CHICAGO, Nov. 12, 2024 (GLOBE NEWSWIRE) -- Monroe Capital Corporation (NASDAQ: MRCC) today announced its financial results for the third quarter ended September 30, 2024.
Except where the context suggests otherwise, the terms "Company,” "we,” "us,” and "our” refer to Monroe Capital Corporation (together with its subsidiaries).
Third Quarter 2024 Financial Highlights
- Net Investment Income ("NII") of $6.5 million, or $0.30 per share
- Adjusted Net Investment Income (a non-GAAP measure described below) of $6.6 million, or $0.31 per share
- Net increase in net assets resulting from operations of $5.0 million, or $0.23 per share
- Net Asset Value ("NAV”) of $198.9 million, or $9.18 per share
- Paid quarterly dividend of $0.25 per share on September 30, 2024
- Current annual cash dividend yield to stockholders of approximately 12.3%(1)
Monroe Capital Corporation is a business development company affiliate of the award-winning private credit investment firm and lender, Monroe Capital LLC.
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(1) Based on an annualized dividend and closing share price as of November 11, 2024.
Management Commentary
Adjusted Net Investment Income totaled $6.6 million, or $0.31 per share for the quarter ended September 30, 2024, a slight decrease from $6.7 million, or $0.31 per share for the quarter ended June 30, 2024. NAV decreased by $0.02 per share, or 0.2%, to $198.9 million or $9.18 per share as of September 30, 2024, compared to $199.3 million or $9.20 per share as of June 30, 2024. The slight decline 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.
At quarter end, the Company's debt-to-equity leverage decreased from 1.54 times debt-to-equity at June 30, 2024 to 1.50 times debt-to-equity at September 30, 2024 as a result of paydowns of the revolving credit facility with proceeds from investment sales and paydowns during 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)
| September 30, 2024 | June 30, 2024 | |||||||
| Consolidated Statements of Assets and Liabilities data: | (unaudited) | |||||||
| Investments, at fair value | $ | 474,259 | $ | 485,804 | ||||
| Total assets | $ | 501,862 | $ | 512,113 | ||||
| Net assets | $ | 198,893 | $ | 199,344 | ||||
| Net asset value per share | $ | 9.18 | $ | 9.20 | ||||
| Three months ended | ||||||||
| September 30, 2024 | June 30, 2024 | |||||||
| Consolidated Statements of Operations data: | (unaudited) | |||||||
| Net investment income | $ | 6,481 | $ | 6,559 | ||||
| Adjusted net investment income(2) | $ | 6,617 | $ | 6,694 | ||||
| Net gain (loss) | $ | (1,515 | ) | $ | (3,301 | ) | ||
| Net increase (decrease) in net assets resulting from operations | $ | 4,966 | $ | 3,258 | ||||
| Per share data: | ||||||||
| Net investment income | $ | 0.30 | $ | 0.30 | ||||
| Adjusted net investment income(2) | $ | 0.31 | $ | 0.31 | ||||
| Net gain (loss) | $ | (0.07 | ) | $ | (0.15 | ) | ||
| Net increase (decrease) in net assets resulting from operations | $ | 0.23 | $ | 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 $474.3 million as of September 30, 2024, as compared to debt and equity investments in 94 portfolio companies, with a total fair value of $485.8 million, as of June 30, 2024. The Company's portfolio consists primarily of first lien loans, representing 80.0% of the portfolio as of September 30, 2024, and 81.1% of the portfolio as of June 30, 2024. As of September 30, 2024, the weighted average contractual and effective yields on the Company's debt and preferred equity investments were 11.0% and 11.0%, respectively, as compared to 11.9% and 11.9%, respectively, as of June 30, 2024. The decreases in yields were primarily due to the decline in base rates and the placement of an additional portfolio company on non-accrual status during the quarter. 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 September 30, 2024, portfolio investments on non-accrual status represented 3.1% of the Company's total investments at fair value.
Financial Review
NII for the quarter ended September 30, 2024 totaled $6.5 million, or $0.30 per share, compared to $6.6 million, or $0.30 per share, for the quarter ended June 30, 2024. Adjusted Net Investment Income was $6.6 million, or $0.31 per share, for the quarter ended September 30, 2024, compared to $6.7 million, or $0.31 per share, for the quarter ended June 30, 2024. Excluding the impact of the incentive fee limitations of $(0.7) million and $(1.0) million for the quarters ended September 30, 2024 and June 30, 2024, respectively, Adjusted Net Investment Income totaled $5.9 million, or $0.27 per share for the quarter ended September 30, 2024, an increase from $5.7 million, or $0.26 per share for the quarter ended June 30, 2024. Please refer to the Company's Form 10-Q for additional information on the Company's incentive fee structure and calculation.
Total investment income for the quarter ended September 30, 2024 totaled $15.7 million, compared to $15.6 million for the quarter ended June 30, 2024. Total investment income increased by $0.1 million primarily due to an increase in fee income stemming from portfolio investment realizations during the quarter included in other income. This increase was partially offset by a decline in interest income primarily resulting from placing an additional portfolio investment on non-accrual status during the quarter and a decrease in average invested assets during the quarter.
Total expenses for the quarter ended September 30, 2024 were $9.2 million, compared to $9.1 million for the quarter ended June 30, 2024. Excluding the impact of the incentive fee limitations, total expenses decreased by $0.2 million primarily due to lower interest and other debt financing expenses associated with a decrease in average debt outstanding during the quarter.
Net gain (loss) was $(1.5) million for the quarter ended September 30, 2024, compared to $(3.3) million for the quarter ended June 30, 2024. This net loss for the quarter ended September 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 net gain on the remainder of the portfolio. The Company's average portfolio mark decreased by 0.9%, from 94.4% of amortized cost as of June 30, 2024 to 93.9% of amortized cost as of September 30, 2024.
Net increase (decrease) in net assets resulting from operations was $5.0 million, or $0.23 per share, for the quarter ended September 30, 2024, compared to $3.3 million, or $0.15 per share, for the quarter ended June 30, 2024.
Liquidity and Capital Resources
As of September 30, 2024, the Company had $4.1 million in cash and cash equivalents, $169.0 million of debt outstanding on its revolving credit facility and $130.0 million of debt outstanding on its 2026 Notes. As of September 30, 2024, the Company had approximately $86.0 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 September 30, 2024, the Company had made net capital contributions of $42.7 million in SLF with a fair value of $32.9 million, as compared to net capital contributions of $42.7 million in SLF with a fair value of $33.1 million as of June 30, 2024. During the quarter ended September 30, 2024, the Company received dividend income from SLF of $0.9 million, consistent with the $0.9 million received during the quarter ended June 30, 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 during the quarter, from 88.3% of amortized cost as of June 30, 2024, to 87.0% of amortized cost as of September 30, 2024.
As of September 30, 2024, SLF had total assets of $107.8 million (including investments at fair value of $98.7 million), total liabilities of $42.0 million (including borrowings under the $110.0 million secured revolving credit facility with Capital One, N.A. (the "SLF Credit Facility”) of $41.5 million) and total members' capital of $65.8 million. 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 SLF Credit Facility of $50.8 million) and total members' capital of $66.2 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 | ||||||||||||||||
| September 30, 2024 | June 30, 2024 | |||||||||||||||
| Amount | Per Share Amount | Amount | Per Share Amount | |||||||||||||
| (unaudited) | ||||||||||||||||
| Net investment income | $ | 6,481 | $ | 0.30 | $ | 6,559 | $ | 0.30 | ||||||||
| Net capital gains incentive fee | - | - | - | - | ||||||||||||
| Income taxes, including excise taxes | 136 | 0.01 | 135 | 0.01 | ||||||||||||
| Adjusted Net Investment Income | $ | 6,617 | $ | 0.31 | $ | 6,694 | $ | 0.31 | ||||||||
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.
Third Quarter 2024 Financial Results Conference Call
The Company will host a webcast and conference call to discuss these operating and financial results on Wednesday, November 13, 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 # 5769748.
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 September 30, 2024 to be filed with the SEC (www.sec.gov) on Tuesday, November 12, 2024.
| MONROE CAPITAL CORPORATION | ||||||||
| CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | ||||||||
| (in thousands, except per share data) | ||||||||
| September 30, 2024 | June 30, 2024 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Investments, at fair value: | ||||||||
| Non-controlled/non-affiliate company investments | $ | 355,273 | $ | 368,238 | ||||
| Non-controlled affiliate company investments | 86,089 | 84,468 | ||||||
| Controlled affiliate company investments | 32,897 | 33,098 | ||||||
| Total investments, at fair value (amortized cost of: $505,008 and $514,380, respectively) | 474,259 | 485,804 | ||||||
| Cash and cash equivalents | 4,070 | 3,876 | ||||||
| Interest and dividend receivable | 22,910 | 21,661 | ||||||
| Other assets | 623 | 772 | ||||||
| Total assets | $ | 501,862 | $ | 512,113 | ||||
| Liabilities | ||||||||
| Debt | $ | 299,000 | $ | 307,800 | ||||
| Less: Unamortized debt issuance costs | (2,254 | ) | (2,581 | ) | ||||
| Total debt, less unamortized debt issuance costs | 296,746 | 305,219 | ||||||
| Interest payable | 1,351 | 2,972 | ||||||
| Base management fees payable | 2,006 | 2,037 | ||||||
| Incentive fees payable | 730 | 351 | ||||||
| Accounts payable and accrued expenses | 2,090 | 2,190 | ||||||
| Directors' fees payable | 46 | - | ||||||
| Total liabilities | 302,969 | 312,769 | ||||||
| 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 | (99,256 | ) | (98,805 | ) | ||||
| Total net assets | $ | 198,893 | $ | 199,344 | ||||
| Total liabilities and total net assets | $ | 501,862 | $ | 512,113 | ||||
| Net asset value per share | $ | 9.18 | $ | 9.20 | ||||
| MONROE CAPITAL CORPORATION | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (in thousands, except per share data) | ||||||||
| Three months ended | ||||||||
| September 30, 2024 | June 30, 2024 | |||||||
| (unaudited) | ||||||||
| Investment income: | ||||||||
| Non-controlled/non-affiliate company investments: | ||||||||
| Interest income | $ | 10,408 | $ | 10,973 | ||||
| Payment-in-kind interest income | 919 | 771 | ||||||
| Dividend income | 114 | 62 | ||||||
| Other income | 694 | 265 | ||||||
| Total investment income from non-controlled/non-affiliate company investments | 12,135 | 12,071 | ||||||
| Non-controlled affiliate company investments: | ||||||||
| Interest income | 1,202 | 1,273 | ||||||
| Payment-in-kind interest income | ()[\]\\.,;:\s@\"]+)*)|(\".+\"))@((\[[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\])|(([a-zA-Z\-0-9]+\.)+[a-zA-Z]{2,}))$/;return b.test(a)}$(document).ready(function(){if(performance.navigation.type==2){location.reload(true)}$("iframe[data-lazy-src]").each(function(b){$(this).attr("src",$(this).attr("data-lazy-src"))});if($(".owl-article-body-images").length){$(".owl-article-body-images").owlCarousel({items:1,loop:true,center:false,dots:false,autoPlay:true,mouseDrag:false,touchDrag:false,pullDrag:false,nav:true})}var a=$("#display_full_text").val();if(a==0){$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:$("#cms_article_id").val()},dataType:"json",success:function(b){},error:function(b,d,c){}})}$(".read-full-article").on("click",function(d){d.preventDefault();var b=$(this).attr("data-cmsArticleId");var c=$(this).attr("data-productId");var f=$(this).attr("data-href");dataLayer.push({event:"paywall_click",paywall_name:"the_manila_times_premium",paywall_id:"paywall_article_"+b});$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:b,productId:c},dataType:"json",success:function(e){window.location.href=$("#BASE_URL").val()+f},error:function(e,h,g){}})});$(".article-embedded-newsletter-form .close-btn").on("click",function(){$(".article-embedded-newsletter-form").fadeOut(1000)})});$(document).on("click",".article-embedded-newsletter-form .newsletter-button",function(){var b=$(".article-embedded-newsletter-form .newsletter_email").val();var d=$("#ga_user_id").val();var c=$("#ga_user_yob").val();var a=$("#ga_user_gender").val();var e=$("#ga_user_country").val();if(validateEmail(b)){$.ajax({url:"/ajax/sendynewsletter",type:"POST",data:{email:b},success:function(f){$(".article-embedded-newsletter-form .nf-message").html(f);$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000);dataLayer.push({event:"newsletter_sub",user_id:d,product_name:"newsletter",gender:a,yob:c,country:e})},error:function(f,h,g){}})}else{$(".article-embedded-newsletter-form .nf-message").html("Please enter a valid email address.");$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000)}});$(document).on("click",".article-embedded-newsletter-form .nf-message",function(){$(this).removeClass("show");$(this).html("")});
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