Financial Data and Key Metrics Changes - Adjusted net investment income for Q4 2024 was $6.2 million or $0.29 per share, a slight decrease from $6.6 million or $0.31 per share in the previous quarter [5][24] - NAV as of December 31, 2024, was $191.8 million or $8.85 per share, down from $198.9 million or $9.18 per share as of September 30, 2024, representing a 3.6% decline [6][26] - The weighted average effective yield on the portfolio's debt and preferred equity investments decreased to 10.2% from 11% in the prior quarter [25] Business Line Data and Key Metrics Changes - The investment portfolio totaled $457 million at year-end, a decrease of $17.3 million from $474.3 million at the end of the last quarter, consisting of debt and equity investments in 91 portfolio companies, down from 94 [17] - In 2024, the company invested $30.4 million in seven new portfolio companies and $57.6 million in existing portfolio companies, with $2.2 million in one new portfolio company and $14.2 million in existing companies during Q4 [21] Market Data and Key Metrics Changes - Middle market direct lending M&A volumes in Q4 2024 saw an 85% year-over-year increase, marking the strongest quarterly results since Q4 2021 [18] - Delayed draw term loan fundings were 2.4 times greater in 2024 than in 2023, indicating a new annual record [19] Company Strategy and Development Direction - The company plans to focus on growing the portfolio and addressing legacy portfolio issues, with expectations to step on the accelerator in 2025 [45] - The strategic partnership with Wendel Group involves a $1 billion commitment to support new and existing investment strategies, with no changes to the investment process or fee structure [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the favorable market outlook, citing lower interest rates and improved economic conditions as supportive of a sustainable deal environment in 2025 [12] - The company aims to leverage its in-house originations platform and rigorous underwriting standards to capitalize on private credit and middle market lending opportunities [12] Other Important Information - Total borrowings as of December 31, 2024, were $293.9 million, with leverage increasing slightly to 1.53 times debt to equity [23] - The company reported a net loss on the portfolio of $7.7 million for the quarter, primarily due to unrealized mark-to-market losses [34] Q&A Session Summary Question: Strategy to grow earnings and portfolio - Management acknowledged the need to clean up legacy portfolio issues and indicated plans to grow the portfolio in 2025 [45] Question: Resolution of non-accrual investments - Management confirmed active efforts to resolve non-accrual investments, including litigation matters, with expectations for progress in 2025 [48] Question: Consideration of swapping bank credit facilities - Management noted that there is significant interest from financial institutions in providing capital for diversified middle market portfolios, and they are always evaluating options for optimizing capital structure [51][55]
Monroe Capital(MRCC) - 2024 Q4 - Earnings Call Transcript