Monroe Capital(US:MRCC)2019-05-08 21:51Financial Data and Key Metrics Changes - The company generated adjusted net investment income of $0.35 per share, consistent with the first quarter dividend of $0.35 per share, marking the 20th consecutive quarter of dividend coverage by adjusted net investment income [7] - The investment portfolio had a fair value of $596.9 million, an increase of $43.3 million or 8% from the prior quarter [8] - Net asset value (NAV) increased to $259.1 million from $258.8 million, with NAV per share rising from $12.66 to $12.67 [23] Business Line Data and Key Metrics Changes - The company funded $70.1 million in new investments during the quarter, offset by $20.1 million in sales, repayments, and prepayment activity [8] - The investment manager platform had a record first quarter with over $1 billion in senior secured debt funded across 26 transactions [10] - The SLF experienced portfolio growth to $191.2 million, a nearly 10% increase from the previous quarter [15] Market Data and Key Metrics Changes - The company reported that 93.4% of its portfolio consists of secured loans, with approximately 90% being first lien secured loans [14] - The weighted average yield in the SLF portfolio remained stable at 7.6% compared to the previous quarter [15] Company Strategy and Development Direction - The company aims to leverage its proprietary deal origination capabilities and broad industry coverage to drive portfolio growth [9] - The recent amendment to the revolving credit facility is expected to provide additional borrowing capacity and regulatory relief, enhancing growth opportunities [18] - The company is positioned to take advantage of both organic and inorganic growth opportunities in the future [19] Management's Comments on Operating Environment and Future Outlook - Management noted that the competitive environment has intensified, with increased leverage and lower pricing in the market, but emphasized the importance of maintaining disciplined underwriting standards [42][51] - The company expects to continue its investment momentum for the remainder of the year, supported by a robust pipeline of committed and anticipated deals [35] - Management expressed confidence in the stability of the portfolio and the ability to generate consistent cash flow for shareholders [80] Other Important Information - The company completed a registered direct offering of $40 million in additional principal amount of its 5.75% notes due in 2023, bringing the total outstanding to $109 million [12] - The company has approximately $109 million of capacity under its revolving credit facility as of March 31 [30] Q&A Session Summary Question: Can you expand on the competitive environment? - Management acknowledged increased competition and capital raising in the market, leading to higher leverage and lower pricing, but emphasized their disciplined approach to underwriting [42][51] Question: Can you size your pipeline today? - Management indicated a significant pipeline with a mix of sponsor and non-sponsor transactions, currently leaning towards 80% sponsor due to favorable market conditions [60] Question: What is your feel on the quality of the portfolio today? - Management expressed comfort with the stability of the portfolio and noted no changes in non-accrual status during the period [80][86] Question: What is the plan for the new bank credit facility? - Management stated that the $400 million facility will be used as the primary funding vehicle for growth, with flexibility to consider additional financing options as needed [111][112]