ICMB Investcorp Credit Management BDC Inc

Investcorp Credit Management BDC, Inc. (NASDAQ: ICMB) (“ICMB” or the “Company”) announced its financial results today for its fiscal quarter ended September 30, 2024.

HIGHLIGHTS

• On November 6, 2024, the Company’s Board of Directors (the “Board”) declared a distribution of $0.12 per share for the quarter ending December 31, 2024, payable in cash on January 8, 2025, to stockholders of record as of December 20, 2024.
• During the quarter, ICMB made investments in three new portfolio companies and three existing portfolio companies. These investments totaled $13.1 million, at cost, of which $0.5 million represents the reinstatement of previously recorded paydowns for interest received from Klein Hersh, LLC while it was on non-accrual status. The weighted average yield (at origination) of debt investments made in the quarter was 10.73%.
• ICMB fully realized its investments in two portfolio companies during the quarter, totaling $13.4 million in proceeds. The internal rate of return on these investments was 11.75%.
• During the quarter, the Company had net repayments of $7,500 on its existing delayed draw and revolving credit commitments to portfolio companies.
• The weighted average yield on debt investments, at cost, for the quarter ended September 30, 2024, was 10.51%, compared to 12.33% for the quarter ended June 30, 2024.
• Net asset value increased $0.34 per share to $5.55, compared to $5.21 as of June 30, 2024. Net assets increased by $4.9 million, or 6.50%, during the quarter ended September 30, 2024 compared to June 30, 2024.

Portfolio results, as of and for the three months ended September 30, 2024:

Total assets

$203.0mm

Investment portfolio, at fair value

$190.1mm

Net assets

 

 

 

$79.89mm

Weighted average yield on debt investments, at cost (1)

 

 

 

10.51%

Net asset value per share

 

 

 

$5.55

Portfolio activity in the current quarter:

 

 

 

 

Number of investments in new portfolio companies during the period

3

Number of portfolio companies invested in, end of period

45

Total capital invested in existing portfolio companies (2)

$4.2mm

Total proceeds from repayments, sales, and amortization (3)

$14.3mm

Net investment income (NII)

$2.3mm

Net investment income per share

$0.16

Net increase in net assets from operations

$6.6mm

Net increase in net assets from operations per share

$0.46

Quarterly per share distribution paid on September 30, 2024

$0.12

(1) Represents weighted average yield on total debt investments for the three months ended September 30, 2024. Weighted average yield on total debt investments is the annualized rate of interest income recognized during the period divided by the average amortized cost of debt investments in the portfolio during the period. The weighted average yield on total debt investments reflected above does not represent actual investment returns to the Company’s stockholders. (2) Includes gross advances to existing revolving credit commitments to portfolio companies and PIK interest. (3) Includes gross repayments on existing delayed draw and revolving credit commitments to portfolio companies.

Mr. Suhail A. Shaikh said “I am pleased to announce that we delivered a strong quarter, reflecting our focus on maintaining a resilient portfolio and capitalizing on selective opportunities in a challenging market environment. Despite economic uncertainties, we are well-positioned to navigate challenges and consistently deliver value to our shareholders.”

The Company’s dividend framework provides a quarterly base dividend and may be supplemented, at the discretion of the Board, by additional dividends as determined to be available by the Company’s net investment income and performance during the quarter.

On November 6, 2024, the Board declared a distribution for the quarter ended December 31, 2024 of $0.12 per share payable on January 8, 2025 to stockholders of record as of December 20, 2024.

This distribution represents a 15.34% yield on the Company’s $3.13 share price as of market close on September 30, 2024. Distributions may include net investment income, capital gains and/or return of capital, however, the Company does not expect the dividend for the quarter ending September 30, 2024, to be comprised of a return of capital. The Company’s investment adviser monitors available taxable earnings, including net investment income and realized capital gains, to determine if a return of capital may occur for the year. The Company estimates the source of its distributions as required by Section 19(a) of the Investment Company Act of 1940 to determine whether payment of dividends are expected to be paid from any other source other than net investment income accrued for the current period or certain cumulative periods, but the Company will not be able to determine whether any specific distribution will be treated as taxable earnings or as a return of capital until after at the end of the taxable year.

Portfolio and Investment Activities

During the quarter, the Company made investments in three new portfolio companies and three existing portfolio companies. The aggregate capital invested during the quarter totaled $13.1 million, at cost, of which $0.5 million represents the reinstatement of previously recorded paydowns for interest received from Klein Hersh, LLC while it was on non-accrual status. The debt investments were made at a weighted average yield of 10.73%.

The Company received proceeds of $14.2 million from repayments, sales and amortization during the quarter, primarily related to the realization of Retail Services WIS Corporation and South Coast Terminals, LLC.

During the quarter, the Company had net repayments of $7,500 on its existing delayed draw and revolving credit commitments to portfolio companies.

The Company’s net realized, and unrealized gains and losses accounted for an increase in the Company’s net investments of approximately $4.3 million, or $0.30 per share. The total net increase in net assets resulting from operations for the quarter was $6.6 million, or $0.46 per share.

As of September 30, 2024, the Company’s investment portfolio consisted of investments in 45 portfolio companies, of which 82.47% were first lien investments and 17.53% were equity, warrants, and other investments. The Company’s debt portfolio consisted of 79.9% floating rate investments and 2.6% fixed rate investments.

Capital Resources

As of September 30, 2024, the Company had $10.1 million in cash, of which $8.3 million was restricted cash, and $52.5 million of unused and available capacity under its revolving credit facility with Capital One, N.A.

Subsequent Events

From October 1, 2024 through November 12, 2024, the Company had advances of $0.5 million on its existing delayed draw credit commitments to portfolio companies. As of November 12, 2024 the Company had investments in 45 portfolio companies.

 

Investcorp Credit Management BDC, Inc. and Subsidiaries Consolidated Statements of Assets and Liabilities

       

 

September 30, 2024 (Unaudited)

 

June 30, 2024

Assets

 

 

 

Non-controlled, non-affiliated investments, at fair value (amortized cost of $186,534,026 and $189,319,802, respectively)

$

186,721,026

 

 

$

181,948,376

 

Non-controlled, affiliated investments, at fair value (amortized cost of $15,170,452

and

 

$15,149,238, respectively)

 

3,421,133

 

 

 

2,621,154

 

Total investments, at fair value (amortized cost of $201,704,478 and

 

$204,469,040, respectively)

 

190,142,159

 

 

 

184,569,530

 

Cash

 

1,748,802

 

 

 

158,768

 

Cash, restricted

 

8,341,711

 

 

 

4,950,036

 

Principal receivable

 

109,826

 

 

 

50,609

 

Interest receivable

 

1,564,642

 

 

 

1,301,516

 

Payment-in-kind interest receivable

 

83,768

 

 

 

66,625

 

Long-term receivable

 

644,831

 

 

 

631,667

 

Escrow receivable

 

99,198

 

 

 

97,173

 

Prepaid expenses and other assets

 

282,217

 

 

 

411,821

 

Total Assets

$

203,017,154

 

 

$

192,237,745

 

Liabilities

 

 

 

Notes payable:

 

 

 

Revolving credit facility

$

47,500,000

 

 

$

43,000,000

 

2026 Notes payable

 

65,000,000

 

 

 

65,000,000

 

Deferred debt issuance costs

 

(1,502,278

)

 

 

(1,654,870

)

Unamortized discount

 

(106,665

)

 

 

(124,443

)

Notes payable, net

 

110,891,057

 

 

 

106,220,687

 

Payable for investments purchased

 

5,188,030

 

 

 

7,425,000

 

Dividend payable

 

1,728,450

 

 

 

—

 

Income-based incentive fees payable

 

630,415

 

 

 

128,876

 

Base management fees payable

 

770,841

 

 

 

816,777

 

Interest payable

 

2,649,596

 

 

 

1,950,925

 

Accrued expenses and other liabilities

 

1,270,377

 

 

 

685,271

 

Total Liabilities

 

123,128,766

 

 

 

117,227,536

 

 

 

 

 

Commitments and Contingencies (see Note 6)

 

 

 

 

 

 

 

Net Assets

 

 

 

Common stock, par value $0.001 per share (100,000,000 shares authorized and 14,403,752

 

and 14,403,752 shares issued and outstanding, respectively)

 

14,404

 

 

 

14,404

 

Additional paid-in capital

 

203,103,263

 

 

 

203,103,263

 

Distributable earnings (loss)

 

(123,229,279

)

 

 

(128,107,458

)

Total Net Assets

 

79,888,388

 

 

 

75,010,209

 

Total Liabilities and Net Assets

$

203,017,154

 

 

$

192,237,745

 

Net Asset Value Per Share

$

5.55

 

 

$

5.21

 

   

Investcorp Credit Management BDC, Inc. and Subsidiaries Consolidated Statements of Operations (unaudited)

   

 

For the three months ended September 30,

 

 

2024

 

 

2023

 

Investment Income:

 

 

Interest income

 

 

Non-controlled, non-affiliated investments

$

4,674,329

 

$

5,465,288

 

Non-controlled, affiliated investments

 

—

 

 

—

 

Total interest income

 

4,674,329

 

 

5,465,288

 

Payment in-kind interest income

 

 

Non-controlled, non-affiliated investments

 

1,859,938

 

 

81,381

 

Non-controlled, affiliated investments

 

20,769

 

 

18,800

 

Total payment-in-kind interest income

 

1,880,707

 

 

100,181

 

Payment in-kind dividend income

 

 

Non-controlled, non-affiliated investments

 

212,979

 

 

188,251

 

Non-controlled, affiliated investments

 

—

 

 

—

 

Total payment-in-kind dividend income

 

212,979

 

 

188,251

 

Other fee income

 

 

Non-controlled, non-affiliated investments

 

78,760

 

 

143,986

 

Non-controlled, affiliated investments

 

—

 

 

—

 

Total other fee income

 

78,760

 

 

143,986

 

Total investment income

 

6,846,775

 

 

5,897,706

 

Expenses:

 

 

Interest expense

 

1,857,409

 

 

2,215,183

 

Base management fees

 

840,459

 

 

978,919

 

Income-based incentive fees

 

501,540

 

 

—

 

Provision for tax expense

 

221,655

 

 

100,747

 

Professional fees

 

394,639

 

 

227,407

 

Allocation of administrative costs from Adviser

 

185,906

 

 

263,375

 

Amortization of deferred debt issuance costs

 

152,591

 

 

173,333

 

Amortization of original issue discount - 2026 Notes

 

17,778

 

 

17,777

 

Insurance expense

 

127,768

 

 

112,984

 

Directors' fees

 

94,529

 

 

73,375

 

Custodian and administrator fees

 

72,123

 

 

69,292

 

Other expenses

 

124,013

 

 

124,277

 

Total expenses

 

4,590,410

 

 

4,356,669

 

Waiver of base management fees

 

(69,578

)

 

(86,630

)

Waiver of income-based incentive fees

 

—

 

 

—

 

Net expenses

 

4,520,832

 

 

4,270,039

 

Net investment income

 

2,325,943

 

 

1,627,667

 

Net realized and unrealized gain/(loss) on investments:

 

 

Net realized gain (loss) from investments

 

 

Non-controlled, non-affiliated investments

 

(4,056,505

)

 

—

 

Non-controlled, affiliated investments

 

—

 

 

—

 

Net realized gain (loss) from investments

 

(4,056,505

)

 

—

 

Net change in unrealized appreciation (depreciation) in value of investments

 

 

Non-controlled, non-affiliated investments

 

7,558,426

 

 

(2,167,498

)

Non-controlled, affiliated investments

 

778,765

 

 

(1,144,531

)

Net change in unrealized appreciation (depreciation) on investments

 

8,337,191

 

 

(3,312,029

)

Total realized gain (loss) and change in unrealized appreciation (depreciation) on investments

 

4,280,686

 

 

(3,312,029

)

Net increase (decrease) in net assets resulting from operations

$

6,606,629

 

$

(1,684,362

)

Basic and diluted:

 

 

Net investment income per share

$

0.16

 

$

0.11

 

Earnings (Loss) per share

$

0.46

 

$

(0.12

)

Weighted average shares of common stock outstanding

 

14,403,752

 

 

14,392,714

 

Distributions paid per common share

$

0.12

 

$

0.15

 

 

About Investcorp Credit Management BDC, Inc.

The Company is an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940. The Company’s investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation through debt and related equity investments by targeting investment opportunities with favorable risk-adjusted returns. The Company seeks to invest primarily in middle-market companies that have annual revenues of at least $50 million and earnings before interest, taxes, depreciation, and amortization of at least $15 million. The Company’s investment activities are managed by its investment adviser, CM Investment Partners LLC. To learn more about Investcorp Credit Management BDC, Inc., please visit www.icmbdc.com.

Forward-Looking Statements

Statements included in this press release and made on the earnings call for the quarter ended September 30, 2024, may contain “forward-looking statements,” which relate to future performance, operating results, events and/or financial condition. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. Any forward-looking statements, including statements other than statements of historical facts, included in this press release or made on the earnings call are based upon current expectations, are inherently uncertain, and involve a number of assumptions and substantial risks and uncertainties, many of which are difficult to predict and are generally beyond the Company’s control.

Investors are cautioned not to place undue reliance on these forward-looking statements. Any such statements are likely to be affected by other unknowable future events and conditions, which the Company may or may not have considered, including, without limitation, changes in base interest rates and the effects of significant market volatility on our business, our portfolio companies, our industry and the global economy. Accordingly, such statements cannot be guarantees or assurances of any aspect of future performance or events. Actual results may differ materially from those anticipated in any forward-looking statements as a result of a number of factors and risks. More information on these risks and other potential factors that could affect actual events and the Company’s performance and financial results, including important factors that could cause actual results to differ materially from plans, estimates or expectations included herein or discussed on the earnings call, is or will be included in the Company’s filings with the Securities and Exchange Commission, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. All forward-looking statements speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

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Investcorp Credit Management BDC, Inc. Investor Relations Email: icmbinvestorrelations@investcorp.com Phone:(646) 690-5047