MONROE CAPITAL Corp Q4 FY2024 earnings call

Financial Results Overview - Adjusted net investment income for Q4 2024 was $6.2 million or $0.29 per share, down from $6.6 million or $0.31 per share in the prior quarter. - NAV decreased by 3.6% to $191.8 million or $8.85 per share as of Dec 31, 2024. - Leverage increased to 1.53 times debt to equity. ### Market Environment Commentary - Benefited from positive economic backdrop, declining interest rates, and steadying inflation. ### Portfolio Management - Focused on maintaining asset quality, exited several investments from credit watch list. - Maintained selective investment approach, with incremental and follow-on investments in existing portfolio companies accounting for over 65% of capital deployment in 2024. ### Partnership with Wendel Group - Shareholders approved new investment advisory and management agreement required for the transaction with Wendel Group. - Transaction expected to close in Q1 2025, with Monroe operating autonomously and independently. ### Industry Dynamics - Middle market loan volumes rose, with sponsored direct lending volumes up 85% year-over-year in 2024, a new record. - Delayed draw term loan fundings were 2.4 times greater in 2024 than 2023, a new annual record.

In the fourth quarter of 2024, Monroe Capital Corporation's adjusted net investment income was $6.2 million or $0.29 per share, a slight decrease from $6.6 million or $0.31 per share in the prior quarter. The NAV as of December 31, 2024 was $191.8 million or $8.85 per share, a 3.6% decline from $198.9 million or $9.18 per share on September 30, 2024. Leverage increased from 1.50 times debt to equity on September 30, 2024 to 1.53 times on December 31, 2024. The investment portfolio totaled $457 million at year end, a $17.3 million decrease from $474.3 million at the end of the prior quarter. In 2024, $30.4 million was invested in seven new portfolio companies and $57.6 million in existing portfolio companies.

2025 Outlook - Expect sustainable and active deal environment supported by lower interest rates, improved economic outlook, and sponsor M&A activity. - Focus on selectively redeploying capital from legacy investments into attractive new and existing portfolio company relationships. - Transaction with Wendel Group expected to close in Q1 2025.

• Market conditions and economic uncertainties could impact performance. - Potential knock-on effect on availability of credit facilities due to commercial real estate crisis (though Monroe is not in real estate). - Unrealized losses in specific portfolio companies affecting NAV. - Idiosyncratic factors in portfolio companies leading to non-accrual status.

Q: About growing earnings and portfolio growth, what's the strategy?

A: Plan to step on the accelerator, working on internal plans to grow the portfolio in 2025.

Q: Regarding non-accrual investments, any resolutions in coming quarters?

A: Actively working on non-accrual names with dedicated team, aiming to rotate them out and put cash into more accretive assets during 2025.

Q: Consideration of swapping bank credit facilities due to commercial real estate crisis?

A: Always a consideration, but focused on well-diversified middle market first-lien loan portfolios, and credit facilities are fairly diversified with lots of options available