Core Viewpoint - Monroe Capital Corporation reported its financial results for the third quarter of 2025, highlighting a decrease in net investment income and net asset value, while announcing a merger with Horizon Technology Finance Corporation that is expected to close in the first quarter of 2026, aiming to create long-term value for shareholders [3][5][31]. Financial Highlights - Adjusted Net Investment Income for Q3 2025 was $1.9 million, or $0.09 per share, down from $3.3 million, or $0.15 per share in Q2 2025 [5][13]. - Net Asset Value (NAV) decreased to $173.0 million, or $7.99 per share, from $179.6 million, or $8.29 per share in the previous quarter [5][8]. - Total investment income for Q3 2025 was $8.2 million, a decline from $9.9 million in Q2 2025, primarily due to decreases in dividend income and interest income [14][30]. Operational Performance - The company experienced a net loss of $(3.0) million for Q3 2025, compared to a net loss of $(5.2) million in Q2 2025, driven by mark-to-market declines in certain portfolio companies [16][29]. - Total expenses for Q3 2025 were $6.4 million, slightly down from $6.6 million in Q2 2025, mainly due to lower professional fees and management fees [15][30]. Portfolio Overview - As of September 30, 2025, investments at fair value totaled $360.7 million, down from $367.7 million in the previous quarter, with 79 portfolio company investments [7][10]. - The percentage of portfolio company investments on non-accrual status was 3.5%, a slight decrease from 3.6% in the prior quarter [10]. Liquidity and Capital Resources - The company had $3.5 million in cash and cash equivalents and $212.8 million in total debt as of September 30, 2025 [18][26]. - Approximately $92.2 million was available for additional borrowings on its revolving credit facility [18]. Merger and Future Outlook - The anticipated merger with Horizon Technology Finance Corporation is expected to unlock significant value and provide long-term upside for shareholders [3][31].

Financial Data and Key Metrics Changes - The company generated $0.37 per share of net investment income on a GAAP basis and $0.38 after adjusting for asset acquisition accounting [6][11] - The net asset value as of September 30 was $16.36 per share, a slight decrease from $16.43 per share as of June 30 [6][7] - Total investment income for the third quarter was $67 million, consistent with the prior quarter [10] - Total expenses increased slightly to $40 million, primarily due to higher interest expenses [11] Business Line Data and Key Metrics Changes - CGBD funded $260 million of investments into new and existing borrowers, resulting in net investment activity of $117 million after accounting for repayments [7] - Total investments increased from $2.3 billion to $2.4 billion during the quarter [7] - The average exposure to any single portfolio company was less than 1% of total investments, with 95% of investments in senior secured loans [9] Market Data and Key Metrics Changes - Year-over-year deal flow at the top of the funnel increased nearly 30% over the last two months [7] - The weighted average spread for the third quarter was slightly over 500 basis points, down from previous quarters [33] Company Strategy and Development Direction - The company remains focused on providing first lien loans to quality companies and maintaining a diversified portfolio [9][30] - The strategy emphasizes defensive positioning in a tight spread environment, with a continued trend towards first lien debt [30] - The company is building out the Carlyle Direct Lending team to enhance origination capabilities [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the credit quality of the portfolio, noting below-average non-accruals compared to the public BDC average [9] - The company anticipates earnings will trough in the next couple of quarters, with a gradual recovery expected in the second half of 2026 into 2027 [53][55] - Management highlighted the potential for increased deal flow and activity supported by declining base rates and resilient economic growth expectations [8][15] Other Important Information - The board declared a fourth-quarter dividend of $0.40 per share, representing an attractive yield of over 12% based on recent share price [11] - The company has $0.86 per share of spillover income generated over the last five years to support the quarterly dividend [11] Q&A Session Summary Question: Can you provide a bridge on the top line this quarter? - The top line remained at $67 million, with a modest decline primarily due to OID accretion on repaid investments [20] Question: Was the 10 basis points change in borrowing spreads due to the baby bond or other factors? - The change was primarily due to post-quarter end items, including the repayment of the legacy CSL3 facility and the issuance of a new institutional deal [22] Question: Can you elaborate on the $0.40 dividend declaration? - Management is comfortable with the $0.40 dividend in the near term, anticipating earnings to trough in the next couple of quarters [24] Question: Will the concentration of first lien debt continue to increase? - The company does not see compelling opportunities in second liens and expects the portfolio to continue trending towards first lien debt [30] Question: What is the quality of the pipeline in terms of yields and terms? - The pipeline consists of high-quality borrowers, with loan-to-value ratios typically around 38-42%, indicating significant coverage [50] Question: How do the potential second JV and existing JV impact earnings power? - The JVs are expected to take time to scale up and will not have a near-term impact on earnings power [53]

Core Insights - Saratoga Investment Corp. reported a 3.6% increase in Net Asset Value (NAV) and a 0.4% increase in NAV per share from the previous quarter, reflecting strong financial performance [1][3] - The company achieved a quarterly Return on Equity (ROE) of 13.8%, resulting in a Last Twelve Months (LTM) ROE of 9.1%, which surpasses the Business Development Company (BDC) industry average of 7.3% [1][3] - The Zollege investment has returned to accrual status, with only one investment remaining on non-accrual status, representing 0.2% of the portfolio at fair value [1][4] Financial Performance - As of August 31, 2025, total assets under management (AUM) were $995.3 million, a decrease of 4.4% year-over-year but an increase of 2.8% from the previous quarter [2][5] - Total investment income for the quarter was $30.6 million, down 28.8% from $43.0 million year-over-year and down 5.2% from $32.3 million in the previous quarter [5][6] - Net Investment Income (NII) per share was $0.58, reflecting a decrease from $1.33 year-over-year and $0.66 from the previous quarter [2][5] - Earnings per share (EPS) for the quarter was $0.84, compared to $0.97 in the same quarter last year [2][5] Portfolio and Investment Activity - The fair value of the portfolio increased by $3.8 million during the quarter, with the core non-CLO portfolio marked up by $3.9 million [4][6] - The company originated $52.2 million in new investments during the quarter, while principal repayments totaled $29.8 million [2][5] - The portfolio composition included 84.3% in first lien debt, indicating a focus on high-quality investments [13] Dividend and Shareholder Returns - The company declared a base dividend of $0.75 per share for the third quarter of fiscal 2026, maintaining a strong dividend distribution history [15][16] - The annualized second quarter dividend of $0.75 per share represents a 12.3% yield based on the stock price of $24.41 as of October 6, 2025 [2][4] Liquidity and Capital Resources - As of August 31, 2025, the company had $200.8 million in cash and cash equivalents, providing a strong liquidity position [4][14] - The total undrawn borrowing capacity, including cash and credit facilities, amounted to $406.8 million, enhancing the company's ability to pursue new investments [14]

Core Insights - Saratoga Investment Corp. reported a 17.9% increase in adjusted net investment income (NII) per share and a 0.9% increase in net asset value (NAV) from the previous quarter, with a quarterly return on equity (ROE) of 14.1%, generating a last twelve months (LTM) ROE of 9.3%, surpassing the BDC industry average of 7.0% [1][2][4] Financial Performance - As of May 31, 2025, assets under management (AUM) were $968.3 million, down 11.6% from $1.095 billion a year earlier and down 1.0% from $978.1 million in the previous quarter [4] - Total investment income for the quarter was $32.3 million, a decrease of 16.4% from $38.7 million year-over-year but an increase of 3.3% from $31.3 million in the previous quarter [4][6] - NAV increased to $396.4 million, up $28.5 million from $367.9 million a year ago and up $3.7 million from $392.7 million in the previous quarter [4][6] - Adjusted NII for the quarter was $10.1 million, a decrease of 29.3% from $14.3 million year-over-year but an increase of 26.2% from $8.0 million in the previous quarter [6][4] Investment Activity - The company originated $50.1 million in new investments during the quarter, including two new portfolio companies and six follow-on investments [4][6] - Principal repayments totaled $64.3 million, which included one equity realization and multiple full and partial repayments of existing investments [4][6] - The fair value of the portfolio increased by $3.8 million during the quarter, with net realized gains of $2.9 million [4][6] Dividend and Shareholder Returns - The company declared a base dividend of $0.75 per share for the second quarter of fiscal 2026, representing an 11.8% yield based on the stock price of $25.44 as of July 7, 2025 [2][4] - The change to monthly dividends resulted in a one-time additional $0.50 per share dividend, increasing total dividends for the quarter to $1.25 per share [3][4] Portfolio Quality and Credit Metrics - The overall credit quality remained steady, with 99.7% of credits rated in the highest category, and only two investments on non-accrual status [4][6] - The portfolio composition consisted of 86.9% first lien term loans, indicating a strong focus on secured investments [4][6] Liquidity and Capital Resources - As of May 31, 2025, the company had $224.3 million in cash and cash equivalents, providing significant liquidity in a volatile macro environment [4][6] - The total undrawn borrowing capacity, including cash and credit facilities, was $430.3 million, allowing for potential new investments or support for existing portfolio companies [4][6]

Financial Performance - Net Investment Income (NII) was $187 million, or $0.67 per share, for the quarter ended March 31, 2025, compared to $171 million, or $0.61 per share, for the previous quarter[2] - Adjusted Net Investment Income (Adjusted NII) was $182 million, or $0.65 per share, for the quarter ended March 31, 2025, compared to $185 million, or $0.66 per share, for the previous quarter[2] - Net Asset Value (NAV) per share as of March 31, 2025, was $23.37, compared to $23.64 as of December 31, 2024[2] - The Adjusted NII / total dividend coverage ratio was 93% for the quarter ended March 31, 2025[2] Investment Activity - New investment fundings in the first quarter were approximately $2 billion[2] - Net investment activity in the first quarter was $881 million, including $290 million of sales to Credit Opportunities Partners JV, LLC (COPJV)[2] Capital Structure and Liquidity - $3.2 billion of liquidity in undrawn debt, cash, and unsettled trades[2] - 54% of drawn leverage was unsecured as of March 31, 2025, and the weighted average effective rate on borrowings was 5.5%[2] - In the first quarter, KKR FSK CLO 2 was closed, issuing $380 million of notes to third parties at a weighted average rate of S+1.58%[2] - 89% of liabilities mature in 2027 and beyond[2] Portfolio Composition - The fair value of investments was $14.1 billion with 224 portfolio companies[9] - Senior secured investments total 72.6% of the portfolio, looking through to the investments in COPJV as of March 31, 2025[14]

Core Viewpoint - Monroe Capital Corporation reported its financial results for the first quarter of 2025, highlighting a decrease in net investment income and net asset value, while maintaining a strong dividend yield supported by prior performance [1][3][5]. Financial Highlights - The company paid a dividend of $0.25 per share, reflecting an annualized yield of approximately 14.3% [3][4]. - Adjusted Net Investment Income (NII) for Q1 2025 was $4.2 million, or $0.19 per share, down from $6.2 million, or $0.29 per share in Q4 2024 [5][12]. - Net Asset Value (NAV) decreased by 2.5% to $186.9 million, or $8.63 per share, compared to $191.8 million, or $8.85 per share at the end of 2024 [5][8]. Portfolio and Investment Performance - Total investments at fair value were $430.6 million as of March 31, 2025, down from $457.0 million at the end of 2024 [7][10]. - The number of portfolio company investments decreased from 91 to 85, with 3.4% of these investments on non-accrual status [10][12]. - The weighted average contractual yield was 10.1%, while the effective yield dropped to 9.2% [10]. Debt and Leverage - The company's debt-to-equity leverage decreased from 1.53 times to 1.45 times due to paydowns of the revolving credit facility [6][17]. - As of March 31, 2025, the company had $141.2 million in debt outstanding on its revolving credit facility and $130.0 million on its 2026 Notes [17]. Income and Expenses - Total investment income for Q1 2025 was $11.6 million, down from $14.0 million in Q4 2024, primarily due to lower effective yields and a decrease in average invested assets [13][14]. - Total expenses decreased to $7.6 million from $8.0 million in the previous quarter, attributed to a lower interest rate environment [14][30]. Net Gains and Losses - The net loss for Q1 2025 was $(3.6) million, an improvement from $(7.7) million in Q4 2024, driven by unrealized losses from specific portfolio companies [15][16]. - The net increase in net assets resulting from operations was $0.5 million, or $0.03 per share, compared to a decrease of $(1.7) million, or $(0.08) per share in the previous quarter [16][28].