Table of contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from: to Commission File Number: 001-33723 Main Street Capital Corporation (Exact name of registrant as specified in its charter) (State or other ...

Main Street Capital (NYSE:MAIN) Q1 2023 Earnings Conference Call May 5, 2023 10:00 AM ET Company Participants Zach Vaughan - Vice President, Dennard Lascar Investor Relations Dwayne Hyzak - Chief Executive Officer David Magdol - President, Chief Investment Officer Jesse Morris - Chief Financial Officer, Chief Operating Officer Nick Meserve - Managing Director, Head of Private Credit Investment Group Conference Call Participants Robert Dodd - Raymond James Bryce Rowe - B. Riley Kenneth Lee - RBC Mark Hughes ...

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Table of contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) For the quarterly period ended March 31, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from: to Commission File Number: 001-33723 Main Street Capital Corporation (Exact name of registrant as specified in its charter) (State or other ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) Main Street Capital Corporation is an internally managed BDC providing debt and equity financing to LMM and Middle Market companies, focused on maximizing total portfolio return - MSCC is a principal investment firm focused on providing customized debt and equity financing to **Lower Middle Market (LMM)** companies and debt capital to **Middle Market** companies[16](index=16&type=chunk) - As an **internally managed BDC**, MSCC avoids external advisory fees, resulting in a beneficial operating expense structure, with a **1.4%** ratio of total operating expenses (excluding interest) to quarterly average total assets in 2022[17](index=17&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - MSCC's wholly-owned subsidiary, MSC Adviser I, LLC (the "**External Investment Manager**"), contributed **$22.3 million** to MSCC's net investment income in 2022 by providing investment management services to third parties[19](index=19&type=chunk)[42](index=42&type=chunk) - The company has elected to be treated as a **Regulated Investment Company (RIC)** for tax purposes, generally avoiding corporate-level federal income taxes on distributed income[20](index=20&type=chunk) - Through its licensed **Small Business Investment Company (SBIC)** subsidiaries, MSCC accesses low-cost, long-term leverage from SBA-guaranteed debentures, with **$350.0 million** outstanding at a weighted-average interest rate of **2.9%** as of year-end 2022[18](index=18&type=chunk)[117](index=117&type=chunk) [Organization](index=5&type=section&id=ORGANIZATION) MSCC operates as an internally managed BDC, owning SBIC funds and an external investment manager, and is taxed as a RIC - MSCC operates as an **internally managed BDC**, directly employing its executive officers and staff, thus avoiding external advisory fees[17](index=17&type=chunk) - The company wholly owns two funds licensed as **SBICs** by the SBA: Main Street Mezzanine Fund, LP (MSMF) and Main Street Capital III, LP (MSC III)[18](index=18&type=chunk) - MSC Adviser I, LLC is a wholly-owned subsidiary acting as an **External Investment Manager** for third parties, accounted for as a portfolio investment rather than a consolidated subsidiary[19](index=19&type=chunk)[26](index=26&type=chunk) - MSCC utilizes wholly-owned **Taxable Subsidiaries** to hold equity investments in pass-through entities and **Structured Subsidiaries** for financing purposes, all consolidated in its financial statements[21](index=21&type=chunk)[22](index=22&type=chunk) [Overview of Our Business](index=6&type=section&id=OVERVIEW%20OF%20OUR%20BUSINESS) The company maximizes total portfolio return through LMM, Private Loan, and Middle Market strategies, benefiting from an internally managed structure and external asset management fee income Investment Strategy Focus | Strategy | Target Company Annual Revenue | Typical Investment Size | | :--- | :--- | :--- | | Lower Middle Market (LMM) | $10 million - $150 million | $5 million - $75 million | | Private Loan | Consistent with LMM/Middle Market | $10 million - $75 million | | Middle Market | $150 million - $1.5 billion | $3 million - $25 million | Operating Expense Ratios | Expense Ratio (as a % of quarterly average total assets) | 2022 | 2021 | | :--- | :--- | :--- | | Total operating expenses (excluding interest) | 1.4% | 1.5% | | Total operating expenses (including interest) | 3.3% | 3.4% | External Investment Manager Contribution to Net Investment Income | Year | Contribution (in millions) | | :--- | :--- | | 2022 | $22.3 | | 2021 | $16.5 | | 2020 | $9.9 | - The company has an SEC exemptive order permitting co-investments with funds advised by its **External Investment Manager**, such as MSC Income and the Private Loan Fund[44](index=44&type=chunk) [Business Strategies](index=9&type=section&id=BUSINESS%20STRATEGIES) Main Street's strategy focuses on maximizing total portfolio return by offering customized financing to LMM companies, growing asset management, and leveraging low-cost capital - Offer customized "**one-stop**" debt and equity financing solutions to LMM portfolio companies[46](index=46&type=chunk) - Focus on established companies with proven management teams, positive cash flow, and defensible market positions[46](index=46&type=chunk) - Leverage an extensive network for proprietary deal flow and grow the external asset management business to diversify income[46](index=46&type=chunk) - Utilize low-cost, long-term capital from SBIC licenses (SBA-guaranteed debentures) and investment-grade ratings to maintain a competitive cost of capital[46](index=46&type=chunk) [Investment Criteria](index=10&type=section&id=INVESTMENT%20CRITERIA) The company evaluates prospective portfolio companies based on management quality, financial performance, competitive advantages, and clear exit strategies - Management teams should be operationally-oriented, have direct industry experience, and hold a meaningful equity stake in the company[49](index=49&type=chunk) - Targets established companies with sound historical financial performance, typically with **EBITDA of $3 million to $20 million** for LMM investments[49](index=49&type=chunk) - Focuses on companies with competitive advantages and/or operating in industries with barriers to entry[49](index=49&type=chunk) - Seeks clear exit alternatives, primarily through repayment from cash flow, refinancing, strategic acquisition, or recapitalization[49](index=49&type=chunk) [Investment Portfolio](index=10&type=section&id=INVESTMENT%20PORTFOLIO) The investment portfolio primarily consists of first-lien secured debt in LMM, Private Loan, and Middle Market companies, complemented by equity investments for capital appreciation - LMM debt investments are generally first-lien, single tranche loans with **5-7 year terms** and interest rates between **10% and 14%**[48](index=48&type=chunk)[50](index=50&type=chunk) - Private Loan and Middle Market debt investments are also typically first-lien secured loans with **3-7 year terms** and floating interest rates[52](index=52&type=chunk)[53](index=53&type=chunk) - In connection with LMM debt, the company often receives equity warrants or makes direct equity investments, targeting a **5% to 50%** fully diluted equity position[54](index=54&type=chunk)[56](index=56&type=chunk) [Investment Process](index=12&type=section&id=INVESTMENT%20PROCESS) The company employs a seven-stage investment process, from deal generation and due diligence to post-investment monitoring and exit, managed by its investment committee - The investment process is managed by an internal investment committee and follows seven stages: Deal Generation, Screening, Term Sheet, Due Diligence, Document and Close, Post-Investment, and Exit/Refinancing[58](index=58&type=chunk) - Due diligence for LMM investments is comprehensive, including site visits, financial reviews, and interviews with customers and suppliers; Private Loan and Middle Market due diligence relies more on external resources and internal assessment[63](index=63&type=chunk) - Post-investment, the company actively monitors its portfolio companies, offering managerial assistance and often taking board representation or observation rights in its LMM investments[69](index=69&type=chunk)[70](index=70&type=chunk) - An internally developed rating system is used to monitor the performance and expected returns of each portfolio company[72](index=72&type=chunk) [Determination of Net Asset Value and Investment Portfolio Valuation Process](index=15&type=section&id=DETERMINATION%20OF%20NET%20ASSET%20VALUE%20AND%20INVESTMENT%20PORTFOLIO%20VALUATION%20PROCESS) The company determines its NAV quarterly, with the illiquid investment portfolio valuation being the most significant estimate, following ASC 820 and SEC Rule 2a-5 - NAV is determined quarterly, and the valuation of the investment portfolio is the most significant estimate in the financial statements[74](index=74&type=chunk)[75](index=75&type=chunk) - The valuation process adheres to **ASC 820** and **SEC Rule 2a-5**, with the Board designating an executive group as the Valuation Committee[75](index=75&type=chunk)[80](index=80&type=chunk) - The quarterly valuation process is a multi-step procedure involving an internal valuation team, the investment team, the Valuation Committee, and rotational review by an independent financial advisory firm[81](index=81&type=chunk) [Human Capital](index=17&type=section&id=HUMAN%20CAPITAL) Main Street's success relies on attracting and retaining talent through competitive compensation, development opportunities, and a diverse, inclusive culture - The company emphasizes attracting, developing, and retaining employees through competitive compensation, benefits, and a strong corporate culture[84](index=84&type=chunk)[87](index=87&type=chunk) - As of December 31, 2022, Main Street had **91 employees**, including **53 investment and portfolio management professionals**[91](index=91&type=chunk) - Maintains initiatives to promote a diverse and inclusive work environment, including a **Women's Initiative** and a **Community Building Committee**[87](index=87&type=chunk)[88](index=88&type=chunk) [Regulation](index=18&type=section&id=REGULATION) Main Street is subject to comprehensive regulation as a BDC, including asset composition and leverage limits, and as a RIC, requiring specific income and distribution tests - As a BDC, the company must maintain at least **70%** of its assets in "**qualifying assets**," primarily securities of private or thinly traded U.S. companies[94](index=94&type=chunk) - Effective May 3, 2022, the company's required asset coverage ratio was reduced from **200% to 150%**, allowing for increased leverage[98](index=98&type=chunk) - Its SBIC funds are regulated by the SBA, which provides access to up to **$350 million** in SBA-guaranteed debentures but imposes specific investment and operational restrictions[110](index=110&type=chunk)[112](index=112&type=chunk)[117](index=117&type=chunk) - To maintain its RIC status, the company must meet a **90% income test**, asset diversification tests, and distribute at least **90%** of its investment company taxable income annually[123](index=123&type=chunk)[126](index=126&type=chunk) [Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) Investing in the company involves significant risks related to business operations, investment performance, leverage, regulatory compliance, and general market conditions - **Business and Structure Risks**: The portfolio is recorded at fair value, which involves subjective estimates; the company's success depends on its ability to manage and deploy capital, attract and retain key personnel, and navigate increasing competition[137](index=137&type=chunk)[143](index=143&type=chunk)[154](index=154&type=chunk) - **Investment Risks**: Investments in LMM companies carry significant risks, including limited financial resources and lack of liquidity; economic downturns, rising interest rates, and inflation could impair portfolio companies' performance and lead to defaults[139](index=139&type=chunk)[162](index=162&type=chunk)[164](index=164&type=chunk) - **Leverage Risks**: The use of borrowed money magnifies the potential for both gains and losses; a decline in asset value would cause NAV to decline more sharply, and default on debt obligations could lead to foreclosure on assets[140](index=140&type=chunk)[189](index=189&type=chunk)[196](index=196&type=chunk) - **Regulatory and Tax Risks**: Failure to comply with BDC regulations could reduce operating flexibility; failure to meet RIC qualification requirements would subject the company to corporate-level income tax, substantially reducing net assets and income available for distribution[140](index=140&type=chunk)[209](index=209&type=chunk)[234](index=234&type=chunk) - **General Risks**: Events outside of the company's control, such as public health crises, supply chain disruptions, inflation, and capital market instability, could negatively affect portfolio companies and overall operations[145](index=145&type=chunk)[242](index=242&type=chunk)[244](index=244&type=chunk) [Unresolved Staff Comments](index=47&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that there are no unresolved staff comments - None[256](index=256&type=chunk) [Properties](index=47&type=section&id=Item%202.%20Properties) The company does not own any real estate or other material physical properties, leasing its corporate headquarters in Houston, Texas - The company leases its corporate headquarters in Houston, Texas and does not own any material real estate[257](index=257&type=chunk) [Legal Proceedings](index=47&type=section&id=Item%203.%20Legal%20Proceedings) The company may be involved in litigation in the normal course of business but does not expect any current legal matters to materially affect its financial condition or results of operations - The company is not currently involved in any legal proceedings that are expected to have a material adverse effect on its financial condition or results of operations[258](index=258&type=chunk) [Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[259](index=259&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=48&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Main Street's common stock trades on the NYSE, consistently at a premium to NAV, with a dividend reinvestment plan, and has significantly outperformed market indices since its IPO Common Stock Price Range and Premium to NAV (2022) | Quarter | NAV per Share | High Price | Low Price | Premium of High to NAV | Premium of Low to NAV | | :--- | :--- | :--- | :--- | :--- | :--- | | Q1 2022 | $25.89 | $44.88 | $39.94 | 73% | 54% | | Q2 2022 | $25.37 | $43.65 | $34.59 | 72% | 36% | | Q3 2022 | $25.94 | $45.28 | $33.23 | 75% | 28% | | Q4 2022 | $26.86 | $39.50 | $32.57 | 47% | 21% | - The company has a dividend reinvestment plan (DRIP) where stockholder dividends are automatically reinvested into additional shares unless they opt out[269](index=269&type=chunk) - During 2022, **625,196 shares** of common stock were issued under the DRIP, with an aggregate value of **$24.1 million**[270](index=270&type=chunk) - The stock performance graph indicates that Main Street's total return since its IPO has substantially exceeded that of major market indices, including the **S&P 500** and the **S&P BDC Index**[273](index=273&type=chunk)[274](index=274&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, Main Street experienced significant growth in investment income and NII, despite a net realized loss and lower unrealized appreciation, maintaining strong liquidity Key Financial Results Comparison (2022 vs. 2021) | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Total Investment Income | $376.9M | $289.0M | 30% | | Net Investment Income (NII) | $245.3M | $182.7M | 34% | | Distributable NII | $257.5M | $194.7M | 32% | | NII per Share | $3.29 | $2.65 | 24% | | Distributable NII per Share | $3.46 | $2.82 | 23% | | Net Realized Gain (Loss) | ($5.2M) | $45.3M | NM | | Net Unrealized Appreciation | $24.8M | $135.6M | NM | - The increase in interest income was primarily due to higher average levels of debt investments and higher floating interest rates[307](index=307&type=chunk) - Total expenses increased by **24%** to **$131.5 million**, mainly due to higher interest expense from increased borrowings and higher compensation costs[309](index=309&type=chunk)[310](index=310&type=chunk) - As of December 31, 2022, the company had **$49.1 million** in cash and **$568.0 million** of unused capacity under its credit facilities[330](index=330&type=chunk) [Investment Portfolio Summary](index=52&type=section&id=INVESTMENT%20PORTFOLIO%20SUMMARY) As of December 31, 2022, the company's investment portfolio grew across LMM, Private Loan, and Middle Market segments, with increased weighted-average effective yields reflecting rising interest rates Portfolio Summary as of December 31, 2022 | Portfolio | of Companies | Fair Value (M) | Cost (M) | Wtd-Avg Yield | | :--- | :--- | :--- | :--- | :--- | | LMM | 78 | $2,060.5 | $1,719.9 | 12.3% | | Private Loan | 85 | $1,471.5 | $1,500.3 | 11.6% | | Middle Market | 31 | $329.1 | $401.7 | 11.0% | Portfolio Summary as of December 31, 2021 | Portfolio | of Companies | Fair Value (M) | Cost (M) | Wtd-Avg Yield | | :--- | :--- | :--- | :--- | :--- | | LMM | 73 | $1,716.4 | $1,455.7 | 11.2% | | Private Loan | 75 | $1,141.8 | $1,157.5 | 8.2% | | Middle Market | 36 | $395.2 | $440.9 | 7.5% | - The investment in the External Investment Manager had a fair value of **$122.9 million** as of December 31, 2022, down from **$140.4 million** at year-end 2021[285](index=285&type=chunk) [Critical Accounting Policies](index=53&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) The company's critical accounting policies involve significant judgment, particularly in the valuation of its investment portfolio at fair value and the recognition of interest and dividend income - The valuation of the Investment Portfolio is the most significant accounting estimate, representing **97%** of total assets, determined at fair value following **ASC 820** and **SEC Rule 2a-5**[289](index=289&type=chunk)[291](index=291&type=chunk) - Interest and dividend income are recorded on an accrual basis; loans are generally placed on non-accrual status when **90 days or more past due** and collectability is doubtful[292](index=292&type=chunk) - The company recognizes non-cash income from Payment-in-Kind (PIK) interest and cumulative dividends, which comprised **1.4%** and **0.5%** of total investment income in 2022, respectively[295](index=295&type=chunk) [Investment Portfolio Composition](index=55&type=section&id=INVESTMENT%20PORTFOLIO%20COMPOSITION) The combined LMM, Private Loan, and Middle Market portfolios are predominantly composed of first-lien debt, with equity investments making up a significant portion at fair value due to unrealized appreciation Portfolio Composition by Investment Type (at Cost) | Investment Type | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | First lien debt | 85.0% | 82.5% | | Equity | 14.2% | 16.2% | | Second lien debt | 0.3% | 0.6% | | Other | 0.5% | 0.7% | Portfolio Composition by Investment Type (at Fair Value) | Investment Type | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | First lien debt | 75.2% | 74.3% | | Equity | 24.1% | 24.6% | | Second lien debt | 0.3% | 0.5% | | Other | 0.4% | 0.6% | [Portfolio Asset Quality](index=56&type=section&id=PORTFOLIO%20ASSET%20QUALITY) The company monitors portfolio asset quality using an internal rating system, with a slight increase in non-accrual investments by number, though a decrease as a percentage of fair value Non-Accrual Investments | Metric | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Number of Investments | 12 | 9 | | % of Portfolio (at Fair Value) | 0.6% | 0.7% | | % of Portfolio (at Cost) | 3.7% | 3.3% | [Discussion and Analysis of Results of Operations](index=57&type=section&id=DISCUSSION%20AND%20ANALYSIS%20OF%20RESULTS%20OF%20OPERATIONS) For 2022, total investment income and net investment income significantly increased due to higher interest income, while net realized and unrealized gains decreased, leading to a lower net increase in net assets Results of Operations (Year Ended Dec 31) | (in thousands) | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Total investment income | $376,860 | $289,047 | $87,813 | | Total expenses | ($131,533) | ($106,382) | ($25,151) | | Net investment income | $245,327 | $182,665 | $62,662 | | Net realized gain (loss) | ($5,212) | $45,336 | ($50,548) | | Net unrealized appreciation | $24,816 | $135,624 | ($110,808) | | Net increase in net assets | $241,606 | $330,762 | ($89,156) | - The **30%** increase in total investment income was driven by a **47%** rise in interest income, partially offset by a **6%** decrease in dividend income[306](index=306&type=chunk)[307](index=307&type=chunk) - The **24%** increase in total expenses was primarily due to a **33%** increase in interest expense and a **15%** increase in cash compensation[309](index=309&type=chunk)[310](index=310&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) In 2022, financing activities provided significant cash, primarily from credit facilities and equity offerings, while operating activities used cash for investments, maintaining strong liquidity and a healthy asset coverage ratio - Net cash provided by financing activities was **$263.4 million** in 2022, while net cash used in operating activities was **$246.9 million**[324](index=324&type=chunk)[325](index=325&type=chunk)[326](index=326&type=chunk) - As of December 31, 2022, liquidity consisted of **$49.1 million** in cash and **$568.0 million** of unused capacity under its Credit Facilities[330](index=330&type=chunk) - In 2022, the company raised **$212.4 million** in gross proceeds from its at-the-market (ATM) equity program and **$55.1 million** from a public equity offering[338](index=338&type=chunk)[339](index=339&type=chunk) - The company's BDC asset coverage ratio was **227%** as of December 31, 2022, well above the required **150%**[345](index=345&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=66&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risk primarily from interest rate changes, with a majority of its debt investments at floating rates and debt obligations at fixed rates, leading to a positive sensitivity to rising rates - As of December 31, 2022, **73%** of the debt investment portfolio (at cost) had floating interest rates, while **70%** of the company's debt obligations had fixed interest rates[361](index=361&type=chunk) Interest Rate Sensitivity Analysis (as of Dec 31, 2022) | Basis Point Change | Change in Net Investment Income (in thousands) | Change in NII per Share | | :--- | :--- | :--- | | +200 | $33,681 | $0.43 | | +100 | $16,755 | $0.21 | | -100 | ($17,098) | ($0.22) | | -200 | ($34,024) | ($0.43) | [Consolidated Financial Statements and Supplementary Data](index=68&type=section&id=Item%208.%20Consolidated%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2022, including balance sheets, statements of operations, cash flows, and detailed notes, with an unqualified audit opinion - The independent auditor, Grant Thornton LLP, issued an **unqualified opinion** on the financial statements and on the effectiveness of the company's internal control over financial reporting[369](index=369&type=chunk)[370](index=370&type=chunk)[380](index=380&type=chunk) - The critical audit matter identified was the fair value of **Level 3 investments**, due to the significant management judgments and estimation uncertainty involved in their valuation[374](index=374&type=chunk) [Consolidated Financial Statements](index=69&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show total assets of $4.24 billion and net assets of $2.11 billion as of December 31, 2022, with total investment income of $376.9 million and a net increase in net assets of $241.6 million for the year Consolidated Balance Sheet Highlights (as of Dec 31) | (in thousands) | 2022 | 2021 | | :--- | :--- | :--- | | Total Investments (Fair Value) | $4,102,177 | $3,561,831 | | Total Assets | $4,241,885 | $3,694,802 | | Total Liabilities | $2,133,299 | $1,905,956 | | Total Net Assets | $2,108,586 | $1,788,846 | | NAV per Share | $26.86 | $25.29 | Consolidated Statement of Operations Highlights (Year Ended Dec 31) | (in thousands) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Total Investment Income | $376,860 | $289,047 | $222,614 | | Net Investment Income | $245,327 | $182,665 | $137,945 | | Net Increase in Net Assets | $241,606 | $330,762 | $29,383 | [Notes to Consolidated Financial Statements](index=131&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail critical accounting policies, particularly the valuation of Level 3 investments, portfolio composition, debt structure, dividend policy, unfunded commitments, and related party transactions - As of December 31, 2022, **$4.10 billion** of the **$4.102 billion** investment portfolio was categorized as **Level 3** in the fair value hierarchy, indicating reliance on unobservable inputs[615](index=615&type=chunk) - The External Investment Manager contributed **$22.3 million** to Main Street's net investment income in 2022 through a combination of allocated expenses and dividend income[654](index=654&type=chunk) - Total debt outstanding as of December 31, 2022, was **$2.007 billion**, consisting of SBIC debentures, credit facilities, and three series of unsecured notes[658](index=658&type=chunk) - As of December 31, 2022, the company had **$274.4 million** in outstanding unfunded commitments, primarily for revolving loans and equity capital[742](index=742&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=198&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item is not applicable to the company - Not applicable[798](index=798&type=chunk) [Controls and Procedures](index=198&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with no material changes reported - Management concluded that disclosure controls and procedures were effective as of the end of the period[799](index=799&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2022, which was attested to by the independent auditor[800](index=800&type=chunk)[801](index=801&type=chunk) [Other Information](index=198&type=section&id=Item%209B.%20Other%20Information) This section provides updated annual expense estimates, totaling 8.92% of net assets, and announces a new Vice President, Chief Accounting Officer, and Assistant Treasurer appointment Annual Expenses (as a % of net assets) | Expense Category | Percentage | | :--- | :--- | | Operating expenses | 3.14% | | Interest payments on borrowed funds | 4.41% | | Income tax expense | 1.11% | | Acquired fund fees and expenses | 0.26% | | **Total annual expenses** | **8.92%** | - On February 21, 2023, the Board appointed Ryan R. Nelson as Vice President, Chief Accounting Officer, and Assistant Treasurer, effective March 13, 2023[810](index=810&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=200&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[814](index=814&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=200&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's 2023 Proxy Statement - Information is incorporated by reference from the 2023 Proxy Statement[816](index=816&type=chunk) [Executive Compensation](index=201&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive and director compensation, including the Compensation Discussion and Analysis, is incorporated by reference from the company's 2023 Proxy Statement - Information is incorporated by reference from the 2023 Proxy Statement[818](index=818&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=201&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of December 31, 2022, over 5.2 million securities were available for future issuance under approved equity compensation plans, with additional securities under unapproved plans Equity Compensation Plan Information (as of Dec 31, 2022) | Plan Category | Securities to be Issued Upon Exercise | Securities Remaining Available for Future Issuance | | :--- | :--- | :--- | | Approved by security holders | — | 5,281,165 | | Not approved by security holders | 165,248 | — | | **Total** | **165,248** | **5,281,165** | [Certain Relationships and Related Transactions, and Director Independence](index=201&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information concerning related party transactions and director independence is incorporated by reference from the company's 2023 Proxy Statement - Information is incorporated by reference from the 2023 Proxy Statement[820](index=820&type=chunk) [Principal Accountant Fees and Services](index=201&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's 2023 Proxy Statement - Information is incorporated by reference from the 2023 Proxy Statement[821](index=821&type=chunk) Part IV [Exhibits and Consolidated Financial Statement Schedules](index=202&type=section&id=Item%2015.%20Exhibits%20and%20Consolidated%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the Annual Report, including financial statements, schedules, and a comprehensive index of exhibits - This section contains the index to the Consolidated Financial Statements and the Schedule of Investments in and Advances to Affiliates[823](index=823&type=chunk)[824](index=824&type=chunk) - A comprehensive list of exhibits is provided, including corporate governance documents, debt indentures, credit agreements, equity incentive plans, and required certifications[824](index=824&type=chunk)[825](index=825&type=chunk)[826](index=826&type=chunk)

Main Street Capital (NYSE:MAIN) Q4 2022 Earnings Conference Call February 24, 2023 10:00 AM ET Company Participants Zach Vaughan - Dennard Lascar-Investor Relations Dwayne Hyzak - Chief Executive Officer David Magdol - President & Chief Investment Officer Jesse Morris - EVP, Chief Financial Officer & Chief Operating Officer Nick Meserve - Managing Director & Head-Private Credit Investment Group Conference Call Participants Robert Dodd - Raymond James Bryce Rowe - B. Riley Kenneth Lee - RBC Capital Markets M ...

CAPITAL CORPORATION Investor Presentation Third Quarter – 2022 Main Street Capital Corporation NYSE: MAIN mainstcapital.com Main Street Capital Corporation NYSE: MAIN mainstcapital.com www.mainstcapital.com Page 1 Disclaimers Main Street Capital Corporation (MAIN) cautions that statements in this presentation that are forward-looking, and provide other than historical information, involve risks and uncertainties that may impact our future results of operations. The forward-looking statements in this present ...

Financial Data and Key Metrics Changes - The total investment income for Q3 2022 increased by $21.6 million or 28% year-over-year and $13.2 million or 15.4% compared to Q2 2022, reaching $98.4 million [39] - Net investment income (NII) per share rose to $0.83, and distributable net investment income (DNII) per share increased to $0.88, both up by $0.12 from the same period last year [46] - The net asset value (NAV) increased by $114.3 million or $0.57 per share, ending the quarter at a record NAV of $25.94 per share [44] Business Line Data and Key Metrics Changes - The lower middle market portfolio included investments in 75 companies with a fair value of $1.9 billion, approximately 20% above the cost basis [35] - The private loan portfolio had investments in 87 companies representing $1.5 billion of fair value, while the middle-market portfolio had investments in 33 companies valued at $354 million [35] - Total investments in the lower middle market portfolio amounted to $112 million, resulting in a net increase of approximately $85 million after repayments [32] Market Data and Key Metrics Changes - The repayment rate in the private loan portfolio has slowed significantly, with a decrease of approximately 70% in Q3 2022 compared to the same quarter in the previous year [34] - The total investment portfolio grew by 6.9% during the third quarter to approximately $4 billion at fair value [35] Company Strategy and Development Direction - The company continues to focus on the underserved lower middle market, targeting a blended internal rate of return in the mid to high teens range through a disciplined mix of debt and equity investments [30] - The company is optimistic about future follow-on investments in existing portfolio companies, indicating strong relationships with management teams [55] - The company plans to recommend future supplemental dividends if DNII significantly exceeds monthly dividends in upcoming quarters [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the investment portfolio and the favorable investment environment, expecting another strong quarter in Q4 2022 with anticipated DNII per share exceeding $0.90 [49] - The company noted that the current market dynamics have created attractive opportunities for deploying capital, particularly in the lower middle market and private loan sectors [26][28] Other Important Information - The company declared a supplemental dividend of $0.10 per share payable in December and increased monthly dividends for Q1 2023 to $0.225 per share, representing a 4.7% increase from Q1 2022 [18] - The company raised $105 million through equity capital during the quarter, enhancing its capital structure [45] Q&A Session Summary Question: What drove the unrealized gains in the lower middle market portfolio? - Management indicated that several companies performed well and improved their capital structures, leading to positive valuations [53] Question: Are there opportunities for follow-on investments in the current macro environment? - Management expressed confidence in existing lower middle market companies and indicated that a significant portion of the current investment pipeline consists of follow-on investments in these companies [55]

Table of contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from: to Commission File Number: 001-33723 Main Street Capital Corporation (Exact name of registrant as specified in its charter) (State or o ...

Main Street Capital Corporation (NYSE:MAIN) Q2 2022 Earnings Conference Call August 5, 2022 10:00 AM ET Company Participants Zach Vaughan - Investor Relations Dwayne Hyzak - Chief Executive Officer David Magdol - President and Chief Investment Officer Jesse Morris - Chief Financial Officer and Chief Operating Officer Nick Meserve - Managing Director and Head, Private Credit Investment Group Conference Call Participants Kenneth Lee - RBC Capital Markets Operator Greetings, and welcome to the Main Street Capi ...

Investment Strategy and Portfolio - The company aims to maximize total return through current income from debt investments and capital appreciation from equity investments, targeting lower middle market (LMM) companies with annual revenues between $10 million and $150 million [364]. - The company’s LMM portfolio investments generally range in size from $5 million to $75 million, while Middle Market investments range from $3 million to $25 million [364]. - The company’s investment strategies include filling the financing gap for LMM businesses, which historically have had limited access to traditional financing sources [365]. - As of June 30, 2022, the fair value of the LMM portfolio was $1,816.3 million, the Private Loan portfolio was $1,309.0 million, and the Middle Market portfolio was $363.5 million [382]. - The number of portfolio companies as of June 30, 2022, included 75 in LMM, 82 in Private Loan, and 34 in Middle Market [382]. - The average EBITDA for the LMM portfolio was $7.5 million, for the Private Loan portfolio was $41.2 million, and for the Middle Market portfolio was $71.4 million as of June 30, 2022 [382]. Financial Performance - Total investment income for Q2 2022 was $85.2 million, a 27% increase from $67.3 million in Q2 2021 [412]. - Net investment income for Q2 2022 increased 29% to $54.7 million, or $0.75 per share, compared to $42.4 million, or $0.62 per share, in Q2 2021 [417]. - Distributable net investment income for Q2 2022 rose 29% to $58.3 million, or $0.80 per share, compared to $45.2 million, or $0.66 per share, in Q2 2021 [418]. - Total investment income for the six months ended June 30, 2022, was $164.6 million, a 27% increase from $130.1 million in the same period of 2021 [429]. - Net investment income for the six months ended June 30, 2022 increased 30% to $106.9 million, or $1.47 per share, compared to $82.1 million, or $1.20 per share, for the same period in 2021 [434]. - Distributable net investment income for the six months ended June 30, 2022 increased 30% to $113.4 million, or $1.56 per share, compared with $87.2 million, or $1.28 per share, in the corresponding period of 2021 [435]. Expenses and Costs - The ratio of total operating expenses, excluding interest expense, as a percentage of quarterly average total assets was 1.5% for the trailing twelve months ended June 30, 2022 [373]. - Total expenses for Q2 2022 were $30.5 million, a 22% increase from $24.9 million in Q2 2021 [414]. - Employee compensation expenses increased by 60% to $10.0 million in Q2 2022 from $6.3 million in Q2 2021 [414]. - Total expenses for the six months ended June 30, 2022, were $57.7 million, reflecting a 20% increase from $48.0 million in the corresponding period of 2021 [432]. Investment Manager and Fees - The total contribution to net investment income from the External Investment Manager was $5.2 million for the three months ended June 30, 2022, compared to $3.8 million for the same period in 2021 [377]. - The External Investment Manager earned base management fee income of $5.4 million during the three months ended June 30, 2022, up from $4.2 million in the same period of 2021 [377]. - The company’s total expenses allocated to the External Investment Manager were $3.5 million for the three months ended June 30, 2022, compared to $2.6 million for the same period in 2021 [379]. Debt and Financing - The company anticipates funding its investment activities through existing cash, cash flows, available borrowings, and future issuances of debt and equity capital [462]. - The Credit Facility included total commitments of $855.0 million from 18 lenders, with a maturity date in April 2026 [448]. - The company had $350.0 million of outstanding SBIC debentures guaranteed by the SBA as of June 30, 2022, with a weighted-average annual fixed interest rate of 2.9% [449]. - The company had $380.0 million in borrowings outstanding under its Credit Facility, which is set to mature in April 2026 [473]. Dividend and Shareholder Returns - The company declared a supplemental cash dividend of $0.10 per share in August 2022, in addition to regular monthly dividends totaling $0.645 per share for Q3 2022 [484]. - Regular monthly dividends of $0.22 per share were declared for Q4 2022, representing a 4.8% increase from the previous year, totaling $0.66 per share for the quarter [485]. Market and Economic Conditions - The company intends to grow its portfolio and investment income over the long term, despite potential limitations during depressed economic periods [372]. - The company is monitoring the impact of interest rate changes on its overall financial performance [491].