Results for the Quarter Ended September 30, 2024 and Other Recent Highlights:
- Net investment income per share for the quarter was $0.44, compared to $0.45 for the quarter ended June 30, 2024
- Net asset value per share as of the end of the quarter was $15.10, a decrease of 0.5% compared to June 30, 2024, excluding the impact of the $0.20 per share special distribution paid to stockholders in connection with the Mergers(1)
- New investment commitments made during the quarter totaled $371 million(1)(2)(3)
- Gross fundings for the quarter, excluding revolver fundings(3)(4), totaled $288 million
- Net fundings, including revolvers(3)(4), totaled $222 million for the quarter
- Closed the Mergers with Apollo Senior Floating Rate Fund Inc. ("AFT”) and Apollo Tactical Income Fund Inc. ("AIF”) (1) , acquiring investments totaling $596 million, of which $234 million were sold or repaid during the quarter
- Net leverage(5) was 1.16x as of September 30, 2024
- On November 6, 2024, the Board of Directors (the "Board”) declared a dividend of $0.38 per share payable on December 26, 2024 to stockholders of record as of December 10, 2024
- Amended and extended the senior secured, multi-currency, revolving credit facility (the "Facility”) in October 2024(6) (the "Amended Senior Secured Facility”)
On November 6, 2024, the Board declared a dividend of $0.38 per share payable on December 26, 2024 to stockholders of record as of December 10, 2024.
Mr. Tanner Powell, the Company's Chief Executive Officer stated, "This quarter MFIC successfully closed its mergers with AFT and AIF which we believe will create significant long-term value for our stockholders. Our focus is on exiting the acquired non-directly originated assets and prudently deploying the investment capacity created from the mergers into directly originated middle market loans. We are fortunate to have access to all the necessary origination to deploy this capital, thanks to the significant volume of loans originated by MidCap Financial, a leading middle market lender with one of the largest direct lending teams in the U.S. and which is managed by Apollo.” Mr. Powell added, "For the quarter, we produced solid net investment income despite the modest amount of fee and prepayment income, reflecting the impact of the total return feature in our incentive fee structure, which resulted in a partial incentive fee for the quarter. NAV declined during the quarter due to the $0.20 per share special distribution paid in connection with the mergers as well as a modest net loss on the portfolio.”
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(1) On July 22, 2024, the Company completed its mergers with Apollo Senior Floating Rate Fund Inc. ("AFT”) and Apollo Tactical Income Fund Inc. ("AIF”) (together, the "Mergers”). The Mergers have been accounted for in accordance with the asset acquisition method of accounting under ASC 805-50, Business Combinations-Related Issues.
(2) Commitments made for the direct origination portfolio.
(3) Excludes assets acquired from the Mergers.
(4) During the quarter ended September 30, 2024, direct origination revolver fundings totaled $28 million, direct origination revolver repayments totaled $15 million, and the Company received a $7.5 million revolver paydown from Merx Aviation Finance, LLC.
(5) The Company's net leverage ratio is defined as debt outstanding plus payable for investments purchased, less receivable for investments sold, less cash and cash equivalents, less foreign currencies, divided by net assets.
(6) On October 17, 2024, the Company amended and extended the Facility. Lender commitments under the Amended Senior Secured Facility total $1.660 billion, an increase of $110 million, excluding non-extending lender commitments. Lender commitments under the Amended Senior Secured Facility total $1.815 billion, including $155 million of commitments from non-extending lenders which are set to terminate on December 22, 2024. The final maturity date under the Amended Senior Secured Facility for extending lenders was extended from April 19, 2028, to October 17, 2029. The remaining material business terms of the Facility will remain substantially the same.
FINANCIAL HIGHLIGHTS
| ($ in billions, except per share data) | September 30, 2024 | June 30,
2024 | March 31,
2024 | December 31, 2023 | September 30, 2023 | ||||||||||||||||||||
| Total assets | $ | 3.22 | $ | 2.55 | $ | 2.45 | $ | 2.50 | $ | 2.46 | |||||||||||||||
| Investment portfolio (fair value) | $ | 3.03 | $ | 2.44 | $ | 2.35 | $ | 2.33 | $ | 2.37 | |||||||||||||||
| Debt outstanding | $ | 1.77 | $ | 1.51 | $ | 1.41 | $ | 1.46 | $ | 1.43 | |||||||||||||||
| Net assets | $ | 1.42 | $ | 1.00 | $ | 1.01 | $ | 1.01 | $ | 0.99 | |||||||||||||||
| Net asset value per share | $ | 15.10 | $ | 15.38 | $ | 15.42 | $ | 15.41 | $ | 15.28 | |||||||||||||||
| Debt-to-equity ratio | 1.25 x | 1.51 x | 1.40 x | 1.45 x | 1.44 x | ||||||||||||||||||||
| Net leverage ratio (1) | 1.16 x | 1.45 x | 1.35 x | 1.34 x | 1.40 x | ||||||||||||||||||||
(1) The Company's net leverage ratio is defined as debt outstanding plus payable for investments purchased, less receivable for investments sold, less cash and cash equivalents, less foreign currencies, divided by net assets.
PORTFOLIO AND INVESTMENT ACTIVITY
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
| (in millions)* | 2024 | 2023 | 2024 | 2023 | |||||||||||||||
| Investments made in portfolio companies (1) | $ | 911.9 | $ | 30.3 | $ | 1,310.1 | $ | 283.0 | |||||||||||
| Investments sold (1) | (188.5 | ) | - | (188.5 | ) | - | |||||||||||||
| Net activity before repaid investments (1) | 723.4 | 30.3 | 1,121.6 | 283.0 | |||||||||||||||
| Investments repaid (1) | (138.8 | ) | (72.9 | ) | (430.6 | ) | (323.7 | ) | |||||||||||
| Net investment activity | $ | 584.6 | $ | (42.6 | ) | $ | 691.0 | $ | (40.6 | ) | |||||||||
| Portfolio companies, at beginning of period | 165 | 150 | 152 | 135 | |||||||||||||||
| Number of investments in new portfolio companies (1) | 131 | 2 | 156 | 22 | |||||||||||||||
| Number of exited companies (1) | (46 | ) | (3 | ) | (58 | ) | (8 | ) | |||||||||||
| Portfolio companies at end of period (1) | 250 | 149 | 250 | 149 | |||||||||||||||
| Number of investments in existing portfolio companies | 60 | 32 | 97 | 68 | |||||||||||||||
* Totals may not foot due to rounding.
(1) Includes investments acquired from the Mergers.
OPERATING RESULTS
| Three Months Ended September 30, | Nine Months Ended
September 30, | |||||||||||||||||||
| (in millions)* | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||
| Net investment income | $ | 38.1 | $ | 27.9 | $ | 96.2 | $ | 86.2 | ||||||||||||
| Net realized and change in unrealized gains (losses) | (11.4 | ) | (2.1 | ) | (21.5 | ) | (0.7 | ) | ||||||||||||
| Net increase in net assets resulting from operations | $ | 26.7 | $ | 30.0 | $ | 74.8 | $ | 85.5 | ||||||||||||
| (per share)* (1) | ||||||||||||||||||||
| Net investment income on per average share basis | $ | 0.44 | $ | 0.43 | $ | 1.32 | $ | 1.32 | ||||||||||||
| Net realized and change in unrealized gain (loss) per share | (0.13 | ) | 0.03 | (0.30 | ) | (0.01 | ) | |||||||||||||
| Earnings per share - basic | $ | 0.31 | $ | 0.46 | $ | 1.03 | $ | 1.31 | ||||||||||||
* Totals may not foot due to rounding.
(1) Based on the weighted average number of shares outstanding for the period presented.
SHARE REPURCHASE PROGRAM *
During the three months ended September 30, 2024, the Company did not repurchase any shares.
Since the inception of the share repurchase program and through November 6, 2024, the Company repurchased 15,593,120 shares at a weighted average price per share of $15.91, inclusive of commissions, for a total cost of $248.1 million, leaving a maximum of $26.9 million available for future purchases under the current Board authorization of $275 million.
* Share figures have been adjusted for the 1-for-3 reverse stock split which was completed after market close on November 30, 2018.
LIQUIDITY
As of September 30, 2024, the Company's outstanding debt obligations, excluding deferred financing cost and debt discount of $6.1 million, totaled $1.779 billion which was comprised of $350 million of Senior Unsecured Notes (the "2025 Notes”) which will mature on March 3, 2025, $125 million of Senior Unsecured Notes (the "2026 Notes”) which will mature on July 16, 2026, $80 million of Senior Unsecured Notes (the "2028 Notes”) which will mature on December 15, 2028, $232 million outstanding Class A-1 Notes under the CLO and $991.9 million outstanding under the Facility. As of September 30, 2024, $15.8 million in standby letters of credit were issued through the Facility. The available remaining capacity under the Facility was $697.3 million as of September 30, 2024, which is subject to compliance with a borrowing base that applies different advance rates to different types of assets in the Company's portfolio.
On October 17, 2024, the Company amended and extended the Facility. Lender commitments under the Amended Senior Secured Facility will increase from $1.705 billion to $1.815 billion until December 22, 2024 and will decrease to $1.660 billion thereafter. The Amended Senior Secured Facility includes an "accordion” feature that allows the Company to increase the size of the Facility to $2.723 billion.
The final maturity date under the Amended Senior Secured Facility for extending lenders was extended by over a year from April 19, 2028 to October 17, 2029. The covenants and representations and warranties the Company is required to comply with were also modified (including,