Monroe Capital Corporation BDC Announces Fourth Quarter and Full Year 2022 Results
Monroe Capital Corporation (MRCC) reported financial results for Q4 and full-year 2022, revealing a net investment income of $5.5 million, equating to $0.25 per share. Adjusted net investment income for Q4 was $5.6 million or $0.26 per share, down from $7.1 million in Q3. The net asset value (NAV) decreased by 0.4% to $225.0 million, while total investments reached $541 million, up from $508 million. The company declared a dividend of $0.25 per share, with a current cash yield of approximately 11.9%. Despite increased portfolio yield, net unrealized losses impacted overall performance. The company noted increased debt-to-equity leverage at 1.49 times, primarily from investment activity.
- Declared a first-quarter distribution of $0.25 per share, payable March 31, 2023.
- Current annual cash dividend yield at approximately 11.9%.
- Total investments increased to $541 million from $508 million.
- Net investment income dropped to $5.5 million in Q4 2022 from $6.3 million in Q3.
- Net decrease in net assets for the full year 2022 was $2.8 million.
- NAV declined by 0.4% from $10.43 per share to $10.39 per share.
CHICAGO, March 01, 2023 (GLOBE NEWSWIRE) -- Monroe Capital Corporation (Nasdaq: MRCC) (“Monroe”) today announced its financial results for the fourth quarter and full year ended December 31, 2022. The Board of Directors of Monroe also declared its first quarter distribution of
Except where the context suggests otherwise, the terms “Monroe,” “we,” “us,” “our,” and “Company” refer to Monroe Capital Corporation.
Fourth Quarter 2022 Financial Highlights
- Net Investment Income of
$5.5 million , or$0.25 per share - Adjusted Net Investment Income (a non-GAAP measure described below) of
$5.6 million , or$0.26 per share - Net increase in net assets resulting from operations of
$4.5 million , or$0.21 per share - Net Asset Value (“NAV”) of
$225.0 million , or$10.39 per share - Paid quarterly dividend of
$0.25 per share on December 30, 2022 - Current annual cash dividend yield to shareholders of approximately
11.9% (1)
_______________________________
(1) Based on an annualized dividend and closing share price as of February 28, 2023.
Full Year 2022 Financial Highlights
- Net investment income of
$22.2 million , or$1.02 per share - Adjusted Net Investment Income (a non-GAAP measure described below) of
$23.6 million , or$1.09 per share - Net decrease in net assets resulting from operations of
$2.8 million , or ($0.13) per share
Chief Executive Officer Theodore L. Koenig commented, “We are pleased to report a strong quarter with Adjusted Net Investment Income of
Monroe Capital Corporation is a business development company affiliate of the award winning private credit investment firm and lender, Monroe Capital LLC.
Management Commentary
Adjusted Net Investment Income totaled
NAV decreased by
During the quarter, MRCC’s debt-to-equity leverage increased from 1.33 times debt-to-equity to 1.49 times debt-to equity. The increase in leverage was primarily driven by strong investment activity during the fourth quarter. We continue to focus on managing our investment portfolio and selectively redeploying capital resulting from repayments.
Selected Financial Highlights
(in thousands, except per share data)
| December 31, 2022 | September 30, 2022 | ||||||
| Consolidated Statements of Assets and Liabilities data: | (unaudited) | ||||||
| Investments, at fair value | $ | 541,040 | $ | 508,018 | |||
| Total assets | $ | 564,995 | $ | 532,556 | |||
| Total net assets | $ | 225,019 | $ | 225,956 | |||
| Net asset value per share | $ | 10.39 | $ | 10.43 | |||
| For the quarter ended | |||||||
| December 31, 2022 | September 30, 2022 | ||||||
| Consolidated Statements of Operations data: | (unaudited) | ||||||
| Net investment income | $ | 5,520 | $ | 6,260 | |||
| Adjusted net investment income(2) | $ | 5,636 | $ | 7,128 | |||
| Net gain (loss) | $ | (1,040 | ) | $ | (7,009 | ) | |
| Net increase (decrease) in net assets resulting from operations | $ | 4,480 | $ | (749 | ) | ||
| Per share data: | |||||||
| Net investment income | $ | 0.25 | $ | 0.29 | |||
| Adjusted net investment income(2) | $ | 0.26 | $ | 0.33 | |||
| Net gain (loss) | $ | (0.05 | ) | $ | (0.32 | ) | |
| Net increase (decrease) in net assets resulting from operations | $ | 0.21 | $ | (0.03 | ) | ||
______
(2) 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 105 portfolio companies, with a total fair value of
Financial Review
Results of Operations: Fourth Quarter 2022
Net Investment Income for the quarter ended December 31, 2022 totaled
Net gain (loss) was (
Net increase (decrease) in net assets resulting from operations was
Results of Operations: Full Year 2022
Net investment income for the year ended December 31, 2022 totaled
Net gain (loss) was (
Net increase (decrease) in net assets resulting from operations was (
Liquidity and Capital Resources
At December 31, 2022, the Company had
MRCC Senior Loan Fund
SLF is a joint venture with Life Insurance Company of the Southwest (“LSW”), an affiliate of National Life Insurance Company. SLF invests primarily in senior secured loans to middle market companies in the United States. The Company and LSW have each committed
As of December 31, 2022, SLF had total assets of
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 income 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 | |||||||||||
| December 31, 2022 | September 30, 2022 | ||||||||||
| Amount | Per Share Amount | Amount | Per Share Amount | ||||||||
| (in thousands, except per share data) | |||||||||||
| Net investment income | $ | 5,520 | $ | 0.25 | $ | 6,260 | $ | 0.29 | |||
| Net capital gains incentive fee | - | - | - | - | |||||||
| Income taxes, including excise taxes | 116 | 0.01 | 868 | 0.04 | |||||||
| Adjusted Net Investment Income | $ | 5,636 | $ | 0.26 | $ | 7,128 | $ | 0.33 | |||
| For the year ended | |||||||||||
| December 31, 2022 | December 31, 2021 | ||||||||||
| Amount | Per Share Amount | Amount | Per Share Amount | ||||||||
| (in thousands, except per share data) | |||||||||||
| Net investment income | $ | 22,192 | $ | 1.02 | $ | 22,168 | $ | 1.03 | |||
| Net capital gains incentive fee | - | - | - | - | |||||||
| Income taxes, including excise taxes | 1,405 | 0.07 | 282 | 0.01 | |||||||
| Adjusted Net Investment Income | $ | 23,597 | $ | 1.09 | $ | 22,450 | $ | 1.04 | |||
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.
Fourth Quarter 2022 Financial Results Conference Call
The Company will host a webcast and conference call to discuss these operating and financial results on Thursday, March 2, 2023 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 (800) 715-9871 approximately 10 minutes prior to the call. Please reference conference ID # 4627218.
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-K for the year ended December 31, 2022 to be filed with the SEC (www.sec.gov) on March 1, 2023.
First Quarter 2023 Distribution
The Board of Directors of Monroe declared its first quarter distribution of
| MONROE CAPITAL CORPORATION | |||||||||||
| CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | |||||||||||
| (in thousands, except per share data) | |||||||||||
| December 31, 2022 | September 30, 2022 | December 31, 2021 | |||||||||
| (unaudited) | |||||||||||
| ASSETS | |||||||||||
| Investments, at fair value: | |||||||||||
| Non-controlled/non-affiliate company investments | $ | 418,913 | $ | 386,200 | $ | 430,287 | |||||
| Non-controlled affiliate company investments | 86,618 | 85,274 | 90,281 | ||||||||
| Controlled affiliate company investments | 35,509 | 36,544 | 41,125 | ||||||||
| Total investments, at fair value (amortized cost of: | 541,040 | 508,018 | 561,693 | ||||||||
| Cash | 5,450 | 7,129 | 2,622 | ||||||||
| Restricted cash | - | - | 15,459 | ||||||||
| Unrealized gain on foreign currency forward contracts | 1,507 | 2,284 | 781 | ||||||||
| Interest receivable | 16,457 | 14,680 | 9,476 | ||||||||
| Other assets | 541 | 445 | 427 | ||||||||
| Total assets | 564,995 | 532,556 | 590,458 | ||||||||
| LIABILITIES | |||||||||||
| Debt: | |||||||||||
| Revolving credit facility | 204,600 | 171,200 | 151,045 | ||||||||
| 2026 Notes | 130,000 | 130,000 | 130,000 | ||||||||
| SBA debentures payable | - | - | 56,900 | ||||||||
| Total debt | 334,600 | 301,200 | 337,945 | ||||||||
| Less: Unamortized deferred financing costs | (4,486 | ) | (3,223 | ) | (5,794 | ) | |||||
| Total debt, less unamortized deferred financing costs | 330,114 | 297,977 | 332,151 | ||||||||
| Interest payable | 3,041 | 1,305 | 3,304 | ||||||||
| Management fees payable | 2,221 | 2,222 | 2,454 | ||||||||
| Incentive fees payable | 1,380 | 1,565 | 435 | ||||||||
| Accounts payable and accrued expenses | 3,220 | 3,496 | 2,643 | ||||||||
| Directors' fees payable | - | 35 | - | ||||||||
| Total liabilities | 339,976 | 306,600 | 340,987 | ||||||||
| Net assets | $ | 225,019 | $ | 225,956 | $ | 249,471 | |||||
| ANALYSIS OF NET ASSETS | |||||||||||
| Common stock, | $ | 22 | $ | 22 | $ | 22 | |||||
| Capital in excess of par value | 298,700 | 298,687 | 298,687 | ||||||||
| Accumulated undistributed (overdistributed) earnings | (73,703 | ) | (72,753 | ) | (49,238 | ) | |||||
| Total net assets | $ | 225,019 | $ | 225,956 | $ | 249,471 | |||||
| Net asset value per share | $ | 10.39 | $ | 10.43 | $ | 11.51 | |||||
| MONROE CAPITAL CORPORATION | |||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
| (in thousands, except per share data) | |||||||||||||||
| For the quarter ended | For the year ended | ||||||||||||||
| December 31, 2022 | September 30, 2022 | December 31, 2022 | December 31, 2021 | ||||||||||||
| (unaudited) | (audited) | ||||||||||||||
| Investment income: | |||||||||||||||
| Non-controlled/non-affiliate company investments: | |||||||||||||||
| Interest income | $ | 9,721 | $ | 9,383 | $ | 35,751 | $ | 33,381 | |||||||
| Payment-in-kind interest income | 970 | 738 | 3,009 | 1,836 | |||||||||||
| Dividend income | 105 | 103 | 372 | 400 | |||||||||||
| Fee income | 776 | 412 | 2,380 | 1,231 | |||||||||||
| Total investment income from non-controlled/non-affiliate company investments | 11,572 | 10,636 | 41,512 | 36,848 | |||||||||||
| Non-controlled affiliate company investments: | |||||||||||||||
| Interest income | 1,383 | 3,830 | 7,585 | 5,150 | |||||||||||
| Payment-in-kind interest income | 1,261 | 502 | 3,680 | 6,484 | |||||||||||
| Dividend income | 48 | 48 | 189 | 987 | |||||||||||
| Fee income | - | - | - | 36 | |||||||||||
| Total investment income from non-controlled affiliate company investments | 2,692 | 4,380 | 11,454 | 12,657 | |||||||||||
| Controlled affiliate company investments: | |||||||||||||||
| Dividend income | 900 | 900 | 3,600 | 4,325 | |||||||||||
| Total investment income from controlled affiliate company investments | 900 | 900 | 3,600 | 4,325 | |||||||||||
| Total investment income | 15,164 | 15,916 | 56,566 | 53,830 | |||||||||||
| Operating expenses: | |||||||||||||||
| Interest and other debt financing expenses | 5,119 | 4,263 | 17,080 | 16,074 | |||||||||||
| Base management fees | 2,221 | 2,222 | 9,055 | 9,514 | |||||||||||
| Incentive fees | 1,380 | 1,565 | 4,127 | 3,690 | |||||||||||
| Professional fees | 154 | 212 | 894 | 1,013 | |||||||||||
| Administrative service fees | 255 | 275 | 1,163 | 1,357 | |||||||||||
| General and administrative expenses | 360 | 216 | 1,082 | 1,072 | |||||||||||
| Directors' fees | 39 | 35 | 148 | 144 | |||||||||||
| Expenses before base management fee and incentive fee waivers | 9,528 | 8,788 | 33,549 | 32,864 | |||||||||||
| Base management fee waivers | - | - | (55 | ) | - | ||||||||||
| Incentive fee waivers | - | - | (525 | ) | (1,484 | ) | |||||||||
| Total operating expenses, net of base management fee and incentive fee waivers | 9,528 | 8,788 | 32,969 | 31,380 | |||||||||||
| Net investment income before income taxes | 5,636 | 7,128 | 23,597 | 22,450 | |||||||||||
| Income taxes, including excise taxes | 116 | 868 | 1,405 | 282 | |||||||||||
| Net investment income | 5,520 | 6,260 | 22,192 | 22,168 | |||||||||||
| Net gain (loss): | |||||||||||||||
| Net realized gain (loss): | |||||||||||||||
| Non-controlled/non-affiliate company investments | 620 | (1,666 | ) | (1,129 | ) | (16,127 | ) | ||||||||
| Non-controlled affiliate company investments | - | (1 | ) | (1 | ) | (5,637 | ) | ||||||||
| Extinguishment of debt | - | - | (1,039 | ) | (3,110 | ) | |||||||||
| Foreign currency forward contracts | 50 | 38 | 119 | (48 | ) | ||||||||||
| Foreign currency and other transactions | 2 | (1 | ) | (36 | ) | (895 | ) | ||||||||
| Net realized gain (loss) | 672 | (1,630 | ) | (2,086 | ) | (25,817 | ) | ||||||||
| Net change in unrealized gain (loss): | |||||||||||||||
| Non-controlled/non-affiliate company investments | (6 | ) | (1,049 | ) | (12,287 | ) | 27,788 | ||||||||
| Non-controlled affiliate company investments | 106 | (4,186 | ) | (5,379 | ) | 4,950 | |||||||||
| Controlled affiliate company investments | (1,035 | ) | (1,007 | ) | (6,116 | ) | 1,841 | ||||||||
| Foreign currency forward contracts | (777 | ) | 863 | 726 | 894 | ||||||||||
| Foreign currency and other transactions | - | - | 164 | 635 | |||||||||||
| Net change in unrealized gain (loss) | (1,712 | ) | (5,379 | ) | (22,892 | ) | 36,108 | ||||||||
| Net gain (loss) | (1,040 | ) | (7,009 | ) | (24,978 | ) | 10,291 | ||||||||
| Net increase (decrease) in net assets resulting from operations | $ | 4,480 | $ | (749 | ) | $ | (2,786 | ) | $ | 32,459 | |||||
| Per common share data: | |||||||||||||||
| Net investment income per share - basic and diluted | $ | 0.25 | $ | 0.29 | $ | 1.02 | $ | 1.03 | |||||||
| Net increase (decrease) in net assets resulting from operations per share - basic and diluted | $ | 0.21 | $ | (0.03 | ) | $ | (0.13 | ) | $ | 1.51 | |||||
| Weighted average common shares outstanding - basic and diluted | 21,666 | 21,666 | 21,666 | 21,453 | |||||||||||
Additional Supplemental Information:
The composition of the Company’s investment income was as follows (in thousands):
| For the quarter ended | For the year ended | ||||||||||
| December 31, 2022 | September 30, 2022 | December 31, 2022 | December 31, 2021 | ||||||||
| Interest income | $ | 10,847 | $ | 12,491 | $ | 41,449 | $ | 35,738 | |||
| Payment-in-kind interest income | 2,231 | 1,240 | 6,689 | 8,320 | |||||||
| Dividend income | 1,053 | 1,051 | 4,161 | 5,712 | |||||||
| Fee income | 776 | 412 | 2,380 | 1,267 | |||||||
| Prepayment gain (loss) | 45 | 495 | 803 | 1,691 | |||||||
| Accretion of discounts and amortization of premiums | 212 | 227 | 1,084 | 1,102 | |||||||
| Total investment income | $ | 15,164 | $ | 15,916 | $ | 56,566 | $ | 53,830 | |||
The composition of the Company’s interest expense and other debt financing expenses was as follows (in thousands):
| For the quarter ended | For the year ended | ||||||||||
| December 31, 2022 | September 30, 2022 | December 31, 2022 | December 31, 2021 | ||||||||
| Interest expense - revolving credit facility | $ | 3,051 | $ | 2,186 | 8,442 | $ | 4,593 | ||||
| Interest expense - 2023 Notes | - | - | - | 837 | |||||||
| Interest expense - 2026 Notes | 1,555 | 1,555 | 6,220 | 5,763 | |||||||
| Interest expense - SBA debentures | - | - | 292 | 2,676 | |||||||
| Amortization of deferred financing costs | 513 | 522 | 2,126 | 2,205 | |||||||
| Total interest and other debt financing expenses | $ | 5,119 | $ | 4,263 | $ | 17,080 | $ | 16,074 | |||
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 premier boutique asset management firm specializing in private credit markets across various strategies, including direct lending, asset-based lending, specialty finance, opportunistic and structured credit, and equity. Since 2004, the firm has been successfully providing capital solutions to clients in the U.S. and Canada. Monroe prides itself on being a value-added and user-friendly partner to business owners, management, and both private equity and independent sponsors. Monroe’s platform offers a wide variety of investment products for both institutional and high net worth investors with a focus on generating high quality “alpha” returns irrespective of business or economic cycles. The firm is headquartered in Chicago and maintains offices in Atlanta, Boston, Los Angeles, Miami, Naples, New York, San Francisco, and Seoul.
Monroe has been recognized by both its peers and investors with various awards including Private Debt Investor as the 2022 Lower Mid-Market Lender of the Year, 2022 CLO Manager of the Year, Americas; Global M&A Network as the 2022 Small Mid-Markets Lender of the Year, Americas; Creditflux as the 2021 Best U.S. Direct Lending Fund; and Pension Bridge as the 2020 Private Credit Strategy of the Year. For more information and important disclaimers, 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: | Mick Solimene Chief Investment Officer and Chief Financial Officer Monroe Capital Corporation (312) 598-8401 Email: msolimene@monroecap.com |
| Media Contact: | Daniel Abramson BackBay Communications (857) 305-8441 Email: daniel.abramson@backbaycommunications.com |
FAQ
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