Third Quarter 2023 Net
Investment Income of $0.99 Per
Share
Third Quarter 2023
Distributable Net Investment
Income(1) of $1.04 Per Share
Net Asset Value of $28.33 Per Share
HOUSTON, Nov. 2, 2023
/PRNewswire/ -- Main Street Capital Corporation (NYSE: MAIN) ("Main
Street") is pleased to announce its financial results for the third
quarter ended September 30, 2023.
Third Quarter 2023 Highlights
- Net investment income of $82.2
million (or $0.99 per
share)
- Distributable net investment income(1) of
$86.2 million (or $1.04 per share)
- Total investment income of $123.2
million
- An industry leading position in cost efficiency, with a ratio
of total non-interest operating expenses as a percentage of
quarterly average total assets ("Operating Expenses to Assets
Ratio") of 1.3% on an annualized basis for the quarter and 1.4% for
the trailing twelve-month ("TTM") period ended September 30, 2023
- Net increase in net assets resulting from operations of
$103.3 million, or $1.25 per share
- Return on equity(2) of 17.9% on an annualized basis
for the quarter and 18.2% for the TTM period ended September 30, 2023
- Net asset value of $28.33 per
share at September 30, 2023,
representing an increase of $0.64 per
share, or 2.3%, compared to $27.69
per share at June 30, 2023, and
$1.47 per share, or 5.5%, compared to
$26.86 per share at December 31, 2022
- Declared regular monthly dividends totaling $0.705 per share for the fourth quarter of 2023,
or $0.235 per share for each of
October, November and December 2023,
representing a 6.8% increase from the regular monthly dividends
paid in the fourth quarter of 2022
- Declared and paid a supplemental dividend of $0.275 per share, resulting in total dividends
paid in the third quarter of 2023 of $0.965 per share and representing a 29.5%
increase from the total dividends paid in the third quarter of 2022
and a 7.2% increase from the total dividends paid in the second
quarter of 2023
- Completed $19.6 million in total
lower middle market ("LMM") portfolio investments, which after
aggregate repayments of debt principal and return of invested
equity capital from several LMM portfolio investments resulted in a
net decrease of $5.0 million in the
total cost basis of our LMM investment portfolio
- Completed $134.6 million in total
private loan portfolio investments, which after aggregate
repayments of debt principal from and sale of several private loan
portfolio investments resulted in a net increase of $53.7 million in the total cost basis of our
private loan investment portfolio
- Net decrease of $10.9 million in
the cost basis of our middle market investment portfolio from net
investment activity
- Completed the initial closing of limited partner equity
commitments to a new private fund managed by our External
Investment Manager (as defined below)
- Expanded our total commitments under the Corporate Facility (as
defined in the Liquidity and Capital Resources section
below) from $980.0 million to
$995.0 million
In commenting on Main Street's operating results for the third
quarter of 2023, Dwayne L. Hyzak,
Main Street's Chief Executive Officer, stated, "We are pleased with
our performance in the third quarter, which included continued
strength in the underlying performance of the majority of our lower
middle market and private loan portfolio companies and significant
contributions from our asset management business. Our results were
highlighted by a return on equity of 18%, which highlights the
strength of the current investment income generating capabilities
of our existing investment portfolio and the unique benefits
provided by the equity investments in our lower middle market
investment portfolio and by our asset management business, both of
which also contributed meaningful fair value increases to our third
quarter results. We believe that these results demonstrate the
continued and sustainable strength of our overall platform, the
benefits of our differentiated and diversified investment
strategies, the unique contributions of our asset management
business and the underlying strength and quality of our portfolio
companies. We are also pleased that we were able to significantly
expand our commitments under our credit facilities with the support
of existing and new lender relationships, which we believe is
another testament to the strength of our platform. We continue to
focus on maintaining a conservative capital structure and
significant liquidity as one of our key strengths, and we believe
this strength has us well positioned for the future."
Mr. Hyzak continued, "Based upon this strong performance, our
distributable net investment income in the third quarter exceeded
the monthly dividends paid to our shareholders by 51% and the total
dividends paid to our shareholders by 8%. This performance allowed
us to deliver significant value to our shareholders, while still
conservatively retaining a meaningful portion of our income and
growing our net asset value per share. In addition, our strong
third quarter results and favorable outlook for the fourth quarter
resulted in the declaration of an increase to our monthly dividends
for the first quarter of 2024 and a $0.275 per share supplemental dividend to be paid
in December 2023. This December 2023 supplemental dividend represents
our ninth consecutive quarterly supplemental dividend and will
result in a 29% increase in the total dividends paid in the fourth
quarter of 2023 and a 25% increase in the total dividends paid for
the full year, in both cases when compared to the prior year. We
are very pleased to be in the position to provide these significant
increases to our shareholders."
Third Quarter 2023 Operating Results
The following table provides a summary of our operating results
for the third quarter of 2023:
|
Three Months Ended
September 30,
|
|
2023
|
|
2022
|
|
Change
($)
|
|
Change
(%)
|
Interest
income
|
$
99,381
|
|
$
75,023
|
|
$
24,358
|
|
32 %
|
Dividend
income
|
21,192
|
|
19,424
|
|
1,768
|
|
9 %
|
Fee income
|
2,664
|
|
3,940
|
|
(1,276)
|
|
(32) %
|
Total investment
income
|
$ 123,237
|
|
$
98,387
|
|
$
24,850
|
|
25 %
|
|
|
|
|
|
|
|
|
Net investment
income
|
$
82,179
|
|
$
62,448
|
|
$
19,731
|
|
32 %
|
Net investment income
per share
|
$
0.99
|
|
$
0.83
|
|
$
0.16
|
|
19 %
|
|
|
|
|
|
|
|
|
Distributable net
investment income(1)
|
$
86,171
|
|
$
65,767
|
|
$
20,404
|
|
31 %
|
Distributable net
investment income per share(1)
|
$
1.04
|
|
$
0.88
|
|
$
0.16
|
|
18 %
|
|
|
|
|
|
|
|
|
Net increase in net
assets resulting from operations
|
$ 103,261
|
|
$
55,338
|
|
$
47,923
|
|
87 %
|
Net increase in net
assets resulting from operations per share
|
$
1.25
|
|
$
0.74
|
|
$
0.51
|
|
69 %
|
|
|
|
|
|
|
|
|
The $24.9 million increase in
total investment income in the third quarter of 2023 from the
comparable period of the prior year was principally attributable to
(i) a $24.4 million increase in
interest income, primarily due to an increase in interest
rates on floating rate investment portfolio debt investments
primarily resulting from increases in benchmark index rates and
higher average levels of income producing investment portfolio debt
investments and (ii) a $1.8 million
increase in dividend income, primarily due to increased dividend
income from our LMM portfolio companies and an increase in dividend
income from the External Investment Manager, partially offset by a
$1.3 million decrease in fee income.
The $24.9 million increase in total
investment income in the third quarter of 2023 includes consistent
amounts of certain income considered less consistent or
non-recurring, including income from accelerated prepayment,
repricing and other activity related to portfolio debt investments,
when compared to the same period in 2022, and in both periods the
amount of such items was not significant.
Total cash expenses(3) increased $4.4 million,
or 13.6%, to $37.1 million in the
third quarter of 2023 from $32.6
million for the same period in 2022. This increase in total
cash expenses was principally attributable to (i) a $5.2 million increase in interest expense, (ii) a
$1.0 million increase in cash
compensation expenses(3) and (iii) a $0.3 million increase in general and
administrative expense, partially offset by a $2.1 million increase in expenses allocated to
the External Investment Manager. The increase in interest
expense is primarily related to an increased weighted average
interest rate on our debt obligations resulting from an increased
average interest rate on our Credit Facilities (as defined below)
due to increases in benchmark index rates and the addition of our
SPV Facility and the December 2025
Notes (each defined below) at higher contractual interest rates
than debt obligations repaid with such borrowing proceeds,
partially offset by decreased average outstanding borrowings. The
increase in cash compensation expenses(3) is
primarily related to (i) increased base compensation rates,
(ii) increased incentive compensation accruals and (iii) increased
headcount to support our growing investment portfolio and asset
management activities.
Non-cash compensation expenses(3) increased
$0.7 million in the third quarter of
2023 from the comparable period of the prior year, resulting from a
$0.5 million increase in share-based
compensation and a $0.1 million
decrease in deferred compensation benefit.
Our Operating Expenses to Assets Ratio (which includes non-cash
compensation expenses(3)) was 1.3% for the third quarter
of 2023, on an annualized basis, as compared to 1.5% for the same
period in 2022.
The $19.7 million increase in net
investment income and the $20.4
million increase in distributable net investment
income(1) in the third quarter of 2023 from the
comparable period of the prior year were both principally
attributable to the increase in total investment income, partially
offset by increased expenses, each as discussed above.
Net investment income and distributable net investment
income(1) on a per share basis for the third quarter of
2023 each increased by $0.16 per
share, compared to the third quarter of 2022, to $0.99 per share and $1.04 per share, respectively. These increases
include the impact of a 10.5% increase in the average shares
outstanding compared to the third quarter of 2022 primarily due to
shares issued since the beginning of the comparable period in prior
year through our (i) at-the-market ("ATM") equity issuance program
and public offering in August 2022,
(ii) dividend reinvestment plan and (iii) equity incentive plans.
Net investment income and distributable net investment
income(1) on a per share basis in the third quarter of
2023 included consistent amounts of items considered less
consistent or non-recurring in nature as the same period in the
prior year, as discussed above, and in the case of both quarters
the total amount of such items was less than $0.01 per share.
The $103.3 million net increase in
net assets resulting from operations in the third quarter of 2023
represents a $47.9 million increase
from the third quarter of 2022. This increase was primarily the
result of (i) a $37.1 million
increase in net unrealized appreciation from portfolio investments
(including the impact of accounting reversals relating to realized
gains/income (losses)) and (ii) a $19.7
million increase in net investment income as discussed
above, partially offset by (i) a $4.5
million increase in income tax provision and (ii) a
$4.4 million decrease in net realized
gain from investments resulting from a net realized gain
of $0.7 million in the third quarter of 2023 compared to a net
realized gain of $5.0 million in the
third quarter of 2022. The $0.7 million net realized gain from
investments for the third quarter of 2023 was primarily the result
of $1.7 million of realized gains on
two other portfolio investments, partially offset by a realized
loss of $0.9 million on the full exit
of one private loan investment.
The following table provides a summary of the total net
unrealized appreciation of $27.0
million for the third quarter of 2023:
|
Three Months Ended
September 30, 2023
|
|
LMM
(a)
|
|
Private
Loan
|
|
Middle
Market
|
|
Other
|
|
Total
|
|
(dollars in
millions)
|
Accounting reversals of
net unrealized (appreciation)
depreciation recognized
in prior periods due to net
realized (gains /
income) losses recognized during the
current
period
|
$
(0.3)
|
|
$
1.0
|
|
$
0.4
|
|
$
(1.7)
|
|
$
(0.6)
|
Net unrealized
appreciation (depreciation) relating to
portfolio
investments
|
24.5
|
|
(14.3)
|
|
4.0
|
|
13.4
|
(b)
|
$ 27.6
|
Total net unrealized
appreciation (depreciation) relating
to portfolio
investments
|
$ 24.2
|
|
$ (13.3)
|
|
$
4.4
|
|
$ 11.7
|
|
$ 27.0
|
|
|
(a)
|
LMM includes unrealized
appreciation on 32 LMM portfolio investments and unrealized
depreciation on 23 LMM portfolio investments.
|
(b)
|
Other includes (i)
$12.2 million of unrealized appreciation relating to the External
Investment Manager and (ii) $1.4 million of net unrealized
appreciation relating to the other portfolio, partially offset by
$0.2 million of unrealized depreciation relating to Main Street's
deferred compensation plan assets.
|
|
|
Liquidity and Capital Resources
As of September 30, 2023, we had aggregate liquidity of
$834.0 million, including (i)
$77.0 million in cash and cash
equivalents and (ii) $757.0 million
of aggregate unused capacity under our corporate revolving credit
facility (our "Corporate Facility") and our special purpose vehicle
revolving credit facility (our "SPV Facility" and, together with
our Corporate Facility, our "Credit Facilities"), which we maintain
to support our investment and operating activities.
Several details regarding our capital structure as of
September 30, 2023 are as
follows:
- Our Corporate Facility included $995.0
million in total commitments from a diversified group of 18
participating lenders, plus an accordion feature that allows us to
request an increase in the total commitments under the facility to
up to $1.4 billion.
- $323.0 million in outstanding
borrowings under our Corporate Facility, with an interest rate of
7.3% based on SOFR effective for the contractual reset date of
October 1, 2023.
- Our SPV Facility included $255.0
million in total commitments from a diversified group of
four participating lenders, plus an accordion feature that allows
us to request an increase in the total commitments under the
facility to up to $450.0
million.
- $170.0 million in outstanding
borrowings under our SPV Facility, with an interest rate of 7.9%
based on SOFR effective for the contractual reset date of
October 1, 2023.
- $500.0 million of notes
outstanding that bear interest at a rate of 3.00% per year (the
"July 2026 Notes"). The July 2026 Notes mature on July 14, 2026 and may be redeemed in whole or in
part at any time at our option subject to certain make-whole
provisions.
- $450.0 million of notes
outstanding that bear interest at a rate of 5.20% per year (the
"May 2024 Notes"). The May 2024 Notes mature on May 1, 2024 and may be redeemed in whole or in
part at any time at our option subject to certain make-whole
provisions.
- $350.0 million of outstanding
Small Business Investment Company ("SBIC") debentures through our
wholly owned SBIC subsidiaries. These debentures, which are
guaranteed by the U.S. Small Business Administration, had a
weighted-average annual fixed interest rate of 3.0% and mature ten
years from original issuance. The first maturity related to our
existing SBIC debentures occurs in the first quarter of 2024, and
the weighted-average remaining duration was 4.9 years.
- $150.0 million of notes
outstanding that bear interest at a weighted average rate of 7.74%
per year (the "December 2025 Notes").
The December 2025 Notes mature on
December 23, 2025 and may be redeemed
in whole or in part at any time at our option subject to certain
make-whole provisions.
- We maintain investment grade debt ratings from each of Fitch
Ratings and S&P Global Ratings, both of which have assigned us
investment grade corporate and credit ratings of BBB- with a stable
outlook.
- Our net asset value totaled $2.4
billion, or $28.33 per
share.
In October 2023, we expanded our
total commitments under the SPV Facility from $255.0 million to $430.0
million and added two new lender relationships to the SPV
Facility, expanding and diversifying the lender group to six
participating lenders. The commitment increases were executed under
the accordion feature of the SPV Facility.
Investment Portfolio Information as of September 30,
2023(4)
The following table provides a summary of the investments in our
LMM portfolio, private loan portfolio and middle market portfolio
as of September 30, 2023:
|
|
As of September
30, 2023
|
|
|
LMM
(a)
|
|
Private
Loan
|
|
Middle
Market
|
|
|
(dollars in
millions)
|
Number of portfolio
companies
|
|
79
|
|
89
|
|
27
|
Fair value
|
|
$
2,190.4
|
|
$
1,544.0
|
|
$
290.6
|
Cost
|
|
$
1,716.9
|
|
$
1,577.5
|
|
$
343.3
|
Debt investments as a %
of portfolio (at cost)
|
|
71.9 %
|
|
96.2 %
|
|
92.7 %
|
Equity investments as a
% of portfolio (at cost)
|
|
28.1 %
|
|
3.8 %
|
|
7.3 %
|
% of debt investments
at cost secured by first priority lien
|
|
99.2 %
|
|
99.5 %
|
|
99.2 %
|
Weighted-average annual
effective yield (b)
|
|
12.9 %
|
|
12.9 %
|
|
12.3 %
|
Average EBITDA
(c)
|
|
$
8.2
|
|
$
28.8
|
|
$
65.7
|
|
|
(a)
|
We had equity ownership
in all of our LMM portfolio companies, and our average fully
diluted equity ownership in those portfolio companies was
40%.
|
(b)
|
The weighted-average
annual effective yields were computed using the effective interest
rates for all debt investments at cost, including amortization of
deferred debt origination fees and accretion of original issue
discount but excluding fees payable upon repayment of the debt
instruments and any debt investments on non-accrual
status.
|
(c)
|
The average EBITDA is
calculated using a simple average for the LMM portfolio and a
weighted-average for the private loan and middle market portfolios.
These calculations exclude certain portfolio companies, including
two LMM portfolio companies and two private loan portfolio
companies, as EBITDA is not a meaningful valuation metric for our
investments in these portfolio companies, and those portfolio
companies whose primary purpose is to own real estate.
|
|
|
The fair value of our LMM portfolio company equity investments
was 201% of the cost of such equity investments, and our LMM
portfolio companies had a median net senior debt (senior
interest-bearing debt through our debt position less cash and cash
equivalents) to EBITDA (Earnings Before Interest, Taxes,
Depreciation and Amortization) ratio of 2.7 to 1.0 and a median
total EBITDA to senior interest expense ratio of 2.4 to 1.0.
Including all debt that is junior in priority to our debt position,
these median ratios were 2.8 to 1.0 and 2.4 to 1.0,
respectively.(4) (5)
As of September 30, 2023, our
investment portfolio also included:
- Other portfolio investments in 15 entities, collectively
totaling $123.6 million in fair value
and $132.2 million in cost basis,
which comprised 2.9% and 3.5% of our investment portfolio at fair
value and cost, respectively; and
- Our investment in the External Investment Manager, with a fair
value of $146.1 million and a cost
basis of $29.5 million, which
comprised 3.4% and 0.8% of our investment portfolio at fair value
and cost, respectively.
As of September 30, 2023,
non-accrual investments comprised 1.0% of the total investment
portfolio at fair value and 3.1% at cost, and our total portfolio
investments at fair value were 113% of the related cost basis.
External Investment Manager
MSC Adviser I, LLC is our wholly owned portfolio company and
registered investment adviser that provides investment management
services to external parties (the "External Investment Manager").
We share employees with the External Investment Manager and
allocate costs related to such shared employees and other operating
expenses to the External Investment Manager. The total contribution
of the External Investment Manager to our net investment income
consists of the combination of the expenses we allocate to the
External Investment Manager and the dividend income we earn from
the External Investment Manager. During the third quarter of 2023,
the External Investment Manager earned $5.7
million of management fee income, an increase of
$0.2 million from the third quarter
of 2022, and incentive fees of $2.6
million, an increase of $2.8
million from the third quarter of 2022. In addition, we
allocated $5.4 million of total
expenses to the External Investment Manager, an increase of
$2.1 million from the third quarter
of 2022. The increase in management fee income was attributable to
an increase in assets under management. The increase in incentive
fees was attributable to the favorable performance and improved
operating results from the assets managed for clients. The increase
in expenses allocated to the External Investment Manager was
primarily related to increased overall operating costs at Main
Street, an increase in assets under management and the positive
operating results from the assets managed for clients. The
combination of the dividend income we earned from the External
Investment Manager and expenses we allocated to it resulted in a
total contribution to our net investment income of $7.6 million, representing an increase of
$2.6 million from the third quarter
of 2022. During the third quarter, we completed the initial closing
of limited partner equity commitments for a new private fund
managed by our External Investment Manager. This new fund is
exclusively focused on investments in our private loan investment
strategy and provides us an additional opportunity for continued
growth of the benefits from the External Investment Manager. The
External Investment Manager ended the third quarter of 2023 with
total assets under management of $1.5
billion.
Third Quarter 2023 Financial Results Conference Call /
Webcast
Main Street has scheduled a conference call for Friday,
November 3, 2023 at 10:00 a.m. Eastern
Time to discuss the third quarter 2023 financial
results.
You may access the conference call by dialing 412-902-0030 at
least 10 minutes prior to the start time. The conference call can
also be accessed via a simultaneous webcast by logging into the
investor relations section of the Main Street web site at
https://www.mainstcapital.com.
A telephonic replay of the conference call will be available
through Friday, November 10, 2023 and may be accessed by
dialing 201-612-7415 and using the passcode 13741922#. An audio
archive of the conference call will also be available on the
investor relations section of the company's website at
https://www.mainstcapital.com shortly after the call and will be
accessible for approximately 90 days.
For a more detailed discussion of the financial and other
information included in this press release, please refer to the
Main Street Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 2023 to be filed
with the Securities and Exchange Commission (www.sec.gov) and Main
Street's Third Quarter 2023 Investor Presentation to be posted on
the investor relations section of the Main Street website at
https://www.mainstcapital.com.
ABOUT MAIN STREET CAPITAL CORPORATION
Main Street (www.mainstcapital.com) is a principal investment
firm that primarily provides long-term debt and equity capital to
lower middle market companies and debt capital to middle market
companies. Main Street's portfolio investments are typically made
to support management buyouts, recapitalizations, growth
financings, refinancings and acquisitions of companies that operate
in diverse industry sectors. Main Street seeks to partner with
entrepreneurs, business owners and management teams and generally
provides "one stop" financing alternatives within its lower middle
market investment strategy. Main Street's lower middle market
companies generally have annual revenues between $10 million and $150
million. Main Street's middle market debt investments are
made in businesses that are generally larger in size than its lower
middle market portfolio companies.
Main Street, through its wholly-owned portfolio company MSC
Adviser I, LLC ("MSC Adviser"), also maintains an asset management
business through which it manages investments for external parties.
MSC Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended.
FORWARD-LOOKING STATEMENTS
Main Street cautions that statements in this press release which
are forward–looking and provide other than historical information,
including but not limited to our ability to successfully source and
execute on new portfolio investments and delivery of future
financial performance and results, are based on current conditions
and information available to Main Street as of the date hereof and
include statements regarding Main Street's goals, beliefs,
strategies and future operating results and cash flows. Although
its management believes that the expectations reflected in those
forward–looking statements are reasonable, Main Street can give no
assurance that those expectations will prove to be correct. Those
forward-looking statements are made based on various underlying
assumptions and are subject to numerous uncertainties and risks,
including, without limitation: Main Street's continued
effectiveness in raising, investing and managing capital; adverse
changes in the economy generally or in the industries in which Main
Street's portfolio companies operate; the impacts of macroeconomic
factors on Main Street and its portfolio companies' business and
operations, liquidity and access to capital, and on the U.S. and
global economies, including impacts related to pandemics and other
public health crises, risk of recession, inflation, supply chain
constraints or disruptions and changes in market index interest
rates; changes in laws and regulations or business, political
and/or regulatory conditions that may adversely impact Main
Street's operations or the operations of its portfolio companies;
the operating and financial performance of Main Street's portfolio
companies and their access to capital; retention of key investment
personnel; competitive factors; and such other factors described
under the captions "Cautionary Statement Concerning Forward-Looking
Statements" and "Risk Factors" included in Main Street's filings
with the Securities and Exchange Commission (www.sec.gov). Main
Street undertakes no obligation to update the information contained
herein to reflect subsequently occurring events or circumstances,
except as required by applicable securities laws and
regulations.
MAIN STREET CAPITAL
CORPORATION
Consolidated
Statements of Operations
(in thousands,
except shares and per share amounts)
(Unaudited)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
INVESTMENT
INCOME:
|
|
|
|
|
|
|
|
Interest, fee and
dividend income:
|
|
|
|
|
|
|
|
Control
investments
|
$ 48,645
|
|
$ 41,367
|
|
$
145,485
|
|
$
110,751
|
Affiliate
investments
|
15,267
|
|
12,490
|
|
53,722
|
|
38,300
|
Non–Control/Non–Affiliate investments
|
59,325
|
|
44,530
|
|
171,867
|
|
113,930
|
Total investment
income
|
123,237
|
|
98,387
|
|
371,074
|
|
262,981
|
EXPENSES:
|
|
|
|
|
|
|
|
Interest
|
(26,414)
|
|
(21,234)
|
|
(78,165)
|
|
(55,216)
|
Compensation
|
(11,560)
|
|
(10,404)
|
|
(34,860)
|
|
(26,480)
|
General and
administrative
|
(4,324)
|
|
(4,018)
|
|
(12,915)
|
|
(11,483)
|
Share–based
compensation
|
(4,164)
|
|
(3,617)
|
|
(12,351)
|
|
(10,031)
|
Expenses allocated to
the External Investment Manager
|
5,404
|
|
3,334
|
|
16,089
|
|
9,613
|
Total
expenses
|
(41,058)
|
|
(35,939)
|
|
(122,202)
|
|
(93,597)
|
NET INVESTMENT
INCOME
|
82,179
|
|
62,448
|
|
248,872
|
|
169,384
|
NET REALIZED GAIN
(LOSS):
|
|
|
|
|
|
|
|
Control
investments
|
546
|
|
(5,822)
|
|
(50,532)
|
|
(5,822)
|
Affiliate
investments
|
(228)
|
|
601
|
|
(16,495)
|
|
1,340
|
Non–Control/Non–Affiliate investments
|
346
|
|
10,252
|
|
(36,196)
|
|
7,784
|
Total net realized
gain (loss)
|
664
|
|
5,031
|
|
(103,223)
|
|
3,302
|
NET UNREALIZED
APPRECIATION (DEPRECIATION):
|
|
|
|
|
|
|
|
Control
investments
|
29,838
|
|
7,517
|
|
122,779
|
|
20,618
|
Affiliate
investments
|
5,188
|
|
(1,069)
|
|
26,859
|
|
3,703
|
Non–Control/Non–Affiliate investments
|
(8,015)
|
|
(16,529)
|
|
17,432
|
|
(44,243)
|
Total net unrealized
appreciation (depreciation)
|
27,011
|
|
(10,081)
|
|
167,070
|
|
(19,922)
|
INCOME
TAXES:
|
|
|
|
|
|
|
|
Federal and state
income, excise and other taxes
|
(1,256)
|
|
(1,540)
|
|
(4,663)
|
|
(3,658)
|
Deferred
taxes
|
(5,337)
|
|
(520)
|
|
(18,690)
|
|
(13,819)
|
Income tax
provision
|
(6,593)
|
|
(2,060)
|
|
(23,353)
|
|
(17,477)
|
NET INCREASE IN NET
ASSETS RESULTING FROM OPERATIONS
|
$
103,261
|
|
$
55,338
|
|
$
289,366
|
|
$
135,287
|
NET INVESTMENT
INCOME PER SHARE-BASIC AND DILUTED
|
$
0.99
|
|
$
0.83
|
|
$
3.07
|
|
$
2.31
|
NET INCREASE IN NET
ASSETS RESULTING FROM OPERATIONS
PER SHARE-BASIC AND DILUTED
|
$
1.25
|
|
$
0.74
|
|
$
3.57
|
|
$
1.84
|
WEIGHTED AVERAGE
SHARES
OUTSTANDING-BASIC
AND DILUTED
|
82,921,764
|
|
75,036,522
|
|
81,065,195
|
|
73,363,281
|
MAIN STREET CAPITAL
CORPORATION
Consolidated Balance
Sheets
(in thousands,
except per share amounts)
|
|
|
|
September
30,
|
|
December
31,
|
|
|
2023
|
|
2022
|
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
Investments at fair
value:
|
|
|
|
|
Control
investments
|
|
$
1,927,019
|
|
$
1,703,172
|
Affiliate
investments
|
|
565,942
|
|
618,359
|
Non–Control/Non–Affiliate investments
|
|
1,801,761
|
|
1,780,646
|
Total
investments
|
|
4,294,722
|
|
4,102,177
|
Cash and cash
equivalents
|
|
77,047
|
|
49,121
|
Interest and dividend
receivable and other assets
|
|
84,897
|
|
82,731
|
Receivable for
securities sold
|
|
4,345
|
|
381
|
Deferred financing
costs, net
|
|
6,749
|
|
7,475
|
Total
assets
|
|
$
4,467,760
|
|
$
4,241,885
|
LIABILITIES
|
|
|
|
|
Credit
Facilities
|
|
$
493,000
|
|
$
607,000
|
July 2026
Notes (par: $500,000 as of both
September 30, 2023 and
December 31, 2022)
|
|
498,530
|
|
498,136
|
May 2024
Notes (par: $450,000 as of both
September 30, 2023 and
December 31,
2022)
|
|
450,318
|
|
450,727
|
SBIC debentures (par:
$350,000 ($63,800 due within one year) and
$350,000 as of
September 30, 2023 and December 31, 2022,
respectively)
|
|
344,239
|
|
343,914
|
December 2025
Notes (par: $150,000 and $100,000 as of
September 30,
2023 and December 31, 2022, respectively)
|
|
148,835
|
|
99,325
|
Accounts payable and
other liabilities
|
|
57,095
|
|
52,092
|
Interest
payable
|
|
18,733
|
|
16,580
|
Dividend
payable
|
|
19,664
|
|
17,676
|
Deferred tax liability,
net
|
|
66,539
|
|
47,849
|
Total
liabilities
|
|
2,096,953
|
|
2,133,299
|
|
|
|
|
|
NET
ASSETS
|
|
|
|
|
Common stock
|
|
836
|
|
784
|
Additional paid–in
capital
|
|
2,225,614
|
|
2,030,531
|
Total undistributed
earnings
|
|
144,357
|
|
77,271
|
Total net
assets
|
|
2,370,807
|
|
2,108,586
|
Total liabilities and
net assets
|
|
$
4,467,760
|
|
$
4,241,885
|
NET ASSET VALUE PER
SHARE
|
|
$
28.33
|
|
$
26.86
|
MAIN STREET CAPITAL
CORPORATION
Reconciliation of
Distributable Net Investment Income,
Total Cash Expenses,
Non-Cash Compensation Expenses
and Cash
Compensation Expenses
(in thousands,
except per share amounts)
(Unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net investment
income
|
$
82,179
|
|
$
62,448
|
|
$
248,872
|
|
$
169,384
|
Non-cash
compensation expenses(3)
|
3,992
|
|
3,319
|
|
13,068
|
|
8,132
|
Distributable net
investment income(1)
|
$
86,171
|
|
$
65,767
|
|
$
261,940
|
|
$
177,516
|
|
|
|
|
|
|
|
|
Per share
amounts:
|
|
|
|
|
|
|
|
Net investment income
per share -
|
|
|
|
|
|
|
|
Basic and diluted
|
$
0.99
|
|
$
0.83
|
|
$
3.07
|
|
$
2.31
|
Distributable net
investment income per share -
|
|
|
|
|
|
|
|
Basic and diluted(1)
|
$
1.04
|
|
$
0.88
|
|
$
3.23
|
|
$
2.42
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Share–based
compensation
|
$
(4,164)
|
|
$
(3,617)
|
|
$
(12,351)
|
|
$
(10,031)
|
Deferred compensation
(expense) benefit
|
172
|
|
298
|
|
(717)
|
|
1,899
|
Total non-cash
compensation expenses(3)
|
(3,992)
|
|
(3,319)
|
|
(13,068)
|
|
(8,132)
|
|
|
|
|
|
|
|
|
Total
expenses
|
(41,058)
|
|
(35,939)
|
|
(122,202)
|
|
(93,597)
|
Less non-cash
compensation expenses(3)
|
3,992
|
|
3,319
|
|
13,068
|
|
8,132
|
Total cash
expenses(3)
|
$
(37,066)
|
|
$
(32,620)
|
|
$
(109,134)
|
|
$
(85,465)
|
|
|
|
|
|
|
|
|
Compensation
|
$
(11,560)
|
|
$
(10,404)
|
|
$
(34,860)
|
|
$
(26,480)
|
Share-based
compensation
|
(4,164)
|
|
(3,617)
|
|
(12,351)
|
|
(10,031)
|
Total compensation
expenses
|
(15,724)
|
|
(14,021)
|
|
(47,211)
|
|
(36,511)
|
Non-cash compensation
expenses(3)
|
3,992
|
|
3,319
|
|
13,068
|
|
8,132
|
Total cash compensation
expenses(3)
|
$
(11,732)
|
|
$
(10,702)
|
|
$
(34,143)
|
|
$
(28,379)
|
|
MAIN STREET CAPITAL
CORPORATION
Endnotes
(1) Distributable net investment income is net investment income
as determined in accordance with U.S. Generally Accepted Accounting
Principles, or U.S. GAAP, excluding the impact of non-cash
compensation expenses(3). Main Street believes
presenting distributable net investment income and the related per
share amount is useful and appropriate supplemental disclosure for
analyzing its financial performance since non-cash compensation
expenses(3) do not result in a net cash impact to Main
Street upon settlement. However, distributable net investment
income is a non-U.S. GAAP measure and should not be considered as a
replacement for net investment income or other earnings measures
presented in accordance with U.S. GAAP and should be reviewed only
in connection with such U.S. GAAP measures in analyzing Main
Street's financial performance. A reconciliation of net investment
income in accordance with U.S. GAAP to distributable net investment
income is detailed in the financial tables included with this press
release.
(2) Return on equity equals the net increase in net assets
resulting from operations divided by the average quarterly total
net assets.
(3) Non-cash compensation expenses consist of (i) share-based
compensation and (ii) deferred compensation expense or benefit,
both of which are non-cash in nature. Share-based compensation does
not require settlement in cash. Deferred compensation expense or
benefit does not result in a net cash impact to Main Street upon
settlement. The appreciation (depreciation) in the fair value of
deferred compensation plan assets is reflected in Main Street's
Consolidated Statements of Operations as unrealized appreciation
(depreciation) and an increase (decrease) in compensation expenses,
respectively. Cash compensation expenses are total compensation
expenses as determined in accordance with U.S. GAAP, less non-cash
compensation expenses. Total cash expenses are total expenses, as
determined in accordance with U.S. GAAP, excluding non-cash
compensation expenses. Main Street believes presenting cash
compensation expenses, non-cash compensation expenses and total
cash expenses is useful and appropriate supplemental disclosure for
analyzing its financial performance since non-cash compensation
expenses do not result in a net cash impact to Main Street upon
settlement. However, cash compensation expenses, non-cash
compensation expenses and total cash expenses are non-U.S. GAAP
measures and should not be considered as a replacement for
compensation expenses, total expenses or other earnings measures
presented in accordance with U.S. GAAP and should be reviewed only
in connection with such U.S. GAAP measures in analyzing Main
Street's financial performance. A reconciliation of compensation
expenses and total expenses in accordance with U.S. GAAP to cash
compensation expenses, non-cash compensation expenses and total
cash expenses is detailed in the financial tables included with
this press release.
(4) Portfolio company financial information has not been
independently verified by Main Street.
(5) These credit statistics exclude portfolio companies on
non-accrual or for which EBITDA is not a meaningful metric.
Contacts:
|
Main Street Capital
Corporation
|
Dwayne L. Hyzak, CEO,
dhyzak@mainstcapital.com
|
Jesse E. Morris, CFO
and COO, jmorris@mainstcapital.com
|
713-350-6000
|
|
Dennard Lascar Investor
Relations
|
Ken Dennard /
ken@dennardlascar.com
|
Zach Vaughan /
zvaughan@dennardlascar.com
|
713-529-6600
|
|
View original
content:https://www.prnewswire.com/news-releases/main-street-announces-third-quarter-2023-results-301976341.html
SOURCE Main Street Capital Corporation