Second Quarter 2023 Net
Investment Income of $1.06 Per
Share
Second Quarter 2023
Distributable Net Investment
Income(1) of
$1.12 Per Share
Net Asset Value of $27.69 Per Share
HOUSTON, Aug. 3, 2023
/PRNewswire/ -- Main Street Capital Corporation (NYSE: MAIN) ("Main
Street") is pleased to announce its financial results for the
second quarter ended June 30,
2023.
Second Quarter 2023 Highlights
- Net investment income of $85.7
million (or $1.06 per
share)
- Distributable net investment income(1) of
$90.3 million (or $1.12 per share)
- Total investment income of $127.6
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 1.4% on an annualized basis for the quarter and 1.4% for
the trailing twelve month ("TTM") period ended June 30, 2023
- Net increase in net assets resulting from operations of
$106.5 million, or $1.32 per share
- Return on equity(2) of 19.2% on an annualized basis
for the quarter
- Net asset value of $27.69 per
share at June 30, 2023, representing
an increase of $0.46 per share, or
1.7%, compared to $27.23 per share at
March 31, 2023, and $0.83 per share, or 3.1%, compared to
$26.86 per share at December 31, 2022
- Declared regular monthly dividends totaling $0.69 per share for the third quarter of 2023, or
$0.23 per share for each of July,
August and September 2023,
representing a 7.0% increase from the regular monthly dividends
paid in the third quarter of 2022
- Declared and paid a supplemental dividend of $0.225 per share, resulting in total dividends
paid in the second quarter of 2023 of $0.90 per share and representing a 25.0% increase
from the total dividends paid in the second quarter of 2022 and a
5.9% increase from the total dividends paid in the first quarter of
2023
- Completed $130.7 million in total
lower middle market ("LMM") portfolio investments, including
investments totaling $106.2 million
in three new LMM portfolio companies, which after aggregate
repayments of debt principal and return of invested equity capital
from several LMM portfolio investments and a decrease in cost basis
due to the realized loss on a LMM portfolio investment resulted in
a net decrease of $6.9 million in the
total cost basis of our LMM portfolio
- Completed $168.1 million in total
private loan portfolio investments, which after aggregate
repayments of debt principal and return of invested equity capital
from several private loan portfolio investments and a decrease in
cost basis due to the realized loss on a private loan portfolio
investment resulted in a net decrease of $11.3 million in the total cost basis of our
private loan portfolio
- Net decrease of $39.4 million in
the cost basis of our middle market portfolio, which resulted from
the net investment activity and a decrease in cost basis due to the
realized losses on several middle market portfolio investments
In commenting on Main Street's operating results for the second
quarter of 2023, Dwayne L. Hyzak,
Main Street's Chief Executive Officer, stated, "We are very pleased
with our quarterly results, which included continued positive
results from our lower middle market and private loan investment
strategies and significant contributions from our asset management
business. Our performance was highlighted by a return on equity of
19% and new quarterly records for net investment income per share,
distributable net investment income per share and net asset value
per share for the fourth consecutive quarter. The continued strong
performance of our LMM portfolio companies was highlighted by the
second consecutive quarter with a new record level of dividend
income from our portfolio equity investments. 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 with the level of
investment activity in the quarter in both our LMM and private loan
portfolios and the healthy pipeline of investment opportunities in
these investment strategies. This attractive investment pipeline,
together with our conservative liquidity position and capital
structure, provides us a continued favorable outlook for the third
quarter."
Mr. Hyzak continued, "Our distributable net investment income in
the second quarter exceeded the monthly dividends paid to our
shareholders by 66% and the total dividends paid to our
shareholders by 24%. This strong 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 second quarter
results and favorable outlook for the third quarter resulted in the
declaration of an increase to our monthly dividends for the fourth
quarter of 2023 and a $0.275 per
share supplemental dividend to be paid in September 2023. This September 2023 supplemental dividend represents
our largest and eighth consecutive quarterly supplemental dividend,
along with five increases to our regular monthly dividends over the
same period, and results in a 30% increase in the total dividends
paid in the third quarter of 2023 and a 24% increase in the
total dividends paid year to date through September 30th, in both cases when compared to
the prior year."
Second Quarter 2023 Operating Results
The following table provides a summary of our operating results
for the second quarter of 2023:
|
Three Months Ended
June 30,
|
|
2023
|
|
2022
|
|
Change
($)
|
|
Change
(%)
|
Interest
income
|
$
97,273
|
|
$
63,984
|
|
$
33,289
|
|
52 %
|
Dividend
income
|
25,599
|
|
17,913
|
|
7,686
|
|
43 %
|
Fee income
|
4,711
|
|
3,303
|
|
1,408
|
|
43 %
|
Total investment
income
|
$ 127,583
|
|
$
85,200
|
|
$
42,383
|
|
50 %
|
|
|
|
|
|
|
|
|
Net investment
income
|
$
85,728
|
|
$
54,726
|
|
$
31,002
|
|
57 %
|
Net investment income
per share
|
$
1.06
|
|
$
0.75
|
|
$
0.31
|
|
41 %
|
|
|
|
|
|
|
|
|
Distributable net
investment income(1)
|
$
90,328
|
|
$
57,097
|
|
$
33,231
|
|
58 %
|
Distributable net
investment income per share(1)
|
$
1.12
|
|
$
0.78
|
|
$
0.34
|
|
44 %
|
|
|
|
|
|
|
|
|
Net increase in net
assets resulting from operations
|
$ 106,516
|
|
$
14,749
|
|
$
91,767
|
|
622 %
|
Net increase in net
assets resulting from operations per share
|
$
1.32
|
|
$
0.20
|
|
$
1.12
|
|
560 %
|
|
|
|
|
|
|
|
|
The $42.4 million increase in
total investment income in the second quarter of 2023 from the
comparable period of the prior year was principally attributable to
(i) a $33.3 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, higher average
levels of income producing investment portfolio debt investments
and an increase in interest rate spreads on new investments over
the last twelve months, (ii) a $7.7
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
(as defined below) and (iii) a $1.4
million increase in fee income. The $42.4 million increase in total investment income
in the second quarter of 2023 includes the impact of a net increase
of $3.4 million in certain
income considered less consistent or non-recurring, including a
$3.8 million increase of such
dividend income as referenced above, partially offset by a
$0.4 million decrease in income
from accelerated prepayment, repricing and other activity related
to portfolio debt investments, in both cases when compared to the
same period in 2022.
Total cash expenses(3) increased 32.7%, or
$9.2 million, to $37.3 million in the second quarter of 2023 from
$28.1 million for the same period in
2022. This increase in total cash expenses was principally
attributable to (i) a $9.5 million
increase in interest expense, (ii) a $1.6
million increase in cash compensation expenses(3)
and (iii) a $0.3 million increase in
general and administrative expense, partially offset by a
$2.2 million increase in expenses
allocated to the External Investment Manager. The increase in
interest expense is primarily related to (i) 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 and (ii) increased average outstanding
borrowings to fund our investment activity and support the growth
of our investment portfolio. The increase in cash compensation
expenses(3) is primarily related to (i) increased
incentive compensation accruals, (ii) increased base compensation
rates and (iii) increased headcount to support our growing
investment portfolio and asset management activities.
Non-cash compensation expenses(3) increased
$2.2 million in the second quarter of
2023 from the comparable period of the prior year, resulting from a
$1.7 million increase in deferred
compensation expense and a $0.5
million increase in share-based compensation.
Our Operating Expenses to Assets Ratio (which includes non-cash
compensation expenses(3)) was 1.4% for the second
quarter of 2023, on an annualized basis, as compared to 1.4% for
the same period in 2022.
The $31.0 million increase in net
investment income and the $33.2
million increase in distributable net investment
income(1) in the second 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 second quarter of
2023 increased by $0.31 per share and
$0.34 per share, respectively,
compared to the second quarter of 2022, to $1.06 per share and $1.12 per share, respectively. These increases
include the impact of a 10.2% increase in the average shares
outstanding compared to the second quarter of 2022 primarily due to
shares issued over the last twelve months (i) through our public
offering in August 2022 and through
our at-the-market ("ATM") program, (ii) shares issued through our
equity incentive plans and (iii) shares issued through our dividend
reinvestment plan. Net investment income and distributable net
investment income(1) on a per share basis in the second
quarter of 2023 include a net increase of $0.02 per share resulting from an increase in
investment income and a decrease from non-cash deferred
compensation expenses, in both cases considered less consistent or
non-recurring in nature compared to the second quarter of 2022, as
discussed above.
The $106.5 million net increase in
net assets resulting from operations in the second quarter of 2023
represents a $91.8 million increase
from the second quarter of 2022. This increase was primarily the
result of (i) a $129.5 million
increase in net unrealized appreciation from portfolio investments
(including the impact of accounting reversals relating to realized
gains/income (losses)), (ii) a $31.0
million increase in net investment income as discussed above
and (iii) a $1.7 million decrease in
income tax provision, partially offset by a $70.4 million change in net realized gain (loss)
from investments resulting from a net realized loss of $75.5 million in the second quarter of 2023
compared to a net realized loss of $5.1
million in the second quarter of 2022. The $75.5 million net realized loss from investments
for the second quarter of 2023 was primarily the result of realized
losses on the exit or restructure of several long standing
underperforming investments, including (i) a $49.3 million realized loss from the full exit of
the debt and equity investments in a LMM portfolio company, (ii) a
$16.3 million realized loss from the
restructuring of a private loan investment, (iii) a $13.5 million realized loss on the restructuring
of two middle market investments and (iv) a $9.6 million realized loss from the full exit of
a middle market investment. These realized losses were partially
offset by (i) a $7.2 million realized
gain from the full exit of a LMM equity investment, (ii)
$4.3 million of realized gains on the
partial exits of three other portfolio investments and (iii) a
$1.9 million realized gain from the
full exit of a private loan investment. The realized losses
recognized in the second quarter were completed at a net realized
fair value $2.4 million greater than
the fair value for such investments at the end of the first quarter
2023.
The following table provides a summary of the total net
unrealized appreciation of $104.9
million for the second quarter of 2023:
|
Three Months Ended
June 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
|
$ 41.6
|
|
$ 14.7
|
|
$ 23.2
|
|
$
(4.2)
|
|
$ 75.3
|
Net unrealized
appreciation (depreciation) relating to
portfolio investments
|
23.0
|
|
0.6
|
|
4.5
|
|
1.5
|
(b)
|
$ 29.6
|
Total net unrealized
appreciation (depreciation) relating
to portfolio investments
|
$ 64.6
|
|
$ 15.3
|
|
$ 27.7
|
|
$
(2.7)
|
|
$ 104.9
|
|
|
(a)
|
LMM includes unrealized
appreciation on 35 LMM portfolio investments and unrealized
depreciation on 23 LMM portfolio investments.
|
(b)
|
Other includes (i) $1.3
million of unrealized appreciation relating to the External
Investment Manager, (ii) $0.5 million of unrealized appreciation
relating to Main Street's deferred compensation plan assets and
(iii) $0.3 million of net unrealized depreciation relating to the
other portfolio.
|
|
|
Liquidity and Capital Resources
As of June 30, 2023, we had
aggregate liquidity of $725.9
million, including (i) $70.9
million in cash and cash equivalents and (ii) $655.0 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
June 30, 2023 are as follows:
- Our Corporate Facility included $980.0
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.
- $410.0 million in outstanding
borrowings under our Corporate Facility, with an interest rate of
7.1% based on SOFR effective for the contractual reset date of
July 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 7.8%
based on SOFR effective for the contractual reset date of
July 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 5.1 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 two investment grade debt ratings, from Fitch
Ratings and S&P Global Ratings, respectively, both of which
affirmed their respective investment grade corporate and credit
ratings of BBB- with a stable outlook during the second quarter of
2023.
- Our net asset value totaled $2.3
billion, or $27.69 per
share.
In July 2023, we expanded our
total commitments under the Corporate Facility from $980.0 million to $995.0
million. The commitment increase was executed under the
accordion feature of the Corporate Facility which allows for an
increase up to $1.4 billion in total
commitments under the facility from new and existing lenders on the
same terms and conditions as the existing commitments.
Investment Portfolio Information as of June 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 June 30, 2023:
|
|
As of June 30,
2023
|
|
|
LMM
(a)
|
|
Private
Loan
|
|
Middle
Market
|
|
|
(dollars in
millions)
|
Number of portfolio
companies
|
|
79
|
|
88
|
|
28
|
Fair value
|
|
$
2,170.2
|
|
$
1,499.3
|
|
$
295.9
|
Cost
|
|
$
1,720.9
|
|
$
1,519.9
|
|
$
352.9
|
Debt investments as a %
of portfolio (at cost)
|
|
72.0 %
|
|
96.1 %
|
|
92.9 %
|
Equity investments as a
% of portfolio (at cost)
|
|
28.0 %
|
|
3.9 %
|
|
7.1 %
|
% of debt investments
at cost secured by first priority lien
|
|
99.2 %
|
|
99.5 %
|
|
99.2 %
|
Weighted-average annual
effective yield (b)
|
|
12.9 %
|
|
12.6 %
|
|
11.8 %
|
Average EBITDA
(c)
|
|
$
8.0
|
|
$
30.5
|
|
$
67.6
|
|
|
(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 196% 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 3.0 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 3.0 to 1.0 and 2.4 to 1.0,
respectively.(4) (5)
As of June 30, 2023, our investment portfolio also
included:
- Other portfolio investments in 15 entities, collectively
totaling $111.2 million in fair value
and $119.4 million in cost basis,
which comprised 2.6% and 3.2% of our investment portfolio at fair
value and cost, respectively; and
- Our investment in the External Investment Manager, with a fair
value of $134.0 million and a cost
basis of $29.5 million, which
comprised 3.2% and 0.8% of our investment portfolio at fair value
and cost, respectively.
As of June 30, 2023, we had nine investments on non-accrual
status, which comprised 0.3% of the total investment portfolio at
fair value and 1.7% 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 second quarter of 2023,
the External Investment Manager earned $5.5
million of management fee income, an increase of
$0.1 million from the second quarter
of 2022, and incentive fees of $3.7
million, an increase of $3.6
million from the second quarter of 2022. In addition, we
allocated $5.7 million of total
expenses to the External Investment Manager, an increase of
$2.2 million from the second 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 $8.5 million, representing an increase of
$3.4 million from the second quarter
of 2022. The External Investment Manager ended the second quarter
of 2023 with total assets under management of $1.4 billion.
Second Quarter 2023 Financial Results Conference Call /
Webcast
Main Street has scheduled a conference call for Friday,
August 4, 2023 at 10:00 a.m. Eastern
Time to discuss the second 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, August 11, 2023 and may be accessed by dialing
201-612-7415 and using the passcode 13739262#. 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 June 30, 2023 to be filed with the Securities and
Exchange Commission (www.sec.gov) and Main Street's Second 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 rising 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
June 30,
|
|
Six Months
Ended
June 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
INVESTMENT
INCOME:
|
|
|
|
|
|
|
|
Interest, fee and
dividend income:
|
|
|
|
|
|
|
|
Control
investments
|
$
47,979
|
|
$
36,808
|
|
$
96,841
|
|
$
69,385
|
Affiliate
investments
|
20,999
|
|
11,893
|
|
38,455
|
|
25,810
|
Non–Control/Non–Affiliate investments
|
58,605
|
|
36,499
|
|
112,542
|
|
69,401
|
Total investment
income
|
127,583
|
|
85,200
|
|
247,838
|
|
164,596
|
EXPENSES:
|
|
|
|
|
|
|
|
Interest
|
(26,754)
|
|
(17,295)
|
|
(51,752)
|
|
(33,982)
|
Compensation
|
(12,188)
|
|
(8,807)
|
|
(23,300)
|
|
(16,076)
|
General and
administrative
|
(4,514)
|
|
(4,238)
|
|
(8,591)
|
|
(7,464)
|
Share–based
compensation
|
(4,087)
|
|
(3,596)
|
|
(8,187)
|
|
(6,414)
|
Expenses allocated to
the External Investment Manager
|
5,688
|
|
3,462
|
|
10,686
|
|
6,279
|
Total
expenses
|
(41,855)
|
|
(30,474)
|
|
(81,144)
|
|
(57,657)
|
NET INVESTMENT
INCOME
|
85,728
|
|
54,726
|
|
166,694
|
|
106,939
|
NET REALIZED GAIN
(LOSS):
|
|
|
|
|
|
|
|
Control
investments
|
(48,111)
|
|
-
|
|
(51,077)
|
|
-
|
Affiliate
investments
|
9,997
|
|
47
|
|
(16,267)
|
|
739
|
Non–Control/Non–Affiliate investments
|
(37,392)
|
|
(5,111)
|
|
(36,542)
|
|
(2,467)
|
Total net realized
loss
|
(75,506)
|
|
(5,064)
|
|
(103,886)
|
|
(1,728)
|
NET UNREALIZED
APPRECIATION (DEPRECIATION):
|
|
|
|
|
|
|
|
Control
investments
|
75,779
|
|
4,822
|
|
92,940
|
|
13,101
|
Affiliate
investments
|
(11,469)
|
|
1,731
|
|
21,672
|
|
4,772
|
Non–Control/Non–Affiliate investments
|
40,631
|
|
(31,146)
|
|
25,447
|
|
(27,714)
|
Total net unrealized
appreciation (depreciation)
|
104,941
|
|
(24,593)
|
|
140,059
|
|
(9,841)
|
INCOME
TAXES:
|
|
|
|
|
|
|
|
Federal and state
income, excise and other taxes
|
(1,671)
|
|
(809)
|
|
(3,407)
|
|
(2,118)
|
Deferred
taxes
|
(6,976)
|
|
(9,511)
|
|
(13,353)
|
|
(13,299)
|
Income tax
provision
|
(8,647)
|
|
(10,320)
|
|
(16,760)
|
|
(15,417)
|
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS
|
$
106,516
|
|
$
14,749
|
|
$
186,107
|
|
$
79,953
|
NET INVESTMENT
INCOME PER SHARE-BASIC AND
DILUTED
|
$
1.06
|
|
$
0.75
|
|
$
2.08
|
|
$
1.47
|
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS PER SHARE-BASIC AND DILUTED
|
$
1.32
|
|
$
0.20
|
|
$
2.32
|
|
$
1.10
|
WEIGHTED AVERAGE
SHARES
OUTSTANDING-BASIC
AND DILUTED
|
80,807,861
|
|
73,304,619
|
|
80,190,630
|
|
72,512,793
|
MAIN STREET CAPITAL
CORPORATION
|
Consolidated Balance
Sheets
|
(in thousands,
except per share amounts)
|
|
|
|
June
30,
|
|
December
31,
|
|
|
2023
|
|
2022
|
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
Investments at fair
value:
|
|
|
|
|
Control
investments
|
|
$
1,883,699
|
|
$
1,703,172
|
Affiliate
investments
|
|
563,125
|
|
618,359
|
Non–Control/Non–Affiliate investments
|
|
1,763,719
|
|
1,780,646
|
Total
investments
|
|
4,210,543
|
|
4,102,177
|
Cash and cash
equivalents
|
|
70,886
|
|
49,121
|
Interest and dividend
receivable and other assets
|
|
117,749
|
|
82,731
|
Receivable for
securities sold
|
|
13,959
|
|
381
|
Deferred financing
costs, net
|
|
7,101
|
|
7,475
|
Total
assets
|
|
$
4,420,238
|
|
$
4,241,885
|
LIABILITIES
|
|
|
|
|
Credit
Facilities
|
|
$
580,000
|
|
$
607,000
|
July 2026
Notes (par: $500,000 as of both June 30,
2023 and
December 31, 2022)
|
|
498,399
|
|
498,136
|
May 2024
Notes (par: $450,000 as of both June 30,
2023 and
December 31, 2022)
|
|
450,454
|
|
450,727
|
SBIC debentures (par:
$350,000 ($63,800 due within one year) and
$350,000 as of June 30, 2023 and December 31, 2022,
respectively)
|
|
343,943
|
|
343,914
|
December 2025
Notes (par: $150,000 and $100,000 as of
June 30, 2023
and December 31, 2022, respectively)
|
|
148,706
|
|
99,325
|
Accounts payable and
other liabilities
|
|
48,502
|
|
52,092
|
Interest
payable
|
|
15,355
|
|
16,580
|
Dividend
payable
|
|
18,729
|
|
17,676
|
Deferred tax liability,
net
|
|
61,202
|
|
47,849
|
Total
liabilities
|
|
2,165,290
|
|
2,133,299
|
|
|
|
|
|
NET
ASSETS
|
|
|
|
|
Common stock
|
|
814
|
|
784
|
Additional paid–in
capital
|
|
2,132,041
|
|
2,030,531
|
Total undistributed
earnings
|
|
122,093
|
|
77,271
|
Total net
assets
|
|
2,254,948
|
|
2,108,586
|
Total liabilities and
net assets
|
|
$
4,420,238
|
|
$
4,241,885
|
NET ASSET VALUE PER
SHARE
|
|
$
27.69
|
|
$
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
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net investment
income
|
$
85,728
|
|
$
54,726
|
|
$
166,694
|
|
$
106,939
|
Non-cash
compensation expenses(3)
|
4,600
|
|
2,371
|
|
9,076
|
|
4,813
|
Distributable net
investment income(1)
|
$
90,328
|
|
$
57,097
|
|
$
175,770
|
|
$
111,752
|
|
|
|
|
|
|
|
|
Per share
amounts:
|
|
|
|
|
|
|
|
Net investment income
per share -
|
|
|
|
|
|
|
|
Basic and diluted
|
$
1.06
|
|
$
0.75
|
|
$
2.08
|
|
$
1.47
|
Distributable net
investment income per share -
|
|
|
|
|
|
|
|
Basic and diluted(1)
|
$
1.12
|
|
$
0.78
|
|
$
2.19
|
|
$
1.54
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Share–based
compensation
|
$
(4,087)
|
|
$
(3,596)
|
|
$
(8,187)
|
|
$
(6,414)
|
Deferred compensation
(expense) benefit
|
(513)
|
|
1,225
|
|
(889)
|
|
1,601
|
Total non-cash
compensation expenses (3)
|
(4,600)
|
|
(2,371)
|
|
(9,076)
|
|
(4,813)
|
|
|
|
|
|
|
|
|
Total
expenses
|
(41,855)
|
|
(30,474)
|
|
(81,144)
|
|
(57,657)
|
Less non-cash
compensation expenses (3)
|
4,600
|
|
2,371
|
|
9,076
|
|
4,813
|
Total cash expenses
(3)
|
$
(37,255)
|
|
$
(28,103)
|
|
$
(72,068)
|
|
$
(52,844)
|
|
|
|
|
|
|
|
|
Compensation
|
$
(12,188)
|
|
$
(8,807)
|
|
$
(23,300)
|
|
$
(16,076)
|
Share-based
compensation
|
(4,087)
|
|
(3,596)
|
|
(8,187)
|
|
(6,414)
|
Total compensation
expenses
|
(16,275)
|
|
(12,403)
|
|
(31,487)
|
|
(22,490)
|
Non-cash compensation
expenses (3)
|
4,600
|
|
2,371
|
|
9,076
|
|
4,813
|
Total cash compensation
expenses (3)
|
$
(11,675)
|
|
$
(10,032)
|
|
$
(22,411)
|
|
$
(17,677)
|
|
|
|
|
|
|
|
|
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
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content:https://www.prnewswire.com/news-releases/main-street-announces-second-quarter-2023-results-301893090.html
SOURCE Main Street Capital Corporation