MidCap Financial Investment (MFIC) Q3 2024 earnings summary

Executive summary

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

• Net investment income for Q3 2024 was $38.1 million ($0.44 per share), up from $27.9 million in Q3 2023, with an annualized ROE of 11.5%.

• Net asset value (NAV) per share was $15.10 at September 30, 2024, down 0.5% from June 30, 2024, reflecting distributions and unrealized losses.

• Paid a $0.20 per share special dividend in connection with the mergers, in addition to a $0.38 per share regular dividend declared for Q4 2024.

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 $11.4 million ($(0.13)/share).

• Net leverage ratio was 1.16x at September 30, 2024, down from 1.45x at June 30, 2024.

• Portfolio grew to 250 companies, up from 149 a year ago, due to the mergers.

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

Outlook and guidance

• Management plans to redeploy approximately $600 million of capital into directly originated middle-market loans and gradually increase leverage back to a 1.4x target.

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

• Optimistic about increased M&A and new money transactions in late Q4 and into 2025, supported by market dynamics and sponsor activity.

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