UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) August 11, 2014
Monroe Capital Corporation
(Exact name of registrant as specified in its charter)
| Maryland | 814-00866 | 27-4895840 | ||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 311 South Wacker Drive, Suite 6400, Chicago, IL | 60606 | |
| (Address of principal executive offices) | (Zip Code) |
(312) 258-8300
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02. Results of Operations and Financial Condition.
On August 11, 2014, Monroe Capital Corporation (the “Company”) issued a press release announcing the Company’s financial results for the second quarter ended June 30, 2014. Additionally, the Company provided an update on the growth of the Company’s investment portfolio since its initial public offering in October 2012. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
ITEM 9.01. Financial Statements and Exhibits
| 99.1 | Press Release, dated August 11, 2014. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MONROE CAPITAL CORPORATION | ||||
| By: | /s/ Aaron D. Peck | |||
| Name: Aaron D. Peck | ||||
| Title: Chief Financial Officer | ||||
Dated: August 11, 2014
Exhibit 99.1
Monroe Capital Corporation Announces Second Quarter 2014 Financial Results
CHICAGO, IL, August 11, 2014 -- Monroe Capital Corporation (Nasdaq: MRCC) (“Monroe”) today announced its financial results for the second quarter ended June 30, 2014.
Except where the context suggests otherwise, the terms “Monroe,” “we,” “us,” “our,” and “Company” refer to Monroe Capital Corporation.
Second Quarter 2014 Financial Highlights
| · | Net increase in net assets resulting from operations of $2.7 million, or $0.28 per share |
| · | Net investment income of $3.5 million, or $0.37 per share |
| · | Adjusted Net Investment Income(a non-GAAP measure described below) of $3.3 million, or $0.35 per share |
| · | Net asset value (“NAV”) of $133.2 million, or $13.93 per share |
| · | Paid quarterly dividend of $0.34 per share on June 27, 2014 |
Chief Executive Officer Theodore L. Koenig commented, “We are pleased to report another strong quarter of performance for the second quarter of 2014, evidenced by the growth in our adjusted net investment income per share to $0.35 per share from $0.33 per share in the first quarter of 2014. This is the first quarter since our initial public offering that adjusted net investment income per share exceeded our dividend of $0.34 per share. We have continued to grow our investment portfolio, as we leveraged Monroe Capital’s robust national loan origination platform and began to access the leverage available to our Small Business Investment Company (“SBIC”) subsidiary. Our principal amount of invested assets increased to $239.7 million as of June 30, 2014, an increase of $13.5 million since March 31, 2014. As well, we have continued to optimize the portfolio during the second quarter, with the weighted average annualized effective yield on the portfolio increasing to 11.1% at June 30, 2014, from 10.8% at March 31, 2014. We expect to continue to focus on optimizing and growing the portfolio throughout the remainder of 2014 as we remain focused on creating long-term value for our shareholders.”
Growth of the Investment Portfolio
The following charts depict the significant growth of the Company’s investment portfolio since the pricing of its initial public offering on October 24, 2012:
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Selected Financial Highlights
(in thousands, except per share data)
| June 30, 2014 | March 31, 2014 | |||||||
| Statements of Assets and Liabilities data: | (unaudited) | |||||||
| Investments, at fair value | $ | 237,660 | $ | 224,671 | ||||
| Total assets | $ | 246,288 | $ | 240,001 | ||||
| Net asset value | $ | 133,185 | $ | 135,068 | ||||
| Net asset value per share | $ | 13.93 | $ | 13.99 | ||||
| For the quarter ended | ||||||||
| June 30, 2014 | March 31, 2014 | |||||||
| Statements of Operations data: | (unaudited) | |||||||
| Net investment income | $ | 3,514 | $ | 3,130 | ||||
| Adjusted net investment income (1) | $ | 3,345 | $ | 3,238 | ||||
| Net gain (loss) on investments and secured borrowings | $ | (848 | ) | $ | 538 | |||
| Net increase in net assets resulting from operations | $ | 2,666 | $ | 3,668 | ||||
| Per share data: | ||||||||
| Net investment income | $ | 0.37 | $ | 0.32 | ||||
| Adjusted net investment income (1) | $ | 0.35 | $ | 0.33 | ||||
| Net gain (loss) on investments and secured borrowings | $ | (0.09 | ) | $ | 0.06 | |||
| Net increase in net assets resulting from operations | $ | 0.28 | $ | 0.38 | ||||
__________
| (1) | See Non-GAAP Financial Measure – Adjusted Net Investment Income below for a detailed description of this non-GAAP measure and a reconciliation from net investment income to adjusted net investment income. |
Portfolio Review
The Company had debt and equity investments in 42 portfolio companies, with a total fair value of $237.7 million, as of June 30, 2014 as compared to debt and equity investments in 43 portfolio companies, with a total fair value of $224.7 million, as of March 31, 2014. As of June 30, 2014, the weighted average contractual yield on the Company’s investments was 10.5% and the effective yield was 11.1% as compared to the weighted average contractual yield of 10.2% and effective yield of 10.8% as of March 31, 2014.
Financial Review
Net investment income for the quarter ended June 30, 2014 increased to $3.5 million, or $0.37 per share, from $3.1 million, or $0.32 per share, when compared to the quarter ended March 31, 2014. Adjusted net investment income was $3.3 million, or $0.35 per share, for the quarter ended June 30, 2014, an increase of $0.1 million over the $3.2 million of adjusted net investment income, or $0.33 per share, for the quarter ended March 31, 2014. The increase in adjusted net investment income per share was primarily attributable to increases in interest income as the Company continued to deploy available capital into new portfolio investments and optimized the portfolio into higher yielding assets.
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Net gain (loss) on investments and secured borrowings was $(0.8) million for the quarter ended June 30, 2014, a decrease of $1.3 million from the $0.5 million of net gain (loss) on investments and secured borrowings for the quarter ended March 31, 2014.
Net increase in net assets resulting from operations was $2.7 million, or $0.28 per share, for the quarter ended June 30, 2014, compared to $3.7 million of net increase in net assets resulting from operations, or $0.38 per share, for the quarter ended March 31, 2014. This decrease is primarily the result of declines in certain portfolio company valuations. The Company’s NAV per share decreased to $13.93 per share at June 30, 2014 from $13.99 per share at March 31, 2014.
Liquidity and Capital Resources
At June 30, 2014, the Company had $4.9 million in cash and $95.5 million of total debt outstanding on its revolving credit facility and $8.0 million in outstanding Small Business Administration (“SBA”) debentures. As of June 30, 2014, the Company had $14.5 million available for additional borrowings on its revolving credit facility and $5.7 million in available SBA-guaranteed debentures.
During the quarter ended June 30, 2014, the Company continued to make repurchases under the previously announced share repurchase plan (“Plan”). During the quarter ended June 30, 2014, the Company repurchased 97,411 shares for a total cost of $1.3 million. Since the approval of the Plan during the fourth quarter of 2013 through June 30, 2014, the Company has repurchased 444,280 shares for a total cost of $5.7 million. Under the Plan, the Company may acquire up to $7.5 million of its outstanding common stock in the open market at prices below its NAV as reported in its then most recently published financial statements.
SBIC Subsidiary
On April 24, 2014, the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, (“MRCC SBIC”) received a commitment letter from the SBA for SBA-guaranteed debentures of $20.0 million and anticipates receiving another commitment for an additional $20.0 million during the third quarter of 2014. As of June 30, 2014, MRCC SBIC had $20.0 million in regulatory capital, $13.7 million in leveragable capital and $8.0 million in SBA-guaranteed debentures outstanding. MRCC SBIC may currently borrow up to one times the amount of its leveragable capital and upon reaching leveragable capital of $20.0 million may borrow up to two times the amount of its regulatory capital, or $40.0 million, subject to customary regulatory requirements.
Non-GAAP Financial Measure – Adjusted Net Investment Income
On a supplemental basis, the Company discloses Adjusted Net Investment Income (including on a per share basis) which is a financial measure that is calculated and presented on a basis of methodology other than in accordance with generally accepted accounting principles of the United States of America (“non-GAAP”). Adjusted Net Investment Income represents net investment income, excluding the net capital gains incentive fee. The management agreement with the Company’s advisor provides that a capital gains incentive fee is determined and paid annually with respect to realized capital gains (but not unrealized capital gains) to the extent such realized capital gains exceed realized and unrealized capital losses for such year. Management believes that Adjusted Net Investment Income is a useful indicator of operations exclusive of any net capital gains incentive fee as net investment income does not include gains associated with the capital gains incentive fee.
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The following table provides a reconciliation from net investment income (the most comparable GAAP measure) to Adjusted Net Investment Income for the periods presented:
| For the quarter ended | ||||||||||||||||
| June 30, 2014 | March 31, 2014 | |||||||||||||||
| Amount | Per Share Amount | Amount | Per Share Amount | |||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| Net investment income | $ | 3,514 | $ | 0.37 | $ | 3,130 | $ | 0.32 | ||||||||
| Net capital gains incentive fee | (169 | ) | (0.02 | ) | 108 | 0.01 | ||||||||||
| Adjusted net investment income | $ | 3,345 | $ | 0.35 | $ | 3,238 | $ | 0.33 | ||||||||
Adjusted Net Investment Income may not be comparable to similar measures presented by other companies, as it is a non-GAAP financial measure that is not based on a comprehensive set of accounting rules or principles and therefore may be defined differently by other companies. In addition, Adjusted Net Investment Income should be considered in addition to, not as a substitute for, or superior to, financial measures determined in accordance with GAAP.
Second Quarter 2014 Financial Results Conference Call
The Company will host a conference call to discuss these operating and financial results on Monday, August 11, 2014 at 2:00pm ET. To participate in the conference call, please dial (877) 312-8807 approximately 10 minutes prior to the call. Please reference conference ID # 81861333.
A telephone replay of the conference call will be available from 5:00pm ET on August 11, 2014 until 11:59pm ET on August 18, 2014 and may be accessed by calling (855) 859-2056 (domestic dial-in) or (404) 537-3406 (international dial-in) and reference conference ID # 81861333.
For a more detailed discussion of the financial and other information
included in this press release, please also refer to the Company’s Form 10-Q for the quarter ended June 30, 2014 to be filed
with the Securities and Exchange Commission (www.sec.gov) on August 11, 2014.
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| MONROE CAPITAL CORPORATION |
| CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES |
| (in thousands, except per share data) |
| June 30, 2014 | March 31, 2014 | |||||||
| (unaudited) | (unaudited) | |||||||
| ASSETS | ||||||||
| Investments, at fair value | ||||||||
| Non-controlled/non-affiliate company investments, at fair value (cost of: $230,152 and $219,298, respectively) | $ | 231,007 | $ | 220,549 | ||||
| Non-controlled affiliated company investments, at fair value (cost of: $7,117 and $3,847, respectively) | 6,653 | 4,122 | ||||||
| Total investments, at fair value (cost of: $237,269 and $223,145, respectively) | 237,660 | 224,671 | ||||||
| Cash | 4,897 | 9,395 | ||||||
| Receivable for open trades | 58 | 2,734 | ||||||
| Interest receivable | 960 | 822 | ||||||
| Deferred financing costs, net | 2,217 | 1,958 | ||||||
| Other assets | 496 | 421 | ||||||
| Total assets | 246,288 | 240,001 | ||||||
| LIABILITIES | ||||||||
| Revolving credit facility | 95,500 | 94,500 | ||||||
| SBA debentures payable | 8,000 | - | ||||||
| Secured borrowings, at fair value (proceeds of $6,650 and $7,997, respectively) | 6,527 | 6,181 | ||||||
| Payable for open trades | - | 1,311 | ||||||
| Interest payable | 135 | 112 | ||||||
| Management fees payable | 1,030 | 953 | ||||||
| Incentive fees payable | 980 | 1,123 | ||||||
| Accounts payable and accrued expenses | 931 | 753 | ||||||
| Total liabilities | 113,103 | 104,933 | ||||||
| Net assets | $ | 133,185 | $ | 135,068 | ||||
| ANALYSIS OF NET ASSETS | ||||||||
| Common stock, $0.001 par value, 100,000 shares authorized, 9,559 and 9,656 shares | ||||||||
| issued and outstanding, respectively | $ | 10 | $ | 10 | ||||
| Capital in excess of par value | 135,353 | 136,650 | ||||||
| Accumulated distributions in excess of net investment income | (2,692 | ) | (3,115 | ) | ||||
| Accumulated net realized gain on (loss) investments | - | - | ||||||
| Accumulated net unrealized appreciation (depreciation) on investments and secured borrowings | 514 | 1,523 | ||||||
| Total net assets | $ | 133,185 | $ | 135,068 | ||||
| Net asset value per share | $ | 13.93 | $ | 13.99 | ||||
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| MONROE CAPITAL CORPORATION |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| (in thousands, except per share data) |
| For the quarter ended | ||||||||
| June 30, 2014 | March 31, 2014 | |||||||
| (unaudited) | ||||||||
| Investment income: | ||||||||
| Interest income: | ||||||||
| Non-controlled/non-affiliate company investments | $ | 6,883 | $ | 6,408 | ||||
| Non-controlled affiliated company investments | 163 | 108 | ||||||
| Total investment income | 7,046 | 6,516 | ||||||
| Operating expenses: | ||||||||
| Interest and other debt financing expenses | 1,115 | 967 | ||||||
| Base management fees | 1,030 | 953 | ||||||
| Incentive fees | 667 | 917 | ||||||
| Professional fees | 298 | 191 | ||||||
| Administrative service fees | 217 | 201 | ||||||
| General and administrative expenses | 205 | 157 | ||||||
| Total expenses | 3,532 | 3,386 | ||||||
| Net investment income | 3,514 | 3,130 | ||||||
| Net gain (loss) on investments and secured borrowings: | ||||||||
| Net realized gain (loss) on investments: | ||||||||
| Non-controlled/non-affiliate company investments | 161 | 44 | ||||||
| Net realized gain (loss) on investments | 161 | 44 | ||||||
| Net change in unrealized appreciation (depreciation) on investments: | ||||||||
| Non-controlled/non-affiliate company investments | (1,243 | ) | 275 | |||||
| Non-controlled affiliated company investments | 110 | 275 | ||||||
| Net change in unrealized appreciation (depreciation) on investments | (1,133 | ) | 550 | |||||
| Net change in unrealized (appreciation) depreciation on secured borrowings | 124 | (56 | ) | |||||
| Net gain (loss) on investments and secured borrowings | (848 | ) | 538 | |||||
| Net increase (decrease) in net assets resulting from operations | $ | 2,666 | $ | 3,668 | ||||
| Per common share data: | ||||||||
| Net investment income per share - basic and diluted | $ | 0.37 | $ | 0.32 | ||||
| Net increase in net assets resulting from operations per share - basic and diluted | $ | 0.28 | $ | 0.38 | ||||
| Weighted average common shares outstanding - basic and diluted | 9,582 | 9,761 | ||||||
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ABOUT MONROE CAPITAL CORPORATION
Monroe Capital Corporation is a publicly-traded specialty finance company that principally invests in senior, unitranche and junior
secured debt and, to a lesser extent, unsecured debt and equity investments in middle-market companies. The Company’s investment
objective is to maximize the total return to its stockholders in the form of current income and capital appreciation. The Company’s
investment activities are managed by its investment adviser, Monroe Capital BDC Advisors, LLC, which is an investment adviser registered
under the Investment Advisers Act of 1940, as amended, and an affiliate of Monroe Capital LLC. To learn more about Monroe Capital
Corporation, visit www.monroebdc.com.
ABOUT MONROE CAPITAL LLC
Monroe Capital LLC is a provider of senior and junior debt and equity co-investments to middle-market companies in the U.S. and
Canada. Investment types include unitranche financings, cash flow and enterprise value based loans, acquisition facilities, mezzanine
debt, second lien or last-out loans and equity co-investments. Monroe Capital LLC prides itself on its flexible investment approach
and its ability to close and fund transactions quickly. Monroe Capital LLC is committed to being a value-added and user-friendly
partner to owners, senior management and private equity sponsors. Monroe has been recognized by Global M&A Network as the 2013
Small Mid Market Lender of the Year and by Private Debt Investor as the 2013 Unitranche Lender of the Year. To learn more
about Monroe Capital LLC, visit www.monroecap.com.
FORWARD-LOOKING STATEMENTS
This press release may contain certain forward-looking statements. Any such statements, other than statements of historical fact,
are likely to be affected by other unknowable future events and conditions, including elements of the future that are or are not
under the Company’s control, and that the Company may or may not have considered; accordingly, such statements cannot be
guarantees or assurances of any aspect of future performance. Actual developments and results are highly likely to vary materially
from these estimates and projections of the future. Such statements speak only as of the time when made, and the Company undertakes
no obligation to update any such statement now or in the future.
| SOURCE: | Monroe Capital Corporation |
| InvestorContact: | Aaron D. Peck |
Chief Investment Officer and Chief Financial Officer
Monroe Capital Corporation
(312) 523-2363
Email: apeck@monroecap.com
| MediaContact: | Kelly Holman |
BackBay Communications
(212) 209-3844
Email: kelly.holman@backbaycommunications.com
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