MidCap Financial Investment (MFIC) - 2025 Q3 - Quarterly Results

Executive Summary & Recent Highlights The company reported Q4 2024 financial results, including net investment income of $0.40 per share and a $399 million CLO transaction, reflecting strategic growth and stable credit metrics Financial Performance Highlights MidCap Financial Investment Corporation reported a net investment income of $0.40 per share for Q4 2024, a slight decrease from the previous quarter. The net asset value per share also saw a modest decline to $14.98 | Metric | Q4 2024 | Q3 2024 | Change (QoQ) | | :-------------------------- | :------ | :------ | :----------- | | Net Investment Income per share | $0.40 | $0.44 | -$0.04 | | Net Asset Value (NAV) per share | $14.98 | $15.10 | -$0.12 | - NAV per share decreased by 0.8% from September 30, 2024, to December 31, 2024[3] - The Board declared a dividend of $0.38 per share payable on March 27, 2025[3] Strategic & Operational Highlights The company made significant new investment commitments totaling $255 million and gross fundings of $248 million during the quarter. Net leverage remained stable at 1.16x. A key strategic move was the closing of a second Collateralized Loan Obligation (CLO) transaction, MFIC Bethesda CLO 2 LLC, securing $399.0 million in debt capital | Metric | Q4 2024 (in millions) | | :-------------------------- | :-------------------- | | New Investment Commitments | $255 | | Gross Fundings (excl. revolvers) | $248 | | Net Repayments (incl. revolvers) | $6 | | Net Leverage Ratio | 1.16x | - The company closed its second CLO transaction, MFIC Bethesda CLO 2 LLC, a $529.6 million CLO secured by middle market loans, adding $399.0 million of secured debt capital with a weighted average price of SOFR + 161 basis points[3] - Direct origination revolver fundings totaled $55 million, and repayments totaled $56 million during the quarter[5] Management Commentary CEO Tanner Powell highlighted solid net investment income despite lower fee income and base rates, noting the strong performance of the portfolio and stability in credit metrics. He emphasized the advantage of MidCap Financial's loan origination and the strategy to gradually increase leverage. CFO Gregory W. Hunt praised the successful closing of the second CLO transaction, citing its attractive term-based financing and high quality of underlying loans - CEO noted solid net investment income despite modest fee income and lower base rates, with the vast majority of the portfolio performing well and stability in credit metrics[4] - The company benefits from MidCap Financial's deal sourcing advantage and observed a modest increase in spreads on new commitments[4] - CFO highlighted the second on-balance sheet CLO transaction as adding attractive term-based financing at tight levels, reflecting the high quality of underlying loans[4] Financial Highlights & Key Metrics The company's financial position as of December 31, 2024, includes $3.19 billion in assets, $37.1 million in Q4 net investment income, and $303.5 million in new investments Balance Sheet Overview As of December 31, 2024, the company's total assets were $3.19 billion, with an investment portfolio valued at $3.01 billion. Net assets stood at $1.40 billion, resulting in a net asset value per share of $14.98. The debt-to-equity ratio remained stable at 1.25x | Metric ($ in billions) | Dec 31, 2024 | Sep 30, 2024 | Change (QoQ) | | :--------------------- | :----------- | :----------- | :----------- | | Total assets | $3.19 | $3.22 | -$0.03 | | Investment portfolio | $3.01 | $3.03 | -$0.02 | | Debt outstanding | $1.75 | $1.77 | -$0.02 | | Net assets | $1.40 | $1.42 | -$0.02 | | Net asset value per share | $14.98 | $15.10 | -$0.12 | | Debt-to-equity ratio | 1.25x | 1.25x | 0.00x | | Net leverage ratio | 1.16x | 1.16x | 0.00x | Operating Results For the quarter ended December 31, 2024, net investment income was $37.1 million, an increase from $29.8 million in the prior year quarter. However, net realized and unrealized losses impacted the net increase in net assets, which was $24.1 million for the quarter and $98.8 million for the full year 2024 | Metric (in millions) | Q4 2024 | Q4 2023 | Change (YoY) | FY 2024 | FY 2023 | Change (YoY) | | :----------------------------------- | :------ | :------ | :----------- | :------ | :------ | :----------- | | Net investment income | $37.1 | $29.8 | +$7.3 | $133.3 | $116.0 | +$17.3 | | Net realized and change in unrealized gains (losses) | ($13.0) | $3.5 | -$16.5 | ($34.5) | $2.8 | -$37.3 | | Net increase in net assets resulting from operations | $24.1 | $33.3 | -$9.2 | $98.8 | $118.8 | -$20.0 | | Earnings per share — basic | $0.26 | $0.51 | -$0.25 | $1.27 | $1.82 | -$0.55 | Portfolio and Investment Activity The company made $303.5 million in investments during Q4 2024, significantly higher than the $134.1 million in Q4 2023. Net investment activity for the quarter was a negative $6.4 million due to higher repayments. For the full year 2024, net investment activity was $684.6 million, with the number of portfolio companies increasing to 233 | Metric (in millions) | Q4 2024 | Q4 2023 | Change (YoY) | FY 2024 | FY 2023 | Change (YoY) | | :-------------------------------- | :------ | :------ | :----------- | :------ | :------ | :----------- | | Investments made in portfolio companies | $303.5 | $134.1 | +$169.4 | $1,613.6| $417.1 | +$1,196.5 |\n| Investments sold | ($82.9) | — | ($82.9) | ($271.5)| — | ($271.5) | | Investments repaid | ($226.9)| ($180.7)| -$46.2 | ($657.5)| ($504.3)| -$153.2 | | Net investment activity | ($6.4) | ($46.5) | +$40.1 | $684.6 | ($87.2) | +$771.8 | | Portfolio companies at end of period | 233 | 152 | +81 | 233 | 152 | +81 | - The number of investments in new portfolio companies was 11 in Q4 2024, and 167 for the full year 2024[8] Capital Management & Liquidity The company maintained its share repurchase program, reported $1.757 billion in outstanding debt, and completed a $529.6 million CLO transaction Share Repurchase Program The company did not repurchase any shares during the three months ended December 31, 2024. Since the program's inception, 15,593,120 shares have been repurchased for a total cost of $248.1 million, with $26.9 million remaining under the current authorization - No shares were repurchased during the three months ended December 31, 2024[12] - Since inception through February 24, 2025, 15,593,120 shares were repurchased at a weighted average price of $15.91 per share, totaling $248.1 million[12] - A maximum of $26.9 million remains available for future purchases under the $275 million Board authorization[12] Debt and Liquidity Position As of December 31, 2024, the company's total outstanding debt obligations were $1.757 billion, comprising various unsecured notes and amounts outstanding under its multi-currency revolving credit facility. The available commitment under the facility was $682.0 million - Outstanding debt obligations totaled $1.757 billion as of December 31, 2024[14] | Debt Type | Amount (in millions) | Maturity Date | | :-------------------------- | :------------------- | :------------ | | Senior Unsecured Notes (2025) | $350 | March 3, 2025 | | Unsecured Notes (2026) | $125 | July 16, 2026 | | Unsecured Notes (2028) | $80 | Dec 15, 2028 | | Class A-1 Notes (Bethesda CLO 1) | $232 | N/A | | Multi-currency revolving credit facility | $970.1 | N/A | - Available remaining commitment under the multi-currency revolving credit facility was $682.0 million as of December 31, 2024[14] CLO Transaction Details On February 24, 2025, the company completed a $529.6 million CLO transaction (MFIC Bethesda CLO 2 LLC), backed by a diversified portfolio of middle-market commercial loans. The transaction involved various classes of notes with different ratings and interest rates, with the company retaining all Class D and Subordinated Notes. Proceeds were used to repay borrowings under the company's Facility - Completed a $529.6 million CLO transaction (MFIC Bethesda CLO 2 LLC) on February 24, 2025[15] | Class | Par Amount ($ in millions) | % of Capital Structure | Coupon | Expected Rating (S&P/Fitch) | | :---------------- | :------------------------- | :--------------------- | :-------------------- | :-------------------------- | | Class A-1 Notes | $304.50 | 57.5% | 3M SOFR + 1.48% | AAA/AAA | | Class A-2 Notes | $21.00 | 4.0% | 3M SOFR + 1.70% | AAA/NR | | Class B Notes | $31.50 | 5.9% | 3M SOFR + 1.85% | AA/NR | | Class C Notes | $42.00 | 7.9% | 3M SOFR + 2.30% | A/NR | | Class D Notes | $31.50 | 5.9% | 3M SOFR + 3.75% | BBB-/NR | | Subordinated Notes | $99.10 | 18.7% | N/A | NR | - The CLO is backed by a diversified portfolio of middle-market commercial loans, and the company retained all Class D Notes and Subordinated Notes. Proceeds were used to repay borrowings under the Company's Facility[16] Investment Portfolio Analysis The investment portfolio as of December 31, 2024, was 93% secured debt, with a 10.8% weighted average yield for total debt and 99% floating rate Portfolio Composition As of December 31, 2024, the portfolio was predominantly composed of first lien secured debt at 92%, with total secured debt accounting for 93% of the fair value. Common equity/interests and warrants represented 5% of the portfolio | Portfolio Composition (at fair value) | Dec 31, 2024 | Sep 30, 2024 | Dec 31, 2023 | | :------------------------------------ | :----------- | :----------- | :----------- | | First lien secured debt | 92% | 91% | 89% | | Second lien secured debt | 1% | 1% | 1% | | Total secured debt | 93% | 92% | 90% | | Structured products and other | 1% | 2% | 2% | | Preferred equity | 1% | 1% | 1% | | Common equity/interests and warrants | 5% | 5% | 7% | Weighted Average Yields The weighted average yield for first lien secured debt was 10.8% as of December 31, 2024, a slight decrease from 11.1% in the prior quarter. The total debt portfolio yield was 10.8%, and the total portfolio yield was 9.5%. The vast majority (99%) of the portfolio's interest rate type is floating rate | Weighted Average Yields (at amortized cost) | Dec 31, 2024 | Sep 30, 2024 | Dec 31, 2023 | | :------------------------------------------ | :----------- | :----------- | :----------- | | First lien secured debt | 10.8% | 11.1% | 12.1% | | Second lien secured debt | 14.4% | 14.0% | 13.7% | | Total secured debt | 10.8% | 11.1% | 12.1% | | Total debt portfolio | 10.8% | 11.1% | 12.1% | | Total portfolio | 9.5% | 9.6% | 10.1% | - 99% of the total portfolio (at fair value and amortized cost) is comprised of floating rate investments[19] Consolidated Financial Statements The consolidated financial statements show total assets of $3.19 billion and net assets of $1.40 billion, with full-year 2024 net investment income of $133.3 million Consolidated Statements of Assets and Liabilities The consolidated balance sheet shows total assets of $3.19 billion as of December 31, 2024, an increase from $2.50 billion in the prior year. Investments at fair value increased to $3.01 billion. Total liabilities grew to $1.79 billion, primarily due to an increase in debt, while net assets increased to $1.40 billion | Metric (in thousands) | Dec 31, 2024 | Dec 31, 2023 | Change (YoY) | | :------------------------------------ | :----------- | :----------- | :----------- | | Total Assets | $3,190,950 | $2,501,331 | +$689,619 | | Investments at fair value | $3,014,416 | $2,334,199 | +$680,217 | | Cash and cash equivalents | $74,357 | $93,575 | -$19,218 | | Total Liabilities | $1,786,304 | $1,496,021 | +$290,283 | | Debt | $1,751,621 | $1,462,267 | +$289,354 | | Net Assets | $1,404,646 | $1,005,310 | +$399,336 | | Net Asset Value Per Share | $14.98 | $15.41 | -$0.43 | Consolidated Statements of Operations For the year ended December 31, 2024, total investment income increased to $301.8 million from $276.5 million in 2023, driven by higher interest income. Net expenses also increased to $168.5 million. Net investment income for the year was $133.3 million. However, net realized and change in unrealized losses of $34.5 million led to a net increase in net assets from operations of $98.8 million, down from $118.8 million in 2023 | Metric (in thousands) | FY 2024 | FY 2023 | Change (YoY) | | :------------------------------------ | :------ | :------ | :----------- | | Total Investment Income | $301,782| $276,522| +$25,260 | | Total expenses | $169,255| $162,103| +$7,152 | | Net Investment Income | $133,296| $115,999| +$17,297 | | Net Realized and Change in Unrealized Gains (Losses) | ($34,477)| $2,761 | -$37,238 | | Net Increase (Decrease) in Net Assets Resulting from Operations | $98,819 | $118,760| -$19,941 | | Earnings (Loss) Per Share — Basic | $1.27 | $1.82 | -$0.55 | - Interest income from non-controlled/non-affiliated investments increased to $265.2 million in FY2024 from $249.1 million in FY2023[24] - Interest and other debt expenses increased to $116.0 million in FY2024 from $104.2 million in FY2023[24] Company Information & Disclosures This section provides an overview of MidCap Financial Investment Corporation, including its investment objective, important disclosures, conference call details, and investor contact information About MidCap Financial Investment Corporation MidCap Financial Investment Corporation (MFIC) is a closed-end, externally managed business development company (BDC) that has elected to be treated as a regulated investment company (RIC). Its investment objective is to generate current income and long-term capital appreciation, primarily by investing in directly originated first lien senior secured loans to privately held U.S. middle-market companies. The company is managed by an affiliate of Apollo Global Management, Inc - MFIC is a closed-end, externally managed, diversified management investment company treated as a Business Development Company (BDC) and a Regulated Investment Company (RIC)[28] - The investment objective is to generate current income and, to a lesser extent, long-term capital appreciation[28] - Primarily invests in directly originated and privately negotiated first lien senior secured loans to privately held U.S. middle-market companies (generally less than $75 million in EBITDA)[28] Important Information & Forward-Looking Statements The report includes standard disclaimers advising investors to carefully consider investment objectives, risks, charges, and expenses, and to read the prospectus. It also contains forward-looking statements regarding future events, performance, and financial condition, which involve risks and uncertainties and are subject to change based on various factors - Investors are advised to carefully consider investment objectives, risks, charges, and expenses, and to read the prospectus filed with the SEC[25] - Forward-looking statements relate to future events, performance, or financial condition and involve risks and uncertainties, including changes in laws, economic conditions, interest rates, and market outlook[30] - The company assumes no obligation to update forward-looking statements and advises consulting additional disclosures filed with the SEC[30] Conference Call & Supplemental Information The company hosted a conference call on February 26, 2025, to discuss financial results, with a simultaneous webcast available. A replay of the call and webcast was also made available. Supplemental information packages are provided on the company's website for additional transparency - A conference call was held on Wednesday, February 26, 2025, at 8:30 a.m. EST, with telephonic and webcast access[17] - A replay of the event was available telephonically through March 19, 2025, and via audio webcast[17] - Supplemental information packages are available in the Shareholders section of the company's website for more transparency[18] Contact Information Contact information for investor relations is provided for inquiries - Elizabeth Besen is the Investor Relations Manager for MidCap Financial Investment Corporation, with contact details provided[32]