Investcorp Credit Management BDC(US:ICMB)2025-08-12 22:02PART I. FINANCIAL INFORMATION Item 1. Financial Statements Presents unaudited consolidated financial statements for Q2 and H1 2025, detailing assets, operations, cash flows, and investment schedules Consolidated Statements of Assets and Liabilities Total assets increased to $224.1 million by June 30, 2025, while net assets slightly decreased to $76.0 million, with NAV per share at $5.27 Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total Investments, at fair value | $204.1 | $191.6 | | Total Assets | $224.1 | $206.9 | | Debt, net | $134.4 | $122.0 | | Total Liabilities | $148.1 | $129.2 | | Total Net Assets | $76.0 | $77.6 | | Net Asset Value Per Share | $5.27 | $5.39 | Consolidated Statements of Operations Q2 2025 saw a net decrease in net assets of $0.4 million, an improvement from Q2 2024, driven by a $2.2 million net realized gain Key Operating Results (Unaudited) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Investment Income | $4,545,199 | $5,119,319 | $8,913,963 | $11,737,408 | | Net Investment Income After Taxes | $604,148 | $1,309,102 | $1,207,674 | $3,387,464 | | Net Realized Gain (Loss) | $2,208,625 | $(1,828,530) | $581,343 | $(8,100,498) | | Net Change in Unrealized (Depreciation) | $(3,247,071) | $(1,432,718) | $(17,023) | $5,172,628 | | Net Increase (Decrease) in Net Assets | $(434,298) | $(1,952,146) | $1,771,994 | $459,594 | | Earnings Per Share (Basic & Diluted) | $(0.03) | $(0.14) | $0.12 | $0.03 | Consolidated Statements of Changes in Net Assets Net assets decreased by $1.6 million to $76.0 million for H1 2025, primarily due to stockholder distributions outweighing operational increases Reconciliation of Net Assets (Six Months Ended June 30) | Description | 2025 | 2024 | | :--- | :--- | :--- | | Net Assets at Beginning of Period | $77,602,130 | $78,840,983 | | Net Increase from Operations | $1,771,994 | $459,594 | | Net Decrease from Distributions | $(3,460,353) | $(4,319,679) | | Net Increase from Capital Transactions | $70,453 | $29,311 | | Net Assets at End of Period | $75,984,224 | $75,010,209 | Consolidated Statements of Cash Flows Net cash increased by $5.2 million in H1 2025, driven by financing activities, reversing the prior year's decrease from debt repayments Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash (Used in) Provided by Operating Activities | $(1,641,178) | $24,904,835 | | Net Cash Provided by (Used in) Financing Activities | $6,881,351 | $(34,460,393) | | Net Change in Cash | $5,240,173 | $(9,555,558) | | Cash and Restricted Cash at End of Period | $17,344,720 | $5,108,804 | Consolidated Schedule of Investments The investment portfolio reached $204.1 million by June 30, 2025, primarily in Senior Secured First Lien Debt, with diversified industry concentrations Portfolio Composition by Investment Type (at Fair Value) | Investment Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Senior Secured First Lien Debt | $161,727,463 (79.2%) | $155,530,390 (81.2%) | | Equity, Warrants and Other | $42,403,216 (20.8%) | $36,086,568 (18.8%) | | Total Investments | $204,130,679 | $191,616,958 | - The portfolio is diversified across various industries, with the top three being Professional Services, Insurance, and Containers & Packaging, collectively making up 32.55% of the total portfolio at fair value as of June 30, 2025111 Notes to Unaudited Consolidated Financial Statements Detailed notes cover accounting policies, investment valuation, debt facilities, related-party transactions, and subsequent events like new dividends and share repurchases - The majority of the investment portfolio, $176.3 million out of $204.1 million, is classified as Level 3 in the fair value hierarchy, indicating their valuation is based on significant unobservable inputs117 Outstanding Borrowings as of June 30, 2025 | Facility | Principal Amount | Maturity Date | | :--- | :--- | :--- | | Capital One Revolving Financing | $70.5 million | Jan 17, 2029 | | 4.875% Notes due 2026 | $65.0 million | Apr 1, 2026 | - Subsequent to quarter-end, on August 7, 2025, the Board declared a quarterly distribution of $0.12 per share plus a supplemental distribution of $0.02 per share; a new $5 million share repurchase program was also authorized for one year178179 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, operating results, portfolio composition, investment activity, asset quality, liquidity, and capital resources Portfolio and Investment Activity The $204.1 million investment portfolio, primarily first lien, maintained strong asset quality with 85.5% rated performing at or above expectations - During the six months ended June 30, 2025, the company invested approximately $24.1 million in two new and six existing portfolio companies224 Portfolio Asset Quality by Fair Value | Investment Rating | % of Portfolio (June 30, 2025) | % of Portfolio (Dec 31, 2024) | | :--- | :--- | :--- | | 1 - Above Expectations | 5.7% | 7.1% | | 2 - At Expectations | 79.8% | 74.6% | | 3 - Below Expectations | 10.4% | 14.6% | | 4 - Substantially Below (Return Loss) | 3.4% | 0.0% | | 5 - Substantially Below (Principal Loss) | 0.7% | 3.7% | Results of Operations Total investment income decreased in Q2 and H1 2025 due to lower interest rates, but a significant net realized gain offset some declines - The decrease in investment income for Q2 and H1 2025 compared to 2024 was primarily driven by lower index and interest rates and reduced PIK interest from certain investments following restructurings230236 - A net realized gain of $2.2 million in Q2 2025, mainly from the sale of an equity interest, contrasted sharply with a $1.8 million net realized loss in Q2 2024, which was related to a restructuring233 Liquidity and Capital Resources The company maintains strong liquidity with $2.9 million cash, $14.4 million restricted cash, and $29.5 million available on its credit facility - The company's asset coverage ratio was 156.1% as of June 30, 2025, providing a cushion over the 150% regulatory requirement for BDCs246248 - As of June 30, 2025, the company had unfunded commitments to portfolio companies totaling $5.6 million, an increase from $4.6 million at year-end 2024227256 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is primarily exposed to interest rate risk, with a favorable asset-liability structure benefiting from rising rates - The company is positioned to benefit from rising interest rates due to its asset-liability structure, with a higher proportion of floating-rate assets than floating-rate liabilities261262 Interest Rate Sensitivity Analysis (as of June 30, 2025) | Change in Interest Rates | Estimated Impact on Net Interest Income | | :--- | :--- | | +1.00% | +8.91% | | +2.00% | +17.82% | Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period267 - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls268 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently subject to any material legal proceedings beyond routine litigation incidental to its business - The company is not involved in any material legal proceedings270 Item 1A. Risk Factors No material changes to the previously disclosed risk factors were reported for the six months ended June 30, 2025 - No material changes to risk factors were reported for the six months ended June 30, 2025272 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2025, the company issued 17,169 shares for $47,738 under its dividend reinvestment plan, exempt from registration - In Q2 2025, 17,169 shares were issued via the dividend reinvestment plan for proceeds of $47,738273 Item 5. Other Information No directors or officers adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted or terminated Rule 10b5-1 trading plans during the quarter277 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications and interactive data files