Press Release: Monroe Capital Corporation BDC Announces Second Quarter 2019 Results

Monroe Capital Corporation BDC Announces Second Quarter 2019 Results

CHICAGO, Aug. 06, 2019 (GLOBE NEWSWIRE) -- Monroe Capital Corporation (Nasdaq: MRCC) ("Monroe") today announced its financial results for the second quarter ended June 30, 2019.

Except where the context suggests otherwise, the terms "Monroe," "we," "us," "our," and "Company" refer to Monroe Capital Corporation.

Second Quarter 2019 Financial Highlights

-- Net investment income of $7.1 million, or $0.35 per share

-- Adjusted Net Investment Income (a non-GAAP measure described below) of
$7.1 million, or $0.35 per share

-- Net increase in net assets resulting from operations of $4.0 million, or
$0.20 per share

-- Net asset value ("NAV") of $255.9 million, or $12.52 per share

-- Paid quarterly dividend of $0.35 per share on June 28, 2019

-- Current annual cash dividend yield to shareholders of approximately 12.4%
(1)

-- Based on an annualized dividend and closing share price as of August 5,
2019.

Chief Executive Officer Theodore L. Koenig commented, "We are pleased to report another quarter of consistent net investment income, with Adjusted Net Investment Income of $0.35 per share, representing the 21(st) straight quarter where per share Adjusted Net Investment Income met or exceeded our quarterly per share dividend. We have also made our 27(th) consecutive quarterly dividend payment to our shareholders. As of quarter end, our portfolio totaled $630.8 million in investments at fair value, which represented a $33.9 million increase in the portfolio during the second quarter, or about a 6% increase. Portfolio growth during the quarter was funded primarily utilizing the available capital under our revolving credit facility. We would expect to continue to selectively grow our portfolio, including utilizing additional leverage capacity available to us under our revolving credit facility. We would expect recent and continued portfolio growth to positively contribute to our earnings in future quarters."

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

Selected Financial Highlights

(in thousands, except per share data)

June 30, 2019 March 31, 2019

Consolidated Statements of Assets and
Liabilities data: (unaudited)
Investments, at fair value $ 630,804 $ 596,945
Total assets $ 668,563 $ 628,514
Net asset value $ 255,888 $ 259,052
Net asset value per share $ 12.52 $ 12.67

For the quarter ended
June 30, 2019 March 31, 2019

Consolidated Statements of Operations
data: (unaudited)
Net investment income $ 7,073 $ 7,074
Adjusted net investment income (1) $ 7,090 $ 7,067
Net gain (loss) $ (3,081) $ 367
Net increase (decrease) in net assets
resulting from operations $ 3,992 $ 7,441

Per share data:
Net investment income $ 0.35 $ 0.35
Adjusted net investment income (1) $ 0.35 $ 0.35
Net gain (loss) $ (0.15) $ 0.01
Net increase (decrease) in net assets
resulting from operations $ 0.20 $ 0.36

______

(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 87 portfolio companies, with a total fair value of $630.8 million as of June 30, 2019, as compared to debt and equity investments in 80 portfolio companies, with a total fair value of $596.9 million, as of March 31, 2019. The Company's portfolio consists primarily of first lien loans, representing 89.9% of the portfolio as of June 30, 2019, and 89.8% of the portfolio as of March 31, 2019. As of June 30, 2019, the weighted average contractual and effective yield on the Company's debt and preferred equity investments was 9.9% and 9.9%, respectively, as compared to the weighted average contractual and effective yield of 9.9% and 10.0%, respectively, as of March 31, 2019. 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

Net investment income and Adjusted Net Investment Income for the quarter ended June 30, 2019 totaled $7.1 million, or $0.35 per share, consistent with the results for the quarter ended March 31, 2019. 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 June 30, 2019 totaled $16.7 million, compared to $16.2 million for the quarter ended March 31, 2019. The $0.5 million increase during the quarter was primarily the result of an increase in interest income (including payment-in-kind interest income), primarily due to a larger average investment portfolio size during the quarter. This increase was partially offset by a decrease in fee income. Total expenses, net of incentive fee waiver, for the quarter ended June 30, 2019 totaled $9.6 million, compared to $9.1 million for the quarter ended March 31, 2019. The $0.5 million increase during the quarter was primarily driven by an increase in interest expense as a result of additional borrowings on our various financing sources (including the 2023 Notes and revolving credit facility) required to support the growth of the portfolio and an increase in base management fees due to the growth in invested assets. These increases were partially offset by a decrease in incentive fees. Incentive fees totaled $0.9 million for the quarter (net of an incentive fee waiver of $0.3 million), compared to $1.3 million (net of an incentive fee waiver of $0.3 million) for the quarter ended March 31, 2019. Incentive fees during the quarter ended June 30, 2019 were limited by $0.4 million due to the total return requirement. Please refer to the Company's Form 10-Q for additional information of the incentive fee calculation.

Net gain (loss) was ($3.1) million for the quarter ended June 30, 2019, compared to $0.3 million for the quarter ended March 31, 2019. During the quarter the Company experienced net unrealized mark-to-market valuation decreases on certain investments in the portfolio.

Net increase (decrease) in net assets resulting from operations was $4.0 million, or $0.20 per share, for the quarter ended June 30, 2019, compared to $7.4 million, or $0.36 per share, for the quarter ended March 31, 2019. This decrease is primarily the result of a decline in certain portfolio valuations during the quarter. The Company's NAV per share decreased to $12.52 per share at June 30, 2019 from $12.67 per share at March 31, 2019.

Liquidity and Capital Resources

At June 30, 2019, the Company had $3.0 million in cash, $23.9 million in restricted cash at Monroe Capital Corporation SBIC LP ("MRCC SBIC," the Company's wholly-owned SBIC subsidiary), $188.6 million of total debt outstanding on its revolving credit facility, $109.0 million of debt outstanding on its 2023 Notes, and $115.0 million in outstanding Small Business Administration ("SBA") debentures. As of June 30, 2019, the Company had $66.4 million available for additional borrowings on its revolving credit facility.

SBIC Subsidiary

As of June 30, 2019, MRCC SBIC had $57.6 million in leverageable capital, $23.9 million in cash and $148.1 million in investments at fair value. Additionally, MRCC SBIC had $115.0 million in SBA debentures outstanding. As of June 30, 2019, the Company has fully drawn all available debentures at MRCC SBIC. The SBA debentures are long-term, fixed rate financing with the advantage of being excluded from the Company's 150% asset coverage test under the Investment Company Act of 1940.

MRCC Senior Loan Fund

MRCC Senior Loan Fund I, LLC ("SLF") is a joint venture with NLV Financial Corporation ("NLV"), the parent of National Life Insurance Company. SLF invests primarily in senior secured loans to middle market companies in the United States. The Company and NLV have each committed $50.0 million of capital to the joint venture. As of June 30, 2019, the Company had made net capital contributions of $35.1 million in SLF with a fair value of $35.9 million, as compared to net capital contributions of $31.3 million in SLF with a fair value of $32.0 million at March 31, 2019. During the quarter ended June 30, 2019, the Company received an income distribution from SLF of $0.9 million, compared to the $0.8 million received during the quarter ended March 31, 2019.

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Press Release: Monroe Capital Corporation BDC -2-

As of June 30, 2019, SLF had total assets of $240.8 million (including investments at fair value of $235.6 million), total liabilities of $168.9 million (including borrowings under the $170.0 million secured revolving credit facility with Capital One, N.A. (the "SLF Credit Facility") of $143.3 million) and total members' capital of $71.9 million. As of March 31, 2019, SLF had total assets of $199.4 million (including investments at fair value of $189.6 million), total liabilities of $135.4 million (including borrowings under the SLF Credit Facility of $121.0 million) and total members' capital of $64.0 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
June 30, 2019 March 31, 2019
Per Share Per Share
Amount Amount Amount Amount

(in thousands, except per share data)
Net
investment
income $ 7,073 $ 0.35 $ 7,074 $ 0.35
Net capital
gains
incentive
fee - - - -
Excise
taxes 17 - (7) -
Adjusted
Net
Investment
Income $ 7,090 $ 0.35 $ 7,067 $ 0.35

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.

Second Quarter 2019 Financial Results Conference Call

The Company will host a webcast and conference call to discuss these operating and financial results on Wednesday, August 7, 2019 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 (877) 312-8807 approximately 10 minutes prior to the call. Please reference conference ID #5591125.

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-Q for the quarter ended June 30, 2019 to be filed with the Securities and Exchange Commission (www.sec.gov) on August 6, 2019.

MONROE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except per share data)

June 30, 2019 March 31, 2019

(unaudited)
ASSETS
Investments, at fair value:
Non-controlled/non-affiliate
company investments $ 533,779 $ 505,957
Non-controlled affiliate company
investments 61,081 58,956
Controlled affiliate company
investments 35,944 32,032
Total investments, at fair value
(amortized cost of: $644,141
and $606,591, respectively) 630,804 596,945
Cash 2,985 4,690
Restricted cash 23,884 17,315
Unrealized gain on foreign currency
forward contracts 23 -
Interest receivable 10,330 8,976
Other assets 537 588
Total assets 668,563 628,514

LIABILITIES
Debt:
Revolving credit facility 188,640 146,342
2023 Notes 109,000 109,000
SBA debentures payable 115,000 115,000
Total debt 412,640 370,342
Less: Unamortized deferred
financing costs (8,797) (9,265)
Total debt, less unamortized
deferred financing costs 403,843 361,077
Interest payable 2,681 1,932
Unrealized loss on foreign currency
forward contracts - 49
Management fees payable 2,723 2,521
Incentive fees payable 883 1,319
Accounts payable and accrued
expenses 2,545 2,529
Directors' fees payable - 35
Total liabilities 412,675 369,462
Net assets $ 255,888 $ 259,052

ANALYSIS OF NET ASSETS

Common stock, $0.001 par value,
100,000 shares authorized, 20,445
and 20,445 shares issued and
outstanding, respectively $ 20 $ 20
Capital in excess of par value 288,911 288,911
Accumulated undistributed
(overdistributed) earnings (33,043) (29,879)
Total net assets $ 255,888 $ 259,052
Net asset value per share $ 12.52 $ 12.67



MONROE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

For the quarter ended
June 30, 2019 March 31, 2019

(unaudited)
Investment income:
Non-controlled/non-affiliate
company investments:
Interest income $ 13,743 $ 12,830
Payment-in-kind interest income 115 98
Dividend income 13 13
Fee income 60 569
Total investment income from
non-controlled/non-affiliate
company investments 13,931 13,510
Non-controlled affiliate company
investments:
Interest income 767 923
Payment-in-kind interest income 1,146 956
Total investment income from
non-controlled affiliate
company investments 1,913 1,879
Controlled affiliate company
investments:
Dividend income 875 770
Total investment income from
controlled affiliate company
investments 875 770
Total investment income 16,719 16,159

Operating expenses:
Interest and other debt financing
expenses 5,107 4,354
Base management fees 2,723 2,521
Incentive fees 1,168 1,600
Professional fees 272 289
Administrative service fees 319 347
General and administrative
expenses 285 227
Excise taxes 17 (7)
Directors' fees 40 35
Expenses before incentive fee
waiver 9,931 9,366
Incentive fee waiver (285) (281)
Total expenses, net of
incentive fee waiver 9,646 9,085

Net investment income 7,073 7,074

Net gain (loss):
Net realized gain (loss):
Non-controlled/non-affiliate
company investments 35 -
Foreign currency forward
contracts 2 (8)
Foreign currency and other
transactions (1) (1)
Net realized gain (loss) 36 (9)

Net change in unrealized gain
(loss):
Non-controlled/non-affiliate
company investments (2,749) 2,288
Non-controlled affiliate
company investments (1,054) (1,754)

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Press Release: Monroe Capital Corporation BDC -3-

Controlled affiliate company
investments 112 323
Foreign currency forward
contracts 72 (65)
Foreign currency and other
transactions 502 (416)
Net change in unrealized gain
(loss) (3,117) 376

Total net gain (loss) (3,081) 367

Net increase (decrease) in net
assets resulting from
operations $ 3,992 $ 7,441

Per common share data:
Net investment income per share -
basic and diluted $ 0.35 $ 0.35
Net increase (decrease) in net
assets resulting from operations
per share - basic and diluted $ 0.20 $ 0.36
Weighted average common shares
outstanding - basic and diluted 20,445 20,445

Additional Supplemental Information:

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

For the quarter ended
June 30, 2019 March 31, 2019

Interest income $ 14,026 $ 13,214
Payment-in-kind interest income 1,261 1,054
Dividend income 888 783
Fee income 60 569
Prepayment gain (loss) 91 113
Accretion of discounts and amortization
of premiums 393 426
Total investment income $ 16,719 $ 16,159


The composition of the Company's interest
expense and other debt financing expenses
was as follows (in thousands):
For the quarter ended
June 30, 2019 March 31, 2019

Interest expense - revolving credit
facility $ 2,092 $ 1,895
Interest expense - 2023 Notes 1,566 1,056
Interest expense - SBA debentures 981 970
Amortization of deferred financing costs 468 433
Total interest and other debt financing
expenses $ 5,107 $ 4,354

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 debt financing to businesses, special situation borrowers, and private equity sponsors. Investment types include cash flow, enterprise value and asset-based loans; unitranche financings; 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, Los Angeles, New York, and San Francisco.

Monroe has been recognized by Creditflux as the 2019 Best U.S. Direct Lending Fund; Private Debt Investor as the 2018 Lower Mid-Market Lender of the Year; Mergers & Acquisitions as the 2018 Lender of the Year; Global M&A Network as the 2018 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 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:

Aaron D. Peck

Chief Investment Officer and Chief Financial Officer

Monroe Capital Corporation

(312) 523-2363

Email: apeck@monroecap.com

Media Contact:

Caroline Collins

BackBay Communications

(617) 963-0065

Email: caroline.collins@backbaycommunications.com

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