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Monroe Capital Corporation BDC Announces Second Quarter 2019 Results

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CHICAGO, Aug. 06, 2019 (GLOBE NEWSWIRE) -- Monroe Capital Corporation (NASDAQ:MRCC) ("Monroe") today announced its financial results for the second quarter ended June 30, 2019.

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

Second Quarter 2019 Financial Highlights

  • Net investment income of $7.1 million, or $0.35 per share
  • Adjusted Net Investment Income (a non-GAAP measure described below) of $7.1 million, or $0.35 per share
  • Net increase in net assets resulting from operations of $4.0 million, or $0.20 per share
  • Net asset value ("NAV") of $255.9 million, or $12.52 per share
  • Paid quarterly dividend of $0.35 per share on June 28, 2019
  • Current annual cash dividend yield to shareholders of approximately 12.4% (1)
  • Based on an annualized dividend and closing share price as of August 5, 2019.

Chief Executive Officer Theodore L. Koenig commented, "We are pleased to report another quarter of consistent net investment income, with Adjusted Net Investment Income of $0.35 per share, representing the 21st straight quarter where per share Adjusted Net Investment Income met or exceeded our quarterly per share dividend. We have also made our 27th consecutive quarterly dividend payment to our shareholders.  As of quarter end, our portfolio totaled $630.8 million in investments at fair value, which represented a $33.9 million increase in the portfolio during the second quarter, or about a 6% increase.  Portfolio growth during the quarter was funded primarily utilizing the available capital under our revolving credit facility. We would expect to continue to selectively grow our portfolio, including utilizing additional leverage capacity available to us under our revolving credit facility. We would expect recent and continued portfolio growth to positively contribute to our earnings in future quarters."

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

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

 
  June 30, 2019   March 31, 2019
   
Consolidated Statements of Assets and Liabilities data: (unaudited)
Investments, at fair value $   630,804     $   596,945
Total assets $   668,563     $   628,514
Net asset value  $   255,888     $   259,052
Net asset value per share $   12.52     $   12.67
       
  For the quarter ended
  June 30, 2019   March 31, 2019
   
Consolidated Statements of Operations data: (unaudited)
Net investment income $   7,073     $   7,074
Adjusted net investment income (1) $   7,090     $   7,067
Net gain (loss) $   (3,081 )   $   367
Net increase (decrease) in net assets resulting from operations $   3,992     $   7,441
       
Per share data:      
Net investment income $   0.35     $   0.35
Adjusted net investment income (1) $   0.35     $   0.35
Net gain (loss)  $   (0.15 )   $   0.01
Net increase (decrease) in net assets resulting from operations $   0.20     $   0.36
       

______

(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 87 portfolio companies, with a total fair value of $630.8 million as of June 30, 2019, as compared to debt and equity investments in 80 portfolio companies, with a total fair value of $596.9 million, as of March 31, 2019. The Company's portfolio consists primarily of first lien loans, representing 89.9% of the portfolio as of June 30, 2019, and 89.8% of the portfolio as of March 31, 2019.  As of June 30, 2019, the weighted average contractual and effective yield on the Company's debt and preferred equity investments was 9.9% and 9.9%, respectively, as compared to the weighted average contractual and effective yield of 9.9% and 10.0%, respectively, as of March 31, 2019. 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 and Adjusted Net Investment Income for the quarter ended June 30, 2019 totaled $7.1 million, or $0.35 per share, consistent with the results for the quarter ended March 31, 2019.  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, 2019 totaled $16.7 million, compared to $16.2 million for the quarter ended March 31, 2019.  The $0.5 million increase during the quarter was primarily the result of an increase in interest income (including payment-in-kind interest income), primarily due to a larger average investment portfolio size during the quarter. This increase was partially offset by a decrease in fee income. Total expenses, net of incentive fee waiver, for the quarter ended June 30, 2019 totaled $9.6 million, compared to $9.1 million for the quarter ended March 31, 2019. The $0.5 million increase during the quarter was primarily driven by an increase in interest expense as a result of additional borrowings on our various financing sources (including the 2023 Notes and revolving credit facility) required to support the growth of the portfolio and an increase in base management fees due to the growth in invested assets.  These increases were partially offset by a decrease in incentive fees. Incentive fees totaled $0.9 million for the quarter (net of an incentive fee waiver of $0.3 million), compared to $1.3 million (net of an incentive fee waiver of $0.3 million) for the quarter ended March 31, 2019.  Incentive fees during the quarter ended June 30, 2019 were limited by $0.4 million due to the total return requirement.  Please refer to the Company's Form 10-Q for additional information of the incentive fee calculation. 

Net gain (loss) was ($3.1) million for the quarter ended June 30, 2019, compared to $0.3 million for the quarter ended March 31, 2019. During the quarter the Company experienced net unrealized mark-to-market valuation decreases on certain investments in the portfolio.

Net increase (decrease) in net assets resulting from operations was $4.0 million, or $0.20 per share, for the quarter ended June 30, 2019, compared to $7.4 million, or $0.36 per share, for the quarter ended March 31, 2019.  This decrease is primarily the result of a decline in certain portfolio valuations during the quarter.  The Company's NAV per share decreased to $12.52 per share at June 30, 2019 from $12.67 per share at March 31, 2019. 

Liquidity and Capital Resources

At June 30, 2019, the Company had $3.0 million in cash, $23.9 million in restricted cash at Monroe Capital Corporation SBIC LP ("MRCC SBIC," the Company's wholly-owned SBIC subsidiary), $188.6 million of total debt outstanding on its revolving credit facility, $109.0 million of debt outstanding on its 2023 Notes, and $115.0 million in outstanding Small Business Administration ("SBA") debentures. As of June 30, 2019, the Company had $66.4 million available for additional borrowings on its revolving credit facility. 

SBIC Subsidiary

As of June 30, 2019, MRCC SBIC had $57.6 million in leverageable capital, $23.9 million in cash and $148.1 million in investments at fair value.  Additionally, MRCC SBIC had $115.0 million in SBA debentures outstanding.  As of June 30, 2019, the Company has fully drawn all available debentures at MRCC SBIC.  The SBA debentures are long-term, fixed rate financing with the advantage of being excluded from the Company's 150% asset coverage test under the Investment Company Act of 1940.

MRCC Senior Loan Fund

MRCC Senior Loan Fund I, LLC ("SLF") is a joint venture with NLV Financial Corporation ("NLV"), the parent of National Life Insurance Company.  SLF invests primarily in senior secured loans to middle market companies in the United States. The Company and NLV have each committed $50.0 million of capital to the joint venture.  As of June 30, 2019, the Company had made net capital contributions of $35.1 million in SLF with a fair value of $35.9 million, as compared to net capital contributions of $31.3 million in SLF with a fair value of $32.0 million at March 31, 2019.  During the quarter ended June 30, 2019, the Company received an income distribution from SLF of $0.9 million, compared to the $0.8 million received during the quarter ended March 31, 2019. 

As of June 30, 2019, SLF had total assets of $240.8 million (including investments at fair value of $235.6 million), total liabilities of $168.9 million (including borrowings under the $170.0 million secured revolving credit facility with Capital One, N.A. (the "SLF Credit Facility") of $143.3 million) and total members' capital of $71.9 million.  As of March 31, 2019, SLF had total assets of $199.4 million (including investments at fair value of $189.6 million), total liabilities of $135.4 million (including borrowings under the SLF Credit Facility of $121.0 million) and total members' capital of $64.0 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, 2019   March 31, 2019
  Amount   Per Share Amount   Amount   Per Share Amount
   
  (in thousands, except per share data)
Net investment income $   7,073   $   0.35   $   7,074     $   0.35
Net capital gains incentive fee     -        -        -          - 
Excise taxes     17       -        (7 )       - 
Adjusted Net Investment Income $   7,090   $   0.35   $   7,067     $   0.35
               

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 2019 Financial Results Conference Call

The Company will host a webcast and conference call to discuss these operating and financial results on Wednesday, August 7, 2019 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 (877) 312-8807 approximately 10 minutes prior to the call. Please reference conference ID #5591125.

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, 2019 to be filed with the Securities and Exchange Commission (www.sec.gov) on August 6, 2019.


 
MONROE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except per share data)
         
    June 30, 2019   March 31, 2019
     
    (unaudited)
ASSETS    
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