Investcorp Credit Management BDC, Inc. Announces Financial Results for the Quarter Ended December 31, 2022, and Quarterly and Supplemental Distributions

Rhea-AI Summary

Investcorp Credit Management BDC, Inc. (ICMB) reported its fiscal second quarter results for the period ending December 31, 2022. The Company's net investment income reached $2.3 million, or $0.16 per share, with a net increase in net assets of $0.6 million, equivalent to $0.04 per share. A distribution of $0.13 per share, alongside a supplemental $0.02 per share, was declared for the upcoming quarter, representing a 17.05% yield based on a share price of $3.52 as of December 31, 2022. However, net asset value per share decreased from $6.47 to $6.36, while the weighted average yield on debt investments fell to 10.73% from 11.91%. Total assets decreased to $239.4 million, reflecting overall market volatility.

Positive

• Declared a quarterly distribution of $0.13 per share and a supplemental distribution of $0.02, yielding 17.05%.
• Net investment income increased to $2.3 million, or $0.16 per share.
• Realized proceeds of $14.2 million from repayments and investments.

Negative

• Net asset value per share decreased from $6.47 to $6.36.
• Weighted average yield on debt investments fell to 10.73% from 11.91%.
• Net assets decreased by $1.5 million, or 1.7%.

NEW YORK, Feb. 13, 2023 /PRNewswire/ -- Investcorp Credit Management BDC, Inc. (NASDAQ: ICMB) ("ICMB" or the "Company") announced its financial results today for its fiscal second quarter ended December 31, 2022.

HIGHLIGHTS

• On February 2, 2023, the Company's Board of Directors (the "Board") declared a distribution of $0.13 per share for the quarter ending March 31, 2023, payable in cash on March 30, 2023, to stockholders of record as of March 10, 2023 and a supplemental distribution of $0.02 per share, payable on March 30, 2023, to stockholders of record as of March 10, 2023.
• During the quarter, ICMB made investments in one portfolio company. These investments totaled $2.5 million, at cost. The weighted average yield (at origination) of debt investments made in the quarter was 10.63%.
• ICMB fully realized one portfolio company during the quarter, totaling $11.4 million in proceeds. The internal rate of return on these investments was 11.42%.
• During the quarter, the Company had net advances of $3.7 million on its existing delayed draw and revolving credit commitments to portfolio companies.
• The weighted average yield on debt investments, at cost, for the quarter ended December 31, 2022, was 10.73%, compared to 11.91% for the quarter ended September 30, 2022.
• Net asset value decreased $0.11 per share to $6.36, compared to $6.47 as of September 30, 2022. Net assets decreased by $1.5 million, or 1.7%, during the quarter ended December 31, 2022.

 

Portfolio results, as of and for the three months ended December 31, 2022:
Total assets	$239.4mm
Investment portfolio, at fair value	$228.6mm
Net assets	$91.5mm
Weighted average yield on debt investments, at cost (1)	10.73 %
Net asset value per share	$6.36
Portfolio activity in the current quarter:
Number of new investments	3
Total capital invested	$6.2mm
Proceeds from repayments, sales, and amortization	$14.2mm
Number of portfolio companies, end of period	37
Net investment income (NII)	$2.3mm
Net investment income per share	$0.16
Net increase in net assets from operations	$0.6mm
Net increase in net assets from operations per share	$0.04
Quarterly per share distribution paid on January 10, 2023	$0.15

(1) Represents weighted average yield on total debt investments for the three months ended December 31, 2022. Weighted average yield on total debt investments is the annualized rate of interest income recognized during the period divided by the average amortized cost of debt investments in the portfolio during the period. The weighted average yield on total debt investments reflected above does not represent actual investment returns to the Company's stockholders.

Mr. Michael C. Mauer, the Company's Chief Executive Officer, said, "We continue to see market volatility and inflationary pressures across the borrower universe.  We have responded with a cautious and deliberate approach to capital deployment, with an emphasis on first lien structures, covenants, and significant equity contributions below us. There remains a stable flow, albeit at a slow pace, of conservative opportunities with attractive structures and returns to consider."

The Company's dividend framework provides a quarterly base dividend and may be supplemented, at the discretion of the Board, by additional dividends as determined to be available by the Company's net investment income and performance during the quarter.

On February 2, 2023, the Board declared a distribution for the quarter ended March 31, 2023 of $0.13 per share payable on March 30, 2023 to stockholders of record as of March 10, 2023 and a supplemental distribution of $0.02 per share, payable on March 30, 2023, to stockholders of record as of March 10, 2023.

This distribution represents a 17.05% yield on the Company's $3.52 share price as of market close on December 31, 2022. Distributions may include net investment income, capital gains and/or return of capital, however, the Company does not expect the dividend for the quarter ending December 31, 2022, to be comprised of a return of capital. The Company's investment adviser monitors available taxable earnings, including net investment income and realized capital gains, to determine if a return of capital may occur for the year. The Company estimates the source of its distributions as required by Section 19(a) of the Investment Company Act of 1940 to determine whether payment of dividends are expected to be paid from any other source other than net investment income accrued for the current period or certain cumulative periods, but the Company will not be able to determine whether any specific distribution will be treated as taxable earnings or as a return of capital until after the end of the taxable year.

Portfolio and Investment Activities

During the quarter, the Company made investments in one new portfolio company. The aggregate capital invested during the quarter totaled $2.5 million, at cost, and the debt investments were made at a weighted average yield of 10.63%.

The Company received proceeds of $14.2 million from repayments, sales and amortization during the quarter, primarily related to the realization of Barri Financial Group, LLC.

During the quarter, the Company had net advances of $3.7 million on its existing and new delayed draw and revolving credit commitments to portfolio companies.

The Company's net realized, and unrealized gains and losses accounted for a decrease in the Company's net investments of $1.7 million, or $0.12 per share. The total net increase in net assets resulting from operations for the quarter was $0.6 million, or $0.04 per share.

As of December 31, 2022, the Company's investment portfolio consisted of investments in 37 portfolio companies, of which 91.0% were first lien investments and 9.0% were equity, warrants, and other investments. The Company's debt portfolio consisted of 99.5% floating rate investments and 0.5% fixed rate investments.

The Company continues to assess the impact of the COVID-19 pandemic on its portfolio companies and will continue to closely monitor its portfolio companies throughout this period, including assessing portfolio companies' operational and liquidity exposure and outlook. For additional information about the COVID-19 pandemic and its potential impact on the Company's results of operations and financial condition, please refer to the disclosure in the Company's quarterly report on Form 10-Q for the quarter ended December 31, 2022, filed with the Securities and Exchange Commission on February 13, 2023.

Capital Resources

As of December 31, 2022, the Company had $8.4 million in cash, of which $7.9 million was restricted cash, and $36.6 million unused capacity under its revolving credit facility with Capital One, N.A.

Subsequent Events

Subsequent to December 31, 2022 and through February 13, 2023, the Company invested a total of $5.5 million, which included investments in one existing and one new portfolio company. As of February 13, 2022, the Company had investments in 37 portfolio companies.

Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Statements of Assets and Liabilities
	December 31, 2022 (Unaudited)	June 30, 2022
Assets
Non-controlled, non-affiliated investments, at fair value (amortized cost of      $251,161,598 and $254,172,763, respectively)	$   217,912,382	$ 223,037,183
Affiliated investments, at fair value (amortized cost of $23,726,516 and $23,395,242,            respectively)	10,681,276	10,646,803
Total investments, at fair value (amortized cost of $274,888,114 and $277,568,005,           respectively)	228,593,658	233,683,986
Cash	553,186	2,550,021
Cash, restricted	7,884,674	6,605,056
Receivable for investments sold	301,677	835,043
Interest receivable	1,919,396	2,298,443
Payment-in-kind interest receivable	16,927	2,137
Prepaid expenses and other assets	90,899	410,401
Total Assets	$    239,360,417	$  246,385,087
Liabilities
Notes payable:
Revolving credit facility	$      78,400,000	$    84,000,000
2026 Notes payable	65,000,000	65,000,000
Deferred debt issuance costs	(1,567,222)	(1,913,889)
Unamortized discount	(231,108)	(266,663)
Notes payable, net	141,601,670	146,819,448
Payable for investments purchased	—	246,984
Dividend payable	2,158,268	2,157,872
Income-based incentive fees payable	34,950	182,095
Base management fees payable	944,623	1,054,063
Interest payable	2,160,160	1,574,356
Directors' fees payable	22,005	20,780
Accrued expenses and other liabilities	961,106	820,097
Total Liabilities	147,882,782	152,875,695
Net Assets
Common stock, par value $0.001 per share (100,000,000 shares authorized, 14,388,456      and 14,385,810 shares issued and outstanding, respectively)	14,389	14,386
Additional paid-in capital	203,600,310	203,590,126
Distributable earnings (loss)	(112,137,064)	(110,095,120)
Total Net Assets	91,477,635	93,509,392
Total Liabilities and Net Assets	$     239,360,417	$   246,385,087
Net Asset Value Per Share	$                  6.36	$                6.50
See notes to unaudited consolidated financial statements.

 

Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Statements of Operations (unaudited)
	For the three months ended December 31,		For the six months ended December 31,
	2022	2021	2022	2021
Investment Income:
Interest income
Non-controlled, non-affiliated investments	$  6,260,515	$  6,021,868	$   11,869,627	$  11,944,764
Affiliated investments	—	40,437	(20,611)	121,319
Total interest income	6,260,515	6,062,305	11,849,016	12,066,083
Payment in-kind interest income
Non-controlled, non-affiliated investments	189,626	21,234	520,809	37,464
Affiliated investments	17,443	89,285	34,447	152,169
Total payment-in-kind interest income	207,069	110,519	555,256	189,633
Dividend income
Non-controlled, non-affiliated investments	101,755	—	101,755	—
Affiliated investments	—	—	—	296,126
Total dividend income	101,755	—	101,755	296,126
Total payment-in-kind interest income
Non-controlled, non-affiliated investments	210,578	36,695	572,428	140,228
Affiliated investments	—	759	—	1,510
Total other fee income	210,578	37,454	572,428	141,738
Total investment income	6,779,917	6,210,278	13,078,455	12,693,580
Expenses:
Interest expense	2,160,336	1,790,513	3,952,344	3,532,083
Base management fees	1,057,104	1,123,105	2,161,085	2,251,609
Income-based incentive fees	—	—	(147,145)	—
Provision for tax expense	65,858	27,960	110,188	27,960
Professional fees	271,782	301,970	543,563	605,759
Allocation of administrative costs from advisor	375,900	351,700	751,800	703,400
Amortization of deferred debt issuance costs	173,334	173,333	346,667	274,444
Amortization of original issue discount – 2026 Notes	17,778	17,778	35,555	35,555
Insurance expense	137,820	121,134	275,641	242,268
Directors' fees	75,625	75,625	151,250	151,250
Custodian and administrator fees	71,828	72,512	143,516	147,844
Other expenses	136,334	158,999	275,815	314,855
Total expenses	4,543,699	4,214,629	8,600,279	8,287,027
Waiver of base management fees	(112,481)	(106,878)	(206,627)	(223,814)
Waiver of income-based incentive fees	—	—	—	—
Net expenses	4,431,218	4,107,751	8,393,652	8,063,213
Net investment income	2,348,699	2,102,527	4,684,803	4,630,367
Net realized and unrealized gain/(loss) on investments:
Net realized gain (loss) from investments
Non-controlled, non-affiliated investments	—	(348,351)	—	413,112
Affiliated investments	—	(8,196,669)	—	(8,196,669)
Net realized gain (loss) from investments	—	(8,545,020)	—	(7,783,557)
Net change in unrealized appreciation (depreciation) in value of investments
Non-controlled, non-affiliated investments	(1,649,361)	1,591,986	(2,113,636)	2,468,568
Aaffiliated investments	(82,479)	8,300,406	(296,801)	7,420,969
Net change in unrealized appreciation (depreciation) on investments	(1,731,840)	9,892,392	(2,410,437)	9,889,537
Total realized gain (loss) and change in unrealized appreciation      (depreciation) on investments	(1,731,840)	1,347,372	(2,410,437)	2,105,980
Net increase (decrease) in net assets resulting from operations	$      616,859	$   3,449,899	$  2,274,366	$   6,736,347
Basic and diluted:
Net investment income per share	$            0.16	$            0.15	$           0.33	$            0.33
Earnings per share	$            0.04	$            0.24	$           0.16	$            0.47
Weighted average shares of common stock outstanding	14,388,242	14,384,025	14,387,526	14,225,197
Distributions paid per common share	$            0.15	$            0.15	$           0.30	$            0.30
See notes to consolidated financial statements.

About Investcorp Credit Management BDC, Inc.

The Company is an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940. The Company's investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation through debt and related equity investments by targeting investment opportunities with favorable risk-adjusted returns. The Company seeks to invest primarily in middle-market companies that have annual revenues of at least $50mm and earnings before interest, taxes, depreciation, and amortization of at least $15mm. The Company's investment activities are managed by its investment adviser, CM Investment Partners LLC. To learn more about Investcorp Credit Management BDC, Inc., please visit www.icmbdc.com.

Forward-Looking Statements

Statements included in this press release and made on the earnings call for the quarter ended December 31, 2022, may contain "forward-looking statements," which relate to future performance, operating results, events and/or financial condition. Words such as "anticipates," "expects," "intends," "plans," "will," "may," "continue," "believes," "seeks," "estimates," "would," "could," "should," "targets," "projects," and variations of these words and similar expressions are intended to identify forward-looking statements. Any forward-looking statements, including statements other than statements of historical facts, included in this press release or made on the earnings call are based upon current expectations, are inherently uncertain, and involve a number of assumptions and substantial risks and uncertainties, many of which are difficult to predict and are generally beyond the Company's control.

Investors are cautioned not to place undue reliance on these forward-looking statements. Any such statements are likely to be affected by other unknowable future events and conditions, which the Company may or may not have considered, including, without limitation, the impact of the COVID-19 pandemic, changes in base interest rates and the effects of significant market volatility on our business, our portfolio companies, our industry and the global economy. Accordingly, such statements cannot be guarantees or assurances of any aspect of future performance or events. Actual results may differ materially from those anticipated in any forward-looking statements as a result of a number of factors and risks. More information on these risks and other potential factors that could affect actual events and the Company's performance and financial results, including important factors that could cause actual results to differ materially from plans, estimates or expectations included herein or discussed on the earnings call, is or will be included in the Company's filings with the Securities and Exchange Commission, including in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. All forward-looking statements speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

Contacts
Investcorp Credit Management BDC, Inc.
Investor Relations
Email: icmbinvestorrelations@investcorp.com
Phone: (646) 690-5034

View original content:https://www.prnewswire.com/news-releases/investcorp-credit-management-bdc-inc-announces-financial-results-for-the-quarter-ended-december-31-2022-and-quarterly-and-supplemental-distributions-301745658.html

SOURCE Investcorp Credit Management BDC

FAQ

What were Investcorp Credit Management BDC's financial results for Q2 2023?

ICMB reported net investment income of $2.3 million, or $0.16 per share, for its fiscal second quarter ended December 31, 2022.

What dividend was declared by ICMB for March 2023?

The Board declared a distribution of $0.13 per share and a supplemental $0.02 per share, both payable on March 30, 2023.

How did net assets change for ICMB in Q2 2023?

Net assets decreased by $1.5 million, representing a 1.7% decline during the quarter.

What was the weighted average yield on debt investments for ICMB in Q2 2023?

The weighted average yield on debt investments was 10.73%, down from 11.91% in the previous quarter.

What is the current net asset value per share for ICMB?

The net asset value per share decreased to $6.36, compared to $6.47 as of September 30, 2022.