MSC Income Fund, Inc. Q3 FY2025 earnings call

• The Fund achieved a return on equity of 14.6% in the third quarter with favorable net investment income. NAV per share was $15.54, a $0.21 increase from the prior quarter.
• Investment activity: Private loan investment activity was slower, but the pipeline is above average. Lower middle market portfolio had $6 million in investments, with a net decrease of $2.6 million.
• Dividends: The Fund declared a regular quarterly dividend of $0.35 per share and a supplemental quarterly dividend of $0.01 per share, payable January 30, 2026, with a dividend yield of approximately 12% based on current stock price.
• Main Street support: Main Street purchased over $23 million of equity in the Fund, entered an open market share purchase plan, and voluntarily waived a portion of its incentive fees for the third quarter.

The Fund has two main investment segments: private loan and lower middle market. The private loan portfolio at quarter end had 92% secured debt investments, over 99% first lien, and 97% floating rate loans, with a weighted average yield of 11.3%. Fair value of the private loan portfolio was $751 million, representing 60% of the total investment portfolio. The lower middle market portfolio had investments in 55 portfolio companies with a fair value of $467 million, representing 37% of the total investment portfolio. The lower middle market portfolio was 53% debt investments with a weighted average yield of approximately 13% and 47% equity investments.

• The Fund expects to continue its dividend policy consistent with pretax net investment income.
• Anticipates increased net investment income and shareholder dividends as it enhances the investment portfolio.
• Expanded regulatory leverage capacity effective end of January 2026 will provide more liquidity for investments.
• Confident in the private loan pipeline and ability to generate attractive new private loan investment opportunities.

• Consumer exposure in the private loan portfolio causing softness, with efforts to maximize recoveries.
• Market uncertainties and economic conditions affecting portfolio companies.
• Regulatory and market risks that could impact investment performance.

Q: Robert Dodd on private loan pipeline and pricing A: Dwayne Hyzak and Nick Meserve discuss that while the market is competitive, pricing is better than a year ago and there's an uptick in pipeline activity Q: Brian McKenna on pipeline acceleration and realized gains A: Dwayne Hyzak talks about leverage, dry powder, and redeployment of capital from exits to private loans Q: Kenneth Lee on private loan pipeline drivers and realized gains A: Dwayne Hyzak and Nick Meserve discuss pipeline drivers and favorable exits on private loan portfolio companies Q: Arren Cyganovich on repayments and leverage targets A: Dwayne Hyzak and Cory Gilbert discuss repayments and leverage plans, with leverage targets changing post-January 2026 Q: Paul Johnson on consumer exposure and lower middle market A: Dwayne Hyzak discusses approach to consumer exposure, being risk off on new investments and evaluating existing names for best paths Q: Doug Harter on incentive fee waiver A: Dwayne Hyzak states Main Street's commitment to supporting the Fund Q: Mickey Schleien on market supply/demand, tariffs, and unrealized gains A: Dwayne Hyzak and Nick Meserve discuss market balance, tariff impact on portfolio companies, and unrealized gains from EBITDA growth and multiple expansion Q: Brian McKenna follow-up on lower middle market portfolio A: Cory Gilbert provides details on fair value vs cost basis of lower middle market equity and holding periods