MONROE CAPITAL Corp Q3 FY2024 earnings call

• Adjusted net investment income for Q3 2024 was $6.6 million or $0.31 per share, covering the $0.25 per share dividend by nearly 1.25 times.
• NAV decreased slightly to $198.9 million or $9.18 per share due to net unrealized losses from certain portfolio companies, offset by net investment income exceeding dividends paid.
• Debt-to-equity leverage decreased from 1.54 times to 1.50 times during the quarter.
• Monroe announced a strategic partnership with the Wendel Group, where Wendel will purchase a majority ownership interest and commit $1 billion in seed capital.
• During Q3, there were three full payoffs of older vintage assets, and investments were made in three new portfolio companies along with numerous incremental investments in existing ones.

In the third quarter of 2024, Monroe Capital Corporation's adjusted net investment income was $6.6 million or $0.31 per share, a nominal decrease from $6.7 million in the previous quarter but stable per share. NAV was $198.9 million or $9.18 per share as of September 30, 2024, down slightly from $199.3 million or $9.20 per share in the prior quarter. Debt-to-equity leverage decreased from 1.54 times at June 30, 2024, to 1.50 times at September 30, 2024. Adjusted net investment income covered the $0.25 per share dividend by nearly 1.25 times. The investment portfolio totaled $474.3 million at quarter end, with incremental investments in existing portfolio companies accounting for nearly 60% of investment activity during the quarter.

• Focus on selectively redeploying capital from payoffs into accretive investment opportunities and existing portfolio companies.
• Continue portfolio management leveraging experienced team to execute playbook.
• Anticipate benefit from partnership with Wendel Group in terms of new investments into the Monroe Capital platform.
• Believe the predominantly first lien portfolio with an average effective yield of 11% positions the company well for attractive risk-adjusted returns.

• Net unrealized losses from certain portfolio companies due to idiosyncratic factors.
• Potential impact of market conditions on portfolio performance and investment outcomes.

Q: Christopher Nolan suggested expense control should be a focus going forward.

A: Ted Koenig thanked him for the suggestion.

Q: Robert Dodd asked about the Wendel partnership and its impact on the BDC.

A: Ted Koenig stated MRCC will benefit from synergistic strategies on the Monroe platform, which will create higher interest earning and diversification.

Q: Robert Dodd asked about the manager's support for MRCC going forward.

A: Ted Koenig indicated the manager has a history of being investor and shareholder friendly and expects continued support for MRCC