Monroe Capital Corporation

Welcome to Monroe Capital Corporation's third quarter 2024 earnings conference call. Before we begin, I would like to take a moment to remind our listeners that remarks made during this call today may contain certain forward-looking statements, including statements regarding our goals, strategies, beliefs, future potential, operating results, and cash flows. Although we believe these statements are reasonable based on management's estimates, assumptions, and projections as of today, November 13, 2024, these statements are not guarantees of future performance. Further, time-sensitive information may no longer be accurate as of the time of any replay or listening. Actual results may differ materially as a result of risks, uncertainty, or other factors. including but not limited to the risk factors described from time to time in the company's filings with the SEC, Monroe Capital takes no obligation to update or revise these forward-looking statements. I will now turn the conference call over to Ted Koenig, Chief Executive Officer of Monroe Capital Corporation.

Good morning, and thank you to everyone who has joined us today.

Welcome to our third quarter earnings 2024 call. I'm here with Mick Salamini, our CFO and chief investment officer, and Alex Parmasek, our deputy portfolio manager. Last evening, we issued our third quarter 2024 press release and filed our 10Q with the SEC. On today's call, I'll begin by providing an overview of our third quarter results and then share some commentary on the recently announced strategic transaction with the Wendell Group. I am pleased to report that for the 18th consecutive quarter, our adjusted net investment income covered our 25 cents per share dividend. MRCC delivered a total annualized dividend yield on our trading price of over 12% using our November 11th, 2024 closing share price. We are proud of our longstanding track record of delivering stable and consistent dividends to our shareholders. In the third quarter of 2024, Our adjusted net investment income was $6.6 million, or 31 cents per share, which was a nominal decrease from $6.7 million last quarter and stable on a per share basis of 31 cents per share. Our adjusted net investment income once again covered our 25 cent per share dividend by nearly 1.25 times. We reported NAV of $198.9 million, or $9.18 per share as of September 30th, 2024 compared to NAV of $199.3 million or $9.20 per share on 30th, 2024. The slight decline in NAV was primarily the result of net unrealized losses attributable to certain portfolio companies set by net investment income in excess of the dividend paid during the quarter. MRCC's debt to equity leverage decreased from 1.54 times at June 30th, 2024 to 1.50 times at September 30th, 2024, driven by several payoffs that occurred throughout the quarter, as well as proceeds from various investment sales and paydowns. We continue to focus on managing and supporting our existing investment portfolio companies with add-on lending opportunities while maintaining a highly selective and disciplined approach when deploying capital from payoffs into new portfolio company relationships. Our ability to grow with our existing portfolio companies that we know well allows us to remain highly selective with new investment opportunities. Our incumbency lending ability has proven to reduce underwriting risk and has historically generated some of our most attractive risk-adjusted returns. During the third quarter, we received three full payoffs of older vintage assets. While we invested in three new portfolio companies, also made numerous incremental investments in various existing portfolio companies. During the quarter, over half of our new fundings were in support of growth initiatives of our existing borrowers. Before I turn the call to Mick and Alex, I want to provide commentary on the strategic partnership that Monroe announced several weeks ago. As you know, Monroe, the owner of MRCC's external advisor, announced plans to partner with the Wendell Group, a French investment company. Wendell is purchasing majority ownership interest in Monroe and will commit $1 billion of new seed capital to support new and existing investment strategies for the Monroe platform. The Wendell Group is a 320-year-old investment firm based in Paris. They are a publicly held company now, but controlled by the Wendell family who owns 52% of the firm and voting control. They are transitioning from an old-line industrial holding company to an asset management company, and Monroe is a significant step for them in making this transition. They are led by Laurent Mignol, who was previously the CEO of Natixis Investment Management, a European multi-manager boutique.