• Monroe Capital Corporation BDC Announces Second Quarter 2023 Results

    ソース: Nasdaq GlobeNewswire / 09 8 2023 15:01:20   America/Chicago

    CHICAGO, Aug. 09, 2023 (GLOBE NEWSWIRE) -- Monroe Capital Corporation (Nasdaq: MRCC) (“Monroe”) today announced its financial results for the second quarter ended June 30, 2023.

    Except where the context suggests otherwise, the terms “Monroe,” “we,” “us,” “our,” and “Company” refer to Monroe Capital Corporation.

    Second Quarter 2023 Financial Highlights

    • Net Investment Income of $5.9 million, or $0.27 per share
    • Adjusted Net Investment Income (a non-GAAP measure described below) of $6.1 million, or $0.28 per share
    • Net decrease in net assets resulting from operations of $4.3 million, or $0.20 per share
    • Net Asset Value (“NAV”) of $213.2 million, or $9.84 per share
    • Paid quarterly dividend of $0.25 per share on June 30, 2023
    • Current annual cash dividend yield to shareholders of approximately 11.7%(1)

    Chief Executive Officer Theodore L. Koenig commented, “We are pleased to report another quarter where Adjusted Net Investment Income exceeded our dividend. We continue to believe that tighter credit conditions as well as volatility in the bank and syndicated markets offer compelling value in the current direct lending environment. As we look ahead into the second half of 2023, we will focus on portfolio credit quality while maximizing Adjusted Net Investment Income and generating strong risk-adjusted returns for our shareholders.”

    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 8, 2023.

    Management Commentary

    Adjusted Net Investment Income totaled $6.1 million or $0.28 per share for the quarter ended June 30, 2023. This compares with $6.9 million or $0.32 per share for the quarter ended March 31, 2023. While the average portfolio yield increased during the quarter ended June 30, 2023 as a result of the rising rate environment, this increase in average portfolio yield was offset by lower average portfolio balances, lower fee income and prepayment gains and the one-time reversal of previously accrued interest income associated with the realization of an investment during the quarter. See Non-GAAP Financial Measure – Adjusted Net Investment Income discussion below.

    NAV decreased by $0.45 per share, or 4.4%, to $213.2 million or $9.84 per share as of June 30, 2023, compared to $223.0 million or $10.29 per share as of March 31, 2023. Our NAV this quarter was primarily affected by market conditions, which negatively impacted realizations on two specific legacy investments in the brick-and-mortar retail space, where we have only nominal remaining exposure. Additionally, the fundamental performance of a couple specific portfolio companies still held in the portfolio and the Company’s investment in MRCC Senior Loan Fund I, LLC (“SLF”) contributed to the NAV decline. The decrease in value at the SLF was driven by unrealized mark-to-market losses on SLF’s investments, which are loans to traditional upper middle-market borrowers. The SLF has continued to experience higher volatility in mark-to-market valuations.

    During the quarter, MRCC’s debt-to-equity leverage increased from 1.49 times debt-to-equity to 1.54 times debt-to-equity. We continue to focus on managing our investment portfolio and selectively redeploying capital resulting from repayments.

    Selected Financial Highlights
    (in thousands, except per share data)    		 
     June 30, 2023 March 31, 2023 
    Consolidated Statements of Assets and Liabilities data:(unaudited) 
         
    Investments, at fair value$515,407  $532,100  
    Total assets$545,892  $559,465  
    Total net assets$213,208  $222,961  
    Net asset value per share$9.84  $10.29  
         
     For the quarter ended 
     June 30, 2023 March 31, 2023 
    Consolidated Statements of Operations data:(unaudited) 
         
    Net investment income$5,924  $6,627  
    Adjusted net investment income(2)$6,091  $6,860  
    Net gain (loss)$(10,260) $(3,268) 
    Net increase (decrease) in net assets resulting from operations$(4,336) $3,359  
         
    Per share data:    
    Net investment income$0.27  $0.31  
    Adjusted net investment income(2)$0.28  $0.32  
    Net gain (loss)$(0.47) $(0.15) 
    Net increase (decrease) in net assets resulting from operations$(0.20) $0.16  
         

    ______

    (2)   See Non-GAAP Financial Measure – Adjusted Net Investment Income below for a detailed description of this non-GAAP measure and a reconciliation from net investment income 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 99 portfolio companies, with a total fair value of $515.4 million as of June 30, 2023, as compared to debt and equity investments in 102 portfolio companies, with a total fair value of $532.1 million, as of March 31, 2023. The Company’s portfolio consists primarily of first lien loans, representing 83.3% of the portfolio as of June 30, 2023, and 83.7% of the portfolio as of March 31, 2023. As of June 30, 2023, the weighted average contractual and effective yield on the Company’s debt and preferred equity investments was 12.2% and 12.2%, respectively, as compared to the weighted average contractual and effective yield of 11.5% and 11.6%, respectively, as of March 31, 2023. 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, 2023, 1.3% of the Company’s total investments at fair value were on non-accrual as compared to 0.4% as of March 31, 2023.

    Financial Review

    Net Investment Income for the quarter ended June 30, 2023 totaled $5.9 million, or $0.27 per share, compared to $6.6 million, or $0.31 per share, for the quarter ended March 31, 2023. Adjusted Net Investment Income was $6.1 million, or $0.28 per share, for the quarter ended June 30, 2023, compared to $6.9 million, or $0.32 per share, for the quarter ended March 31, 2023. Investment income for the quarter ended June 30, 2023 totaled $16.3 million, compared to $16.8 million for the quarter ended March 31, 2023. The $0.5 million decrease in investment income was primarily the result of a decrease in fee income and prepayment gains during the quarter and the one-time reversal of previously accrued interest income associated with the realization of an investment during the quarter. The increase in the average portfolio yield resulting from the rising rate environment was offset by lower average portfolio balances. Total expenses for the quarter ended June 30, 2023 totaled $10.4 million, compared to $10.2 million for the quarter ended March 31, 2023. The $0.2 million increase in expenses during the quarter was primarily driven by an increase in interest and other debt financing expenses resulting from the rising interest rate environment.

    Net gain (loss) was ($10.3) million for the quarter ended June 30, 2023, compared to ($3.3) million for the quarter ended March 31, 2023. Net realized and unrealized gains (losses) on investments were ($10.2) million for the quarter. This net loss was primarily attributable to net losses on the disposition of two portfolio company investments which resulted in net losses of $7.4 million during the quarter. Additionally, unrealized mark-to-market losses related to fundamental performance of a couple of specific portfolio companies still held in the portfolio and unrealized mark-to-market losses on SLF contributed to the net losses on investments for the quarter. Other net gains (losses) totaled ($0.1) million for the quarter ended June 30, 2023.

    Net increase (decrease) in net assets resulting from operations was ($4.3) million, or ($0.20) per share, for the quarter ended June 30, 2023, compared to $3.4 million, or $0.16, for the quarter ended March 31, 2023.

    Liquidity and Capital Resources

    At June 30, 2023, the Company had $12.3 million in cash, $197.4 million of debt outstanding on its revolving credit facility and $130.0 million of debt outstanding on its 2026 Notes. As of June 30, 2023, the Company had approximately $57.6 million available for additional borrowings on its revolving credit facility, subject to borrowing base availability.

    MRCC Senior Loan Fund

    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, 2023, the Company had made net capital contributions of $42.7 million in SLF with a fair value of $34.5 million, as compared to net capital contributions of $42.7 million in SLF with a fair value of $35.8 million at March 31, 2023. During the quarter ended June 30, 2023, the Company received an income distribution from SLF of $0.9 million, consistent with the $0.9 million received during the quarter ended March 31, 2023. The 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. The SLF’s portfolio decreased in value by 2.0% during the quarter, from 93.5% of amortized cost as of March 31, 2023, to 91.5% of amortized cost as of June 30, 2023.

    As of June 30, 2023, SLF had total assets of $176.9 million (including investments at fair value of $168.2 million), total liabilities of $107.8 million (including borrowings under the $110.0 million secured revolving credit facility with Capital One, N.A. (the “SLF Credit Facility”) of $107.9 million) and total members’ capital of $69.1 million. As of March 31, 2023, SLF had total assets of $187.0 million (including investments at fair value of $178.2 million), total liabilities of $115.5 million (including borrowings under the SLF Credit Facility of $115.7 million) and total members’ capital of $71.5 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 net investment income, 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 net investment income does not include gains associated with the capital gains incentive fee.

    The following table provides a reconciliation from net investment income (the most comparable GAAP measure) to Adjusted Net Investment Income for the periods presented:

     For the quarter ended
     June 30, 2023 March 31, 2023
     Amount Per Share Amount Amount Per Share Amount
     (in thousands, except per share data)
            
    Net investment income$5,924 $0.27 $6,627 $0.31
    Net capital gains incentive fee -  -  -  -
    Income taxes, including excise taxes 167  0.01  233  0.01
    Adjusted Net Investment Income$6,091 $0.28 $6,860 $0.32
            

    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 2023 Financial Results Conference Call

    The Company will host a webcast and conference call to discuss these operating and financial results on Thursday, August 10, 2023 at 11:00 am ET. 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 # 2857464.

    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, 2023 to be filed with the SEC (www.sec.gov) on August 9, 2023.

    MONROE CAPITAL CORPORATION
    CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
    (in thousands, except per share data)
         
      June 30, 2023 March 31, 2023
      (unaudited)
    ASSETS   
    Investments, at fair value:   
     Non-controlled/non-affiliate company investments$396,816  $407,445 
     Non-controlled affiliate company investments 84,046   88,892 
     Controlled affiliate company investments 34,545   35,763 
     Total investments, at fair value (amortized cost of: $528,235 and $574,555, respectively) 515,407   532,100 
    Cash 12,301   6,929 
    Unrealized gain on foreign currency forward contracts -   1,687 
    Interest and dividend receivable 17,616   18,089 
    Other assets 568   660 
    Total assets 545,892   559,465 
         
    LIABILITIES   
    Debt:   
     Revolving credit facility 197,400   202,800 
     2026 Notes 130,000   130,000 
     Total debt 327,400   332,800 
     Less: Unamortized deferred financing costs (3,896)  (4,190)
     Total debt, less unamortized deferred financing costs 323,504   328,610 
    Interest payable 3,090   1,669 
    Management fees payable 2,163   2,200 
    Incentive fees payable 1,481   1,657 
    Accounts payable and accrued expenses 2,446   2,333 
    Directors' fees payable -   35 
    Total liabilities 332,684   336,504 
    Net assets$213,208  $222,961 
         
    ANALYSIS OF 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 298,700   298,700 
    Accumulated undistributed (overdistributed) earnings (85,514)  (75,761)
    Total net assets$213,208  $222,961 
    Net asset value per share$9.84  $10.29 
         


    MONROE CAPITAL CORPORATION 
    CONSOLIDATED STATEMENTS OF OPERATIONS 
    (in thousands, except per share data) 
         
     For the quarter ended 
     June 30, 2023 March 31, 2023 
     (unaudited) 
    Investment income:    
    Non-controlled/non-affiliate company investments:    
    Interest income$11,214  $11,710  
    Payment-in-kind interest income 706   885  
    Dividend income 106   146  
    Fee income 170   310  
    Total investment income from non-controlled/non-affiliate company investments 12,196   13,051  
    Non-controlled affiliate company investments:    
    Interest income 1,415   1,417  
    Payment-in-kind interest income 1,785   1,387  
    Dividend income 51   49  
    Total investment income from non-controlled affiliate company investments 3,251   2,853  
    Controlled affiliate company investments:    
    Dividend income 900   900  
    Total investment income from controlled affiliate company investments 900   900  
    Total investment income 16,347   16,804  
         
    Operating expenses:    
    Interest and other debt financing expenses 5,790   5,514  
    Base management fees 2,163   2,200  
    Incentive fees 1,481   1,657  
    Professional fees 224   128  
    Administrative service fees 224   255  
    General and administrative expenses 334   155  
    Directors' fees 40   35  
    Total operating expenses 10,256   9,944  
    Net investment income before income taxes 6,091   6,860  
    Income taxes, including excise taxes 167   233  
    Net investment income 5,924   6,627  
         
    Net gain (loss):    
    Net realized gain (loss):    
    Non-controlled/non-affiliate company investments (39,790)  706  
    Foreign currency forward contracts 1,719   37  
    Foreign currency and other transactions (128)  (3) 
    Net realized gain (loss) (38,199)  740  
         
    Net change in unrealized gain (loss):    
    Non-controlled/non-affiliate company investments 31,354   (3,417) 
    Non-controlled affiliate company investments (509)  (1,025) 
    Controlled affiliate company investments (1,218)  254  
    Foreign currency forward contracts (1,687)  180  
    Foreign currency and other transactions (1)  -  
    Net change in unrealized gain (loss) 27,939   (4,008) 
         
    Net gain (loss) (10,260)  (3,268) 
         
    Net increase (decrease) in net assets resulting from operations$(4,336) $3,359  
         
    Per common share data:    
    Net investment income per share - basic and diluted$0.27  $0.31  
    Net increase (decrease) in net assets resulting from operations per share - basic and diluted$(0.20) $0.16  
    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):
     For the quarter ended
     June 30, 2023 March 31, 2023
     (unaudited)
        
    Interest income$12,225 $12,524
    Payment-in-kind interest income 2,491  2,272
    Dividend income 1,057  1,095
    Fee income 170  310
    Prepayment gain (loss) 106  243
    Accretion of discounts and amortization of premiums 298  360
    Total investment income$16,347 $16,804
        
    The composition of the Company’s interest expense and other debt financing expenses was as follows (in thousands):
        
     For the quarter ended
     June 30, 2023 March 31, 2023
     (unaudited)
        
    Interest expense - revolving credit facility$3,909 $3,638
    Interest expense - 2026 Notes 1,555  1,555
    Amortization of deferred financing costs 326  321
        Total interest and other debt financing expenses$5,790 $5,514
        

    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 (“Monroe”) is a premier boutique asset management firm specializing in private credit markets across various strategies, including direct lending, technology finance, venture debt, opportunistic, 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 Lower Mid-Market Lender of the Decade, 2022 Lower Mid-Market Lender of the Year, 2022 CLO Manager of the Year, Americas; 2022 Best Performance in Private Debt – Mid Cap by Korean Economic Daily; Global M&A Network as the 2022 Small Mid-Markets Lender of the Year, Americas; 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 Investment Officer and Chief Financial 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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