Monroe Capital Corporation (NASDAQ: MRCC) today announced its
financial results for the second quarter ended June 30, 2024.
Except where the context suggests otherwise, the terms
“Company,” “we,” “us,” and “our” refer to Monroe Capital
Corporation (together with its subsidiaries).
Second Quarter 2024 Financial Highlights
- Net Investment Income ("NII") of $6.6
million, or $0.30 per share
- Adjusted Net Investment Income (a non-GAAP measure described
below) of $6.7 million, or $0.31 per share
- Net increase in net assets resulting from operations of $3.3
million, or $0.15 per share
- Net Asset Value (“NAV”) of $199.3 million, or $9.20 per
share
- Paid quarterly dividend of $0.25 per share on June 28,
2024
- Current annual cash dividend yield to stockholders of
approximately 14.0%(1)
Chief Executive Officer Theodore L. Koenig commented, “We are
pleased to announce a $0.25 per share dividend for the 17th
consecutive quarter. Our predominantly first lien portfolio
continues to offer attractive risk-adjusted returns to our
shareholders with a 14.0% annualized dividend yield. Our focus
remains on maintaining the portfolio’s asset quality in the face of
a higher-for-longer interest rate environment and delivering value
for stockholders.”
Monroe Capital Corporation is a business development company
affiliate of the award-winning private credit investment firm and
lender, Monroe Capital
LLC.______________________________________________________________________(1)
Based on an annualized dividend and closing share price as of
August 6, 2024.
Management Commentary
Adjusted Net Investment Income totaled $6.7 million or $0.31 per
share for the quarter ended June 30, 2024. This compares with
$5.5 million or $0.25 per share for the quarter ended
March 31, 2024. Total investment income increased by $0.4
million as a result of an increase in average invested assets
during the quarter and an increase in other income as part of a
portfolio company realization during the quarter. This increase was
partially offset by an increase in interest and other debt
financing expenses of $0.3 million associated with an increase in
average debt outstanding during the quarter. Additionally, during
the quarter, incentive fees were limited by $1.0 million as a
result of the total return requirement in the Company's incentive
fee structure. Please refer to the Company’s Form 10-Q for
additional information on the incentive fee calculation. See
Non-GAAP Financial Measure – Adjusted Net Investment Income
discussion below.
NAV decreased by $0.10 per share, or 1.1%, to $199.3 million or
$9.20 per share as of June 30, 2024, compared to $201.5
million or $9.30 per share as of March 31, 2024. The decrease
in NAV this quarter was primarily the result of net unrealized
losses attributable to certain portfolio companies, partially
offset by NII in excess of the dividend paid during the
quarter.
During the quarter, the Company's debt-to-equity leverage
decreased from 1.60 times debt-to-equity to 1.54 times
debt-to-equity. While average leverage was slightly up during the
quarter, leverage at quarter end decreased as a result of paydowns
of the revolving credit facility with proceeds from investment
sales and paydowns which were more heavily weighted towards the end
of the quarter. We continue to focus on managing our investment
portfolio and selectively redeploying capital resulting from future
repayments.
Selected Financial Highlights(in thousands,
except per share data)
|
June 30, 2024 |
|
March 31, 2024 |
Consolidated
Statements of Assets and Liabilities data: |
(unaudited) |
Investments, at fair value |
$ |
485,804 |
|
$ |
500,889 |
Total assets |
$ |
512,113 |
|
$ |
527,488 |
Net assets |
$ |
199,344 |
|
$ |
201,502 |
Net asset value per share |
$ |
9.20 |
|
$ |
9.30 |
|
Three months ended |
|
June 30, 2024 |
|
March 31, 2024 |
Consolidated
Statements of Operations data: |
(unaudited) |
Net investment income |
$ |
6,559 |
|
|
$ |
5,470 |
|
Adjusted net investment
income(2) |
$ |
6,694 |
|
|
$ |
5,488 |
|
Net gain (loss) |
$ |
(3,301 |
) |
|
$ |
(2,275 |
) |
Net increase (decrease) in net
assets resulting from operations |
$ |
3,258 |
|
|
$ |
3,195 |
|
|
|
|
|
Per share data: |
|
|
|
Net investment income |
$ |
0.30 |
|
|
$ |
0.25 |
|
Adjusted net investment
income(2) |
$ |
0.31 |
|
|
$ |
0.25 |
|
Net gain (loss) |
$ |
(0.15 |
) |
|
$ |
(0.10 |
) |
Net increase (decrease) in net
assets resulting from operations |
$ |
0.15 |
|
|
$ |
0.15 |
|
______________________________________________________________________(2)
See Non-GAAP Financial Measure – Adjusted Net Investment Income
below for a detailed description of this non-GAAP measure and a
reconciliation from NII to Adjusted Net Investment Income. The
Company uses this non-GAAP financial measure internally in
analyzing financial results and believes that this non-GAAP
financial measure is useful to investors as an additional tool to
evaluate ongoing results and trends for the Company.
Portfolio Review
The Company had debt and equity investments in 94 portfolio
companies, with a total fair value of $485.8 million as of
June 30, 2024, as compared to debt and equity investments in
98 portfolio companies, with a total fair value of $500.9 million,
as of March 31, 2024. The Company’s portfolio consists
primarily of first lien loans, representing 81.1% of the portfolio
as of June 30, 2024, and 81.9% of the portfolio as of
March 31, 2024. As of both June 30, 2024 and
March 31, 2024, the weighted average contractual and effective
yield on the Company’s debt and preferred equity investments was
11.9% and 11.9%, respectively. Portfolio yield is calculated only
on the portion of the portfolio that has a contractual coupon and
therefore does not account for dividends on equity investments
(other than preferred equity). As of June 30, 2024, loans and
preferred equity investments on non-accrual status represented 1.9%
of the Company’s total investments at fair value.
Financial Review
NII for the quarter ended June 30, 2024 totaled $6.6
million, or $0.30 per share, compared to $5.5 million, or $0.25 per
share, for the quarter ended March 31, 2024. Adjusted Net
Investment Income was $6.7 million, or $0.31 per share, for the
quarter ended June 30, 2024, compared to $5.5 million, or
$0.25 per share, for the quarter ended March 31, 2024.
Total investment income for the quarter ended June 30, 2024
totaled $15.6 million, compared to $15.2 million for the quarter
ended March 31, 2024. Investment income increased by
$0.4 million, as a result of the increase in the size of the
Company’s average investment portfolio during the quarter and an
increase in other income as part of a portfolio company realization
during the quarter.
Total expenses for the quarter ended June 30, 2024 were
$9.1 million, compared to $9.7 million for the quarter ended
March 31, 2024. Excluding the impact of the incentive fee
limitation of $(1.0) million, total expenses increased by $0.4
million primarily due to an increase in interest and other debt
financing expenses and a slight increase in income taxes, including
excise tax.
Net gain (loss) was $(3.3) million for the quarter ended
June 30, 2024, compared to $(2.3) million for the quarter
ended March 31, 2024. This net loss for the quarter ended
June 30, 2024 was primarily attributable to unrealized
mark-to-market losses attributable to certain portfolio companies
that have underlying credit performance concerns that were still
held as of quarter end, partially offset by a slight gain on the
remainder of the portfolio. The Company's average portfolio mark
decreased by 0.9%, from 95.3% of amortized cost as of
March 31, 2024 to 94.4% of amortized cost as of June 30,
2024.
Net increase (decrease) in net assets resulting from operations
was $3.3 million, or $0.15 per share, for the quarter ended
June 30, 2024, compared to $3.2 million, or $0.15 per share,
for the quarter ended March 31, 2024.
Liquidity and Capital Resources
As of June 30, 2024, the Company had $3.9 million in cash
and cash equivalents, $177.8 million of debt outstanding on its
revolving credit facility and $130.0 million of debt outstanding on
its 2026 Notes. As of June 30, 2024, the Company had
approximately $77.2 million available for additional borrowings on
its revolving credit facility, subject to borrowing base
availability.
MRCC Senior Loan Fund
MRCC Senior Loan Fund I, LLC ("SLF") is a joint venture with
Life Insurance Company of the Southwest (“LSW”), an affiliate of
National Life Insurance Company. SLF invests primarily in senior
secured loans to middle market companies in the United States. The
Company and LSW have each committed $50.0 million of capital to the
joint venture. As of June 30, 2024, the Company had made net
capital contributions of $42.7 million in SLF with a fair value of
$33.1 million, as compared to net capital contributions of $42.7
million in SLF with a fair value of $33.0 million as of
March 31, 2024. During the quarter ended June 30, 2024,
the Company received dividend income from SLF of $0.9 million,
consistent with the $0.9 million received during the quarter ended
March 31, 2024. SLF’s underlying investments are loans to
middle-market borrowers that are generally larger than the rest of
MRCC’s portfolio which is focused on lower middle-market companies.
SLF’s average mark on the underlying investment portfolio decreased
slightly during the quarter, from 88.9% of amortized cost as of
March 31, 2024, to 88.3% of amortized cost as of June 30,
2024.
As of June 30, 2024, SLF had total assets of $117.3 million
(including investments at fair value of $109.7 million), total
liabilities of $51.1 million (including borrowings under the $110.0
million secured revolving credit facility with Capital One, N.A.
(the “SLF Credit Facility”) of $50.8 million) and total members’
capital of $66.2 million. As of March 31, 2024, SLF had total
assets of $124.9 million (including investments at fair value of
$116.4 million), total liabilities of $58.9 million (including
borrowings under the SLF Credit Facility of $58.0 million) and
total members’ capital of $66.0 million.
Non-GAAP Financial Measure – Adjusted Net Investment
Income
On a supplemental basis, the Company discloses Adjusted Net
Investment Income (including on a per share basis) which is a
financial measure that is calculated and presented on a basis of
methodology other than in accordance with generally accepted
accounting principles of the United States of America (“non-GAAP”).
Adjusted Net Investment Income represents NII, excluding the net
capital gains incentive fee and income taxes. The Company uses this
non-GAAP financial measure internally in analyzing financial
results and believes that this non-GAAP financial measure is useful
to investors as an additional tool to evaluate ongoing results and
trends for the Company. The management agreement with the Company’s
advisor provides that a capital gains incentive fee is determined
and paid annually with respect to realized capital gains (but not
unrealized capital gains) to the extent such realized capital gains
exceed realized and unrealized capital losses for such year.
Management believes that Adjusted Net Investment Income is a useful
indicator of operations exclusive of any net capital gains
incentive fee as NII does not include gains associated with the
capital gains incentive fee.
The following tables provide a reconciliation from NII (the most
comparable GAAP measure) to Adjusted Net Investment Income for the
periods presented (in thousands, except per share data):
|
Three Months Ended |
|
June 30, 2024 |
|
March 31, 2024 |
|
Amount |
|
Per Share Amount |
|
Amount |
|
Per Share Amount |
|
(unaudited) |
Net investment income |
$ |
6,559 |
|
$ |
0.30 |
|
$ |
5,470 |
|
$ |
0.25 |
Net capital gains incentive
fee |
|
— |
|
|
— |
|
|
— |
|
|
— |
Income taxes, including excise
taxes |
|
135 |
|
|
0.01 |
|
|
18 |
|
|
— |
Adjusted Net Investment
Income |
$ |
6,694 |
|
$ |
0.31 |
|
$ |
5,488 |
|
$ |
0.25 |
|
Adjusted Net Investment Income may not be comparable to similar
measures presented by other companies, as it is a non-GAAP
financial measure that is not based on a comprehensive set of
accounting rules or principles and therefore may be defined
differently by other companies. In addition, Adjusted Net
Investment Income should be considered in addition to, not as a
substitute for, or superior to, financial measures determined in
accordance with GAAP.
Second Quarter 2024 Financial Results Conference
Call
The Company will host a webcast and conference call to discuss
these operating and financial results on Thursday, August 8, 2024
at 11:00 a.m. Eastern Time. The webcast will be hosted on a webcast
link located in the Investor Relations section of the Company’s
website at http://ir.monroebdc.com/events.cfm. To participate in
the conference call, please dial (800) 715-9871 approximately 10
minutes prior to the call. Please reference conference ID #
7213559.
For those unable to listen to the live broadcast, the webcast
will be available for replay on the Company’s website approximately
two hours after the event.
For a more detailed discussion of the financial and other
information included in this press release, please also refer to
the Company’s Form 10-Q for the quarter ended June 30, 2024 to
be filed with the SEC (www.sec.gov) on Wednesday, August 7,
2024.
MONROE CAPITAL CORPORATIONCONSOLIDATED STATEMENTS
OF ASSETS AND LIABILITIES(in thousands, except per share
data) |
|
June 30, 2024 |
|
March 31, 2024 |
|
(unaudited) |
Assets |
|
|
|
Investments, at fair
value: |
|
|
|
Non-controlled/non-affiliate company investments |
$ |
368,238 |
|
|
$ |
384,266 |
|
Non-controlled affiliate company investments |
|
84,468 |
|
|
|
83,633 |
|
Controlled affiliate company investments |
|
33,098 |
|
|
|
32,990 |
|
Total investments, at fair
value (amortized cost of: $514,380 and $525,658, respectively) |
|
485,804 |
|
|
|
500,889 |
|
Cash and cash equivalents |
|
3,876 |
|
|
|
4,856 |
|
Interest and dividend
receivable |
|
21,661 |
|
|
|
20,885 |
|
Other assets |
|
772 |
|
|
|
858 |
|
Total assets |
$ |
512,113 |
|
|
$ |
527,488 |
|
|
|
|
|
Liabilities |
|
|
|
Debt |
$ |
307,800 |
|
|
$ |
321,700 |
|
Less: Unamortized debt issuance costs |
|
(2,581 |
) |
|
|
(2,908 |
) |
Total debt, less unamortized debt issuance costs |
|
305,219 |
|
|
|
318,792 |
|
Interest payable |
|
2,972 |
|
|
|
1,621 |
|
Base management fees
payable |
|
2,037 |
|
|
|
2,048 |
|
Incentive fees payable |
|
351 |
|
|
|
1,368 |
|
Accounts payable and accrued
expenses |
|
2,190 |
|
|
|
2,081 |
|
Directors' fees payable |
|
— |
|
|
|
76 |
|
Total liabilities |
|
312,769 |
|
|
|
325,986 |
|
|
|
|
|
Net
Assets |
|
|
|
Common stock, $0.001 par
value, 100,000 shares authorized, 21,666 and 21,666 shares issued
and outstanding, respectively |
$ |
22 |
|
|
$ |
22 |
|
Capital in excess of par
value |
|
298,127 |
|
|
|
298,127 |
|
Accumulated undistributed
(overdistributed) earnings |
|
(98,805 |
) |
|
|
(96,647 |
) |
Total net assets |
$ |
199,344 |
|
|
$ |
201,502 |
|
Total liabilities and total net assets |
$ |
512,113 |
|
|
$ |
527,488 |
|
|
|
|
|
Net asset value per
share |
$ |
9.20 |
|
|
$ |
9.30 |
|
MONROE CAPITAL CORPORATIONCONSOLIDATED STATEMENTS
OF OPERATIONS(in thousands, except per share
data) |
|
Three months ended |
|
June 30, 2024 |
|
March 31, 2024 |
|
(unaudited) |
Investment
income: |
|
|
|
Non-controlled/non-affiliate company investments: |
|
|
|
Interest income |
$ |
10,973 |
|
|
$ |
10,830 |
|
Payment-in-kind interest income |
|
771 |
|
|
|
808 |
|
Dividend income |
|
62 |
|
|
|
59 |
|
Other income |
|
265 |
|
|
|
37 |
|
Total investment income from non-controlled/non-affiliate company
investments |
|
12,071 |
|
|
|
11,734 |
|
Non-controlled affiliate company investments: |
|
|
|
Interest income |
|
1,273 |
|
|
|
1,188 |
|
Payment-in-kind interest income |
|
1,328 |
|
|
|
1,307 |
|
Dividend income |
|
55 |
|
|
|
53 |
|
Total investment income from non-controlled affiliate company
investments |
|
2,656 |
|
|
|
2,548 |
|
Controlled affiliate company investments: |
|
|
|
Dividend income |
|
900 |
|
|
|
900 |
|
Total investment income from controlled affiliate company
investments |
|
900 |
|
|
|
900 |
|
Total investment income |
|
15,627 |
|
|
|
15,182 |
|
|
|
|
|
Operating
expenses: |
|
|
|
Interest and other debt financing expenses |
|
5,780 |
|
|
|
5,507 |
|
Base management fees |
|
2,037 |
|
|
|
2,048 |
|
Incentive fees |
|
351 |
|
|
|
1,368 |
|
Professional fees |
|
199 |
|
|
|
268 |
|
Administrative service fees |
|
250 |
|
|
|
209 |
|
General and administrative expenses |
|
243 |
|
|
|
218 |
|
Directors' fees |
|
73 |
|
|
|
76 |
|
Total operating expenses |
|
8,933 |
|
|
|
9,694 |
|
Net investment income before income taxes |
|
6,694 |
|
|
|
5,488 |
|
Income taxes, including excise taxes |
|
135 |
|
|
|
18 |
|
Net investment income |
|
6,559 |
|
|
|
5,470 |
|
|
|
|
|
Net gain
(loss): |
|
|
|
Net realized gain (loss): |
|
|
|
Non-controlled/non-affiliate company investments |
|
506 |
|
|
|
4 |
|
Net realized gain (loss) |
|
506 |
|
|
|
4 |
|
|
|
|
|
Net change in unrealized gain (loss): |
|
|
|
Non-controlled/non-affiliate company investments |
|
(2,985 |
) |
|
|
(1,344 |
) |
Non-controlled affiliate company investments |
|
(930 |
) |
|
|
(803 |
) |
Controlled affiliate company investments |
|
108 |
|
|
|
(132 |
) |
Net change in unrealized gain (loss) |
|
(3,807 |
) |
|
|
(2,279 |
) |
|
|
|
|
Net gain (loss) |
|
(3,301 |
) |
|
|
(2,275 |
) |
|
|
|
|
Net increase
(decrease) in net assets resulting from operations |
$ |
3,258 |
|
|
$ |
3,195 |
|
|
|
|
|
Per common share
data: |
|
|
|
Net investment income per
share - basic and diluted |
$ |
0.30 |
|
|
$ |
0.25 |
|
Net increase (decrease) in net
assets resulting from operations per share - basic and diluted |
$ |
0.15 |
|
|
$ |
0.15 |
|
Weighted average common shares
outstanding - basic and diluted |
|
21,666 |
|
|
|
21,666 |
|
|
Additional Supplemental Information:
The composition of the Company’s investment income was as
follows (in thousands):
|
Three months ended |
|
June 30, 2024 |
|
March 31, 2024 |
|
(unaudited) |
Interest income |
$ |
11,850 |
|
$ |
11,662 |
Payment-in-kind interest
income |
|
2,099 |
|
|
2,115 |
Dividend income |
|
1,017 |
|
|
1,012 |
Other income |
|
265 |
|
|
37 |
Prepayment gain (loss) |
|
145 |
|
|
105 |
Accretion of discounts and
amortization of premiums |
|
251 |
|
|
251 |
Total investment income |
$ |
15,627 |
|
$ |
15,182 |
|
The composition of the Company’s interest expense and other debt
financing expenses was as follows (in thousands):
|
Three months ended |
|
June 30, 2024 |
|
March 31, 2024 |
|
(unaudited) |
Interest expense - revolving credit facility |
$ |
3,898 |
|
$ |
3,625 |
Interest expense - 2026
Notes |
|
1,555 |
|
|
1,555 |
Amortization of debt issuance
costs |
|
327 |
|
|
327 |
Total interest and other debt financing expenses |
$ |
5,780 |
|
$ |
5,507 |
|
About Monroe Capital Corporation
Monroe Capital Corporation is a publicly-traded specialty
finance company that principally invests in senior, unitranche and
junior secured debt and, to a lesser extent, unsecured debt and
equity investments in middle-market companies. The Company’s
investment objective is to maximize the total return to its
stockholders in the form of current income and capital
appreciation. The Company’s investment activities are managed by
its investment adviser, Monroe Capital BDC Advisors, LLC, which is
an investment adviser registered under the Investment Advisers Act
of 1940, as amended, and an affiliate of Monroe Capital LLC. To
learn more about Monroe Capital Corporation, visit
www.monroebdc.com.
About Monroe Capital LLC
Monroe Capital LLC (including its subsidiaries and affiliates,
together “Monroe”) is a premier asset management firm specializing
in private credit markets across various strategies, including
direct lending, technology finance, venture debt, alternative
credit, structured credit, real estate and equity. Since 2004, the
firm has been successfully providing capital solutions to clients
in the U.S. and Canada. Monroe prides itself on being a value-added
and user-friendly partner to business owners, management, and both
private equity and independent sponsors. Monroe’s platform offers a
wide variety of investment products for both institutional and high
net worth investors with a focus on generating high quality “alpha”
returns irrespective of business or economic cycles. The firm is
headquartered in Chicago and maintains 10 offices throughout the
United States and Asia.
Monroe has been recognized by both its peers and investors with
various awards including Private Debt Investor as the 2023 Lower
Mid-Market Lender of the Decade, 2023 Lower Mid-Market Lender of
the Year, 2023 CLO Manager of the Year, Americas; Inc.’s 2023
Founder-Friendly Investors List; Global M&A Network as the 2023
Lower Mid-Markets Lender of the Year, U.S.A.; DealCatalyst as the
2022 Best CLO Manager of the Year; Korean Economic Daily as the
2022 Best Performance in Private Debt – Mid Cap; Creditflux as the
2021 Best U.S. Direct Lending Fund; and Pension Bridge as the 2020
Private Credit Strategy of the Year. For more information and
important disclaimers, please visit www.monroecap.com.
Forward-Looking Statements
This press release may contain certain forward-looking
statements. Any such statements, other than statements of
historical fact, are likely to be affected by other unknowable
future events and conditions, including elements of the future that
are or are not under the Company’s control, and that the Company
may or may not have considered; accordingly, such statements cannot
be guarantees or assurances of any aspect of future performance.
Actual developments and results are highly likely to vary
materially from these estimates and projections of the future. Such
statements speak only as of the time when made, and the Company
undertakes no obligation to update any such statement now or in the
future.
SOURCE: Monroe
Capital Corporation
Investor Contact: |
Mick Solimene |
|
Chief Financial Officer and
Chief Investment Officer |
|
Monroe Capital
Corporation |
|
(312) 598-8401 |
|
Email:
msolimene@monroecap.com |
|
|
Media Contact: |
Daniel Abramson |
|
BackBay Communications |
|
(857) 305-8441 |
|
Email:
daniel.abramson@backbaycommunications.com |
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