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Monroe Capital Corporation BDC Announces Second Quarter Results

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CHICAGO, Aug. 07, 2018 (GLOBE NEWSWIRE) -- Monroe Capital Corporation (NASDAQ:MRCC) ("Monroe") today announced its financial results for the second quarter ended June 30, 2018. 

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

Second Quarter 2018 Financial Highlights

  • Net investment income of $7.9 million, or $0.39 per share
  • Adjusted Net Investment Income (a non-GAAP measure described below) of $7.9 million, or $0.39 per share
  • Net increase in net assets resulting from operations of $4.3 million, or $0.21 per share
  • Net asset value ("NAV") of $270.7 million, or $13.35 per share
  • Paid quarterly dividend of $0.35 per share on June 29, 2018

Chief Executive Officer Theodore L. Koenig commented, "We are pleased to report another quarter of solid earnings for the second quarter of 2018, with Adjusted Net Investment Income of $0.39 per share, representing the 17th straight quarter where per share Adjusted Net Investment Income met or exceeded our quarterly per share dividend. We have also made our 23rd consecutive quarterly dividend payment to our shareholders without any reduction in our distributions.  As of quarter end, our portfolio totaled $498.2 million in investments at fair value, which represented a slight increase in the portfolio since the end of the first quarter. Measured portfolio growth, as well as growth in our MRCC Senior Loan Fund joint venture, should 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)

  June 30, 2018   March 31, 2018  
Consolidated Statements of Assets and Liabilities data: (unaudited)  
Investments, at fair value $ 498,235     $ 496,034    
Total assets $ 513,603     $ 512,704    
Net asset value $ 270,708     $ 273,005    
Net asset value per share $ 13.35     $ 13.49    
         
  For the quarter ended  
  June 30, 2018   March 31, 2018  
Consolidated Statements of Operations data: (unaudited)  
Net investment income $ 7,906     $ 8,465    
Adjusted net investment income (1) $ 7,906     $ 8,476    
Net gain (loss) on investments, secured borrowings and foreign currency borrowings $ (3,626 )   $ (7,075 )  
Net increase in net assets resulting from operations $ 4,280     $ 1,390    
         
Per share data:        
Net investment income $ 0.39     $ 0.42    
Adjusted net investment income (1) $ 0.39     $ 0.42    
Net gain (loss) on investments, secured borrowings, foreign currency transactions and foreign currency borrowings $ (0.18 )   $ (0.35 )  
Net increase in net assets resulting from operations $ 0.21     $ 0.07    

______
(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 71 portfolio companies, with a total fair value of $498.2 million, as of June 30, 2018 as compared to debt and equity investments in 72 portfolio companies, with a total fair value of $496.0 million, as of March 31, 2018. The Company's portfolio consists primarily of first lien loans, representing 88.1% of the portfolio as of June 30, 2018 and 85.9% of the portfolio as of March 31, 2018.  As of June 30, 2018, the weighted average contractual and effective yield on the Company's debt and preferred equity investments was 9.9% and 10.0%, respectively, as compared to the weighted average contractual and effective yield of 10.0% and 10.6%, respectively, as of March 31, 2018. 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

Net investment income for the quarter ended June 30, 2018 totaled $7.9 million, or $0.39 per share, compared to $8.5 million, or $0.42 per share, for the quarter ended March 31, 2018. Adjusted Net Investment Income was $7.9 million, or $0.39 per share, for the quarter ended June 30, 2018, compared to $8.5 million, or $0.42 per share, for the quarter ended March 31, 2018.  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. Investment income for the quarter ended June 30, 2018 totaled $14.8 million, compared to $15.0 million for the quarter ended March 31, 2018.  The $0.2 million decrease during the quarter was primarily the result of a decrease in net accretion of discounts on the portfolio assets during the quarter, partially offset by increase in dividend income and prepayment gain (loss) during the quarter.  Total expenses for the quarter ended June 30, 2018 totaled $6.9 million, compared to $6.5 million for the quarter ended March 31, 2018. The $0.4 million increase during the quarter was primarily driven by a $0.2 million increase in incentive fees and $0.1 million increase in interest expense.  Incentive fees were limited due to the total return requirement during both periods presented.  Please refer to the Company's Form 10-Q for additional information of the incentive fee calculation and associated limitation. 

Net gain (loss) on investments, secured borrowings, foreign currency transactions and foreign currency borrowings was ($3.6) million for the quarter ended June 30, 2018, compared to ($7.1) million for the quarter ended March 31, 2018. The net loss on investments, secured borrowings and foreign currency borrowings during the quarter ended June 30, 2018 was primarily the result of net unrealized mark-to-market losses on investments in the portfolio during the quarter.  The largest contributor to the net unrealized mark-to-market losses during the quarter was the write-down of the Company's remaining debt investment in TPP Operating, Inc. to zero as of June 30, 2018. During the quarter, that borrower ceased its operations and virtually all of its assets were sold.  Please refer to the Company's Form 10-Q for additional information concerning the Company's investment in TPP.

Net increase in net assets resulting from operations was $4.3 million, or $0.21 per share, for the quarter ended June 30, 2018, compared to $1.4 million, or $0.07 per share, for the quarter ended March 31, 2018.  This increase is primarily the result of a decrease in net unrealized mark-to-market losses on investments during the quarter. The Company's NAV per share decreased to $13.35 per share at June 30, 2018 from $13.49 per share at March 31, 2018. 

Liquidity and Capital Resources

At June 30, 2018, the Company had $2.8 million in cash, $4.2 million in restricted cash at Monroe Capital Corporation SBIC LP ("MRCC SBIC," the Company's wholly-owned SBIC subsidiary), $125.5 million of total debt outstanding on its revolving credit facility and $115.0 million in outstanding Small Business Administration ("SBA") debentures. As of June 30, 2018, the Company had $74.5 million available for additional borrowings on its revolving credit facility. 

SBIC Subsidiary

As of June 30, 2018, MRCC SBIC had $57.6 million in leverageable capital, $4.2 million in cash and $170.6 million in investments at fair value.  Additionally, MRCC SBIC had $115.0 million in SBA-guaranteed debentures outstanding. 

As of June 30, 2018, the Company has fully drawn all available debentures at MRCC SBIC.  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.

MRCC Senior Loan Fund

The Company formed a joint venture with NLV Financial Corporation ("NLV"), the parent of National Life Insurance Company ("National Life"), to create MRCC Senior Loan Fund I, LLC (the "SLF") during the fourth quarter of 2017.  SLF invests primarily in senior secured loans to middle market companies in the United States. The Company and NLV have each initially committed $50.0 million of capital to the joint venture.  During the quarter ended March 31, 2018, SLF entered a $100.0 million secured revolving credit facility with Capital One, N.A. (the "SLF Credit Facility").  As of June 30, 2018, the Company had made net capital contributions of $17.9 million in SLF with a fair value of $18.7 million.  During the quarter ended June 30, 2018, the Company received an income distribution from SLF of $0.3 million. 

As of June 30, 2018, SLF had total assets of $98.6 million (including investments at fair value of $94.8 million), total liabilities of $61.2 million (including borrowings under the SLF Credit Facility of $56.4 million) and total members' capital of $37.4 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 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  
  June 30, 2018   March 31, 2018  
  Amount   Per Share Amount   Amount   Per Share Amount  
                         
  (in thousands, except per share data)  
Net investment income $ 7,906   $ 0.39   $ 8,465   $ 0.42  
Net capital gains incentive fee   -     -     -     -  
Excise taxes   -     -     11     -  
Adjusted Net Investment Income $ 7,906   $ 0.39   $ 8,476   $ 0.42  

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 2018 Financial Results Conference Call

The Company will host a webcast and conference call to discuss these operating and financial results on Wednesday, August 8, 2018 at 12:00 pm 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 (877) 312-8807 approximately 10 minutes prior to the call. Please reference conference ID #3279739.

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, 2018 to be filed with the Securities and Exchange Commission (www.sec.gov) on August 7, 2018.

MONROE CAPITAL CORPORATION  
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES  
(in thousands, except per share data)  
           
    June 30, 2018   March 31, 2018  
    (unaudited)   (unaudited)  
ASSETS        
Investments, at fair value:        
  Non-controlled/non-affiliate company investments $ 425,220     $ 426,058    
  Non-controlled affiliate company investments   54,322       53,643    
  Controlled affiliate company investments   18,693       16,333    
  Total investments, at fair value (amortized cost of: $522,734 and $516,121, respectively)   498,235       496,034    
Cash   2,779       3,070    
Restricted cash   4,252       7,117    
Interest receivable   7,239       5,756    
Other assets   1,098       727    
   Total assets   513,603       512,704    
           
LIABILITIES        
Debt:        
  Revolving credit facility   125,496       125,584    
  SBA debentures payable   115,000       112,800    
  Total debt   240,496       238,384    
  Less:  Unamortized deferred financing costs   (4,462 )     (4,468 )  
  Total debt, less unamortized deferred financing costs   236,034       233,916    
Interest payable   1,657       795    
Management fees payable   2,202       2,163    
Incentive fees payable   990       761    
Accounts payable and accrued expenses   2,012       2,027    
Directors' fees payable   -       37    
  Total liabilities   242,895       239,699    
  Net assets $ 270,708     $ 273,005    
           
ANALYSIS OF NET ASSETS        
Common stock, $0.001 par value, 100,000 shares authorized, 20,279 and 20,240 shares        
 issued and outstanding, respectively $ 20     $ 20    
Capital in excess of par value   286,651       286,141    
Undistributed net investment income (accumulated distributions in excess of net investment income)   8,907       8,088    
Accumulated net realized gain (loss) on investments and secured borrowings and foreign currency transactions   (369 )     (360 )  
Accumulated net unrealized gain (loss) on investments, secured borrowings and foreign currency borrowings   (24,501 )     (20,884 )  
  Total net assets $ 270,708     $ 273,005    
Net asset value per share $ 13.35     $ 13.49    
           


MONROE CAPITAL CORPORATION  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(in thousands, except per share data)  
         
  For the quarter ended  
  June 30, 2018   March 31, 2018  
                 
  (unaudited)  
Investment income:        
  Interest income:        
  Non-controlled/non-affiliate company investments $   11,788     $   11,963    
  Non-controlled affiliate company investments     1,751         1,828    
  Total interest income     13,539         13,791    
  Dividend income:        
  Non-controlled/non-affiliate company investments     265         260    
  Controlled affiliate company investments     350         175    
  Total dividend income     615         435    
  Fee income:        
  Non-controlled/non-affiliate company investments     583         724    
  Non-controlled affiliate company investments     83         -     
  Total fee income     666         724    
  Total investment income     14,820         14,950    
         
Operating expenses:        
  Interest and other debt financing expenses     2,836         2,706    
  Base management fees     2,202         2,163    
  Incentive fees     990         761    
  Professional fees     302         307    
  Administrative service fees     322         324    
  General and administrative expenses     225         176    
  Excise taxes     -          11    
  Directors' fees     37         37    
  Total expenses     6,914         6,485    
         
  Net investment income     7,906         8,465    
         
Net gain (loss) on investments, secured borrowings and foreign currency borrowings:        
  Net realized gain (loss):        
 Foreign currency transactions     (9 )       12    
   Net realized gain (loss)      (9 )       12    
         
  Net change in unrealized gain (loss):        
  Non-controlled/non-affiliate company investments     (515 )       (165 )  
  Non-controlled affiliate company investments     (4,157 )       (6,923 )  
  Controlled affiliate company investments     260         443    
 Foreign currency borrowings     795         (442 )  
    Net change in unrealized gain (loss)      (3,617 )       (7,087 )  
         
  Net gain (loss) on investments, secured borrowings, foreign currency transactions        
     and foreign currency borrowings     (3,626 )       (7,075 )  
         
  Net increase (decrease) in net assets resulting from operations $   4,280     $   1,390    
         
Per common share data:        
Net investment income per share - basic and diluted $   0.39     $   0.42    
Net increase in net assets resulting from operations per share - basic and diluted $   0.21     $   0.07    
Weighted average common shares outstanding - basic and diluted     20,244         20,240    
         
         

Additional Supplemental Information:

The composition of the Company's investment income was as follows (dollars in thousands):  
         
  For the quarter ended  
  June 30, 2018   March 31, 2018  
         
Interest income $ 12,703   $ 12,626  
Dividend income   615     435  
Fee income   666     724  
Prepayment gain (loss)   312     133  
Accretion of discounts and amortization of premiums   524     1,032  
Total investment income $ 14,820   $ 14,950  
         
The composition of the Company's interest expense and other debt financing expenses was as follows (dollars in thousands):  
         
  For the quarter ended  
  June 30, 2018   March 31, 2018  
         
Interest expense - revolving credit facility $ 1,551   $ 1,557  
Interest expense - SBA debentures   970     868  
Amortization of deferred financing costs   315     281  
Total interest and other debt financing expenses $ 2,836   $ 2,706  
         


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 private credit asset management firm specializing in direct lending and opportunistic private credit investing. Since 2004, the firm has provided private credit solutions to borrowers in the U.S. and Canada. Monroe's middle market lending platform provides senior and junior debt financing to businesses, special situation borrowers, and private equity sponsors. Investment types include unitranche financings; cash flow, asset based and enterprise value based loans; and equity co-investments. Monroe is committed to being a value-added and user-friendly partner to business owners, senior management, and private equity and independent sponsors. The firm is headquartered in Chicago and maintains offices in Atlanta, Boston, Dallas, Los Angeles, New York, and San Francisco.

Monroe has been recognized by Creditflux as the 2018 Best U.S. Direct Lending Fund; Private Debt Investor as the 2017 Lower Mid-Market Lender of the Year; Global M&A Network as the 2017 Small Middle Markets Lender of the Year; M&A Advisor as the 2016 Lender Firm of the Year; and the U.S. Small Business Administration as the 2015 Small Business Investment Company (SBIC) of the Year. For more information, 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:       
Aaron D. Peck
Chief Investment Officer and Chief Financial Officer
Monroe Capital Corporation
(312) 523-2363
Email: apeck@monroecap.com

Media Contact:          
Emily Stoermer
BackBay Communications
(617) 391-0801
Email: emily.stoermer@backbaycommunications.com

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