Results for the Quarter Ended September 30, 2023 and Other Recent Highlights:
- Net investment income per share for the quarter was $0.43, compared to $0.44 for the quarter ended June 30, 2023
- Net asset value per share as of the end of the quarter was $15.28, compared to $15.20 as of June 30, 2023, an increase of $0.08 per share primarily due to net investment income in excess of the dividend
- New investment commitments made during the quarter totaled $20 million(1)
- Gross fundings excluding revolver fundings, totaled $16 million and net repayments including revolvers, totaled $43 million for the quarter
- Net leverage(2) was 1.40x as of September 30, 2023
- Declared a dividend of $0.38 per share for the quarter ending September 30, 2023(3)
- On November 2, 2023, the Company completed its inaugural Collateralized Loan Obligation ("CLO") transaction, MFIC Bethesda CLO 1 LLC, a $402 million CLO which is secured by middle market loans
- On November 7, 2023, the Company announced that it has entered into two separate merger agreements with Apollo Senior Floating Ratio Fund Inc. (NYSE:AFT) and Apollo Tactical Fund Inc. (NYSE:AIF) (the "Mergers")(4)
NEW YORK, Nov. 07, 2023 (GLOBE NEWSWIRE) -- MidCap Financial Investment Corporation (NASDAQ:MFIC) or the "Company," today announced financial results for its quarter ended September 30, 2023. The Company's net investment income was $0.43 per share for the quarter ended September 30, 2023, compared to $0.44 per share for the quarter ended June 30, 2023. The Company's net asset value ("NAV") was $15.28 per share as of September 30, 2023, compared to $15.20 as of June 30, 2023.
On November 7, 2023, the Board of Directors (the "Board") declared a dividend of $0.38 per share payable on December 28, 2023 to shareholders of record as of December 12, 2023.
Mr. Tanner Powell, the Company's Chief Executive Officer, commented, "We are pleased to report another strong quarter of results as well as some key strategic initiatives. We are excited to announce transformative merger agreements with two funds managed by Apollo which, if both mergers successfully close, will grow MFIC's net assets by over 40% and will enhance economics for our shareholders. We closed our first CLO transaction which priced favorably compared to other recent middle market CLO's, a reflection of the strong quality of our corporate lending assets." Mr. Powell continued, "We also reported a good quarter including strong net investment income, an increase in net asset value, and continued stable credit quality. It is clear from these results that we are reaping the rewards of our multi-year focus on investing in true first lien middle market loans sourced by MidCap Financial, a leading middle market lender managed by Apollo."
Mr. Gregory W. Hunt, the Company's Chief Financial Officer, said, "We are pleased to announce MFIC's first CLO transaction which closed in early November which enhances our liquidity position with long-term financing and diversifies our sources of funding at an attractive all-in cost. We benefited from MidCap Financial and Apollo Global's experience in CLO management and structuring."
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(1) | Commitments made for the corporate lending portfolio. | |
(2) | The Company's net leverage ratio is defined as debt outstanding plus payable for investments purchased, less receivable for investments sold, less cash and cash equivalents, less foreign currencies, divided by net assets. | |
(3) | The dividend is payable on December 28, 2023 to stockholders of record on December 12, 2023. | |
(4) | The Company has issued a separate press release and posted a presentation on its website which provide additional detail on the merger announcement. The Company's Joint Proxy Statement (as defined below) and Registration Statement (as defined below) that it will file with the SEC in the coming weeks will also contain important information on the Mergers. | |
FINANCIAL HIGHLIGHTS
($ in billions, except per share data) | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | ||||||||||||||
Total assets | $ | 2.46 | $ | 2.50 | $ | 2.49 | $ | 2.53 | $ | 2.57 | |||||||||
Investment portfolio (fair value) | $ | 2.37 | $ | 2.41 | $ | 2.39 | $ | 2.40 | $ | 2.46 | |||||||||
Debt outstanding | $ | 1.43 | $ | 1.48 | $ | 1.47 | $ | 1.48 | $ | 1.50 | |||||||||
Net assets | $ | 0.99 | $ | 0.99 | $ | 0.99 | $ | 0.99 | $ | 1.01 | |||||||||
Net asset value per share | $ | 15.28 | $ | 15.20 | $ | 15.18 | $ | 15.10 | $ | 15.45 | |||||||||
Debt-to-equity ratio | 1.44 x | 1.49 x | 1.48 x | 1.50 x | 1.49 x | ||||||||||||||
Net leverage ratio (1) | 1.40 x | 1.45 x | 1.41 x | 1.41 x | 1.42 x |
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(1) The Company's net leverage ratio is defined as debt outstanding plus payable for investments purchased, less receivable for investments sold, less cash and cash equivalents, less foreign currencies, divided by net assets.
PORTFOLIO AND INVESTMENT ACTIVITY
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in millions)* | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Investments made in portfolio companies | $ | 30.3 | $ | 113.0 | $ | 283.0 | $ | 560.8 | ||||||||
Investments sold | — | — | — | (9.7 | ) | |||||||||||
Net activity before repaid investments | 30.3 | 113.0 | 283.0 | 551.1 | ||||||||||||
Investments repaid | (72.9 | ) | (196.0 | ) | (323.7 | ) | (644.6 | ) | ||||||||
Net investment activity | $ | (42.6 | ) | $ | (82.9 | ) | $ | (40.7 | ) | $ | (93.5 | ) | ||||
Portfolio companies, at beginning of period | 150 | 140 | 135 | 139 | ||||||||||||
Number of investments in new portfolio companies | 2 | 1 | 22 | 14 | ||||||||||||
Number of exited companies | (3 | ) | (5 | ) | (8 | ) | (17 | ) | ||||||||
Portfolio companies at end of period | 149 | 136 | 149 | 136 | ||||||||||||
Number of investments in existing portfolio companies | 32 | 51 | 68 | 82 |
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* Totals may not foot due to rounding.
OPERATING RESULTS
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in millions)* | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Net investment income | $ | 27.9 | $ | 22.6 | $ | 86.2 | $ | 73.0 | ||||||||
Net realized and change in unrealized gains (losses) | 2.1 | (6.6 | ) | (0.7 | ) | (47.1 | ) | |||||||||
Net increase in net assets resulting from operations | $ | 30.0 | $ | 16.0 | $ | 85.5 | $ | 25.9 | ||||||||
(per share)* (1) | ||||||||||||||||
Net investment income on per average share basis | $ | 0.43 | $ | 0.35 | $ | 1.32 | $ | 1.14 | ||||||||
Net realized and change in unrealized gain (loss) per share | 0.03 | (0.10 | ) | (0.01 | ) | (0.74 | ) | |||||||||
Earnings per share — basic | $ | 0.46 | $ | 0.25 | $ | 1.31 | $ | 0.40 |
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* Totals may not foot due to rounding.
(1) Based on the weighted average number of shares outstanding for the period presented.
SHARE REPURCHASE PROGRAM *
During the three months ended September 30, 2023, the Company did not repurchase any shares.
Since the inception of the share repurchase program and through November 6, 2023, the Company repurchased 15,593,120 shares at a weighted average price per share of $15.91, inclusive of commissions, for a total cost of $248.1 million, leaving a maximum of $26.9 million available for future purchases under the current Board authorization of $275 million.
* Share figures have been adjusted for the 1-for-3 reverse stock split which was completed after market close on November 30, 2018.
LIQUIDITY
As of September 30, 2023, the Company's outstanding debt obligations, excluding deferred financing cost and debt discount of $3.4 million, totaled $1.438 billion which was comprised of $350 million of Senior Unsecured Notes (the "2025 Notes") which will mature on March 3, 2025, $125 million of Unsecured Notes (the "2026 Notes") which will mature on July 16, 2026 and $962.9 million outstanding under the multi-currency revolving credit facility (the "Facility"). As of September 30, 2023, $60.6 million in standby letters of credit were issued through the Facility. The available remaining capacity under the Facility was $681.6 million as of September 30, 2023, which is subject to compliance with a borrowing base that applies different advance rates to different types of assets in the Company's portfolio.
On November 2, 2023, the Company completed a $402.36 million term debt securitization (the "2023 Debt Securitization"), a form of secured financing incurred by MFIC Bethesda CLO 1 LLC (the "CLO Issuer"), an indirect wholly owned, consolidated subsidiary of the Company. The notes offered by the CLO Issuer in connection with the 2023 Debt Securitization consist of $232 million of AAA(sf) Class A-1 Senior Secured Floating Rate Notes due 2035, which bear interest at the three-month SOFR plus 2.40%, $16 million of AAA(sf) Class A-2 Senior Secured Floating Rate Notes due 2035, which bear interest at three-month SOFR plus 2.90% and $154.36 million of Subordinated notes due 2135, which do not bear interest. The notes offered in the transaction (the "Notes") are structured as follows:
Class | Par Amount ($ in millions) | % of Capital Structure | Coupon | Expected Rating (S&P/Fitch) | Price |
Class A-1 Notes | $232.00 | 57.7% | 3-month SOFR+ 2.40% | AAA/AAA | 100.00% |
Class A-2 Notes | 16.00 | 4.0% | 3-month SOFR+ 2.90% | AAA/- | 100.00% |
Subordinated Notes | 154.36 | 38.4% | N/A | NR | 100.00% |
Total | $402.36 | ||||
The 2023 Debt Securitization is backed ...