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Monroe Capital Corporation BDC Announces Fourth Quarter Financial Results

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CHICAGO, March 07, 2017 (GLOBE NEWSWIRE) -- Monroe Capital Corporation (NASDAQ:MRCC) ("Monroe") today announced its financial results for the fourth quarter and full year ended December 31, 2016.  The Board of Directors of Monroe also declared its first quarter dividend of $0.35 per share, payable on March 31, 2017 to stockholders of record on March 17, 2017.

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

Fourth Quarter 2016 Financial Highlights

  • Net investment income of $5.4 million, or $0.32 per share
  • Adjusted Net Investment Income (a non-GAAP measure described below) of $5.8 million, or $0.35 per share
  • Net increase in net assets resulting from operations of $7.5 million, or $0.45 per share
  • Net asset value ("NAV") of $240.9 million, or $14.52 per share
  • Paid quarterly dividend of $0.35 per share on December 31, 2016

Full Year 2016 Financial Highlights

  • Net investment income of $22.5 million, or $1.55 per share as compared to $18.7 million, or $1.60 per share, for the year ended December 31, 2015
  • Adjusted Net Investment Income (a non-GAAP measure described below) of $23.4 million, or $1.61 per share as compared to $18.8 million, or $1.61 per share, for the year ended December 31, 2015
  • Net increase in net assets resulting from operations of $24.4 million, or $1.68 per share as compared to $17.9 million, or $1.53 per share for the year ended December 31, 2015
  • NAV of $240.9 million, or $14.52 per share, a $0.33 per share increase from $14.19 per share at December 31, 2015

Chief Executive Officer Theodore L. Koenig commented, "We are pleased to report another quarter of strong earnings for the fourth quarter of 2016, with Adjusted Net Investment Income of $0.35 per share, once again covering our fourth quarter dividend of $0.35 per share.  Our Net Asset Value was $14.52 per share as compared to $14.42 per share last quarter, a $0.10 per share increase.  We were also able to announce our regular dividend for the first quarter, which will again be $0.35 per share, an annualized yield of approximately 9% on our shares based on yesterday's close.  We are also pleased to have been able to continue to grow the portfolio during the quarter, increasing our portfolio by $36.3 million to $412.9 million as of year end.  We have been able to put the proceeds of our accretive third quarter capital raise to work and the majority of the growth in the fourth quarter occurred at our SBIC subsidiary.  Our recently announced upsize to our revolving credit facility and our access to $63.5 million of additional SBA-guaranteed debentures, will allow us to profitably grow our portfolio and continue to create long term value for our shareholders." 

Monroe Capital Corporation is the business development company affiliate of the award winning private debt investment firm and lender, Monroe Capital LLC.

Selected Financial Highlights
(in thousands, except per share data)

  December 31, 2016   September 30, 2016  
Consolidated Statements of Assets and Liabilities data: (audited)   (unaudited)  
Investments, at fair value $   412,920   $   376,656    
Total assets $   424,545   $   387,410    
Net asset value  $   240,850   $   239,087    
Net asset value per share $   14.52   $   14.42    
         
  For the quarter ended  
  December 31, 2016   September 30, 2016  
Consolidated Statements of Operations data: (unaudited)  
Net investment income $   5,377   $   5,583    
Adjusted net investment income (1) $   5,802   $   5,787    
Net gain (loss) on investments and secured borrowings $   2,155   $   (1,971 )  
Net increase in net assets resulting from operations $   7,532   $   3,612    
         
Per share data:        
Net investment income $   0.32   $   0.36    
Adjusted net investment income (1) $   0.35   $   0.37    
Net gain (loss) on investments and secured borrowings $   0.13   $   (0.13 )  
Net increase in net assets resulting from operations $   0.45   $   0.23    

                    

(1) 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 70 portfolio companies, with a total fair value of $412.9 million, as of December 31, 2016 as compared to debt and equity investments in 62 portfolio companies, with a total fair value of $376.7 million, as of September 30, 2016. The Company's portfolio consists primarily of first lien loans, representing 79.2% of the portfolio as of December 31, 2016 and 77.7% of the portfolio as of September 30, 2016. As of December 31, 2016, the weighted average contractual and effective yield on the Company's investments was 9.5% and 9.6%, respectively, as compared to the weighted average contractual and effective yield of 9.7% and 9.7%, respectively, as of September 30, 2016. 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).  

Financial Review

Results of Operations:  Fourth Quarter 2016

Net investment income for the quarter ended December 31, 2016 totaled $5.4 million, or $0.32 per share, compared to $5.6 million, or $0.36 per share, for the quarter ended September 30, 2016. Adjusted Net Investment Income was $5.8 million, or $0.35 per share, for the quarter ended December 31, 2016, compared to $5.8 million, or $0.37 per share, for the quarter ended September 30, 2016.  The Company believes that Adjusted Net Investment Income is a consistent measure of the Company's earnings – see Non-GAAP Financial Measure – Adjusted Net Investment Income discussion below. Total investment income increased by $0.1 million during the quarter.  Interest income increased during the quarter, primarily as a result in the increase in the size of the Company's investment portfolio as the Company put more of the proceeds from the third quarter equity capital raise to work during the fourth quarter.  This increase in interest income was offset by a decline in dividend income on the Company's LLC investments during the quarter.  Total expenses, net of incentive fee waiver, increased by $0.3 million during the quarter, primarily driven by increases in interest expense and base management fees given the growth of the portfolio as compared to the prior quarter.  The Company's manager, Monroe Capital BDC Advisors, LLC, provided a waiver of $0.3 million in part one incentive fees (incentive fees based on net investment income) during the quarter ended December 31, 2016.

Net gain (loss) on investments and secured borrowings was $2.2 million for the quarter ended December 31, 2016, compared to ($2.0) million for the quarter ended September 30, 2016. The net gain on investments and secured borrowings during the quarter ended December 31, 2016 was primarily the result of net unrealized mark-to-market gains on investments in the portfolio during the quarter.

Net increase in net assets resulting from operations was $7.5 million, or $0.45 per share, for the quarter ended December 31, 2016, compared to $3.6 million, or $0.23 per share, for the quarter ended September 30, 2016.  This increase is primarily the result of net unrealized mark-to-market gains on investments during the quarter as net investment income declined only slightly as compared to the prior quarter. The Company's NAV increased on a per share basis to $14.52 per share at December 31, 2016 from $14.42 per share at September 30, 2016.  This increase in NAV per share was primarily driven by net mark-to-market gains on investments in the quarter.

Results of Operations:  Full Year 2016

Net investment income for the year ended December 31, 2016 totaled $22.5 million, or $1.55 per share, compared to $18.7 million, or $1.60 per share, for the year ended December 31, 2015. Adjusted Net Investment Income was $23.4 million, or $1.61 per share, for the year ended December 31, 2016, compared to $18.8 million, or $1.61 per share, for the year ended December 31, 2015. Total investment income increased by $8.1 million during the year, primarily driven by increases in interest income as a result of a larger average portfolio size during 2016 and increases in dividend income on the Company's LLC investments.  Total expenses, net of incentive fee waiver, increased by $4.4 million during the year.  This increase was primarily driven by a larger average portfolio, driving increases in interest expense, base management fees and incentive fees.

Net gain (loss) on investments and secured borrowings was $1.9 million for the year ended December 31, 2016, compared to ($0.8) million for the year ended December 31, 2015. The net gain on investments and secured borrowings during the year ended December 31, 2016 was primarily the result of net unrealized mark-to-market gains on investments in the portfolio during the year.

Net increase in net assets resulting from operations was $24.4 million, or $1.68 per share, for the year ended December 31, 2016, compared to $17.9 million, or $1.53 per share, for the year ended December 31, 2015. This increase is primarily the result of increases in net investment income during the year and net unrealized mark-to-market gains on investments in the portfolio during the year. The Company's NAV increased to $14.52 per share at December 31, 2015 from $14.19 per share at December 31, 2015.

Liquidity and Capital Resources

At December 31, 2016, the Company had $6.0 million in cash, $2.4 million in restricted cash at Monroe Capital Corporation SBIC LP ("MRCC SBIC," the Company's wholly-owned SBIC subsidiary), $129.0 million of total debt outstanding on its revolving credit facility and $51.5 million in outstanding Small Business Administration ("SBA") debentures. As of December 31, 2016, the Company had $31.0 million available for additional borrowings on its revolving credit facility and $63.5 million in available SBA-guaranteed debentures. 

On February 22, 2017, the Company closed a $40.0 million upsize to its revolving credit facility, from $160.0 million to $200.0 million in revolving commitments, in accordance with the facility's accordion feature.

SBIC Subsidiary

As of December 31, 2016, MRCC SBIC had $41.0 million in leveragable capital, $2.4 million in cash and $97.1 million in investments at fair value.  Additionally, MRCC SBIC had $51.5 million in SBA-guaranteed debentures outstanding. 

In order for MRCC SBIC to gain access to the entirety of the $63.5 million in remaining additional SBA-guaranteed debentures, the Company would be required to contribute to MRCC SBIC an additional $16.5 million in leveragable capital. The SBA-guaranteed debentures are long-term, fixed rate financing with the advantage of being excluded from the Company's 200% asset coverage test under the Investment Company Act of 1940.

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 excise 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  
  December 31, 2016   September 30, 2016  
  Amount   Per Share Amount   Amount   Per Share Amount  
  (in thousands, except per share data)  
Net investment income $   5,377   $         0.32   $   5,583     $   0.36    
Net capital gains incentive fee     175       0.01       (138 )       (0.01 )  
Excise taxes     250       0.02       342         0.02    
Adjusted Net Investment Income $   5,802     $                        0.35    $   5,787        $                     0.37    


  For the year ended    
  December 31, 2016   December 31, 2015
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