Questions? +1 (202) 540-8337 Login
Trusted News Since 1995
A service for global professionals · Friday, October 19, 2018 · 465,588,562 Articles · 3+ Million Readers

Monroe Capital Corporation BDC Announces Fourth Quarter And Full Year 2017 Financial Results

CHICAGO, March 14, 2018 (GLOBE NEWSWIRE) -- Monroe Capital Corporation (Nasdaq:MRCC) (“Monroe”) today announced its financial results for the fourth quarter and full year ended December 31, 2017. 

/EIN News/ -- Except where the context suggests otherwise, the terms “Monroe,” “we,” “us,” “our,” and “Company” refer to Monroe Capital Corporation.

Fourth Quarter 2017 Financial Highlights

  • Net investment income of $7.0 million, or $0.35 per share
  • Adjusted Net Investment Income (a non-GAAP measure described below) of $7.0 million, or $0.35 per share
  • Net increase in net assets resulting from operations of $2.2 million, or $0.11 per share
  • Net asset value (“NAV”) of $278.7 million, or $13.77 per share
  • Paid quarterly dividend of $0.35 per share on December 29, 2017

Full Year 2017 Financial Highlights

  • Net investment income of $26.0 million, or $1.40 per share
  • Adjusted Net Investment Income (a non-GAAP measure described below) of $25.9 million, or $1.39 per share
  • Net increase in net assets resulting from operations of $12.2 million, or $0.65 per share as compared to $24.4 million

Chief Executive Officer Theodore L. Koenig commented, “We are pleased to report another quarter of consistent earnings for the fourth quarter of 2017, with Adjusted Net Investment Income of $0.35 per share, representing the 15th straight quarter where per share Adjusted Net Investment Income met or exceeded our quarterly per share dividend.  We have also made our 21st consecutive quarterly dividend payment to our shareholders without any reduction in our distributions.  As of quarter end, our portfolio totaled $494.1 million in investments at fair value, which represented a $63.0 million increase in the portfolio since the end of the third quarter. Continued measured portfolio growth as well as growth in our MRCC Senior Loan Fund joint venture, including the addition of a leverage facility for the joint venture, should positively contribute to our earnings in future quarters.”

Monroe Capital Corporation is the business development company affiliate of the award winning private debt investment firm and lender, Monroe Capital LLC.

Selected Financial Highlights
(in thousands, except per share data)

  December 31, 2017   September 30, 2017
Consolidated Statements of Assets and Liabilities data:     (unaudited)
Investments, at fair value $   494,138     $   431,097  
Total assets $   507,432     $   445,262  
Net asset value  $   278,699     $   283,542  
Net asset value per share $   13.77     $   14.01  
       
  For the quarter ended
  December 31, 2017   September 30, 2017
Consolidated Statements of Operations data: (unaudited)
Net investment income $   6,995     $   6,887  
Adjusted net investment income (1) $   6,995     $   6,987  
Net gain (loss) on investments, secured borrowings and foreign currency borrowings $   (4,754 )   $   (569 )
Net increase in net assets resulting from operations $   2,241     $   6,318  
       
Per share data:      
Net investment income $   0.35     $   0.34  
Adjusted net investment income (1) $   0.35     $   0.35  
Net gain (loss) on investments, secured borrowings, foreign currency transactions and foreign currency borrowings $   (0.24 )   $   (0.03 )
Net increase in net assets resulting from operations $   0.11     $   0.31  

______

  1. 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 72 portfolio companies, with a total fair value of $494.1 million, as of December 31, 2017 as compared to debt and equity investments in 66 portfolio companies, with a total fair value of $431.1 million, as of September 30, 2017. The Company’s portfolio consists primarily of first lien loans, representing 86.7% of the portfolio as of December 31, 2017 and 86.5% of the portfolio as of September 30, 2017.  As of December 31, 2017, the weighted average contractual and effective yield on the Company’s investments was 9.8% and 10.0%, respectively, as compared to the weighted average contractual and effective yield of 9.8% and 9.9%, respectively, as of September 30, 2017. Portfolio yield is calculated only on the portion of the portfolio that has a contractual coupon and therefore does not account for dividends on equity investments (other than preferred equity).  

Financial Review

Results of Operations:  Fourth Quarter 2017

Net investment income for the quarter ended December 31, 2017 totaled $7.0 million, or $0.35 per share, compared to $6.9 million, or $0.34 per share, for the quarter ended September 30, 2017. Adjusted Net Investment Income was $7.0 million, or $0.35 per share, for the quarter ended December 31, 2017, compared to $7.0 million, or $0.35 per share, for the quarter ended September 30, 2017.  The Company believes that Adjusted Net Investment Income is a consistent measure of the Company’s earnings – see Non-GAAP Financial Measure – Adjusted Net Investment Income discussion below. Investment income for the quarter ended December 31, 2017 totaled $13.4 million, compared to $13.5 million for the quarter ended September 30, 2017.  The $0.1 million decrease during the quarter was primarily the result of a decline in fee income and prepayment gain (loss) during the quarter, partially offset by an increase in the size of the Company’s average investment portfolio during the quarter and a slight increase in the effective portfolio yield. Total expenses for the quarter ended December 31, 2017 totaled $6.4 million (net of the incentive fee waiver of $58,000) compared to $6.6 million for the quarter ended September 30, 2017. The $0.2 million decline during the quarter was primarily driven by a $0.6 million decrease in incentive fees (net of incentive fee waiver).  During the fourth quarter incentive fees were limited due to the total return requirement.  Please refer to the Company’s Form 10-K for additional information of the incentive fee calculation and associated limitation.  There was no incentive fee waiver or limitation for the quarter ended September 30, 2017.  This decline in incentive fees was partially offset by increases in interest and other debt financing expenses and base management fees which both increased as the size of the average portfolio increased during the quarter.

Net gain (loss) on investments, secured borrowings, foreign currency transactions and foreign currency borrowings was ($4.8) million for the quarter ended December 31, 2017, compared to ($0.6) million for the quarter ended September 30, 2017. The net loss on investments, secured borrowings and foreign currency borrowings during the quarter ended December 31, 2017 was primarily the result of net unrealized mark-to-market losses on investments in the portfolio during the quarter.  These net unrealized mark-to-market losses were primarily attributable to the Company’s equity investment in Rockdale Blackhawk, LLC and debt investment in TPP Operating, Inc. 

Net increase in net assets resulting from operations was $2.2 million, or $0.11 per share, for the quarter ended December 31, 2017, compared to $6.3 million, or $0.31 per share, for the quarter ended September 30, 2017.  This decrease is primarily the result of net unrealized mark-to-market losses on investments during the quarter. The Company’s NAV per share decreased to $13.77 per share at December 31, 2017 from $14.01 per share at September 30, 2017. 

Results of Operations:  Full Year 2017

Net investment income for the year ended December 31, 2017 totaled $26.0 million, or $1.40 per share, compared to $22.5 million, or $1.55 per share, for the year ended December 31, 2016. Adjusted Net Investment Income was $25.9 million, or $1.39 per share, for the year ended December 31, 2017, compared to $23.4 million, or $1.61 per share, for the year ended December 31, 2016. Total investment income increased by $6.1 million during the year, primarily driven by increases in interest income as a result of a larger average portfolio size and increased prepayment activity during 2017, partially offset by decreases in dividend income on the Company’s LLC investments.  Total expenses, net of incentive fee waiver, increased by $3.5 million during the year.  This increase was primarily driven by a larger average investment portfolio, resulting in increases in interest expense, base management fees, and professional fees, partially offset by a decline in excise tax accrual as a result of lower undistributed taxable income. 

Net gain (loss) on investments, secured borrowings, foreign currency transactions and foreign currency borrowings was ($13.9) million for the year ended December 31, 2017, compared to $1.9 million for the year ended December 31, 2016. The net loss on investments, secured borrowings, foreign currency transactions and foreign currency borrowings during the year ended December 31, 2017 was primarily the result of net unrealized mark-to-market losses on investments in the portfolio during the year. 

Net increase in net assets resulting from operations was $12.2 million, or $0.65 per share, for the year ended December 31, 2017, compared to $24.4 million, or $1.68 per share, for the year ended December 31, 2016. This decrease is primarily the result of net unrealized mark-to-market losses on investments in the portfolio, partially offset by an increase in net investment income during the year.  The Company’s NAV decreased to $13.77 per share at December 31, 2017 from $14.52 per share at December 31, 2016.

Liquidity and Capital Resources

At December 31, 2017, the Company had $4.3 million in cash, $2.9 million in restricted cash at Monroe Capital Corporation SBIC LP (“MRCC SBIC,” the Company’s wholly-owned SBIC subsidiary), $117.1 million of total debt outstanding on its revolving credit facility and $109.5 million in outstanding Small Business Administration (“SBA”) debentures. As of December 31, 2017, the Company had $82.9 million available for additional borrowings on its revolving credit facility and $5.5 million in available SBA-guaranteed debentures. 

SBIC Subsidiary

As of December 2017, MRCC SBIC had $57.6 million in leverageable capital, $2.9 million in cash and $170.7 million in investments at fair value.  Additionally, MRCC SBIC had $109.5 million in SBA-guaranteed debentures outstanding. 

As of December 31, 2017, the Company has made all required leverageable capital contributions to MRCC SBIC in order to access the remaining $5.5 million in available SBA-guaranteed debentures.  The SBA-guaranteed debentures are long-term, fixed rate financing with the advantage of being excluded from the Company’s 200% asset coverage test under the Investment Company Act of 1940.

MRCC Senior Loan Fund

On November 1, 2017, the Company announced the formation of a joint venture with NLV Financial Corporation (“NLV”), the parent of National Life Insurance Company (“National Life”), to create MRCC Senior Loan Fund I, LLC (the “SLF”).  The SLF is expected to invest primarily in senior secured loans to middle market companies in the United States. The Company and NLV have each initially committed $50 million of capital to the joint venture.  In addition, the SLF intends to obtain third party financing during the first quarter of 2018 that is expected to allow the joint venture to access market levels of leverage. As of December 31, 2017, the Company has invested $9.5 million in the SLF with a fair value of $9.6 million. As of December 31, 2017, the SLF had called $19.0 million of total capital, had total investments at fair value of $29.1 million and total members’ capital of $19.3 million.

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 excise 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, 2017          September 30, 2017   
  Amount   Per Share
Amount
  Amount   Per Share
Amount
  (in thousands, except per share data)
Net investment income $   6,995   $   0.35   $   6,887   $   0.34
Net capital gains incentive fee     -        -        -        - 
Excise taxes     -        -        100       0.01
Adjusted Net Investment Income $   6,995   $   0.35   $   6,987   $   0.35
               


  For the year ended
  December 31, 2017   December 31, 2016
  Amount   Per Share
Amount
  Amount   Per Share
Amount
  (in thousands, except per share data)
Net investment income $   26,004     $   1.40     $   22,506   $   1.55
Net capital gains incentive fee     (175 )       (0.01 )       175       0.01
Excise taxes     100         0.01         679       0.05
Adjusted Net Investment Income $   25,929     $   1.39     $   23,360   $   1.61
               

 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 2017 Financial Results Conference Call

The Company will host a webcast and conference call to discuss these operating and financial results on Thursday, March 15, 2018 at 12:00 pm 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 (877) 312-8807 approximately 10 minutes prior to the call. Please reference conference ID #4959196.

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, 2017 to be filed with the Securities and Exchange Commission (www.sec.gov) on March 14, 2018.


MONROE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except per share data)
             
    December 31, 2017   September 30, 2017   December 31, 2016
        (unaudited)    
ASSETS          
Investments, at fair value:          
  Non-controlled/non-affiliate company investments $   425,747     $   368,634     $   353,980  
  Non-controlled affiliate company investments      58,751         53,595         50,041  
  Controlled affiliate company investments      9,640         8,868         8,899  
  Total investments, at fair value (amortized cost of: $507,580, $439,922 and $413,242, respectively)     494,138         431,097         412,920  
Cash      4,332         3,721         5,958  
Restricted cash     2,867         5,689         2,373  
Interest receivable     5,335         4,220         2,643  
Other assets     760         535         651  
  Total assets     507,432         445,262         424,545  
             
LIABILITIES          
Debt:          
  Revolving credit facility      117,092         60,612         129,000  
  SBA debentures payable     109,520         92,100         51,500  
  Total debt     226,612         152,712         180,500  
  Less:  Unamortized deferred financing costs     (4,670 )       (4,524 )       (3,945 )
  Total debt, less unamortized deferred financing costs     221,942         148,188         176,555  
Secured borrowings, at fair value (proceeds of: $0, $0 and $1,320, respectively)     -          -          1,314  
Payable for open trades     -          7,425         -   
Interest payable     1,535         541         735  
Management fees payable     2,064         1,953         1,749  
Incentive fees payable     1,157         1,721         1,222  
Accounts payable and accrued expenses     2,035         1,855         2,120  
Directors' fees payable     -          37         -   
  Total liabilities     228,733         161,720         183,695  
  Net assets $   278,699     $   283,542     $   240,850  
             
ANALYSIS OF NET ASSETS          
Common stock, $0.001 par value, 100,000 shares authorized, 20,240, 20,240 and 16,582          
shares issued and outstanding, respectively $   20     $   20     $   17  
Capital in excess of par value     286,141         286,269         233,526  
Undistributed net investment income (accumulated distributions in excess of net investment income)     6,707         6,081         7,037  
Accumulated net realized gain (loss) on investments and secured borrowings and foreign currency transactions     (372 )       81         587  
Accumulated net unrealized gain (loss) on investments, secured borrowings and foreign currency borrowings     (13,797 )       (8,909 )       (317 )
  Total net assets $   278,699     $   283,542     $   240,850  
Net asset value per share $   13.77     $   14.01     $   14.52  
             

 

MONROE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
               
  For the quarter ended   For the year ended
  December 31, 2017   September 30, 2017   December 31, 2017   December 31, 2016
  (unaudited)    (audited) 
Investment income:              
Interest income:              
Non-controlled/non-affiliate company investments $   11,060     $   10,887     $   42,055     $   34,348  
Non-controlled affiliate company investments     1,789         1,470         5,566         4,511  
Controlled affiliate company investments     -          200         594         140  
Total interest income     12,849         12,557         48,215         38,999  
Dividend income:              
Non-controlled/non-affiliate company investments     251         251         1,002         1,002  
Non-controlled affiliate company investments     -          -          -          3,546  
Total dividend income     251         251         1,002         4,548  
Fee income:              
Non-controlled/non-affiliate company investments     264         661         1,890         1,435  
Non-controlled affiliate company investments     -          -          -          36  
Total fee income     264         661         1,890         1,471  
Total investment income     13,364         13,469         51,107         45,018  
               
Operating expenses:              
Interest and other debt financing expenses     2,211         1,907         8,312         6,782  
Base management fees     2,065         1,953         7,726         6,347  
Incentive fees     1,215         1,721         5,686         5,777  
Professional fees     389         277         1,243         988  
Administrative service fees     322         295         1,248         1,287  
General and administrative expenses     188         292         948         779  
Excise taxes     -          100         100         679  
Directors' fees     37         37         148         146  
Total expenses before incentive fee waiver     6,427         6,582         25,411         22,785  
Incentive fee waiver     (58 )       -          (308 )       (273 )
Total expenses, net of incentive fee waiver     6,369         6,582         25,103         22,512  
               
Net investment income     6,995         6,887         26,004         22,506  
               
Net gain (loss) on investments, secured borrowings and foreign currency borrowings:              
Net realized gain (loss):              
Non-controlled/non-affiliate company investments     133         (2,900 )       (439 )       587  
Secured borrowings     -          -          66        -   
Foreign currency transactions     1         -          1        -   
Net realized gain (loss)     134         (2,900 )       (372 )       587  
               
Net change in unrealized gain (loss):              
Non-controlled/non-affiliate company investments     976         3,099         4,764         (610 )
Non-controlled affiliate company investments     (5,733 )       454         (14,635 )       7,013  
Controlled affiliate company investments     140         (1,155 )       (3,249 )       (5,078 )
Secured borrowings     -          -          (6 )       (53 )
Foreign currency borrowings     (271 )       (67 )       (354 )      -   
Net change in unrealized gain (loss)     (4,888 )       2,331         (13,480 )       1,272  
                   
Net gain (loss) on investments, secured borrowings, foreign currency transactions and foreign currency borrowings     (4,754 )       (569 )       (13,852 )       1,859  
               
Net increase (decrease) in net assets resulting from operations $   2,241     $   6,318     $   12,152     $   24,365  
               
Per common share data:              
Net investment income per share - basic and diluted $   0.35     $   0.34     $   1.40     $   1.55  
Net increase in net assets resulting from operations per share - basic and diluted $   0.11     $   0.31     $   0.65     $   1.68  
Weighted average common shares outstanding - basic and diluted     20,240         20,240         18,625         14,546  
               

Additional Supplemental Information:

The composition of the Company’s investment income was as follows (dollars in thousands):

 

                 
  For the quarter ended   For the year ended  
  December 31, 2017   September 30, 2017   December 31, 2017   December 31, 2016  
                 
Interest income $   11,965   $   11,511   $   44,565   $   36,448  
Dividend income     251       251       1,002       4,548  
Fee income     264       661       1,890       1,471  
Prepayment gain (loss)     302       514       1,790       995  
Accretion of discounts and amortization of premiums     582       532       1,860       1,556  
Total investment income $   13,364   $   13,469   $   51,107   $   45,018  
                 

The composition of the Company’s interest expense and other debt financing expenses was as follows (dollars in thousands):

                 
  For the quarter ended   For the year ended  
  December 31, 2017   September 30, 2017   December 31, 2017   December 31, 2016  
                 
Interest expense - revolving credit facility $   1,097   $   944   $   4,771   $   4,422  
Interest expense - SBA debentures     827       683       2,434       1,340  
Amortization of deferred financing costs     282       274       1,042       820  
Interest expense - secured borrowings     -        -        34       123  
Other     5       6       31       77  
Total interest and other debt financing expenses $   2,211   $   1,907   $   8,312   $   6,782  
                 

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 private credit asset management firm specializing in direct lending and opportunistic private credit investing. Since 2004, the firm has provided private credit solutions to borrowers in the U.S. and Canada. Monroe’s middle market lending platform provides senior and junior debt financing to businesses, special situation borrowers, and private equity sponsors. Investment types include unitranche financings; cash flow, asset based and enterprise value based loans; and equity co-investments. Monroe is committed to being a value-added and user-friendly partner to business owners, senior management, and private equity and independent sponsors. The firm is headquartered in Chicago and maintains offices in Atlanta, Boston, Dallas, Los Angeles, New York, and San Francisco. Monroe has been recognized by Private Debt Investor as the 2017 Lower Mid-Market Lender of the Year; Global M&A Network as the 2017 Small Middle Markets Lender of the Year; M&A Advisor as the 2016 Lender Firm of the Year; and the U.S. Small Business Administration as the 2015 Small Business Investment Company (SBIC) of the Year. For more information, please visit 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. 

  

Investor Contact:. Aaron D. Peck
  Chief Investment Officer and Chief Financial Officer
  Monroe Capital Corporation
  (312) 523-2363
  Email: apeck@monroecap.com
Media Contact: Emily Stoermer
  BackBay Communications
  (617) 391-0801
  Email: emily.stoermer@backbaycommunications.com
   

Primary Logo

Powered by EIN News