MidCap Financial Investment (MFIC) Q3 2024 earnings summary

Executive summary

• Completed mergers with Apollo Senior Floating Rate Fund (AFT) and Apollo Tactical Income Fund (AIF), acquiring up to $622 million in net assets, issuing 28.5 million shares, and increasing net assets by over 40%.

• Net investment income for Q3 2024 was $38.1 million ($0.44/share), up from $27.9 million in Q3 2023, driven by portfolio growth from the mergers.

• Net asset value (NAV) per share was $15.10 as of September 30, 2024, down 0.5% from June 30, 2024, excluding a $0.20 special dividend.

• Board declared a $0.38 per share dividend payable December 26, 2024, plus a $0.20 special dividend paid in connection with the mergers.

• Portfolio composition remains focused on first lien senior secured loans to U.S. middle-market companies, with 91–92% in secured debt at fair value.

Financial highlights

• Total investment income for Q3 2024 was $82.1 million, up from $68.2 million in Q3 2023.

• Net realized and unrealized losses for Q3 2024 were $11.4 million, or $0.13 per share.

• Earnings per share for Q3 2024 was $0.31, down from $0.46 in Q3 2023.

• Net leverage ratio was 1.16x as of September 30, 2024, down from 1.45x in the prior quarter.

• Total assets reached $3.22 billion as of September 30, 2024, up from $2.55 billion at June 30, 2024.

Outlook and guidance

• Management plans to gradually increase leverage to the 1.4x target and redeploy capital into directly originated middle-market loans.

• Amended and extended the senior secured revolving credit facility, increasing lender commitments to $1.815 billion and extending maturity to October 2029.

• Optimism for increased M&A and new money transactions in late Q4 and into 2025, supported by rate cuts and sponsor activity.

• Focus remains on exiting non-directly originated assets acquired in the mergers.

• No assurance that the $0.38/share base dividend will continue.