MSCC(US:MAIN)2022-08-05 14:52Investment 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].