Morgan Stanley Direct Lending Fund(MSDL) - 2025 Q1 - Quarterly Results

Company Announcement & Quarterly Highlights This section provides an overview of Morgan Stanley Direct Lending Fund's first-quarter financial results, dividend declaration, and key operational metrics Announcement Morgan Stanley Direct Lending Fund (MSDL) announced its first-quarter financial results for March 31, 2025, and declared a regular dividend of $0.50 per share for Q2 2025 - Morgan Stanley Direct Lending Fund (MSDL) announced its first-quarter financial results for March 31, 2025[1][2] - The company's Board of Directors declared a regular dividend of $0.50 per share for the second quarter of 2025[1][7] Quarterly Financial Highlights The company reported key financial metrics for the first quarter ended March 31, 2025, including per share net investment income, earnings, dividends, and balance sheet data Key Financial Metrics | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Per Share Information | | | | Net Investment Income per share | $0.52 | $0.57 | | Net Realized and Unrealized Gain (Loss) per share | ($0.18) | $0.01 | | Earnings per share | $0.34 | $0.58 | | Regular Dividend per share | $0.50 | $0.50 | | Special Dividend per share | — | $0.10 | | Balance Sheet Information (in thousands) | | | | Investments (at fair value) | $3,788,178 | $3,791,494 | | Total Debt (at principal) | $2,013,588 | $1,983,401 | | Net Assets | $1,817,807 | $1,842,156 | | Net Asset Value per share | $20.65 | $20.81 | | Debt to Equity Ratio | 1.11x | 1.08x | | Net Debt to Equity Ratio | 1.07x | 1.04x | Key Operational Highlights This quarter saw a decrease in net investment income and NAV per share, a slight increase in the debt-to-equity ratio, new investment commitments, and the establishment of an ATM offering program - Net investment income was $46.2 million, or $0.52 per share, down from $50.7 million or $0.57 per share in the prior quarter[7] - Net asset value per share was $20.65, a decrease from $20.81 as of December 31, 2024[7] - The debt-to-equity ratio was 1.11x, up from 1.08x as of December 31, 2024[7] - New investment commitments totaled $233.4 million, fundings were $205.6 million, and sales and repayments were $201.8 million, resulting in $3.8 million of net capital deployed[7] - The company established an At-The-Market (ATM) offering program to sell common stock with an aggregate offering price of up to $300 million[7] Detailed Financial Results This section presents a comprehensive review of the company's operating performance, investment portfolio, and capital and liquidity position for the reporting period Results of Operations Total investment income slightly decreased this quarter due to lower benchmark rates, partially offset by higher repayment-related income, while total net expenses increased primarily from higher management and incentive fees Investment Income and Expenses Total investment income for the quarter decreased slightly due to lower benchmark rates, while total net expenses increased primarily from the end of fee waiver periods - Total investment income for the quarter ended March 31, 2025, was $101.5 million, down from $103.0 million for the quarter ended December 31, 2024, primarily due to lower benchmark rates, partially offset by higher repayment-related income[6] - Total net expenses for the quarter ended March 31, 2025, were $55.2 million, up from $52.3 million for the quarter ended December 31, 2024, mainly due to increased management and incentive fees after the expiration of fee waivers[7] Net Investment Income and Earnings Net investment income and earnings per share decreased this quarter, primarily due to a net unrealized depreciation in investments, partially offset by net realized gains Net Investment Income and Earnings (in millions) | Metric | Quarter Ended March 31, 2025 | Quarter Ended December 31, 2024 | | :--- | :--- | :--- | | Net Investment Income | $46.2 | $50.7 | | Net Investment Income per share | $0.52 | $0.57 | | Net Realized Gains | $0.5 | — | | Net Unrealized Depreciation | $17.1 | — | - Net unrealized depreciation on investments for the quarter ended March 31, 2025, was $17.1 million, partially offset by $0.5 million in net realized gains[9] Portfolio and Investment Activity As of March 31, 2025, the company's investment portfolio fair value was approximately $3.8 billion, predominantly composed of first lien debt, with increased new investment commitments and fundings, and a slight decrease in weighted average yield - As of March 31, 2025, the company's investment portfolio had a fair value of approximately $3.8 billion, comprising 210 portfolio companies across 34 industries, with an average investment size of $18 million[10] Investment Type Distribution | Investment Type | March 31, 2025 (% of Total) | December 31, 2024 (% of Total) | | :--- | :--- | :--- | | First Lien Debt | 96.3% | 96.5% | | Second Lien Debt | 1.9% | 1.8% | | Other Debt Investments | 0.3% | 0.2% | | Equity | 1.5% | 1.5% | | Total | 100.0% | 100.0% | Investment Activity (in thousands) | Investment Activity | Three Months Ended March 31, 2025 | Three Months Ended December 31, 2024 | | :--- | :--- | :--- | | New Investment Commitments (at par) | $233,368 | $188,269 | | Investment Fundings | $205,647 | $187,324 | | Number of New Portfolio Companies | 9 | 10 | | Number of Companies Exited or Fully Repaid | 7 | 2 | - The weighted average yield on debt securities at amortized cost and fair value was 10.2% and 10.3% respectively as of March 31, 2025, down from 10.4% and 10.5% as of December 31, 2024[10] - Floating rate debt investments constituted 99.6% of the total portfolio at fair value as of March 31, 2025, consistent with the prior quarter, with certain investments in two portfolio companies on non-accrual status, representing 0.2% of total investments at amortized cost[10] Capital and Liquidity As of March 31, 2025, the company's total debt principal was $2.0136 billion, with a revised Truist credit facility extending maturity and increasing the total commitment, ensuring ample liquidity - As of March 31, 2025, the company's total debt principal was $2.0136 billion[11] - On February 25, 2025, the company amended its Truist credit facility, extending the maturity to February 2030, increasing the total commitment to $1.45 billion, and reducing the spread to 1.775%[11] - The weighted average interest rate on debt was 6.11% as of March 31, 2025[11] - As of March 31, 2025, the company had $1.0841 billion available under its credit facilities and $65.6 million in unrestricted cash[11] Debt to Equity Ratio | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Debt to Equity Ratio | 1.11x | 1.08x | Shareholder & Corporate Actions This section details the company's share repurchase program, the establishment of an At-The-Market offering plan, and the latest dividend declaration Share Repurchase Program The Board of Directors approved a revised $100 million share repurchase program, and the company repurchased a portion of its shares during the quarter - On February 27, 2025, the Board of Directors approved an amended and restated share repurchase program for up to $100 million (excluding prior repurchases)[13] - For the three months ended March 31, 2025, the company repurchased 491,332 shares at an average price of $20.38 per share[13] At-The-Market (ATM) Offering The company established an ATM offering program for up to $300 million in common stock but did not issue any shares through this program in Q1 2025 - On March 28, 2025, the company entered into an equity distribution agreement to sell common stock with an aggregate offering price of up to $300 million[14] - No shares were issued under the ATM offering program for the three months ended March 31, 2025[15] Dividend Declaration The Board of Directors declared a regular dividend of $0.50 per share on May 8, 2025, payable on July 25, 2025, to shareholders of record as of June 30, 2025 - On May 8, 2025, the Board of Directors declared a regular dividend of $0.50 per share[16] - This dividend is payable on July 25, 2025, to shareholders of record as of June 30, 2025[16] Additional Information This section provides background on Morgan Stanley Direct Lending Fund, details for the upcoming conference call, forward-looking statement disclaimers, and contact information About Morgan Stanley Direct Lending Fund Morgan Stanley Direct Lending Fund (MSDL) is a non-diversified, externally managed specialty finance company focused on lending to middle-market companies, regulated as a business development company - MSDL is a non-diversified, externally managed specialty finance company focused on providing loans to middle-market companies[18] - MSDL has elected to be regulated as a Business Development Company (BDC) under the Investment Company Act of 1940, as amended[18] - MSDL is externally managed by MS Capital Partners Adviser Inc., an indirect wholly-owned subsidiary of Morgan Stanley[18] Conference Call Information The company will host a conference call on May 9, 2025, to discuss financial results and conduct a Q&A session, offering both dial-in and webcast options - Morgan Stanley Direct Lending Fund will host a conference call on May 9, 2025, at 10:00 AM ET, to review its financial results and conduct a question-and-answer session[17] - Participants can join via an audio webcast or by dialing domestic/international numbers (Domestic: 323-994-2093, International: 888-254-3590, Passcode: 221038)[17][20] Forward-Looking Statements The report contains forward-looking statements regarding future events or MSDL's performance and financial condition, which are subject to various risks and uncertainties - Statements in the report may constitute "forward-looking statements" concerning future events or MSDL's future performance or financial condition[19] - These statements are not guarantees of future performance, condition, or results and involve a number of risks and uncertainties[19] - MSDL undertakes no obligation to update any forward-looking statements[19] Contacts Investor and media contact information is provided for inquiries - Investor Contact: Sanna Johnson (msdl@morganstanley.com)[22] - Media Contact: Alyson Barnes (212-762-0514, alyson.barnes@morganstanley.com)[22] Consolidated Financial Statements This section presents the company's consolidated balance sheets and statements of operations, providing a detailed view of its financial position and performance Consolidated Statements of Assets and Liabilities The consolidated balance sheet as of March 31, 2025, and December 31, 2024, details the company's assets, liabilities, and net assets, including investments, cash, debt, and equity Consolidated Statements of Assets and Liabilities (in thousands) | Item | March 31, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Assets | | | | Total Investments (at fair value) | $3,788,178 | $3,791,494 | | Cash and Cash Equivalents | $69,400 | $72,372 | | Deferred Financing Costs | $19,847 | $16,498 | | Interest and Dividends Receivable | $26,934 | $30,554 | | Other Assets | $7,812 | $1,100 | | Total Assets | $3,912,171 | $3,912,018 | | Liabilities | | | | Debt (net of unamortized issuance costs) | $2,008,946 | $1,973,479 | | Payables for Investments | $2,096 | $192 | | Due to Affiliates | $11 | $29 | | Dividends Payable | $44,103 | $53,229 | | Management Fees Payable | $8,977 | $7,042 | | Incentive Fees Payable | $9,468 | $8,956 | | Payable for Repurchased Shares | $392 | — | | Interest Payable | $16,366 | $21,205 | | Other Liabilities | $4,005 | $5,730 | | Total Liabilities | $2,094,364 | $2,069,862 | | Net Assets | | | | Common Stock | $88 | $89 | | Paid-in Capital in Excess of Par | $1,802,435 | $1,812,443 | | Total Distributable Earnings (Loss) | $15,284 | $29,624 | | Total Net Assets | $1,817,807 | $1,842,156 | | Net Asset Value per share | $20.65 | $20.81 | Consolidated Statements of Operations For the three months ended March 31, 2025, total investment income slightly increased, but higher expenses and net unrealized depreciation led to lower net investment income and net asset increase from operations compared to the prior year Consolidated Statements of Operations (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Investment Income | | | | Total Investment Income | $101,458 | $99,101 | | Expenses | | | | Interest and Other Financing Expenses | $34,179 | $27,260 | | Management Fees | $9,618 | $8,230 | | Incentive Fees | $9,843 | $11,336 | | Fee Waivers | ($1,016) | ($4,308) | | Net Expenses | $54,603 | $44,014 | | Net Investment Income (Loss) Before Taxes | $46,855 | $55,087 | | Excise Tax Expense | $627 | $436 | | Net Investment Income (Loss) After Taxes | $46,228 | $54,651 | | Net Realized and Unrealized Gain (Loss) | | | | Net Realized Gain (Loss) | $549 | ($5,625) | | Net Unrealized Appreciation (Depreciation) | ($17,107) | $2,658 | | Total Net Realized and Unrealized Gain (Loss) | ($16,558) | ($2,967) | | Net Increase (Decrease) in Net Assets Resulting from Operations | $29,670 | $51,684 | | Net Investment Income per share | $0.52 | $0.63 | | Earnings per share | $0.34 | $0.59 | | Weighted Average Shares Outstanding | 88,413,652 | 87,358,527 | - Total investment income for the three months ended March 31, 2025, was $101.5 million, an increase from $99.1 million in the prior year period[26] - Net expenses increased to $54.6 million from $44.0 million in the prior year period, primarily due to higher interest and other financing expenses, increased management fees, and reduced fee waivers[26] - Net investment income after taxes was $46.2 million, lower than $54.7 million in the prior year period[26] - Net unrealized depreciation for the quarter was $17.1 million, compared to net unrealized appreciation of $2.7 million in the prior year period, resulting in a total net realized and unrealized loss of $16.6 million[26]