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CST: 21/08/2019 04:53:42   

Monroe Capital Corporation BDC Announces Second Quarter 2019 Results

14 Days ago

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      
Investments, at fair value:      
  Non-controlled/non-affiliate company investments $   533,779     $   505,957  
  Non-controlled affiliate company investments      61,081         58,956  
  Controlled affiliate company investments      35,944         32,032  
  Total investments, at fair value (amortized cost of: $644,141 and $606,591, respectively)     630,804         596,945  
Cash      2,985         4,690  
Restricted cash     23,884         17,315  
Unrealized gain on foreign currency forward contracts      23         -   
Interest receivable     10,330         8,976  
Other assets     537         588  
  Total assets     668,563         628,514  
         
LIABILITIES      
Debt:      
  Revolving credit facility      188,640         146,342  
  2023 Notes     109,000         109,000  
  SBA debentures payable     115,000         115,000  
  Total debt     412,640         370,342  
  Less: Unamortized deferred financing costs     (8,797 )       (9,265 )
  Total debt, less unamortized deferred financing costs     403,843         361,077  
Interest payable     2,681         1,932  
Unrealized loss on foreign currency forward contracts     -          49  
Management fees payable     2,723         2,521  
Incentive fees payable     883         1,319  
Accounts payable and accrued expenses     2,545         2,529  
Directors' fees payable     -          35  
  Total liabilities     412,675         369,462  
  Net assets $   255,888     $   259,052  
         
ANALYSIS OF NET ASSETS      
       
Common stock, $0.001 par value, 100,000 shares authorized, 20,445 and 20,445 shares issued and outstanding, respectively $   20     $   20  
Capital in excess of par value     288,911         288,911  
Accumulated undistributed (overdistributed) earnings     (33,043 )       (29,879 )
  Total net assets $   255,888     $   259,052  
Net asset value per share $   12.52     $   12.67  
         

 

MONROE CAPITAL CORPORATION  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(in thousands, except per share data)  
         
  For the quarter ended  
  June 30, 2019   March 31, 2019  
     
  (unaudited)  
Investment income:        
Non-controlled/non-affiliate company investments:        
Interest income $ 13,743     $ 12,830    
Payment-in-kind interest income   115       98    
Dividend income   13       13    
Fee income   60       569    
Total investment income from non-controlled/non-affiliate company investments   13,931       13,510    
Non-controlled affiliate company investments:        
Interest income   767       923    
Payment-in-kind interest income   1,146       956    
Total investment income from non-controlled affiliate company investments   1,913       1,879    
Controlled affiliate company investments:        
Dividend income   875       770    
Total investment income from controlled affiliate company investments   875       770    
Total investment income   16,719       16,159    
         
Operating expenses:        
Interest and other debt financing expenses   5,107       4,354    
Base management fees   2,723       2,521    
Incentive fees   1,168       1,600    
Professional fees   272       289    
Administrative service fees   319       347    
General and administrative expenses   285       227    
Excise taxes   17       (7 )  
Directors' fees   40       35    
Expenses before incentive fee waiver   9,931       9,366    
Incentive fee waiver   (285 )     (281 )  
Total expenses, net of incentive fee waiver   9,646       9,085    
         
Net investment income   7,073       7,074    
         
Net gain (loss):        
Net realized gain (loss):        
Non-controlled/non-affiliate company investments   35       -    
Foreign currency forward contracts   2       (8 )  
Foreign currency and other transactions   (1 )     (1 )  
Net realized gain (loss)   36       (9 )  
         
Net change in unrealized gain (loss):        
Non-controlled/non-affiliate company investments   (2,749 )     2,288    
Non-controlled affiliate company investments   (1,054 )     (1,754 )  
Controlled affiliate company investments   112       323    
Foreign currency forward contracts   72       (65 )  
Foreign currency and other transactions   502       (416 )  
Net change in unrealized gain (loss)   (3,117 )     376    
         
Total net gain (loss)   (3,081 )     367    
         
Net increase (decrease) in net assets resulting from operations $ 3,992     $ 7,441    
         
Per common share data:        
Net investment income per share - basic and diluted $ 0.35     $ 0.35    
Net increase (decrease) in net assets resulting from operations per share - basic and diluted $ 0.20     $ 0.36    
Weighted average common shares outstanding - basic and diluted   20,445       20,445    
         


Additional Supplemental Information:

The composition of the Company’s investment income was as follows (in thousands):

       
  For the quarter ended
  June 30, 2019   March 31, 2019
       
Interest income $   14,026   $   13,214
Payment-in-kind interest income     1,261       1,054
Dividend income     888       783
Fee income     60       569
Prepayment gain (loss)     91       113
Accretion of discounts and amortization of premiums     393       426
Total investment income $   16,719   $   16,159
       
       
The composition of the Company’s interest expense and other debt financing expenses was as follows (in thousands):      
  For the quarter ended
  June 30, 2019   March 31, 2019
       
Interest expense - revolving credit facility $   2,092   $   1,895
Interest expense - 2023 Notes     1,566       1,056
Interest expense - SBA debentures     981       970
Amortization of deferred financing costs     468       433
Total interest and other debt financing expenses $   5,107   $   4,354
       


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 debt financing to businesses, special situation borrowers, and private equity sponsors. Investment types include cash flow, enterprise value and asset-based loans; unitranche financings; 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, Los Angeles, New York, and San Francisco.

Monroe has been recognized by Creditflux as the 2019 Best U.S. Direct Lending Fund; Private Debt Investor as the 2018 Lower Mid-Market Lender of the Year; Mergers & Acquisitions as the 2018 Lender of the Year; Global M&A Network as the 2018 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:          
Caroline Collins
BackBay Communications
(617) 963-0065
Email: caroline.collins@backbaycommunications.com  

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