MSC INCOME FUND ANNOUNCES SECOND QUARTER 2025 RESULTS
Second
Quarter 2025 Net Investment Income of
Net Asset Value of
Second Quarter 2025 Highlights
- Net investment income of
$16.3 million (or$0.35 per share), including excise tax and net investment income related income taxes of$1.0 million (or$0.02 per share) - Net investment income before taxes of
$17.3 million (or$0.37 per share) - Total investment income of
$35.6 million - Net increase in net assets resulting from operations of
$16.3 million (or$0.35 per share) - Return on equity(1) of 9.0% on an annualized basis for the quarter and 9.1% for the trailing twelve-month period ended
June 30, 2025 - Net asset value of
$15.33 per share as ofJune 30, 2025 - Declared a regular quarterly dividend of
$0.35 per share and a supplemental quarterly dividend of$0.01 per share, both payable in the third quarter of 2025, resulting in total dividends declared in the second quarter of 2025 of$0.36 per share - Completed
$44.0 million in total private loan portfolio investments, which after aggregate repayments and sales of debt investments, return of invested equity capital and a decrease in cost basis due to a realized loss resulted in a net decrease of$29.6 million in the total cost basis of the private loan investment portfolio - Completed
$20.3 million in total lower middle market ("LMM") portfolio follow-on investments, which after aggregate repayments of debt investments and return of invested equity capital resulted in a net increase of$15.9 million in the total cost basis of the LMM investment portfolio - Net decrease of
$0.6 million in the total cost basis of the middle market investment portfolio
In commenting on the Company's operating results for the second quarter of 2025,
Second Quarter 2025 Operating Results (2)
The following table provides a summary of the Fund's operating results for the second quarter of 2025:
|
|
Three Months Ended |
||||||
|
|
2025 |
|
2024 |
|
Change ($) |
|
Change (%) |
|
|
(in thousands, except per share amounts) |
||||||
|
Interest income |
$ 29,349 |
|
$ 28,859 |
|
$ 490 |
|
2 % |
|
Dividend income |
4,956 |
|
4,007 |
|
949 |
|
24 % |
|
Fee income |
1,338 |
|
1,080 |
|
258 |
|
24 % |
|
Total investment income |
$ 35,643 |
|
$ 33,946 |
|
$ 1,697 |
|
5 % |
|
|
|
|
|
|
|
|
|
|
Net investment income (3) |
$ 16,307 |
|
$ 13,419 |
|
$ 2,888 |
|
22 % |
|
Net investment income per share (3) |
$ 0.35 |
|
$ 0.33 |
|
$ 0.02 |
|
6 % |
|
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations |
$ 16,289 |
|
$ 18,129 |
|
$ (1,840) |
|
(10) % |
|
Net increase in net assets resulting from operations per share |
$ 0.35 |
|
$ 0.45 |
|
$ (0.10) |
|
(22) % |
The
Total expenses, net of waivers, decreased by
The Fund's ratio of total non-interest operating expenses, excluding incentive fees, as a percentage of quarterly average total assets, or the Operating Expenses to Assets Ratio, decreased to 1.9% on an annualized basis for the second quarter of 2025, from 2.2% for the second quarter of 2024, primarily as a result of the decreased base management fee percentage under the amended advisory agreement effective upon the listing of the Fund's shares of common stock in
The
The
The following table provides a summary of the total net unrealized depreciation of
|
|
Three Months Ended |
||||||||
|
|
Private Loan |
|
LMM (a) |
|
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 |
$ (0.1) |
|
$ (0.3) |
|
$ — |
|
$ (5.3) |
|
$ (5.7) |
|
Net unrealized appreciation (depreciation) relating to portfolio investments |
(0.8) |
|
3.1 |
|
(1.0) |
|
0.5 |
|
1.8 |
|
Total net unrealized appreciation (depreciation) relating to portfolio investments |
$ (0.9) |
|
$ 2.8 |
|
$ (1.0) |
|
$ (4.8) |
|
$ (3.9) |
|
|
|
|
(a) |
LMM includes unrealized appreciation on 28 LMM portfolio investments and unrealized depreciation on 15 LMM portfolio investments. |
Liquidity and Capital Resources
As of
Several details regarding the Fund's capital structure as of
- The SPV Facility included
$300.0 million in total commitments plus an accordion feature that allows the Fund to request an increase in the total commitments under the facility to up to$450.0 million . -
$240.0 million in outstanding borrowings under the SPV Facility, with an interest rate of 6.5% based on the applicable Secured Overnight Financing Rate ("SOFR") effective for the contractual reset date ofJuly 1, 2025 . - The Corporate Facility included
$245.0 million in total commitments from a diversified group of seven lenders plus an accordion feature that allows the Fund to request an increase in the total commitments under the facility to up to$300.0 million . -
$149.0 million in outstanding borrowings under the Corporate Facility, with an interest rate of 6.4% based on the applicable SOFR effective for the contractual reset date ofJuly 1, 2025 . -
$150.0 million of notes outstanding that bear interest at a rate of 4.04% per year (the "Series A Notes"). The Series A Notes mature onOctober 30, 2026 . - The Fund maintains an investment grade rating from
Kroll Bond Rating Agency, LLC of BBB- with a stable outlook. - The Fund's net asset value totaled
$722.8 million , or$15.33 per share. - The Fund's debt-to-equity ratio was 0.75x as of
June 30, 2025 , below the Fund's targeted leverage range.
Investment Portfolio Information as of
The following table provides a summary of the investments in the Fund's private loan portfolio and LMM portfolio as of
|
|
|
As of |
||
|
|
|
Private Loan |
|
LMM (a) |
|
|
|
(dollars in millions) |
||
|
Number of portfolio companies |
|
82 |
|
57 |
|
Fair value |
|
$ 741.6 |
|
$ 458.5 |
|
Cost |
|
$ 764.3 |
|
$ 372.2 |
|
Debt investments as a % of portfolio (at cost) |
|
93.2 % |
|
69.2 % |
|
Equity investments as a % of portfolio (at cost) |
|
6.8 % |
|
30.8 % |
|
% of debt investments at cost secured by first priority lien |
|
99.9 % |
|
99.9 % |
|
Weighted-average annual effective yield (b) |
|
11.5 % |
|
13.1 % |
|
Average EBITDA (c) |
|
$ 30.0 |
|
$ 10.9 |
|
|
|
|
(a) |
The Fund had equity ownership in all of its LMM portfolio companies, and the Fund's average fully diluted equity ownership in those portfolio companies was 9%. |
|
(b) |
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments as of |
|
(c) |
The average EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is calculated using a weighted-average for the private loan portfolio and a simple average for the LMM portfolio. These calculations exclude certain portfolio companies, including four private loan portfolio companies and four LMM portfolio companies, as EBITDA is not a meaningful valuation metric for the Fund's investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate and those portfolio companies whose primary operations have ceased and only residual value remains. |
The Fund's total investment portfolio at fair value consists of approximately 60% private loan, 37% LMM, 2% middle market and 1% other portfolio investments.
The fair value of the Fund's LMM portfolio company equity investments was 185% of the cost of such equity investments, and the Fund's LMM portfolio companies had a median net senior debt (senior interest-bearing debt through the Fund's debt position less cash and cash equivalents) to EBITDA ratio of 2.8 to 1.0 and a median total EBITDA to senior interest expense ratio of 2.8 to 1.0. Including all debt that is junior in priority to the Fund's debt position, these median ratios were 2.8 to 1.0 and 2.7 to 1.0, respectively.(4)(5)
As of
- Middle market portfolio investments in eight portfolio companies, collectively totaling
$29.3 million in fair value and$40.1 million in cost basis, which comprised 2.4% and 3.4% of the Fund's investment portfolio at fair value and cost, respectively; and - Other portfolio investments in six entities, spread across four investment managers, collectively totaling
$16.2 million in fair value and$14.9 million in cost basis, both of which comprised 1.3% of the Fund's investment portfolio at fair value and cost.
As of
Second Quarter 2025 Financial Results Conference Call / Webcast
MSC Income has scheduled a conference call for
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 Company's website at https://www.mscincomefund.com.
A telephonic replay of the conference call will be available through
For a more detailed discussion of the financial and other information included in this press release, please refer to the MSC Income Quarterly Report on Form 10-Q for the quarterly period ended
ABOUT
The Company (www.mscincomefund.com) is a principal investment firm that primarily provides debt capital to private companies owned by or in the process of being acquired by a private equity fund. The Company's portfolio investments are typically made to support leveraged buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. The Company seeks to partner with private equity fund sponsors and primarily invests in secured debt investments within its private loan investment strategy. The Company also maintains a portfolio of customized long-term debt and equity investments in lower middle market companies, and through those investments, the Company has partnered with entrepreneurs, business owners and management teams in co-investments with
ABOUT MSC ADVISER I, LLC
FORWARD-LOOKING STATEMENTS
MSC Income cautions that statements in this press release which are forward–looking and provide other than historical information, including but not limited to MSC Income's ability to successfully source and execute on new portfolio investments and deliver future financial performance and results, are based on current conditions and information available to MSC Income as of the date hereof and include statements regarding MSC Income'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, MSC Income 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: MSC Income's continued effectiveness in raising, investing and managing capital; adverse changes in the economy generally or in the industries in which MSC Income's portfolio companies operate; the impacts of macroeconomic factors on MSC Income and its portfolio companies' businesses and operations, liquidity and access to capital, and on the
|
Consolidated Statements of Operations (in thousands, except shares and per share amounts) (Unaudited) |
|||||||
|
|
|||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
|
INVESTMENT INCOME: |
|
|
|
|
|
|
|
|
Interest, fee and dividend income: |
|
|
|
|
|
|
|
|
Control investments |
$ 1,514 |
|
$ 1,014 |
|
$ 2,956 |
|
$ 1,824 |
|
Affiliate investments |
9,617 |
|
8,243 |
|
18,952 |
|
15,171 |
|
Non–Control/Non–Affiliate investments |
24,512 |
|
24,689 |
|
46,962 |
|
50,900 |
|
Total investment income |
35,643 |
|
33,946 |
|
68,870 |
|
67,895 |
|
EXPENSES: |
|
|
|
|
|
|
|
|
Interest |
(8,678) |
|
(9,546) |
|
(16,921) |
|
(19,095) |
|
Base management fees |
(4,907) |
|
(5,179) |
|
(9,879) |
|
(10,207) |
|
Incentive fees |
(3,431) |
|
(3,591) |
|
(5,454) |
|
(7,228) |
|
Internal administrative services expenses |
(172) |
|
(2,520) |
|
(346) |
|
(4,787) |
|
General and administrative |
(1,149) |
|
(1,106) |
|
(2,176) |
|
(2,139) |
|
Total expenses before expense waivers |
(18,337) |
|
(21,942) |
|
(34,776) |
|
(43,456) |
|
Waiver of internal administrative services expenses |
— |
|
2,361 |
|
— |
|
4,472 |
|
Total expenses, net of expense waivers |
(18,337) |
|
(19,581) |
|
(34,776) |
|
(38,984) |
|
NET INVESTMENT INCOME BEFORE TAXES |
17,306 |
|
14,365 |
|
34,094 |
|
28,911 |
|
Excise tax expense |
(87) |
|
(4) |
|
(279) |
|
(80) |
|
Federal and state income and other tax expenses |
(912) |
|
(942) |
|
(1,761) |
|
(1,425) |
|
NET INVESTMENT INCOME (3) |
16,307 |
|
13,419 |
|
32,054 |
|
27,406 |
|
NET REALIZED GAIN (LOSS): |
|
|
|
|
|
|
|
|
Control investments |
5,296 |
|
47 |
|
5,305 |
|
57 |
|
Affiliate investments |
2 |
|
— |
|
2 |
|
— |
|
Non–Control/Non–Affiliate investments |
(519) |
|
267 |
|
(21,594) |
|
(1,627) |
|
Total net realized gain (loss) |
4,779 |
|
314 |
|
(16,287) |
|
(1,570) |
|
NET UNREALIZED APPRECIATION (DEPRECIATION): |
|
|
|
|
|
|
|
|
Control investments |
(5,068) |
|
3,297 |
|
(5,901) |
|
3,719 |
|
Affiliate investments |
(69) |
|
1,003 |
|
2,767 |
|
984 |
|
Non–Control/Non–Affiliate investments |
1,233 |
|
1,926 |
|
18,013 |
|
390 |
|
Total net unrealized appreciation (depreciation) |
(3,904) |
|
6,226 |
|
14,879 |
|
5,093 |
|
Income tax benefit (provision) on net realized gain (loss) and net unrealized appreciation (depreciation) |
(893) |
|
(1,830) |
|
1,518 |
|
(2,212) |
|
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
$ 16,289 |
|
$ 18,129 |
|
$ 32,164 |
|
$ 28,717 |
|
NET INVESTMENT INCOME BEFORE TAXES PER SHARE—BASIC AND DILUTED |
$ 0.37 |
|
$ 0.36 |
|
$ 0.74 |
|
$ 0.72 |
|
NET INVESTMENT INCOME PER SHARE—BASIC AND DILUTED (2)(3) |
$ 0.35 |
|
$ 0.33 |
|
$ 0.70 |
|
$ 0.68 |
|
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE—BASIC AND DILUTED (2) |
$ 0.35 |
|
$ 0.45 |
|
$ 0.70 |
|
$ 0.72 |
|
WEIGHTED-AVERAGE SHARES OUTSTANDING—BASIC AND DILUTED (2) |
47,047,888 |
|
40,166,664 |
|
45,870,527 |
|
40,148,029 |
|
Consolidated Balance Sheets (in thousands, except per share amounts) |
||||
|
|
||||
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
ASSETS |
|
|
|
|
|
Investments at fair value: |
|
|
|
|
|
Control investments |
|
$ 61,612 |
|
$ 69,878 |
|
Affiliate investments |
|
383,824 |
|
351,360 |
|
Non–Control/Non–Affiliate investments |
|
800,127 |
|
756,269 |
|
Total investments |
|
1,245,563 |
|
1,177,507 |
|
Cash and cash equivalents |
|
28,338 |
|
28,375 |
|
Interest and dividend receivable |
|
11,668 |
|
11,925 |
|
Deferred financing costs |
|
3,596 |
|
1,985 |
|
Prepaids and other assets |
|
3,060 |
|
4,254 |
|
Deferred tax asset, net |
|
842 |
|
625 |
|
Total assets |
|
$ 1,293,067 |
|
$ 1,224,671 |
|
LIABILITIES |
|
|
|
|
|
Credit Facilities |
|
$ 389,000 |
|
$ 415,688 |
|
Series A Notes due 2026 (par: |
|
149,602 |
|
149,453 |
|
Accounts payable and other liabilities |
|
503 |
|
4,723 |
|
Interest payable |
|
5,862 |
|
6,909 |
|
Dividend payable |
|
16,974 |
|
14,487 |
|
Management and incentive fees payable |
|
8,338 |
|
8,508 |
|
Total liabilities |
|
570,279 |
|
599,768 |
|
NET ASSETS |
|
|
|
|
|
Common stock |
|
47 |
|
40 |
|
Additional paid–in capital |
|
789,134 |
|
689,580 |
|
Total overdistributed earnings |
|
(66,393) |
|
(64,717) |
|
Total net assets |
|
722,788 |
|
624,903 |
|
Total liabilities and net assets |
|
$ 1,293,067 |
|
$ 1,224,671 |
|
NET ASSET VALUE PER SHARE |
|
$ 15.33 |
|
$ 15.53 |
|
|
|
|
Endnotes |
|
|
|
|
|
(1) |
Return on equity equals the net increase in net assets resulting from operations divided by the average quarterly total net assets. |
|
(2) |
All prior period per share amounts have been retrospectively adjusted for a 2-for-1 reverse stock split completed by the Company, effective as of |
|
(3) |
Net investment income for 2024 and the first quarter of 2025 necessary to present the comparable year-to-date amounts for the six months ended |
|
(4) |
Portfolio company financial information has not been independently verified by MSC Income. |
|
(5) |
These credit statistics exclude portfolio companies on non-accrual status and portfolio companies for which EBITDA is not a meaningful metric. |
Contacts:
713-350-6000
713-529-6600
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