Main Street Announces Preliminary Estimate of Fourth Quarter 2024 Operating Results

Rhea-AI Summary

Main Street Capital (NYSE: MAIN) has released preliminary operating results for Q4 2024, showing strong performance across key financial metrics. The company estimates Q4 net investment income (NII) of $1.01-1.03 per share and distributable net investment income (DNII) of $1.07-1.09 per share.

The estimated net asset value (NAV) per share as of December 31, 2024, is $31.62-31.68, representing a 3.4-3.6% increase from Q3. The company achieved an estimated quarterly annualized return on equity of over 25% for Q4 2024 and over 19% for the full year.

Investment activities included $167.6 million in lower middle market investments, $108.0 million in private loan portfolio investments, and a net decrease of $25.2 million in the middle market portfolio. Non-accrual investments represented 0.9% of the total portfolio at fair value and 3.5% at cost.

Positive

• Strong Q4 performance with NII of $1.01-1.03 per share
• NAV increased by 3.4-3.6% from Q3 2024
• High quarterly return on equity of over 25%
• Low non-accrual rate of 0.9% at fair value
• Significant investment activity with $275.6M in new investments

Negative

• Net decrease of $25.2M in middle market investment portfolio
• 3.5% of investments at cost on non-accrual status

Insights

Financial Analyst

MAIN's Q4 2024 preliminary results showcase exceptional performance with DNII of $1.07-$1.09 per share and NAV growth of 3.4-3.6% quarter-over-quarter. The impressive ROE of over 25% for Q4 and 19% for the full year demonstrates robust operational efficiency and value creation.

The investment portfolio quality remains strong with only 0.9% of investments at fair value on non-accrual status. The company's diversified investment approach across LMM, private loan and middle market segments shows strategic capital deployment with $167.6M in LMM investments and $108.0M in private loan investments.

The dividend tax treatment breakdown (31% qualified, 69% ordinary income) offers tax advantages for investors, particularly beneficial for individual shareholders in lower tax brackets. The strong NAV growth to $31.62-$31.68 per share reflects portfolio appreciation and accretive equity issuances.

Portfolio Manager

The preliminary results indicate robust portfolio performance and risk management. The minimal non-accrual rate of 0.9% at fair value suggests strong asset quality despite market volatility. The strategic portfolio adjustments, including net increases in LMM and private loan investments while reducing middle market exposure, demonstrate active portfolio optimization.

The estimated ROE exceeding 25% is particularly impressive for a BDC, significantly outperforming industry averages. The NAV appreciation, combined with the regular and supplemental dividend payments, indicates strong total return potential for shareholders. The tax-efficient structure, with 31% of dividends qualifying for preferential tax treatment, enhances after-tax returns for investors.

Announces Federal Tax Treatment of 2024 Dividends

Announces Fourth Quarter and Full Year 2024 Earnings Release and Conference Call Schedule

HOUSTON, Jan. 16, 2025 /PRNewswire/ -- Main Street Capital Corporation (NYSE: MAIN) ("Main Street" or the "Company") is pleased to announce its preliminary operating results for the fourth quarter of 2024, the federal tax treatment of its dividends paid in 2024 and its fourth quarter and full year 2024 earnings release and conference call schedule.

In commenting on the Company's preliminary operating results for the fourth quarter of 2024, Dwayne L. Hyzak, Main Street's Chief Executive Officer, stated, "We are extremely pleased with our continued strong performance in the fourth quarter, which closed another record year for Main Street across several key financial metrics. Our preliminary operating results highlight that our fourth quarter performance resulted in another quarter of strong operating results, including favorable distributable net investment income per share and significant net realized gains and net unrealized appreciation, which resulted in an estimated record return on equity of over 25% for the fourth quarter. We are extremely pleased with our fourth quarter and full year 2024 results and look forward to sharing the full details of our results in a few weeks."

Preliminary Estimates of Fourth Quarter 2024 Results

Main Street's preliminary estimate of fourth quarter 2024 net investment income ("NII") is $1.01 to $1.03 per share and distributable net investment income ("DNII") is $1.07 to $1.09 per share.⁽¹⁾

Main Street's preliminary estimate of net asset value ("NAV") per share as of December 31, 2024 is $31.62 to $31.68, representing an increase of $1.05 to $1.11 per share, or 3.4% to 3.6%, from the NAV per share of $30.57 as of September 30, 2024, with this increase after the impact of the supplemental dividend paid in December 2024 of $0.30 per share. The estimated increase in NAV per share is primarily due to the net fair value increase on the investment portfolio resulting from the net unrealized appreciation and the net realized gain on portfolio investments, including an increase in the fair value of the wholly-owned asset manager, the accretive impact of equity issuances during the quarter and the net tax benefit for the quarter.

As a result of Main Street's preliminary estimates of NII, net changes in the fair market value of its investment portfolio and the net tax benefit as noted above, Main Street estimates that it generated a quarterly annualized return on equity of over 25% for the fourth quarter of 2024⁽²⁾ and actual return on equity of over 19% for the full year.⁽²⁾

Main Street preliminarily estimates that investments on non-accrual status comprised 0.9% of the total investment portfolio at fair value and 3.5% at cost as of December 31, 2024.

Investment Portfolio Activity

The Company's fourth quarter 2024 operating activities include the following investment activity in the lower middle market ("LMM"), private loan and middle market investment strategies:

• $167.6 million in total LMM portfolio investments, which after aggregate repayments of debt investments, return of invested equity capital and a decrease in cost basis due to realized losses resulted in a net increase of $11.4 million in the total cost basis of the LMM investment portfolio;
• $108.0 million in total private loan portfolio investments, which after aggregate repayments of debt investments and a decrease in cost basis due to a realized loss resulted in a net increase of $6.7 million in the total cost basis of the private loan investment portfolio; and
• a net decrease of $25.2 million in the total cost basis of the middle market investment portfolio.

Federal Tax Treatment of 2024 Dividends

Main Street has posted information regarding the U.S. federal income tax characteristics of its dividends paid in 2024 on its website under "2024 Form 1099 Information" (https://www.mainstcapital.com/investors/listed-securities-information/tax-information).⁽³⁾ Main Street paid dividends totaling $4.11 per share in 2024, with approximately 31% of such dividends taxed as qualified dividends and approximately 69% taxed as ordinary income. Qualified dividends paid to non-corporate taxpayers (including individuals) qualify for favorable tax treatment under the Internal Revenue Code ("IRC") and, for 2024, will generally be subject to a maximum 20% U.S. federal income tax rate (plus a 3.8% Medicare surtax, if applicable).

Federal Tax Treatment of 2024 Dividends – Non-U.S. Shareholders

Non-U.S. resident and foreign corporation shareholders ("Non-U.S. Shareholders") in a Regulated Investment Company ("RIC"), such as Main Street, are exempt from U.S. withholding tax on both "interest-related" dividends and short-term capital gains in accordance with the IRC Sections 871(k) and 881(e). In addition, Non-U.S. Shareholders in a RIC are also exempt from U.S. withholding tax on long-term capital gains. Main Street paid dividends totaling $4.11 per share in 2024, with approximately 36% of such dividends relating to "interest-related" dividends and short-term capital gains. See the "Tax Treatment of 2024 Dividends for Non-U.S. Shareholders" posted on Main Street's website for more details (https://www.mainstcapital.com/investors/listed-securities-information/tax-information).⁽³⁾

To the extent Non-U.S. Shareholder taxes were withheld on dividends distributed, this information may be considered in connection with any claims for refund on taxes made with the U.S. Internal Revenue Service. Non-U.S. Shareholders should contact their tax advisor with any questions regarding this information.

Fourth Quarter and Full Year 2024 Earnings Release and Conference Call Schedule

Main Street's fourth quarter and full year 2024 results will be released on Thursday, February 27, 2025, after the financial markets close. In conjunction with the release, Main Street has scheduled a conference call, which will be broadcast live via phone and over the Internet, on Friday, February 28, 2025, at 10:00 a.m. Eastern time. Investors may participate either by phone or audio webcast.⁽³⁾

By Phone:	Dial 412-902-0030 at least 10 minutes before the call. A replay will be available through March 7, 2025 by dialing 201-612-7415 and using the access code 13750941#.
By Webcast:	Connect to the webcast via the Investor Relations section of Main Street's website at www.mainstcapital.com. Please log in at least 10 minutes in advance to register and download any necessary software. A replay of the conference call will be available on Main Street's website shortly after the call and will be accessible until the date of Main Street's earnings release for the next quarter.

ABOUT MAIN STREET CAPITAL CORPORATION

Main Street (www.mainstcapital.com) is a principal investment firm that primarily provides customized long-term debt and equity capital solutions to lower middle market companies and debt capital to private companies owned by or in the process of being acquired by a private equity fund. Main Street's portfolio investments are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. Main Street seeks to partner with entrepreneurs, business owners and management teams and generally provides customized "one-stop" debt and equity financing alternatives within its lower middle market investment strategy. Main Street seeks to partner with private equity fund sponsors and primarily invests in secured debt investments in its private loan investment strategy. Main Street's lower middle market portfolio companies generally have annual revenues between $10 million and $150 million. Main Street's private loan portfolio companies generally have annual revenues between $25 million and $500 million.

Main Street, through its wholly owned portfolio company MSC Adviser I, LLC ("MSC Adviser"), also maintains an asset management business through which it manages investments for external parties. MSC Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, as amended.

FORWARD-LOOKING STATEMENTS AND OTHER MATTERS

Main Street cautions that statements in this press release which are forward-looking and provide other than historical information, including but not limited to the preliminary estimates of fourth quarter and full year 2024 financial information and results and the declaration and payment of future dividends, are based on current conditions and information available to Main Street as of the date hereof. Although its management believes that the expectations reflected in those forward-looking statements are reasonable, Main Street can give no assurance that those expectations will prove to be correct. Those forward-looking statements are made based on various underlying assumptions and are subject to numerous uncertainties and risks, including, without limitation, such factors described under the captions "Cautionary Statement Concerning Forward-Looking Statements" and "Risk Factors" included in Main Street's filings with the Securities and Exchange Commission (the "SEC") (www.sec.gov). Main Street undertakes no obligation to update the information contained herein to reflect subsequently occurring events or circumstances, except as required by applicable securities laws and regulations.

The preliminary estimates of fourth quarter and full year 2024 financial information and results furnished above are based on Main Street management's preliminary determinations and current expectations, and such information is inherently uncertain. The preliminary estimates provided herein have been prepared by, and are the responsibility of, management and are subject to completion of Main Street's customary year-end closing and review procedures and third-party audit, including the determination of the fair value of Main Street's portfolio investments. As a result, actual results could differ materially from the current preliminary estimates based on adjustments made during Main Street's year-end closing and review procedures and third-party audit, and Main Street's reported information in its Annual Report on Form 10-K for the year ended December 31, 2024 may differ from this information, and any such differences may be material. In addition, the information furnished above does not include all of the information regarding Main Street's financial condition and results of operations for the quarter and full year periods ended December 31, 2024 that may be important to readers. As a result, readers are cautioned not to place undue reliance on the information furnished in this press release and should view this information in the context of Main Street's full fourth quarter and full year 2024 results when such results are disclosed by Main Street in its Annual Report on Form 10-K for the year ended December 31, 2024. The information furnished in this press release is based on Main Street's management's current expectations that involve substantial risks and uncertainties that could cause actual results to differ materially from the results expressed in, or implied by, such information.

Neither this press release nor the 2024 Form 1099 Information or the Tax Treatment of 2024 Dividends for Non-U.S. Shareholders information referenced above is intended to constitute tax, legal, investment or other professional advice. This is general information and reference should be made to your 2024 Form 1099-DIV for tax reporting purposes. Shareholders should receive their 2024 Form 1099-DIVs by mid-February 2025 (generally from their brokers) and should consult a tax advisor for tax guidance pertinent to their specific facts and circumstances. If you did not hold Main Street stock for all of calendar year 2024, your 1099-DIV will only reflect the tax characteristics for the portion of the year you owned Main Street stock.

Main Street has an existing effective shelf registration statement on Form N-2 on file with the SEC relating to the offer and sale from time to time of its securities. Investors are advised to carefully consider the investment objective, risks and charges and expenses of Main Street before investing in any of Main Street's securities. The prospectus included in the shelf registration statement, together with any related prospectus supplement, contain this and other information about Main Street and should be read carefully before investing. A copy of the prospectus and any related prospectus supplement may be obtained by contacting Main Street.

End Notes

(1)	Distributable net investment income is net investment income as determined in accordance with U.S. Generally Accepted Accounting Principles, or U.S. GAAP, excluding the impact of non-cash compensation expenses, which includes both share-based compensation expenses and deferred compensation expense or benefit. Main Street believes presenting distributable net investment income per share is useful and appropriate supplemental disclosure for analyzing its financial performance, since share-based compensation does not require settlement in cash and deferred compensation expense or benefit does not result in a net cash impact to Main Street upon settlement. However, distributable net investment income is a non-U.S. GAAP measure and should not be considered as a replacement for net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, distributable net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing Main Street's financial performance. In order to reconcile estimated distributable net investment income per share to estimated net investment income per share in accordance with U.S. GAAP for the fourth quarter of 2024, an estimated $0.05 to $0.06 per share of non-cash compensation expenses are added back to calculate estimated distributable net investment income per share.
(2)	Return on equity equals the net increase in net assets resulting from operations divided by the average quarterly total net assets.
(3)	No information contained on the Company's website or disclosed on the February 28, 2025 conference call, including the webcast and the archived versions, is incorporated by reference in this press release or any of the Company's filings with the SEC, and you should not consider that information to be part of this press release or any other such filing.

Contacts:
Main Street Capital Corporation
Dwayne L. Hyzak, CEO, dhyzak@mainstcapital.com
Ryan R. Nelson, CFO, rnelson@mainstcapital.com
713-350-6000

Dennard Lascar Investor Relations
Ken Dennard / ken@dennardlascar.com
Zach Vaughan / zvaughan@dennardlascar.com
713-529-6600

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SOURCE Main Street Capital Corporation

FAQ

What is MAIN's estimated Net Investment Income (NII) per share for Q4 2024?

Main Street Capital's estimated NII for Q4 2024 is between $1.01 and $1.03 per share.

How much did MAIN's NAV per share increase in Q4 2024?

MAIN's NAV per share increased by $1.05 to $1.11, or 3.4% to 3.6%, reaching $31.62 to $31.68 as of December 31, 2024.

What was MAIN's return on equity for Q4 2024?

Main Street Capital achieved an estimated quarterly annualized return on equity of over 25% for Q4 2024.

What percentage of MAIN's portfolio was on non-accrual status at the end of 2024?

As of December 31, 2024, 0.9% of MAIN's portfolio was on non-accrual status at fair value and 3.5% at cost.

How much did MAIN invest in lower middle market (LMM) portfolio during Q4 2024?

MAIN invested $167.6 million in total LMM portfolio investments during Q4 2024.