders to the bottom of the FTSE 100 in early trading, after warning it expects few completions in 2023, said Interactive Investor. Persimmon has lost more than 55% of its market valuation since the start of […]]]>
Persimmon’s Cautious Update Drowns Other Homebuilders
08.50 GMT – Persimmon’s cautious business update pushed a number of key UK homebuilders to the bottom of the FTSE 100 in early trading, after warning it expects few completions in 2023, said Interactive Investor. Persimmon has lost more than 55% of its market valuation since the start of the year, underperforming the FTSE 100 and its rivals as it grapples with cost inflation and macroeconomic pressures, says Victoria Scholar , chief investment officer at Interactive Investor, in a market commentary. “It languishes at the bottom of the UK index today, dragging other homebuilder stocks with it,” Scholar said. Persimmon shares are down 7.8% at 1,220.5p, Barratt Developments are down 2.4% at 376.4p while Taylor Wimpey is down 3.3% at 93.34 pence. ([email protected])
Companies News:
Persimmon sales plummeted; Backs 2022 View but sees 2023 sales slip
Persimmon PLC said on Tuesday that sales in the first four months of the second half of the year fell in the face of strong comparative and macroeconomic headwinds, and while it sees sights on the 2022 meeting, it s expect 2023 sales to fall.
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ALD’s acquisition of LeasePlan obtains clearance from UK competition authorities
The British competition regulator announced on Tuesday that it had cleared the acquisition of LeasePlan Corp. by ALD SA, the vehicle rental activity of Société Générale SA.
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Aveva’s first-half pretax loss widened on amortization related to Schneider deal
Aveva Group PLC said on Tuesday its first-half pretax loss widened due to amortization of intangible assets related to combinations with the industrial software business of Schneider Electric and OSIsoft.
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WPP CFO John Rogers resigns; Britvic’s Joanne Wilson named successor
WPP PLC said on Tuesday that chief financial officer John Rogers had decided to step down from the company and named Joanne Wilson, chief financial officer of soft drink company Britvic PLC, as his successor.
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AB Foods’ pre-tax profit for fiscal 2022 increased on strong pricing; Launches £500m share buyback
Associated British Foods PLC said on Tuesday that pre-tax profit for the financial year 2022 rose on the back of robust pricing amid normalizing customer behavior, and increased its dividend payout and launched a buyback program.
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IMI 3Q organic revenue up; EPS 2022 Guidelines Upgrades
IMI PLC said on Tuesday that organic revenue growth in the third quarter was 4% and that it was revising its earnings per share forecast for the full year upwards.
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Irish government sells 134 million shares of AIB Group at EUR 2.96
JP Morgan Securities PLC said on Tuesday it had sold 134 million ordinary shares of AIB Group PLC on behalf of the Irish government at 2.96 euros per share ($2.97), as first announced on Monday evening.
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Hilton Food’s SeaFood 2022 business earnings fall short of expectations
Hilton Food Group PLC said volumes and revenue were in line with the board’s expectations, although it expects lower operating profit from its UK seafood business for the first year in a context of macroeconomic pressures.
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Hammerson 3Q rental income, sales up; sees 2022 adjusted earnings increase
Hammerson PLC said on Tuesday that its rental income and sales in the third quarter had increased thanks to the continued post-pandemic recovery, and it expects adjusted profit to increase for the full year.
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Seraphine sees an hour loss in tough UK conditions
Seraphine Group PLC said on Tuesday it expected to post a first-half loss after experiencing a difficult retail environment and weaker trading during the summer months.
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IMI PLC to buy UK maker of smart thermostatic controls for up to £118m
IMI PLC announced on Tuesday that it is buying British smart thermostatic controls maker Heatmiser UK Ltd. for up to £118 million ($135.9 million), as part of its plan to accelerate the growth of smart buildings.
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Marks Electrical 1H Pretax Profit Flat; Supports exercise orientation
Marks Electrical Group PLC said on Tuesday that pre-tax profit for its fiscal first half was stable year on year in a difficult business environment and was well positioned to meet its full-year targets.
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Direct line insurance Q3 new business sales drop
Direct Line Insurance Group PLC said on Tuesday that new business sales in the third quarter fell due to price increases to restore margins in the automotive division.
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CVS Group plans to double Ebitda and increase revenue over five years
CVS Group PLC said on Tuesday that it expects to double its Ebitda over the next five years and significantly increase revenue growth.
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ZOO Digital Reports First-Half Pretax Earnings on Localization Growth and Media Services Expansion
ZOO Digital Group PLC said on Tuesday it recorded its first-ever pre-tax profit for the first half of fiscal 2023 and backed its full-year guidance.
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Chesterfield Resources abandons some Cypriot licenses to focus on the most promising
Chesterfield Resources PLC said on Tuesday it would let go of a number of licenses in Cyprus as they expire over the next six months, allowing it to focus on the most promising licenses.
Market Talk:
AB Foods seems able to weather the economic storms
08:43 GMT – AB Foods posted a resilient performance in fiscal 2022, with robust growth despite a challenging environment, and Primark getting back on its feet, Interactive Investor’s head of markets, Richard Hunter, said in a statement. research note. The strong results of the British conglomerate are based on the diversification and scope of its activities, which offer protection during periods of economic uncertainty, notes Hunter. “Unfortunately, September’s earnings warning on the outlook for next year is still ringing in investors’ ears. An outlook that incorporates further cost inflation, some continued supply chain pressures and, in particular , an increasingly cash-strapped consumer, should weigh on the numbers ahead,” adds Hunter ([email protected])
AB Foods buyback program viewed positively given cheap price
08:35 GMT – Associated British Foods has reported mixed results for the 2022 financial year, but the announcement of a share buyback program should be welcomed by investors, according to RBC analysts Richard Chamberlain and Manjari Dhar in a report research note. Shares rise 3.5%. The British conglomerate’s share price is quite depressed and should be supported by the £500m buyout program and its strong balance sheet, analysts add. AB Foods is also expected to experience a robust recovery in sales, driven by continued positive recovery trends for in-store retail, they say. However, margins are likely to be affected by currency and other inflationary pressures, RBC notes. ([email protected])
Persimmon’s soft update means late 2023 estimates are likely to fall
08:20 GMT – Persimmon released a somewhat soft trading performance update, with weekly sell rates falling broadly in line with expectations and cancellation rates rising from 21% to 28%, according to Citi. The homebuilder has a wide range of consensus expectations in the market, but Citi thinks the low end of the range should fall by around 3% to 4% due to the weaker outlook on outlet growth and sales. average selling prices, analyst Ami Galla said in a research note. “The focus will be on the scale of ordinary dividend payouts, increased building security provisions and underlying property price pressures,” the US bank said. Citi retains its neutral rating and target price of 1,207 pence on the share. The shares are down 8.7% at 1,208.0 pence. ([email protected])
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Aveva’s low 1H largely academic due to Schneider’s offer
08:18 GMT – Aveva Group has released weak first-half results as expected after its pre-announcement, although this is largely academic due to the ongoing supply situation with Schneider Electric, say Jefferies analysts Charles Brennan and Alex Nguyen in a research note. The British engineering and industrial software company is moving to a subscription model, which deflates license growth in favor of annualized recurring revenue, they say. However, licensing was down 35%, with ARR growth of 11.6%, and management initially saw ARR growth accelerating, with licensing broadly flat, analysts note. Jefferies has a holding rating on the stock with a target price of 3,250.00 pence. The shares are trading down 0.1% at 3,134.00 pence. ([email protected])
Contact: London NewsPlus; [email protected]
(END) Dow Jones Newswire
November 08, 2022 04:06 ET (09:06 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.
David Iben said it well when he said: “Volatility is not a risk that interests us. What matters to us is to avoid the permanent loss of capital. So it may be obvious that you need to take debt into account when thinking about the risk of a given stock, because too much debt can […]]]>David Iben said it well when he said: “Volatility is not a risk that interests us. What matters to us is to avoid the permanent loss of capital. So it may be obvious that you need to take debt into account when thinking about the risk of a given stock, because too much debt can sink a business. Above all, niio finance group SA (ETR:NIIN) is in debt. But does this debt worry shareholders?
When is debt a problem?
Debt helps a business until the business struggles to pay it back, either with new capital or with free cash flow. Ultimately, if the company cannot meet its legal debt repayment obligations, shareholders could walk away with nothing. However, a more common (but still painful) scenario is that it has to raise new equity at a low price, thereby permanently diluting shareholders. Of course, many companies use debt to finance their growth, without any negative consequences. When we think about a company’s use of debt, we first look at cash and debt together.
Our analysis indicates that The NIIN is potentially undervalued!
What is niiio financial group’s net debt?
The graph below, which you can click on for more details, shows that the niiio financial group had €5.30m in debt in June 2022; about the same as the previous year. However, he has €6.49m in cash which offsets this, leading to a net cash of €1.18m.
A look at the liabilities of the niiio financial group
According to the last published balance sheet, the niiio financial group had liabilities of 5.38 million euros maturing within 12 months and liabilities of 7.48 million euros maturing beyond 12 months. In return, it had €6.49 million in cash and €557.6 thousand in receivables due within 12 months. Its liabilities therefore total €5.81 million more than the combination of its cash and short-term receivables.
This shortfall is not that bad as the niiio financial group is worth 27.8 million euros and therefore could probably raise enough capital to shore up its balance sheet, should the need arise. But we definitely want to keep our eyes peeled for indications that its debt is too risky. Despite its notable liabilities, the niiio financial group has net cash, so it is fair to say that it is not heavily indebted! The balance sheet is clearly the area to focus on when analyzing debt. But it is future earnings, more than anything, that will determine niiio financial group’s ability to maintain a healthy balance sheet in the future. So if you want to see what the professionals think, you might find this free analyst earnings forecast report interesting.
Over 12 months, niiio finance group achieved a turnover of €6.2 million, a gain of 111%, although it did not record a profit before interest and taxes. Its fairly obvious shareholders therefore hope for more growth!
So how risky is niiio financial group?
Statistically speaking, businesses that lose money are riskier than those that make money. And we note that the niiio financial group has recorded a loss of earnings before interest and taxes (EBIT) over the past year. And over the same period, it recorded a negative free cash outflow of 5.6 million euros and recorded an accounting loss of 3.5 million euros. Given that it only has net cash of 1.18 million euros, the company may need to raise more capital if it does not break even soon. The good news for shareholders is that the niiio financial group has skyrocketing revenue growth, so there’s a very good chance it can increase its free cash flow in the years to come. High-growth, for-profit businesses may well be risky, but they can also offer great rewards. The balance sheet is clearly the area to focus on when analyzing debt. But at the end of the day, every business can contain risks that exist outside of the balance sheet. For example – the niiio financial group has 4 warning signs we think you should know.
Of course, if you’re the type of investor who prefers to buy stocks without the burden of debt, then feel free to check out our exclusive list of cash-efficient growth stocks today.
Valuation is complex, but we help make it simple.
Find out if niiio financial group is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.
See the free analysis
Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
Forward-looking statements The information contained in this section should be read in conjunction with our consolidated financial statements and related notes and schedules thereto appearing elsewhere in this Quarterly Report on Form 10-Q. Except as otherwise specified, references to "the Company", "we", "us", and "our" refer to TriplePoint Venture Growth BDC Corp. and its subsidiaries. […]]]>Forward-looking statements
The information contained in this section should be read in conjunction with our consolidated financial statements and related notes and schedules thereto appearing elsewhere in this Quarterly Report on Form 10-Q. Except as otherwise specified, references to "the Company", "we", "us", and "our" refer toTriplePoint Venture Growth BDC Corp. and its subsidiaries. This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as "anticipates," "expects," "intends," "plans," "will," "may," "continue," "believes," "seeks," "estimates," "would," "could," "should," "targets," "projects," and variations of these words and similar expressions are intended to identify forward-looking statements. The forward-looking statements contained in this Quarterly Report on Form 10-Q include statements as to:
•the future results of operations and financial condition of our companies and our portfolio, including our ability and that of our portfolio companies to achieve our respective objectives;
•our business prospects and the prospects of our portfolio companies;
• our relationships with third parties, including, but not limited to, lenders and venture capitalists, including other investors in our portfolio companies;
•the impact and timing of our unfunded commitments;
•the expected market for venture capital investments;
•the performance of our existing portfolio and other investments we may make in the future;
•the impact of the investments we plan to make;
•actual and potential conflicts of interest with PTC, the advisor and its senior investment team and its investment committee;
•our contractual arrangements and our relationships with third parties;
•the dependence of our future success on the
•our planned financing and investments;
•the Advisor’s ability to find suitable investments for us and to monitor and administer our investments;
• our advisor’s ability to attract, retain and gain access to highly talented professionals, including our advisor’s management team;
•our ability to maintain our qualification as RIC and BDC;
•the adequacy of our available liquidity, cash resources and working capital and compliance with covenants under our debt agreements; and
•the timing of cash flows, if any, from the operations of our portfolio companies.
These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation: •changes in laws and regulations, changes in political, economic or industry conditions, and changes in the interest rate environment or other conditions affecting the financial and capital markets; •the length and duration of the COVID-19 outbreak inthe United States as well as worldwide, and the magnitude of its impact and time required for economic recovery; •an economic downturn and the time period required for robust economic recovery therefrom, including relating to the impact of the COVID-19 pandemic, which could lead to the loss of some or all of our investments in such portfolio companies and have a material adverse effect on our results of operations and financial condition; •a contraction of available credit, an inability or unwillingness of our lenders to fund their commitments to us and/or an inability to access capital markets or additional sources of liquidity, which could have a material adverse effect on our results of operations and financial condition and impair our lending and investment activities;
•interest rate volatility could adversely affect our results, especially as we use leverage as part of our investment strategy;
•currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currencies rather than in
53 -------------------------------------------------------------------------------- •risks associated with possible disruption in our or our portfolio companies' operations due to wars and other forms of conflict, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics; and •the risks, uncertainties and other factors we identify in "Risk Factors" in this Quarterly Report on Form 10-Q, in our most recent Annual Report on Form 10-K under Part I, Item 1A, and in our other filings with theSEC that we make from time to time. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include, without limitation, our ability to originate new loans and investments, borrowing costs and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q.
Insight
We are an externally managed, closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act. We have elected to be treated, and intend to qualify annually, as a RIC under Subchapter M of the Code forU.S. federal income tax purposes. Our shares are currently listed on theNew York Stock Exchange (the "NYSE") under the symbol "TPVG".
We were created to expand the venture capital growth stage business segment of TPC’s investment platform. TPC is widely recognized as a leading global financing provider dedicated to serving venture-backed companies with creative, flexible and customized debt financing, equity and complementary services throughout their life. lifetime. TPC is located on
Our investment objective is to maximize our total shareholder return primarily in the form of current income and, to a lesser extent, capital appreciation by lending primarily with warrants to growth-stage companies focused on technology and other high-growth industries supported by TPC’s select group. leading venture capitalists.
COVID-19 developments
The COVID-19 pandemic, and the related effect on theU.S. and global economies, including the uncertainty associated with the timing and likelihood of economic recovery, has had adverse consequences for the business operations of some of our portfolio companies and threatens to continue to adversely affect our operations and the operations of the Adviser. While we have been monitoring, and continue to monitor, the COVID-19 pandemic and its impact on our and our portfolio companies' business, we have continued to raise capital, maintain appropriate levels of available liquidity, support and monitor our existing portfolio companies, fund existing unfunded commitments, and selectively deploy capital in new investment opportunities in venture capital-backed companies. Any significant increase in aggregate unrealized depreciation of our investment portfolio or significant reductions in our net asset value as a result of the effects of the COVID-19 pandemic or otherwise increases the risk of failing to meet the 1940 Act asset coverage requirements and breaching covenants under the Credit Facility, or under the governing agreements for the 2025 Notes, the 2026 Notes and the 2027 Notes, or otherwise triggering an event of default under our borrowing arrangements. Any such breach of covenant or event of default, if we are not able to obtain a waiver from the required lenders or debt holders, would have a material adverse effect on our business, liquidity, financial condition, results of operations and ability to pay distributions to our stockholders. See "Risk Factors" in this Quarterly Report on Form 10-Q and "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the year endedDecember 31, 2021 for more information. As ofSeptember 30, 2022 , we were in compliance with the asset coverage requirements under the 1940 Act and with our covenants under the Credit Facility and under the governing agreements for the 2025 Notes, the 2026 Notes and the 2027 Notes. We will continue to monitor the evolving situation relating to the COVID-19 pandemic and related guidance fromU.S. and international authorities, including federal, state and local public health authorities. Given the dynamic nature of this situation and the fact that there may be developments outside of our control that require us or our portfolio companies to adjust plans of operation, we cannot reasonably estimate the full impact of COVID-19 on our financial condition, results of operations or cash flows in the future. However, it could have a material adverse impact for a prolonged period of time on our future net investment income, particularly with respect to our interest income, the fair value of our portfolio investments, and our portfolio companies' respective results of operations and financial condition. See "Risk Factors" in this Quarterly Report on Form 10-Q, and in our other filings with theSEC that we make from time to time, for more information. 54
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Portfolio composition, investment activity and asset quality
Composition of the portfolio
We originate and invest primarily in venture growth stage companies. Companies at the venture growth stage have distinct characteristics differentiating them from venture capital-backed companies at other stages in their development lifecycle. We invest primarily in (i) growth capital loans that have a secured collateral position and that are generally used by venture growth stage companies to finance their continued expansion and growth, (ii) equipment financings, which may be structured as loans or leases, that have a secured collateral position on specified mission-critical equipment, (iii) on a select basis, revolving loans that have a secured collateral position and that are typically used by venture growth stage companies to advance against inventory, components, accounts receivable, contractual or future billings, bookings, revenues, sales or cash payments and collections including proceeds from a sale, financing or the equivalent and (iv) direct equity investments in venture growth stage companies. In connection with our growth capital loans, equipment financings and revolving loans, we generally receive warrant investments as part of the transaction that allow us to participate in any equity appreciation of our borrowers and enhance our overall investment returns. As ofSeptember 30, 2022 , we had 318 investments in 116 companies. Our investments included 139 debt investments, 120 warrant investments, and 59 direct equity and related investments. As ofSeptember 30, 2022 , the aggregate cost and fair value of these investments were$969.2 million and$962.4 million , respectively. As ofSeptember 30, 2022 , 12 of our portfolio companies were publicly traded. As ofSeptember 30, 2022 , the 139 debt investments had an aggregate fair value of$856.7 million and a weighted average loan to enterprise value ratio at the time of underwriting of 7.7%. Enterprise value of a portfolio company is estimated based on information available, including any information regarding the most recent rounds of equity funding, at the time of origination. As ofDecember 31, 2021 , we had 246 investments in 91 companies. Our investments included 107 debt investments, 92 warrant investments, and 47 direct equity and related investments. As ofDecember 31, 2021 , the aggregate cost and fair value of these investments were$837.8 million and$865.3 million , respectively. As ofDecember 31, 2021 , 10 of our portfolio companies were publicly traded. As ofDecember 31, 2021 , the 107 debt investments had an aggregate fair value of$757.2 million and a weighted average loan to enterprise value ratio at the time of underwriting of 7.7%. Enterprise value of a portfolio company is estimated based on information available, including any information regarding the most recent rounds of equity funding, at the time of origination.
The following tables present information on the cost and fair value of our investments in companies as well as the number of companies in our portfolio at
September 30, 2022
Investments by Type Net Unrealized Number of Number of
(dollars in thousands) Cost Fair Value Gains (losses) Investments Companies
Debt investments $ 898,268 $ 856,659 $ (41,609) 139 59
Warrant investments 29,284 52,568 23,284 120 102
Equity investments 41,683 53,203 11,520 59 50
Total investments in portfolio companies
318 116 (1)
_______________
(1)Represents a non-redundant number of companies.
December 31, 2021
Investments by Type Net Unrealized Number of Number of
(dollars in thousands) Cost Fair Value Gains (losses) Investments Companies
Debt investments $ 774,652 $ 757,222 $ (17,430) 107 49
Warrant investments 25,597 51,756 26,159 92 81
Equity investments 37,600 56,362 18,762 47 40
Total investments in portfolio companies
246 91 (1)
_______________
(1)Represents a non-redundant number of companies.
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The following tables present the fair value of the investment portfolio, by industry and the percentage of the total investment portfolio, at
September 30, 2022
Investments in Portfolio Companies by Industry Percentage of Total
(dollars in thousands) At Fair Value Investments
Consumer Products and Services $ 140,218 14.6 %
E-Commerce - Clothing and Accessories 130,048 13.5
Business Applications Software 102,468 10.6
Financial Institution and Services 71,360 7.4
Healthcare Technology Systems 53,553 5.6
Real Estate Services 52,603 5.5
Business/Productivity Software 50,716 5.3
Business Products and Services 44,012 4.6
Consumer Non-Durables 36,660 3.8
Security Services 35,137 3.7
Travel & Leisure 32,458 3.4
Shopping Facilitators 28,031 2.9
Entertainment 27,381 2.8
Other Financial Services 23,319 2.4
Application Software 22,656 2.4
Multimedia and Design Software 20,032 2.1
Healthcare Services 19,874 2.1
Food & Drug 17,902 1.9
Consumer Finance 17,702 1.8
E-Commerce - Personal Goods 13,752 1.4
Database Software 13,503 1.4
Consumer Retail 2,169 0.2
General Media and Content 2,162 0.2
Network Systems Management Software 1,924 0.2
Commercial Services 1,220 0.1
Financial Software 995 0.1
Social/Platform Software 151 *
Business to Business Marketplace 144 *
Educational/Training Software 131 *
Computer Hardware 116 *
Aerospace and Defense 19 *
Advertising / Marketing 13 *
Transportation 1 *
Building Materials/Construction Machinery - *
Medical Software and Information Services - *
Total portfolio company investments $ 962,430 100.0 %
_______________
*Amount represents less than 0.05% of total portfolio investments at fair value.
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December 31, 2021
Investments in Portfolio Companies by Industry
(dollars in thousands) At Fair Value Percentage of Total Investments
Business Applications Software $ 114,109 13.2 %
E-Commerce - Clothing and Accessories 111,941 12.9
Consumer Products and Services 78,826 9.1
Financial Institution and Services 71,673 8.3
Household & Office Goods 42,470 4.9
Other Financial Services 40,474 4.7
Real Estate Services 38,651 4.5
Security Services 38,282 4.4
Healthcare Technology Systems 37,418 4.3
Network Systems Management Software 37,283 4.3
Travel & Leisure 31,686 3.7
Entertainment 30,881 3.6
Consumer Non-Durables 30,531 3.5
Shopping Facilitators 27,642 3.2
Business Products and Services 22,940 2.7
Business/Productivity Software 17,393 2.0
Consumer Finance 17,345 2.0
Food & Drug 17,316 2.0
Multimedia and Design Software 15,619 1.8
E-Commerce - Personal Goods 15,091 1.7
Database Software 12,876 1.5
Computer Hardware 7,944 0.9
Consumer Retail 2,680 0.3
Communications Software 2,000 0.2
General Media and Content 1,092 0.1
Educational/Training Software 252 *
Commercial Services 238 *
Conferencing Equipment / Services 205 *
Social/Platform Software 151 *
Business to Business Marketplace 144 *
Transportation 111 *
Healthcare Services 61 *
Advertising / Marketing 13 *
Building Materials/Construction Machinery 2 *
Medical Software and Information Services - *
Total portfolio company investments $ 865,340 100.0 %
_______________
*Amount represents less than 0.05% of total portfolio investments at fair value.
The following table presents the type of financing product for our debt investments in
September 30, 2022 December 31 ,
2021
Debt Investments By Financing Product Percentage of Total Debt Percentage of Total Debt (dollars in thousands) Fair Value Investments Fair Value Investments Growth capital loans$ 845,112 98.7 %$ 752,268 99.4 % Revolver loans 10,922 1.2 4,029 0.5 Convertible notes 625 0.1 925 0.1 Total debt investments$ 856,659 100.0 %$ 757,222 100.0 % Growth capital loans in which the borrower held a term loan facility, with or without an accompanying revolving loan, in priority to our senior lien represent 23.6% and 26.2% of our debt investments at fair value as ofSeptember 30, 2022 andDecember 31, 2021 , respectively. 57 --------------------------------------------------------------------------------
Investing activity
During the three months endedSeptember 30, 2022 , we entered into debt commitments with seven new portfolio companies and three existing portfolio companies totaling$103.3 million , funded debt investments to 14 portfolio companies for$101.7 million in principal value, acquired warrant investments representing$1.9 million of value, and made equity investments of$2.6 million . Debt investments funded during the three months endedSeptember 30, 2022 carried a weighted average annualized portfolio yield of 14.5% at origination. During the nine months endedSeptember 30, 2022 , we entered into debt commitments with 28 new portfolio companies and nine existing portfolio companies totaling$489.0 million , funded debt investments to 33 portfolio companies for$322.0 million in principal value, acquired warrant investments representing$4.8 million of value, and made equity investments of$5.7 million . Debt investments funded during the nine months endedSeptember 30, 2022 carried a weighted average annualized portfolio yield of 13.8% at origination. During the three months endedSeptember 30, 2021 , we entered into debt commitments with three new portfolio companies and four existing portfolio companies totaling$116.3 million , funded debt investments to 15 portfolio companies for$117.0 million in principal value, acquired warrant investments representing$1.7 million of value, and made equity investments of$1.2 million . Debt investments funded during the three months endedSeptember 30, 2021 carried a weighted average annualized portfolio yield of 12.8% at origination.
In the nine months ended
During the three months endedSeptember 30, 2022 , we received$0.6 million of principal prepayments,$0.1 million of early repayments and$3.3 million of scheduled principal amortization. During the nine months endedSeptember 30, 2022 , we received$166.4 million of principal prepayments,$4.9 million of early repayments and$19.5 million of scheduled principal amortization. During the three months endedSeptember 30, 2021 , we received$18.2 million of principal prepayments and$14.1 million of scheduled principal amortization. During the nine months endedSeptember 30, 2021 , we received$100.1 million of principal prepayments and$52.3 million of scheduled principal amortization.
The following table shows total portfolio investment activity for the three and nine month periods ended
For the Three Months Ended For the Nine Months Ended September
September 30, 30,
(in thousands) 2022 2021 2022 2021
Beginning portfolio at fair value $ 876,718 $ 647,717 $ 865,340 $ 633,779
New debt investments, net(1) 99,208 113,973 315,058 244,060
Scheduled principal amortization (3,282) (14,118) (19,446) (52,302)
Principal prepayments and early
repayments (723) (18,170) (171,295) (100,135)
Net amortization and accretion of
premiums and discounts and end-of-term
payments 4,873 3,404 10,414 5,015
Payment-in-kind coupon 1,659 2,117 4,593 6,330
New warrant investments 1,873 1,652 4,833 5,519
New equity investments 2,951 1,531 6,747 4,684
Proceeds from dispositions of
investments (4,616) (84) (4,862) (15,084)
Net realized gains (losses) on
investments (12,990) (3,104) (14,653) (18,806)
Net change in unrealized gains (losses)
on investments (3,241) 32,095 (34,299) 53,953
Ending portfolio at fair value $ 962,430 $
767,013
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(1) The debt balance is net of fees and discounts applied to the loan at origination.
Our level of investment activity can vary substantially from period to period as
our Adviser chooses to slow or accelerate new business originations depending on
market conditions, rate of investment of TPC's select group of leading venture
capital investors, our Adviser's knowledge, expertise and experience, our
funding capacity (including availability under the Credit Facility and our
ability or inability to raise equity or debt capital), the amount of our
outstanding unfunded commitments and other market dynamics.
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The following table shows the debt commitments, fundings of debt investments
(principal balance) and equity investments, and non-binding term sheet activity
for the three and nine months ended September 30, 2022 and 2021:
For the Three Months Ended For the Nine Months Ended September
Commitments and Fundings September 30, 30,
(in thousands) 2022 2021 2022 2021
Debt Commitments
New portfolio companies $ 88,000 $
61,667
Existing holding companies
15,286 54,647 92,786 87,866 Total(1)$ 103,286 $
116,314
Funded Debt Investments$ 101,732 $ 116,954 $ 321,988 $ 249,884 Equity Investments$ 2,596 $ 1,204 $ 5,688 $ 3,697 Non-Binding Term Sheets$ 268,753 $
303 505
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(1)Includes the backlog of potential future commitments.
We may enter into commitments with certain portfolio companies that permit an
increase in the commitment amount in the future in the event that conditions to
such increases are met ("backlog of potential future commitments"). If such
conditions to increase are met, these amounts may become unfunded commitments if
not drawn prior to expiration. As of September 30, 2022 and December 31, 2021 ,
we did not have any backlog of potential future commitments.
Asset quality
Consistent with TPC's existing policies, our Adviser maintains a credit watch
list which places borrowers into five risk categories based on our Adviser's
senior investment team's judgment, where 1 is the highest rating and all new
loans are generally assigned a rating of 2.
Category Category Definition Action Item
Clear (1) Performing above expectations and/or Review quarterly.
strong financial or enterprise profile,
value or coverage.
White (2) Performing at expectations and/or
Periodically contact the portfolio company;
reasonably close to it. Reasonable in
no events less than quarterly.
financial or enterprise profile, value or
coverage. Generally, all new loans are
initially graded White (2).
Yellow (3) Performing generally below expectations
Contact the portfolio company monthly or
and/or some proactive concern. Adequate
more frequently as determined by our
financial or enterprise profile, value or
Advisor’s Investment Committee; Contact
coverage. venture capital investors.
Orange (4) Needs close attention due to performance
Contact the portfolio company weekly or so
materially below expectations, weak
frequently as determined by our
financial and/or enterprise profile,
Advisor’s Investment Committee; Contact
concern regarding additional capital or
venture capitalists regularly; our
exit equivalent.
The counselor forms a training group to
minimize risk of loss.
Red (5) Serious concern/trouble due to pending or
Maximize asset value.
actual default or equivalent. May
experience partial and/or full loss.
The following table shows the credit rankings for the portfolio companies that
had outstanding debt obligations to us as of September 30, 2022 and December 31,
2021 :
September 30, 2022 December 31, 2021
Number of Number of
Credit Category Percentage of Total Portfolio Percentage of Total Portfolio
(dollars in thousands) Fair Value Debt Investments Companies Fair Value Debt Investments Companies Clear (1)$ 58,688 6.9 % 4$ 166,091 21.9 % 8 White (2) 712,684 83.1 50 538,167 71.1 38 Yellow (3) 76,898 9.0 4 41,628 5.5 2 Orange (4) 8,389 1.0 1 11,336 1.5 1 Red (5) - - - - - -$ 856,659 100.0 % 59$ 757,222 100.0 % 49 59
-------------------------------------------------------------------------------- As ofSeptember 30, 2022 andDecember 31, 2021 , the weighted average investment ranking of our debt investment portfolio was 2.04 and 1.87, respectively. During the three months endedSeptember 30, 2022 , portfolio company credit category changes, excluding fundings and repayments, consisted of the following: one portfolio company with a principal balance of$14.0 million was upgraded from White (2) to Clear (1), one portfolio company with a principal balance of$25.0 million was upgraded from Yellow (3) to White (2), one portfolio company with a principal balance of$34.3 million was downgraded from White (2) to Yellow (3), and one portfolio company with a principal balance of$15.0 million was sold and removed from Red (5) and from the Company's investment portfolio.
From
Operating results
Comparison of operating results for the three and nine months ended
An important measure of our financial performance is net increase (decrease) in net assets resulting from operations, which includes net investment income (loss), net realized gains (losses) and net unrealized gains (losses). Net investment income (loss) is the difference between our income from interest, dividends, fees and other investment income and our operating expenses including interest on borrowed funds. Net realized gains (losses) on investments is the difference between the proceeds received from dispositions of portfolio investments and their amortized cost. Net unrealized gains (losses) on investments is the net change in the fair value of our investment portfolio. For the three months endedSeptember 30, 2022 , our net increase in net assets resulting from operations was$0.4 million , which was comprised of$16.9 million of net investment income and$16.4 million of net realized and unrealized losses. For the three months endedSeptember 30, 2021 , our net increase in net assets resulting from operations was$38.9 million , which was comprised of$9.9 million of net investment income and$29.0 million of net realized and unrealized gains. On a per share basis for the three months endedSeptember 30, 2022 , net investment income was$0.51 per share and the net increase in net assets from operations was$0.01 per share, as compared to net investment income of$0.32 per share and a net increase in net assets from operations of$1.26 per share for the three months endedSeptember 30, 2021 . For the nine months endedSeptember 30, 2022 , our net decrease in net assets resulting from operations was$8.3 million , which was comprised of$43.1 million of net investment income and$51.3 million of net realized and unrealized losses. For the nine months endedSeptember 30, 2021 , our net increase in net assets resulting from operations was$62.7 million , which was comprised of$28.2 million of net investment income and$34.5 million of net realized and unrealized gains. On a per share basis for the nine months endedSeptember 30, 2022 , net investment income was$1.35 per share and the net decrease in net assets from operations was$0.26 per share, as compared to net investment income of$0.91 per share and a net increase in net assets from operations of$2.03 per share for the nine months endedSeptember 30, 2021 .
investment income
For the three months endedSeptember 30, 2022 , total investment and other income was$29.7 million as compared to$21.2 million for the three months endedSeptember 30, 2021 . The increase in total investment and other income for the three months endedSeptember 30, 2022 , compared to the 2021 period, is primarily due to a greater weighted average principal amount outstanding on our income-bearing debt investment portfolio and higher investment yields. For the nine months endedSeptember 30, 2022 , total investment and other income was$84.5 million as compared to$61.5 million for the nine months endedSeptember 30, 2021 . The increase in total investment and other income for the nine months endedSeptember 30, 2022 , compared to the 2021 period, is primarily due to a greater weighted average principal amount outstanding on our income-bearing debt investment portfolio, higher investment yields and increased prepayment activity. For the three months endedSeptember 30, 2022 , we recognized$0.5 million in other income consisting of$0.1 million due to the termination or expiration of unfunded commitments and$0.4 million from the realization of certain fees paid and accrued from portfolio companies and other income related to prepayment activity. For the nine months endedSeptember 30, 2022 , we recognized$2.3 million in other income consisting of$0.1 million due to the termination or expiration of unfunded commitments and$2.2 million from the realization of certain fees paid and accrued from portfolio companies and other income related to prepayment activity. For the three months endedSeptember 30, 2021 , we recognized$2.5 million in other income consisting of$0.2 million due to the termination or expiration of unfunded commitments and$2.3 million from the realization of certain fees paid and accrued from portfolio companies and other income related to prepayment activity. For the nine months endedSeptember 30, 2021 , we recognized we recognized$3.9 million in other income consisting of$0.5 million due to the termination or expiration of unfunded commitments and$3.3 million from the realization of certain fees paid and accrued from portfolio companies and other income related to prepayment activity. 60 --------------------------------------------------------------------------------
Functionnary costs
Total operating expenses consist of our base management fee, income incentive fee, capital gains incentive fee, interest expense and amortization of fees, administration agreement expenses, and general and administrative expenses. We anticipate operating expenses will increase over time as our portfolio continues to grow. However, we anticipate operating expenses, as a percentage of totals assets and net assets, will generally decrease over time as our portfolio and capital base expand. We expect base management and income incentive fees will increase as we grow our asset base and our earnings. The capital gains incentive fee will depend on realized gains and losses and unrealized losses. Interest expenses will generally increase as we borrow greater amounts under the Credit Facility, issue additional debt securities, and as interest rates increase. We generally expect expenses under the administration agreement and general and administrative expenses to increase over time to meet the additional requirements associated with servicing a larger portfolio. For the three months endedSeptember 30, 2022 , total operating expenses were$12.8 million as compared to$11.3 million for the three months endedSeptember 30, 2021 . For the nine months endedSeptember 30, 2022 , total operating expenses were$41.4 million as compared to$33.3 million for the nine months endedSeptember 30, 2021 . Base management fees for the three months endedSeptember 30, 2022 and 2021 totaled$3.9 million and$3.2 million , respectively. Base management fees increased during the three months endedSeptember 30, 2022 , as compared to the three months endedSeptember 30, 2021 , due to an increase in the average size of our portfolio during the applicable periods used in the calculation. Base management fees for the nine months endedSeptember 30, 2022 and 2021 totaled$11.6 million and$9.2 million , respectively. Base management fees increased during the nine months endedSeptember 30, 2022 , as compared to the nine months endedSeptember 30, 2021 , due to an increase in the average size of our portfolio during the applicable periods used in the calculation. Income incentive fees totaled$0.1 million and$2.5 million for the three months endedSeptember 30, 2022 and 2021, respectively, and$6.7 million and$7.0 million for the nine months endedSeptember 30, 2022 and 2021, respectively. For the three months endedSeptember 30, 2022 , our income incentive fee was reduced by$3.3 million due to the total return requirement under the income component of our incentive fee structure, which resulted in a corresponding increase of$3.3 million in net investment income. Income incentive fees decreased during the nine months endedSeptember 30, 2022 , as compared to the nine months endedSeptember 30, 2021 , due to the total return requirement described above.
There was no capital gains incentive commission expense for the three and nine month periods ended
Interest expense and amortization of fees totaled$7.2 million and$4.1 million for the three months endedSeptember 30, 2022 and 2021, respectively. The increase during the three months endedSeptember 30, 2022 , as compared to the three months endedSeptember 30, 2021 , is due to a greater weighted-average outstanding principal balance under the Credit Facility and an increase in interest rates. Interest expense and amortization of fees totaled$18.4 million and$12.6 million for the nine months endedSeptember 30, 2022 and 2021, respectively. The increase during the nine months endedSeptember 30, 2022 , as compared to the nine months endedSeptember 30, 2021 , is due to the issuance of the 2027 Notes in the first quarter of 2022 and a greater weighted-average outstanding principal balance under the Credit Facility and an increase in interest rates. Administration agreement and general and administrative expenses totaled$1.7 million and$1.6 million for the three months endedSeptember 30, 2022 and 2021, respectively. Administration agreement and general and administrative expenses totaled$4.8 million and$4.4 million for the nine months endedSeptember 30, 2022 and 2021, respectively. The increase for the nine months endedSeptember 30, 2022 , as compared to the nine months endedSeptember 30, 2021 , was primarily due to higher administration expenses under the Administration Agreement as well as increased third-party expenses.
Net realized gains and losses and net unrealized gains and losses
Realized gains and losses are included in “Net realized gains (losses) on investments” in the Consolidated Statements of Income.
During the three months endedSeptember 30, 2022 , we recognized net realized losses on investments of$13.2 million , resulting primarily from the sale ofPencil and Pixel, Inc. , which was rated Red (5) on our watch list, and its removal from our investment portfolio. During the nine months endedSeptember 30, 2022 , we recognized net realized losses on investments of$17.0 million , primarily resulting from the sale ofPencil and Pixel, Inc. and the sale of our investment inCasper Sleep Inc. During the three months endedSeptember 30, 2021 , we recognized net realized losses on investments of$3.1 million , consisting of a$2.1 million realized loss from the write-off of an equity investment and$1.0 million of realized losses from the termination of warrants. During the nine months endedSeptember 30, 2021 , we recognized net realized losses on investments of$18.8 million , consisting primarily of$15.6 million of realized losses from the sale of our investment inKnotel, Inc. , which was rated Red (5) on our credit watch list, and its removal from our investment portfolio, a$2.1 million realized loss from the write-off of an equity investment and$1.1 million of realized losses from the termination of warrants.
Unrealized gains and losses are included in “Net change in unrealized gains (losses) on investments” in the Consolidated Statements of Income.
61 -------------------------------------------------------------------------------- Net change in unrealized losses during the three months endedSeptember 30, 2022 was$3.2 million , consisting of$4.6 million of net unrealized losses on our warrant and equity portfolio resulting from fair value and mark-to-market adjustments as well as$5.0 million of net unrealized losses from foreign currency adjustments, offset by$6.4 million of net unrealized gains on our debt investment portfolio, of which$13.2 million of unrealized gains relate to the reversal of previous losses onPencil and Pixel, Inc. and$6.8 million of net unrealized losses are due to fair value adjustments. Net change in unrealized losses during the nine months endedSeptember 30, 2022 was$34.3 million , consisting of$14.8 million of net unrealized losses on our debt investment portfolio,$9.4 million of net unrealized losses on our warrant and equity portfolio resulting from fair value and mark-to-market adjustments, as well as$10.1 million of net unrealized losses from foreign currency adjustments. Net change in unrealized gains during the three months endedSeptember 30, 2021 was$32.1 million , resulting primarily from fair value adjustments. Net change in unrealized gains during the nine months endedSeptember 30, 2021 was$54.0 million , resulting primarily from the reversal and recognition of$15.6 million of previously recorded unrealized losses associated withKnotel, Inc. in connection with the recognition of a realized loss on the investment, as well as net unrealized gains on our investment portfolio resulting from fair value adjustments.
The net change in realized and unrealized gains or losses in subsequent periods may be volatile, as these results depend on market developments, changes in the underlying performance of our portfolio companies and their respective industries , and other market factors.
Portfolio return and total return
Investment income includes interest income on our debt investments utilizing the
effective yield method including cash interest income as well as the
amortization of any purchase premium, accretion of purchase discount, original
issue discount, facilities fees, and the amortization and payment of the
end-of-term ("EOT") payments. For the three and nine months ended September 30,
2022 , interest income totaled $29.2 million and $82.1 million , respectively,
representing a weighted average annualized portfolio yield on total debt
investments for the period held of 13.8% and 14.5%, respectively. For the three
and nine months ended September 30, 2021 , interest income totaled $18.7 million
and $57.7 million , respectively, representing a weighted average annualized
portfolio yield on total debt investments for the period held of 12.3% and
13.2%, respectively.
We calculate weighted average annualized portfolio yields for periods shown as
the annualized rates of the interest income recognized during the period divided
by the average amortized cost of debt investments in the portfolio during the
period. The weighted average yields reported for these periods are annualized
and reflect the weighted average yields to maturities. Should the portfolio
companies choose to repay their loans earlier, our weighted average yields will
increase for those debt investments affected but may reduce our weighted average
yields on the remaining portfolio in future quarters.
For the three and nine months ended September 30, 2022 , the yield on our total
debt portfolio, excluding the impact of prepayments, was 13.8% and 13.1%,
respectively. For the three and nine months ended September 30, 2021 , the yield
on our total debt portfolio, excluding the impact of prepayments, was 12.1% and
12.0%, respectively.
The following table shows the weighted average annualized portfolio yield on our
total debt portfolio comprising of cash interest income, accretion of the net
purchase discount, facilities fees and the value of warrant investments
received, accretion of EOT payments and the accelerated receipt of EOT payments
on prepayments:
Ratios For the Three Months Ended September 30, For the Nine Months Ended September 30,
(Percentages, on an annualized
basis)(1) 2022 2021 2022 2021
Weighted average annualized
portfolio yield on total debt
investments(2) 13.8 % 12.3 % 14.5 % 13.2 %
Coupon income 11.3 % 9.8 % 10.6 % 9.8 %
Accretion of discount 0.8 % 0.9 % 0.8 % 0.8 %
Accretion of end-of-term payments 1.7 % 1.4 % 1.7 % 1.4 %
Impact of prepayments during the
period - % 0.2 % 1.4 % 1.2 %
_____________
(1)Weighted average portfolio yields on total debt investments for periods shown
are the annualized rates of interest income recognized during the period divided
by the average amortized cost of debt investments in the portfolio during the
period.
(2)The weighted average portfolio yields on total debt investments reflected
above do not represent actual investment returns to our stockholders.
Our weighted average annualized portfolio yield on debt investments may be
higher than an investor's yield on an investment in shares of our common stock.
Our weighted average annualized portfolio yield on debt investments does not
reflect operating expenses that may be incurred by us and, thus, by our
stockholders. In addition, our weighted average annualized portfolio yield on
debt investments and total return figures disclosed in this Quarterly Report on
Form 10-Q do not consider the effect of any sales commissions or charges that
may be incurred in connection with the sale of shares of our common stock. Our
weighted average annualized portfolio yield on debt investments and total return
figures do not represent actual investment returns to stockholders. Our weighted
average annualized portfolio yield on debt investments and total return figures
are subject to change and, in the future, may be greater or less than the rates
in this Quarterly Report on Form 10-Q. Total return based on NAV is the change
in ending NAV per share plus distributions per share paid during the period
assuming participation in our dividend reinvestment plan divided by the
beginning NAV per share for such period.
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Total return based on stock price is the change in the ending stock price of our
common stock plus distributions paid during the period assuming participation in
our dividend reinvestment plan divided by the beginning stock price of our
common stock for such period. For the three and nine months ended September 30,
2022 , our total return during the period based on the change in NAV plus
distributions reinvested as of the respective distribution dates was 1.0% and
(1.4)%, respectively, and our total return during the period based on the change
in stock price plus distributions reinvested as of the respective distribution
dates was (11.8)% and (34.2)%, respectively. For the three and nine months ended
September 30, 2021 , our total return during the period based on the change in
NAV plus distributions reinvested as of the respective distribution dates was
9.5% and 16.5%, respectively, and our total return during the period based on
the change in stock price plus distributions reinvested as of the respective
distribution dates was 6.8% and 31.9%, respectively. These total return figures
are for the periods indicated and are not annualized.
The table below shows our return on average total assets and return on average net asset value for the three and nine months ended
For the Three Months Ended For the Nine Months Ended September
Returns on Net Asset Value and Total September 30, 30,
Assets
(dollars in thousands) 2022 2021 2022 2021
Net investment income $ 16,860 $ 9,887 $ 43,061 $ 28,197
Net increase (decrease) in net assets $ 432 $ 38,860 $ (8,276) $ 62,705
Average net asset value(1) $ 435,522 $ 398,948 $ 433,234 $ 399,746
Average total assets(1) $ 952,878 $ 698,584 $ 896,841 $ 693,154
Net investment income to average net asset
value(2) 15.4 % 9.8 % 13.3 % 9.4 %
Net increase (decrease) in net assets to
average net asset value(2) 0.4 % 38.6 % (2.6) % 21.0 %
Net investment income to average total
assets(2) 7.0 % 5.6 % 6.4 % 5.4 %
Net increase (decrease) in net assets to
average total assets(2) 0.2 % 22.1 % (1.2) % 12.1 %
_______________
(1)The average net asset values and the average total assets are computed based
on daily balances.
(2)Percentage is presented on an annualized basis.
Critical accounting policies
The preparation of our consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates, including with respect to the valuation of our investments, could cause actual results to differ. Understanding our accounting policies and the extent to which we use management's judgment and estimates in applying these policies is integral to understanding our financial statements. We describe our most significant accounting policies in "Note 2. Significant Accounting Policies" in our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2021 and in this Quarterly Report on Form 10-Q. Critical accounting policies are those that require the application of management's most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. Management has utilized available information, including our past history, industry standards and the current economic environment, among other factors, in forming the estimates and judgments, giving due consideration to materiality. We have identified the valuation of our investment portfolio, including our investment valuation policy (which has been approved by the Board), as our critical accounting policy and estimates. The critical accounting policies should be read in conjunction with our risk factors in our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2021 and in this Quarterly Report on Form 10-Q.
Investment appraisal
Investment transactions are recorded on a trade-date basis. Our investments are
carried at fair value in accordance with the 1940 Act and ASC Topic 946 and
measured in accordance with Accounting Standards Codification Topic 820, Fair
Value Measurements and Disclosure, or "ASC Topic 820," issued by the FASB. ASC
Topic 820 defines fair value as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. Fair value is a market-based measure
considered from the perspective of the market's participant who holds the
financial instrument rather than an entity-specific measure. When market
assumptions are not readily available, our own assumptions are set to reflect
those that the Adviser believes market participants would use in pricing the
financial instruments on the measurement date.
The availability of observable inputs can vary depending on the financial
instrument and is affected by a variety of factors. To the extent the valuation
is based on models or inputs that are less observable, the determination of fair
value requires more judgment. Our valuation methodology is approved by the
Board, and the Board is responsible for the fair values determined. As markets
change, new types of investments are made, or pricing for certain investments
becomes more or less observable, management, with oversight from the Board, may
refine our valuation methodologies to best reflect the fair value of our
investments appropriately.
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From
See "Note 4. Investments" in the notes to the consolidated financial statements included in our Annual Report on Form 10-K filed with theSEC onMarch 2, 2022 and "Note 4. Investments" in the notes to the consolidated financial statements included in this Quarterly Report on Form 10-Q for more information on our valuation process.
Cash and capital resources
We believe that our current cash and cash equivalents on hand, our available borrowing capacity under the Credit Facility and our anticipated cash flows from operations, including from net cash proceeds from our ATM Program (described below) and contractual monthly portfolio company payments and cash flows, prepayments, and the ability to liquidate publicly traded investments, will be adequate to meet our cash needs for our daily operations, including to fund our unfunded commitment obligations.
Cash flow
During the nine months endedSeptember 30, 2022 , net cash used in operating activities, consisting primarily of purchases, sales and repayments of investments and the items described in "Results of Operations," was$107.3 million , and net cash provided by financing activities was$63.1 million due primarily to the issuance of the 2027 Notes and proceeds received from ourAugust 2022 public follow-on offering of common stock, offset by net repayments under the Credit Facility of$79.0 million and$33.7 million in distributions paid. As ofSeptember 30, 2022 , cash and cash equivalents, including restricted cash, was$15.0 million . During the nine months endedSeptember 30, 2021 , net cash used in operating activities, consisting primarily of purchases, sales and repayments of investments and the items described in "Results of Operations," was$76.5 million , and net cash provided by financing activities was$54.9 million due primarily to the issuance of the 2026 Notes, partially offset by net repayments under the Credit Facility of$33.0 million , the redemption of the 2022 Notes and$34.9 million in distributions paid. As ofSeptember 30, 2021 , cash and cash equivalents, including restricted cash, was$23.1 million .
Capital resources and borrowings
As a BDC, we generally have an ongoing need to raise additional capital for investment purposes. As a result, we expect, from time to time, to access the debt and equity markets when we believe it is necessary and appropriate to do so. In this regard, we continue to explore various options for obtaining additional debt or equity capital for investments. This may include expanding or extending the Credit Facility or the issuance of additional shares of our common stock, including through our ATM Program (as described below) or debt securities. If we are unable to obtain leverage or raise equity capital on terms that are acceptable to us, our ability to grow our portfolio could be substantially impacted.
Credit facility
As ofSeptember 30, 2022 , we had$350 million in total commitments available under the Credit Facility, subject to various covenants and borrowing base requirements. The Credit Facility also includes an accordion feature, which allows us to increase the size of the Credit Facility to up to$400 million under certain circumstances. The revolving period under the Credit Facility expires onMay 31, 2024 , and the maturity date of the Credit Facility isNovember 30, 2025 (unless otherwise terminated earlier pursuant to its terms). Borrowings under the Credit Facility bear interest at the sum of (i) a floating rate based on certain indices, including SOFR and commercial paper rates (subject to a floor of 0.50%), plus (ii) a margin of 2.80% if facility utilization is greater than or equal to 75%, 2.90% if utilization is greater than or equal to 50%, 3.00% if utilization is less than 50% and 4.5% during the amortization period. See "Note 6. Borrowings" in the notes to the consolidated financial statements for more information regarding the terms of the Credit Facility. As ofSeptember 30, 2022 andDecember 31, 2021 , we had outstanding borrowings under the Credit Facility of$121.0 million and$200.0 million , respectively, excluding deferred credit facility costs of$4.5 million and$2.2 million , respectively, which is included in the consolidated statements of assets and liabilities. We had$229.0 million and$150.0 million of remaining capacity on our Credit Facility as ofSeptember 30, 2022 andDecember 31, 2021 , respectively.
Tickets 2022
OnJuly 14, 2017 , we completed a public offering of$65.0 million in aggregate principal amount of the 2022 Notes and received net proceeds of$62.8 million , after the payment of fees and offering costs. OnJuly 24, 2017 , as a result of the underwriters' full exercise of their option to purchase additional 2022 Notes, we issued an additional$9.75 million in aggregate principal amount of the 2022 Notes and received net proceeds of$9.5 million , after the payment of fees and offering costs. The interest on the 2022 Notes accrued at an annual rate of 5.75%, payable quarterly. 64 -------------------------------------------------------------------------------- OnMarch 5, 2021 , we notified the trustee under the indenture governing the 2022 Notes of our election to redeem, in full, the$74.75 million aggregate principal amount of the 2022 Notes outstanding, and instructed the trustee to provide notice of such redemption to the holders of the 2022 Notes in accordance with the terms of the indenture. OnApril 5, 2021 , the entire$74.75 million aggregate principal amount of 2022 Notes was redeemed in full in accordance with the terms of the indenture governing the 2022 Notes. In connection with the redemption, the 2022 Notes were delisted from theNew York Stock Exchange . The redemption was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of$0.7 million . See "Note 6. Borrowings" in the notes to the consolidated financial statements for more information regarding the 2022 Notes.
Tickets 2025
OnMarch 19, 2020 , we completed a private offering of$70.0 million in aggregate principal amount of the 2025 Notes and received net proceeds of$69.1 million , after the payment of fees and offering costs. The interest on the 2025 Notes, which accrues at an annual rate of 4.50%, is payable semiannually onMarch 19 andSeptember 19 each year. The maturity date of the 2025 Notes is scheduled forMarch 19, 2025 .
From
Tickets 2026
OnMarch 1, 2021 , we completed a private offering of$200.0 million in aggregate principal amount of the 2026 Notes and received net proceeds of$197.9 million , after the payment of fees and offering costs. The interest on the 2026 Notes, which accrues at an annual rate of 4.50%, is payable semiannually onMarch 19 andSeptember 19 each year, beginning onSeptember 19, 2021 . The maturity date of the 2026 Notes is scheduled forMarch 1, 2026 . As ofSeptember 30, 2022 andDecember 31, 2021 , we have recorded in the consolidated statements of assets and liabilities our liability for the 2026 Notes, net of deferred issuance costs, of$198.5 million and$198.2 million , respectively. See "Note 6. Borrowings" in the notes to the consolidated financial statements for more information regarding the 2026 Notes.
Tickets 2027
OnFebruary 28, 2022 , we completed a private offering of$125.0 million in aggregate principal amount of the 2027 Notes and received net proceeds of$123.7 million , after the payment of fees and offering costs. The interest on the 2027 Notes, which accrues at an annual rate of 5.00%, is payable semiannually onFebruary 28 andAugust 28 each year, beginning onAugust 28, 2022 . The maturity date of the 2027 Notes is scheduled forFebruary 28, 2027 . As ofSeptember 30, 2022 , we have recorded in the consolidated statements of assets and liabilities our liability for the 2027 Notes, net of deferred issuance costs, of$123.8 million . See "Note 6. Borrowings" in the notes to the consolidated financial statements for more information regarding the 2027 Notes.
ATM program
OnSeptember 30, 2022 , we entered into a sales agreement (the "Sales Agreement") with the Adviser, theAdministrator andUBS Securities LLC (the "Sales Agent"), providing for the issuance from time to time of up to an aggregate of$50 million in shares of our common stock by means of at-the-market offerings (the "ATM Program"). Subject to the terms of the Sales Agreement, the Sales Agent is not required to sell any specific number or dollar amount of securities but will act as our sales agent using commercially reasonable efforts consistent with the Sales Agent's normal trading and sales practices, on mutually agreed terms between us and the Sales Agent.
From
Asset Coverage Requirements OnJune 21, 2018 , our stockholders voted at a special meeting of stockholders to approve a proposal to authorize us to be subject to a reduced asset coverage ratio of at least 150% under the 1940 Act. As a result of the stockholder approval at the special meeting, effectiveJune 22, 2018 , our applicable minimum asset coverage ratio under the 1940 Act has been decreased to 150% from 200%. Thus, we are permitted under the 1940 Act, under specified conditions, to issue multiple classes of debt and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 150% immediately after each such issuance. As ofSeptember 30, 2022 , our asset coverage for borrowed amounts was 187%. 65 --------------------------------------------------------------------------------
Contractual obligations
The following table provides a summary of our payment obligations for the repayment of debt to
Payments Due By Period September 30, 2022 (in thousands) Total Less than 1 year 1-3 years 3-5 years More than 5 years Credit Facility$ 121,000 $ -$ 121,000 $ - $ - 2025 Notes 70,000 - 70,000 - - 2026 Notes 200,000 - - 200,000 - 2027 Notes 125,000 - - 125,000 - Total$ 516,000 $ -$ 191,000 $ 325,000 $ - Unfunded Commitments We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. As ofSeptember 30, 2022 andDecember 31, 2021 , our unfunded commitments totaled$331.1 million and$191.7 million , respectively, of which$128.4 million and$50.3 million , respectively, was dependent upon the portfolio companies reaching certain milestones before the debt commitment becomes available to them. 66
-------------------------------------------------------------------------------- The following table shows our unfunded commitments by portfolio company as ofSeptember 30, 2022 andDecember 31, 2021 : Unfunded Commitments(1) (in thousands) September 30, 2022 December 31, 2021 Corelight, Inc. $ 30,000 $ - Frubana Inc. 25,000 - Overtime Sports, Inc. 22,857 - Athletic Greens (USA), Inc. 20,000 - Found Health, Inc. 20,000 - Jerry Services, Inc. 15,000 - LeoLabs, Inc. 15,000 - RenoRun US Inc. 12,750 12,750 Flink SE 12,500 - Savage X, Inc. 12,500 12,000 The Aligned Company (f/k/a Thingy Thing Inc.) 12,000 2,000 Activehours, Inc. (d/b/a Earnin) 10,000 10,000 Homelight, Inc. 10,000 - Homeward, Inc. 10,000 10,000 Loft Orbital Solutions Inc. 10,000 Merama Inc. 9,718 9,718 Mynd Management, Inc. 9,000 - McN Investments Ltd. 8,000 - Foodology Inc. 7,976 - Good Eggs, Inc. 7,000 14,000 Untitled Labs, Inc. 5,833 - Forum Brands, LLC 5,437 12,951 Everdrop GmbH 5,323 - Cart.com, Inc. 5,000 - Don't Run Out, Inc. 5,000 5,000 Quick Commerce Ltd 4,000 - FlashParking, Inc. 3,490 3,837 Minted, Inc. 3,400 - Baby Generation, Inc. 3,125 - True Footage Inc. 2,494 5,695 Flo Health, Inc. 2,167 - JOKR S.à r.l. 1,499 1,496 Belong Home, Inc. 1,000 - Dia Styling Co. 1,000 - Mystery Tackle Box, Inc. (d/b/a Catch Co.) 1,000 - Pair EyeWear, Inc. 1,000 - Substack Inc. 1,000 - Tempo Interactive Inc. - 25,000 The Pill Club Holdings, Inc. - 20,000 Arcadia Power, Inc. - 18,000 Curology, Inc. - 9,000 Demain ES (d/b/a Luko) - 7,940 Narvar, Inc. - 3,750 Sonder USA, Inc. - 3,000 Trendly, Inc. - 3,000 VanMoof Global Holding B.V. - 2,025 Alyk, Inc. - 500 Total $ 331,069 $ 191,662 _____________
(1) Does not include the backlog of potential future commitments. See “Investment Activity” above.
67 -------------------------------------------------------------------------------- The following table shows additional information on our unfunded commitments regarding milestones and expirations as ofSeptember 30, 2022 andDecember 31, 2021 : Unfunded Commitments(1) (in thousands) September 30, 2022 December 31, 2021 Dependent on milestones $ 128,392 $ 50,250 Expiring during: 2022 $ 50,166 $ 131,429 2023 187,646 50,233 2024 67,000 10,000 2025 26,257 - Total $ 331,069 $ 191,662 _______________
(1) Does not include the backlog of potential future commitments.
As ofSeptember 30, 2022 , our unfunded commitments to 37 companies totaled$331.1 million . During the three and nine months endedSeptember 30, 2022 ,$19.0 million and$25.8 million , respectively, in unfunded commitments expired or were terminated.
From
Our credit agreements contain customary lending provisions that allow us relief from funding obligations for previously made commitments in instances where the underlying portfolio company experiences material adverse events that affect the financial condition or business outlook for the portfolio company. Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for us. We generally expect 50% - 75% of our gross unfunded commitments to eventually be drawn before the expiration of their corresponding availability periods. The fair value at the inception of the delay draw credit agreements with our portfolio companies is equal to the fees and/or warrants received to enter into these agreements, taking into account the remaining terms of the agreements and the relevant counterparty's credit profile. The unfunded commitment liability reflects the fair value of these future funding commitments. As ofSeptember 30, 2022 andDecember 31, 2021 , the fair value for these unfunded commitments totaled$5.3 million and$3.2 million , respectively, and was included in "other accrued expenses and liabilities" in our consolidated statements of assets and liabilities. Distributions We have elected to be treated, and intend to qualify annually, as a RIC under the Code. To maintain RIC tax treatment, we must distribute at least 90% of our net ordinary income and net realized short-term capital gains in excess of our net realized long-term capital losses, if any, to our stockholders. In order to avoid a non-deductible 4%U.S. federal excise tax on certain of our undistributed income, we would need to distribute during each calendar year an amount at least equal to the sum of: (a) 98% of our ordinary income (not taking into account any capital gains or losses) for such calendar year; (b) 98.2% of the amount by which our capital gains exceed our capital losses (adjusted for certain ordinary losses) for a one-year period ending onOctober 31 of the calendar year (unless an election is made by us to use our taxable year); and (c) certain undistributed amounts from previous years on which we paid noU.S. federal income tax. For the tax years endedDecember 31, 2021 and 2020, we were subject to a 4%U.S. federal excise tax and we may be subject to this tax in future years. In such cases, we will be liable for the tax only on the amount by which we do not meet the foregoing distribution requirement. To the extent our taxable earnings fall below the total amount of our distributions for the year, a portion of those distributions may be deemed a return of capital to our stockholders. Our Adviser monitors available taxable earnings, including net investment income and realized capital gains, to determine if a return of capital may occur for the year. We estimate the source of our distributions as required by Section 19(a) of the 1940 Act to determine whether payment of dividends are expected to be paid from any other source other than net investment income accrued for the current period or certain cumulative periods, but we will not be able to determine whether any specific distribution will be treated as made out of our taxable earnings or as a return of capital until after the end of our taxable year. Any amount treated as a return of capital will reduce a stockholder's adjusted tax basis in his or her common stock, thereby increasing his or her potential gain or reducing his or her potential loss on the subsequent sale or other disposition of his or her common stock. On a quarterly basis, for any payment of dividends estimated to be paid from any other source other than net investment income accrued for the current period or certain cumulative periods based on the Section 19(a) requirement, we post a Section 19(a) notice through theDepository Trust Company's Legal Notice System and our website, as well as send our registered stockholders a printed copy of such notice along with the dividend payment. The estimates of the source of the distribution are interim estimates based on GAAP that are subject to revision, and the exact character of the distributions for tax purposes cannot be determined until the final books and records are finalized for the calendar year. Therefore, these estimates are made solely in order to comply with the requirements of Section 19(a) of the 1940 Act and should not be relied upon for tax reporting or any other purposes and could differ significantly from the actual character of distributions for tax purposes. 68 -------------------------------------------------------------------------------- The following table shows our cash distributions per share that have been authorized by our Board since our initial public offering toSeptember 30, 2022 . FromMarch 5, 2014 (commencement of operations) toDecember 31, 2015 , and during the years endedDecember 31, 2017 andDecember 31, 2018 , distributions represent ordinary income as our earnings exceeded distributions. Approximately$0.24 per share of the distributions during the year endedDecember 31, 2016 represented a return of capital. During the years endedDecember 31, 2021 , 2020 and 2019, distributions represent ordinary income and long term capital gains. Depending on the duration of the COVID-19 pandemic and the extent of its impact on our portfolio companies' operations and our net investment income, any future distributions to our stockholders may be for amounts less than our historical distributions, may be made less frequently than historical practices, and may be made in part cash and part stock (as per each stockholder's election), subject to a limitation that the aggregate amount of cash to be distributed to all stockholders must be at least 20% of the aggregate declared distribution. Period Ended Date Declared Record Date Payment Date Per Share Amount March 31, 2014 April 3, 2014 April 15, 2014 April 30, 2014 $ 0.09 (1) June 30, 2014 May 13, 2014 May 30, 2014 June 17, 2014 0.30 September 30, 2014 August 11, 2014 August 29, 2014 September 16, 2014 0.32 December 31, 2014 October 27, 2014 November 28, 2014 December 16, 2014 0.36 December 31, 2014 December 3, 2014 December 22, 2014 December 31, 2014 0.15 (2) March 31, 2015 March 16, 2015 March 26, 2015 April 16, 2015 0.36 June 30, 2015 May 6, 2015 May 29, 2015 June 16, 2015 0.36 September 30, 2015 August 11, 2015 August 31, 2015 September 16, 2015 0.36 December 31, 2015 November 10, 2015 November 30, 2015 December 16, 2015 0.36 March 31, 2016 March 14, 2016 March 31, 2016 April 15, 2016 0.36 June 30, 2016 May 9, 2016 May 31, 2016 June 16, 2016 0.36 September 30, 2016 August 8, 2016 August 31, 2016 September 16, 2016 0.36 December 31, 2016 November 7, 2016 November 30, 2016 December 16, 2016 0.36 March 31, 2017 March 13, 2017 March 31, 2017 April 17, 2017 0.36 June 30, 2017 May 9, 2017 May 31, 2017 June 16, 2017 0.36 September 30, 2017 August 8, 2017 August 31, 2017 September 15, 2017 0.36 December 31, 2017 November 6, 2017 November 17, 2017 December 1, 2017 0.36 March 31, 2018 March 12, 2018 March 23, 2018 April 6, 2018 0.36 June 30, 2018 May 2, 2018 May 31, 2018 June 15, 2018 0.36 September 30, 2018 August 1, 2018 August 31, 2018 September 14, 2018 0.36 December 31, 2018 October 31, 2018 November 30, 2018 December 14, 2018 0.36 December 31, 2018 December 6, 2018 December 20, 2018 December 28, 2018 0.10 (2) March 31, 2019 March 1, 2019 March 20, 2019 March 29, 2019 0.36 June 30, 2019 May 1, 2019 May 31, 2019 June 14, 2019 0.36 September 30, 2019 July 31, 2019 August 30, 2019 September 16, 2019 0.36 December 31, 2019 October 30, 2019 November 29, 2019 December 16, 2019 0.36 March 31, 2020 February 28, 2020 March 16, 2020 March 30, 2020 0.36 June 30, 2020 April 30, 2020 June 16, 2020 June 30, 2020 0.36 September 30, 2020 July 30, 2020 August 31, 2020 September 15, 2020 0.36 December 31, 2020 October 29, 2020 November 27, 2020 December 14, 2020 0.36 December 31, 2020 December 21, 2020 December 31, 2020 January 13, 2021 0.10 (2) March 31, 2021 February 24, 2021 March 15, 2021 March 31, 2021 0.36 June 30, 2021 April 29, 2021 June 16, 2021 June 30, 2021 0.36 September 30, 2021 July 28, 2021 August 31, 2021 September 15, 2021 0.36 December 31, 2021 October 29, 2021 November 30, 2021 December 15, 2021 0.36 March 31, 2022 February 22, 2022 March 15, 2022 March 31, 2022 0.36 June 30, 2022 April 28, 2022 June 16, 2022 June 30, 2022 0.36 September 30, 2022 July 27, 2022 September 15, 2022 September 30, 2022 0.36 Total cash distributions $ 12.58 _____________ (1)The amount of this initial distribution reflected a quarterly distribution rate of$0.30 per share, prorated for the 27 days for the period from the pricing of our initial public offering onMarch 5, 2014 (commencement of operations), throughMarch 31, 2014 . (2)Represents a special distribution. For the three months endedSeptember 30, 2022 , distributions paid were comprised of interest-sourced distributions (qualified interest income) in an amount equal to 74.1% of total distributions paid. As ofSeptember 30, 2022 , we had estimated undistributed taxable earnings from net investment income of$18.5 million , or$0.52 per share. 69
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Recent accounting pronouncements
InJune 2022 , the FASB issued ASU No. 2022-03, "Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions" ("ASU 2022-03"). ASU 2022-03 (1) clarifies the guidance in ASC 820 on the fair value measurement of an equity security that is subject to a contractual sale restriction and (2) requires specific disclosures related to such an equity security. ASU 2022-03 is effective for fiscal years beginning afterDecember 15, 2023 and interim periods within that fiscal year, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2022-03 on our consolidated financial statements. InJanuary 2021 , theFinancial Accounting Standards Board issued Accounting Standards Update ("ASU") No. 2021-01, Reference Rate Reform (Topic 848) ("ASU 2021-01"). ASU 2021-01 is an update of ASU 2020-04, which is in response to concerns about structural risks of interbank offered rates, and particularly the risk of cessation of LIBOR; regulators have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. ASU 2020-04 provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. ASU 2020-04 is elective and applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The ASU 2021-01 update clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The amendments in this update are effective immediately throughDecember 31, 2022 , for all entities. The adoption of these rules did not have a material impact on the consolidated financial statements. Recent Developments Distribution
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Recent Portfolio Activity
OnOctober 11, 2022 , portfolio company ForgeRock, Inc. announced that it has entered into a definitive agreement to be acquired byThoma Bravo , for$23.25 per share, in an all-cash transaction valued at approximately$2.3 billion . The transaction is anticipated to close in the first quarter of 2022 and based upon current terms, is expected to generate an additional gain of$2.6 million on the Company's warrant holdings from theSeptember 30, 2022 closing value. FromOctober 1, 2022 throughNovember 1, 2022 , we funded$27.9 million in new investments. TPC's direct originations platform entered into$96.3 million of additional non-binding signed term sheets with venture growth stage companies. These investment opportunities for us are subject to due diligence, definitive documentation and investment committee approval, as well as compliance with TPC's allocation policy. FromOctober 1, 2022 throughNovember 1, 2022 , we received$33.8 million of principal prepayments generating more than$1.0 million of accelerated income.
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infinitii ai (FRA:Y31) Annual results 2022 Main financial results Revenue: CA$1.62m (down 39% from FY2021). Net loss: CA$2.46m (loss reduced by 47% compared to FY2021). Loss of CA$0.019 per share (improvement from loss of CA$0.049 in fiscal 2021). DB:Y31 Earnings and Revenue History October 30, 2022 All figures shown in the table above are for […]]]>infinitii ai (FRA:Y31) Annual results 2022
Main financial results
- Revenue: CA$1.62m (down 39% from FY2021).
- Net loss: CA$2.46m (loss reduced by 47% compared to FY2021).
- Loss of CA$0.019 per share (improvement from loss of CA$0.049 in fiscal 2021).
All figures shown in the table above are for the 12 month period (TTM)
Shares of infinitii ai are down 29% from a week ago.
Risk analysis
What about the risks? Every business has them, and we’ve spotted 4 warning signs for infinitii ai (3 of which are significant!) that you should know.
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Not everyone needs automation,” says Ian Hobkirk, senior vice president of business development consulting at KPI Integrated Solutions. “Not everyone has the budget. The return on investment. The business case. Or the need for the risk associated with automation,” adds Hobkirk. So what exactly is conventional warehousing in a seemingly automation-obsessed retail world? That’s what […]]]>Not everyone needs automation,” says Ian Hobkirk, senior vice president of business development consulting at KPI Integrated Solutions.
“Not everyone has the budget. The return on investment. The business case. Or the need for the risk associated with automation,” adds Hobkirk.
So what exactly is conventional warehousing in a seemingly automation-obsessed retail world?
That’s what we asked an expert panel of conventional warehousing equipment, automation and software vendors as well as consultants. Here’s what they had to say.
What does it look like ?
Let’s start with what conventional warehousing looks like. And to be honest, it wasn’t particularly difficult to get consensus here.
Basically, conventional warehousing has forklifts and a rack. There’s nothing wrong with ground stacking either. On the information side, you have barcode scanners, voice systems, and radio frequency communications. Add to that a warehouse management system (WMS).
Then our experts started to nibble on other elements. Some included the limited use of conveyors and even autonomous robots. Others included warehouse execution systems (WES). Placement Walls were mentioned in passing, as were Crate Picker Modules with WES support.
For the most part, virtually all other material handling equipment as well as data management systems and software are prohibited. However, Kyle Nevenhoven, principal consultant at automation provider Dematic, had the strictest definition of conventional no-nibble warehousing. “Conventional is well suited to a warehouse with limited order complexity and a relatively low number of SKUs,” he says.
All good, but what are the main characteristics of conventional warehousing?
“A conventional warehouse is very fluid. It has no fixed constraints [beyond rack] like a conveyor bolted to the ground. This makes these installations very flexible,” says Ryan Wachsmuth, Dynamic Storage Sales Manager for Steel King.
“Conventional is great for new businesses as well as those that are highly seasonal but have a mix of standard orders and highly repeatable processes,” says Diana Mueller, account executive at Fortna.
“Even in the face of high volume, conventional warehousing isn’t a bad answer,” said Bryan Jensen, president and executive vice president of St. Onge. And, he says, it does whether the move is dominated by full-pallet moves in food and beverage or retail e-commerce.
“The viability of conventional warehousing is entirely dependent on content and level of manpower. As both move upmarket and take longer to process an order, conventional warehousing starts to become less promising,” adds Jensen.
Unless, of course, some software is introduced, says Dan Gilmore, vice president of marketing at Softeon.
When the conventional falls short
This brings us to the dividing line between conventional, mechanized and automated. Yes, it’s fuzzy and requires thoughtful assessment to decide when and how a conventional operation has passed its peak.
For starters, there’s no escaping labor constraints. If there is a case for moving immediately to automation now, it is a persistent labor shortage that is hampering conventional operations. Period.
With that out of the way, Hobkirk quotes a minimum of 98% inventory accuracy for conventional to remain viable. “Inventory accuracy has ripple effects, whether it’s what’s on the shelves, an order being picked, or a shipment,” he adds.
There is also the matter of time, says Hobkirk. “Especially in e-commerce operations, service levels are critical. If a conventional warehouse cannot pick and ship with a same-day cut-off time of 2:00 p.m. or 3:00 p.m., then there is a need to reevaluate,” he adds.
Fortna’s Mueller adds space constraints and throughput levels. She emphasizes the latter, specifically an inability to meet service level agreements. Quite simply, it is never good to always disappoint customers.
Service level agreements are also a focus for Nevenhoven at Dematic. Beyond time and accuracy, he cites a warehouse’s ability to be store and driver friendly. Store friendly involves the ability to sequence goods in a store in an aisle-friendly manner. Driver friendliness is more associated with truck organization, single-paddle controls, or perfectly sequenced floor loading.
Nevenhoven also has a list of features that a conventional warehouse is not a candidate for automation. As Hobkirk said up top, a company may not have the mindset to spend enough capex to effect change.
Another, says Nevenhoven, is the lack of interest in going beyond a single 8-10 hour shift. “For automation to work, the business will have to overbuild to make a single shift work.”
A third is a strong pride in the company’s conventional warehouse. “This culture can prevent a company from being ready to succeed with automation,” adds Nevenhoven.
Problem resolution
Backed by a corporate philosophy that conventional is best, there are ways to make improvements, even if it means snacking on the strictest definition of conventional warehousing.
One of the clearer options here, according to Steel King’s Wachsmuth, is to use different types of racks than conventional single-depth selective racks or floor stacking. From drive-in to drive-in and even push-back rack and more, several options can provide higher storage density. At the same time, they come with limitations such as first in/first out and first in/last out.
Either way, says Wachsmuth, these options offer the potential for increased operational efficiencies that are entirely dependent on the goals and operational specifics of the warehouse.
The same can be said of forklifts. Options for improving efficiency depend on the type of truck, from pallet truck to counterbalance truck, and the combination of these types of forklifts in the fleet. Most people considered the man on forklifts to be outside the realm of conventional warehousing. But they might still be worth a look.
Still on the inventory transportation front, the limited use of conveyors and autonomous robots is also an option for improvement. However, the extent to which either violates conventional warehouse covenant may be a point of discussion. Either way, the main goal would be to minimize how they change the footprint and flow of the facility, which of course is easier to do with robots.
Yet another option that encompasses both racks and trucks in particular is the layout of the facility, says Fortna’s Mueller. She explains that travel time is an important factor in determining inventory speed. In fact, a warehouse may well have the right mix of equipment, but require a different layout to speed up inventory and order fulfillment.
Jensen of St. Onge adds that travel time can also depend on where different types of inventory are stored. For example: are fast movers closest to the docks and slow movers further away? No need to change the layout, just the storage locations.
The power of software
Interestingly, no one has introduced other types of data capture beyond wireless devices, scanners, and voice systems. However, the discussion has widened a bit when it comes to software beyond a traditional WMS, which typically manages inventory, order picking, and shipping.
As Softeon’s Gilmore explains, the ability to assign the right work at the right time is critical to success in a conventional warehouse. A WES is at the heart of this.
“A WES provides real-time, granular visibility by area in the warehouse,” says Gilmore. “In addition, the software levels the workload across the entire facility and automatically initiates orders. This activity is based on order priority, human resources and carrier deadlines,” continues Gilmore.
It tells the story of a third-party logistics (3PL) provider that added a WES. “The company doubled its productivity over the holiday season compared to the previous year without the help of WES,” says Gilmore.
He also cited the benefits of adding shelving walls and other non-automated picking modules to a conventional warehouse under WES leadership. Increased order consolidation and related order processing efficiency is a typical result.
Which brings us to slotting software. The idea here is to store the product in the right place for its level of activity. This makes it appropriately accessible whenever needed. “Slotting software also minimizes travel, improves productivity, and optimizes the movement of people,” says Fortna’s Mueller.
Additionally, according to Gilmore, positioning optimization is particularly effective in managing SKUs when there are not enough selection faces for all SKUs or you expect large increases in demand. “Slotting software dynamically creates new slots until demand is met,” adds Gilmore.
Jensen describes something he calls “fat slotting”. In this diagram, the warehouse is divided into several (perhaps only four) quadrants. Each contains SKUs that evolve at roughly the same overall rate. This has the effect of creating four separate picking areas within a larger warehouse, reducing travel distances to a quarter of what they could be if the entire warehouse were treated as one picking area.
That said, conventional warehousing has a lot to offer a wide range of order fulfillment operations. And perhaps just as importantly, there may not always be as much pressure as perceived to switch to mechanized and automated components when performance needs a little TLC.
By Lorilyn C. Lirio Former Bicycle and Pedestrian Advisory Committee Jim Lazar urged Olympia board members to hold a study session with advisory committees and community activists to discuss funding for the city’s sidewalks. Lazar submitted his written comment to City Council, which opened the public hearing for the 2023 Preliminary Capital Plan on Tuesday, […]]]>By Lorilyn C. Lirio
Former Bicycle and Pedestrian Advisory Committee Jim Lazar urged Olympia board members to hold a study session with advisory committees and community activists to discuss funding for the city’s sidewalks.
Lazar submitted his written comment to City Council, which opened the public hearing for the 2023 Preliminary Capital Plan on Tuesday, October 18.
Four community members participated in the public hearing, asking to include the sidewalk project in the call for proposals.
Lazar discussed the Voted Utilities Tax (VUT) and the programs those funds should fund.
In 2004, according to Olympia’s website, voters approved a 3% increase in private STV to fund parks and boardwalk facilities. He added that 1% — about $1 million — of those funds goes to neighborhood sidewalk and trail projects each year.
According to Lazar, Olympia’s fact sheet was sent to all residents to explain STV. It lists specific projects to be funded by STV for the period 2004-2025.
He said Fones Road was not included. The project was to be funded through grants and impact fees.
Lazar claimed that the sidewalk portion of the Fones project has grown since then, while the 22nd/Eastside sidewalk, which is included on the map in the fact sheet, has not been built and is not planned for the construction in this call for proposals.
“I am not suggesting abandoning or delaying the Fones Road project. There is no need to jeopardize the grants for this project,” Lazar said.
He recommended that the City Council remove STV funding for Fones Road and replace it with $3 million in Transportation Impact Fee funding. “That was the funding mechanism identified when the sidewalk program was drafted and voters embraced STV.”
“Removing STV’s enforcement at Fones Road will free up $3 million from STV for sidewalk spending that our neighborhoods need and want. This would allow you to do what the public asks and what the public has been promised when we voted in 2004 to have STV used for local sidewalks,” Lazar said.
“There is no shortage of revenue options for sidewalks,” Lazar commented. “There is a lack of creativity on the part of the City Manager and his staff to bring all possible funding options to Council.”
No penny added
Larry Dzieza, chairman of the Council Neighborhood Association (CNA), said the Planning Commission is against passing the CFP unless a review is carried out in the transport sector, particularly pavements. (See the other article today: Olympia Planning Commission: No to adoption of 2023 preliminary capital plan.)
Dzieza expressed frustration when Olympia rejected the commission’s suggestion.
“Your staff replied that we should wait because ‘it is unrealistic to accomplish the complex task of revising the CFP in such a short period of time’. But you all knew this problem existed for years”, said Dzieza, adding that ANC members had been frustrated for years.
He pointed to Olympia’s polls reflecting the community’s desire to prioritize the sidewalk project. But the city only allocated an $11,000 budget for the sidewalks.
In 2019, Dzieza said, Olympia conducted a survey asking what it should spend if the city found new funding. “The highest response was sidewalks.”
As of May of this year, Olympia had $10.2 million in funding available due to higher revenue and salary savings from vacancies.
The city spent $7 million on leadership training, financial software, records management software, staff support for the climate program, workers’ compensation fund, and setting aside 3 million dollars for an increased fund balance.
The community leader noted that the town had not spent “a dime on what the public said was its priority.”
“Not a penny was added to the $11,000 [fund] sidewalks,” he added.
“If you don’t listen to your polls, stop spending their money and use it for something useful. Frustration has a cause which is a lack of action. That’s what causes frustration. I tell you asks for positive action on the issue of sidewalks, even if it’s just a small one-time increase in the budget while we work on a more comprehensive approach, showing that you are acting on what the public,” Dzieza told council members.
Redefining sidewalk priorities
Karen Messmer said people have been begging for sidewalks since she joined the Planning Commission in 1995. She said the transport master plan spells out the need for increased investment and support for walking.
“I was particularly frustrated to see staff’s response to public comments that they were not recommending changes to the PA. I understand that there are grant guidelines and timelines, but on what are you organizing this public hearing? said Messmer, who participated in the public hearing virtually.
She told council members that they could change the operating and capital budgets. “You’re the decision maker. Ask transportation and fundraising staff to spend more on finding internal and external funding for sidewalks and walking.”
Messmer, a former council member, also asked the city to restore money from the general fund for sidewalks and move two sidewalk projects into the 2023 construction year from the CFP — including the sidewalks at 22nd and 12th. side is initially planned for 2017.
She cited that the city council has repeatedly reorganized its staff priorities to focus on housing and the COVID-19 response. “You can change the direction and the priorities. It’s time to act on the sidewalks.”
Melissa Allen asked council members to consider asking Olympia staff to work with neighborhoods to create innovative ways to fix sidewalks.
“I’ve been dealing with the issue of the neighborhood for over ten years, and we’ve talked about [sidewalks] From the beginning. So I’m trying to think of less technical ways for the city to demonstrate that they care about these neighborhoods and want people to be able to get around safely,” Allen said.