Investcorp Credit Management BDC, Inc. Announces Financial Results for the Quarter and Fiscal Year Ended June 30, 2024, and Quarterly Distribution

Rhea-AI Summary

Investcorp Credit Management BDC (NASDAQ: ICMB) announced financial results for Q4 and fiscal year ended June 30, 2024. Key highlights:

• Board declared a distribution of $0.12 per share for Q3 2024
• Investments made in 2 new and 3 existing portfolio companies, totaling $17.9 million
• Fully realized investments in 3 portfolio companies, totaling $22.1 million
• Net asset value decreased $0.28 per share to $5.21
• Net assets decreased by $4.1 million (5.17%) during Q4
• Weighted average yield on debt investments: 12.33%
• Net investment income: $1.3 million ($0.09 per share)
• Net decrease in net assets from operations: $2.5 million ($0.17 per share)

The company maintained a disciplined investment approach amid challenging market conditions, focusing on portfolio stability and long-term growth.

Positive

• Declared quarterly distribution of $0.12 per share
• Made investments in 2 new and 3 existing portfolio companies, totaling $17.9 million
• Fully realized investments in 3 portfolio companies with 11.27% internal rate of return
• Weighted average yield on debt investments remained stable at 12.33%

Negative

• Net asset value decreased $0.28 per share to $5.21
• Net assets decreased by $4.1 million (5.17%) during Q4
• Net decrease in net assets from operations of $2.5 million ($0.17 per share)
• Total net decrease in net assets resulting from operations of $4.1 million for the fiscal year

Insights

Financial Analyst

Investcorp Credit Management BDC's Q4 and fiscal year 2024 results reveal a challenging period for the company. Key points:

• Net asset value (NAV) decreased by $0.28 per share to $5.21, a 5.17% drop from the previous quarter.
• Net investment income (NII) was $1.3 million ($0.09 per share), down significantly from previous quarters.
• The company declared a quarterly distribution of $0.12 per share, a reduction from the previous $0.15.
• Total assets decreased to $192.2 million, with the investment portfolio valued at $184.6 million.
• The weighted average yield on debt investments slightly decreased to 12.33%.

These results indicate ongoing pressure on the company's earnings and portfolio value. The reduced dividend and declining NAV suggest caution for investors, although the current yield remains attractive at 14.29% based on the recent share price. The company's focus on maintaining portfolio stability in a challenging market environment is prudent but may limit growth opportunities in the near term.

Market Research Analyst

The BDC sector is facing headwinds, as evidenced by ICMB's results. Notable market trends include:

• Subdued deal activity: New investment opportunities are , with ICMB only investing in two new portfolio companies this quarter.
• Competitive pressure: High-quality assets are scarce, intensifying competition among lenders.
• Refinancing activity: This provides some capital deployment opportunities but is insufficient to drive significant growth.
• Yield compression: The slight decrease in weighted average yield indicates ongoing pressure on returns.

The company's cautious approach, focusing on portfolio stability over growth, aligns with current market conditions. However, this strategy may result in underperformance compared to more aggressive peers if market conditions improve. Investors should monitor the BDC sector for signs of increased deal flow and yield expansion, which could signal a more favorable environment for ICMB and its peers.

NEW YORK--(BUSINESS WIRE)-- Investcorp Credit Management BDC, Inc. (NASDAQ: ICMB) (“ICMB” or the “Company”) announced its financial results today for its fourth quarter and fiscal year ended June 30, 2024.

HIGHLIGHTS

• On September 18, 2024, the Company’s Board of Directors (the “Board”) declared a distribution of $0.12 per share for the quarter ending September 30, 2024, payable in cash on November 6, 2024, to stockholders of record as of October 16, 2024.
• During the quarter, ICMB made investments in two new portfolio companies and three existing portfolio companies. These investments totaled $17.9 million, at cost. The weighted average yield (at origination) of debt investments made in the quarter was 10.23%.
• ICMB fully realized its investments in three portfolio companies during the quarter, totaling $22.1 million in proceeds. The internal rate of return on these investments was 11.27%.
• During the quarter, the Company had net repayments of $0.41 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 June 30, 2024, was 12.33%, compared to 12.36% for the quarter ended March 31, 2024.
• Net asset value decreased $0.28 per share to $5.21, compared to $5.49 as of March 31, 2024. Net assets decreased by $4.1 million, or 5.17%, during the quarter ended June 30, 2024 compared to March 31, 2024.

Portfolio results, as of and for the three months ended June 30, 2024:

Total assets	$192.2mm
Investment portfolio, at fair value	$184.6mm
Net assets	$75.01mm
Weighted average yield on debt investments, at cost (1)	12.33%
Net asset value per share	$5.21
Portfolio activity in the current quarter:
Number of investments in new portfolio companies during the period	2
Number of portfolio companies invested in, end of period	41
Total capital invested in existing portfolio companies (2)	$8.5mm
Total proceeds from repayments, sales, and amortization (3)	$23.5mm
Net investment income (NII)	$1.3mm
Net investment income per share	$0.09
Net decrease in net assets from operations	$(2.5)mm
Net decrease in net assets from operations per share	$(0.17)
Quarterly per share distribution paid on June 30, 2024	$0.15
(1) Represents weighted average yield on total debt investments for the three months ended June 30, 2024. 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.
(2) Includes gross advances to existing revolving credit commitments to portfolio companies and PIK interest
(3) Includes gross repayments on existing delayed draw and revolving credit commitments to portfolio companies

Mr. Suhail A. Shaikh said “During the quarter, we navigated a persistently challenging market environment characterized by subdued new deal activity and heightened competition for high-quality assets. Despite these headwinds, we remained disciplined in our investment approach, focusing on opportunities that align with our rigorous underwriting standards. While refinancing activity provided some avenues for capital deployment, we are maintaining a highly selective stance on new deals. Our priority continues to be preserving the stability of our portfolio and positioning the company for long-term growth as market conditions evolve.”

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 September 18, 2024, the Board declared a distribution for the quarter ended September 30, 2024 of $0.12 per share payable on November 6, 2024 to stockholders of record as of October 16, 2024.

This distribution represents a 14.29% yield on the Company’s $3.36 share price as of market close on June 28, 2024. 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 June 30, 2024, 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 at the end of the taxable year.

Portfolio and Investment Activities

During the quarter, the Company made investments in two new portfolio companies and three existing portfolio companies. The aggregate capital invested during the quarter totaled $17.9 million, at cost, and the debt investments were made at a weighted average yield of 10.23%.

The Company received proceeds of $23.5 million from repayments, sales and amortization during the quarter, primarily related to the realization of Empire Office Inc., Northstar Group Services, Inc., and Potpourri Group, Inc.

During the quarter, the Company had net repayments of $0.4 million on its existing 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 approximately $3.8 million, or $0.26 per share. The total net decrease in net assets resulting from operations for the quarter was $(2.5) million, or $(0.17) per share.

As of June 30, 2024, the Company’s investment portfolio consisted of investments in 41 portfolio companies, of which 85.02% were first lien investments and 14.98% were equity, warrants, and other investments. The Company’s debt portfolio consisted of 97.4% floating rate investments and 2.6% fixed rate investments.

Capital Resources

As of June 30, 2024, the Company had $5.1 million in cash, of which $4.95 million was restricted cash, and $57.0 million of unused and available capacity under its revolving credit facility with Capital One, N.A.

Subsequent Events

Subsequent to June 30, 2024 and through September 25, 2024, the Company invested a total of $12.9 million, which included investments in three new portfolio companies and two existing portfolio companies. As of September 25, 2024, the Company had investments in 44 portfolio companies.

Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Statements of Assets and Liabilities
		June 30, 2024					June 30, 2023
Assets
Non-controlled, non-affiliated investments, at fair value (amortized cost of $189,319,802 and $219,319,251, respectively)		$		181,948,376			$		210,150,018
Affiliated investments, at fair value (amortized cost of $15,149,238 and $23,979,565, respectively)				2,621,154					9,961,311
Total investments, at fair value (amortized cost of $204,469,040 and $243,298,816, respectively)				184,569,530					220,111,329
Cash				158,768					1,093,758
Cash, restricted				4,950,036					8,057,458
Principal receivable				50,609					93,581
Interest receivable				1,301,516					2,041,877
Payment-in-kind interest receivable				66,625					46,088
Long-term receivable				631,667					—
Escrow receivable				97,173					—
Other receivables				—					1,050
Prepaid expenses and other assets				411,821					361,719
Total Assets		$		192,237,745			$		231,806,860
Liabilities
Notes payable:
Revolving credit facility		$		43,000,000			$		71,900,000
2026 Notes payable				65,000,000					65,000,000
Deferred debt issuance costs				(1,654,870	)				(1,220,556	)
Unamortized discount				(124,443	)				(195,553	)
Notes payable, net				106,220,687					135,483,891
Payable for investments purchased				7,425,000					1,795,297
Dividend payable				—					2,590,520
Income-based incentive fees payable				128,876					576,023
Base management fees payable				816,777					906,218
Interest payable				1,950,925					2,293,766
Directors' fees payable				—					15,755
Accrued expenses and other liabilities				685,271					445,082
Total Liabilities				117,227,536					144,106,552
Commitments and Contingencies (see Note 6)
Net Assets
Common stock, par value $0.001 per share (100,000,000 shares authorized and 14,403,752 and 14,391,775 shares issued and outstanding, respectively)				14,404					14,392
Additional paid-in capital				203,103,263					203,327,714
Distributable earnings (loss)				(128,107,458	)				(115,641,798	)
Total Net Assets				75,010,209					87,700,308
Total Liabilities and Net Assets		$		192,237,745			$		231,806,860
Net Asset Value Per Share		$		5.21			$		6.09

Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Statements of Operations (unaudited)
		For the Years Ended June 30,
		2024					2023					2022
Investment Income:
Interest income
Non-controlled, non-affiliated investments		$		20,271,776			$		23,822,181			$		22,641,798
Affiliated investments				12,451					(20,611	)				29,813
Total interest income				20,284,227					23,801,570					22,671,611
Payment in-kind interest income
Non-controlled, non-affiliated investments				2,028,744					1,250,169					102,720
Affiliated investments				77,680					70,070					208,470
Total payment-in-kind interest income				2,106,424					1,320,239					311,190
Dividend income
Non-controlled, non-affiliated investments				54,138					101,755					—
Affiliated investments				—					—					296,126
Total dividend income				54,138					101,755					296,126
Payment in-kind dividend income
Non-controlled, non-affiliated investments				784,854					691,972					282,952
Affiliated investments				—					—					—
Total payment-in-kind dividend income				784,854					691,972					282,952
Other fee income
Non-controlled, non-affiliated investments				648,659					768,617					868,727
Affiliated investments				—					—					759
Total other fee income				648,659					768,617					869,486
Total investment income				23,878,302					26,684,153					24,431,365
Expenses:
Interest expense				8,606,309					8,413,409					6,633,587
Base management fees				3,800,693					4,201,394					4,594,588
Income-based incentive fees				(72,942	)				401,597					(348,670	)
Provision for tax expense				267,150					294,330					270,618
Professional fees				1,239,122					984,290					1,302,513
Allocation of administrative costs from Adviser				1,360,194					966,045					1,247,205
Amortization of deferred debt issuance costs				576,475					693,333					621,111
Amortization of original issue discount - 2026 Notes				71,110					71,110					71,110
Insurance expense				479,502					506,963					512,347
Directors' fees				294,907					302,500					302,500
Custodian and administrator fees				316,128					292,267					334,214
Other expenses				713,789					516,160					446,330
Total expenses				17,652,437					17,643,398					15,987,453
Waiver of base management fees				(365,225	)				(387,311	)				(480,032	)
Waiver of income-based incentive fees				—					—					—
Net expenses				17,287,212					17,256,087					15,507,421
Net investment income				6,591,090					9,428,066					8,923,944
Net realized and unrealized gain/(loss) on investments:
Net realized gain (loss) from investments
Non-controlled, non-affiliated investments				(7,731,553	)				(26,890,095	)				(6,198,762	)
Affiliated investments				(6,239,984	)				-					(8,196,669	)
Net realized gain (loss) from investments				(13,971,537	)				(26,890,095	)				(14,395,431	)
Net change in unrealized appreciation (depreciation) in value of investments
Non-controlled, non-affiliated investments				1,797,807					21,966,347					2,898,538
Affiliated investments				1,490,170					(1,269,815	)				5,159,579
Net change in unrealized appreciation (depreciation) on investments				3,287,977					20,696,532					8,058,117
Total realized gain (loss) and change in unrealized appreciation (depreciation) on investments				(10,683,560	)				(6,193,563	)				(6,337,314	)
Net increase (decrease) in net assets resulting from operations		$		(4,092,470	)		$		3,234,503			$		2,586,630
Basic and diluted:
Net investment income per share		$		0.46			$		0.66			$		0.62
Earnings per share		$		(0.28	)		$		0.22			$		0.18
Weighted average shares of common stock outstanding				14,396,201					14,389,163					14,304,641
Distributions paid per common share		$		0.60			$		0.63			$		0.60

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 $50 million and earnings before interest, taxes, depreciation, and amortization of at least $15 million. 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, 2023, 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, 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240925927968/en/

Investcorp Credit Management BDC, Inc.

Investor Relations

Email: icmbinvestorrelations@investcorp.com

Phone: (646) 690-5047

Source: Investcorp Credit Management BDC

FAQ

What was ICMB's net asset value per share as of June 30, 2024?

ICMB's net asset value per share was $5.21 as of June 30, 2024, a decrease from $5.49 as of March 31, 2024.

How much did ICMB invest in new and existing portfolio companies during Q4 2024?

ICMB invested a total of $17.9 million in two new portfolio companies and three existing portfolio companies during Q4 2024.

What was ICMB's net investment income for Q4 2024?

ICMB's net investment income for Q4 2024 was $1.3 million, or $0.09 per share.

What is the quarterly distribution amount declared by ICMB for Q3 2024?

ICMB declared a quarterly distribution of $0.12 per share for Q3 2024, payable on November 6, 2024, to stockholders of record as of October 16, 2024.