In This Article:
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Net Investment Income Per Share: $0.45 for the June quarter.
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Annualized Return on Equity (ROE): 11.8% based on net investment income.
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GAAP EPS: $0.35 for the June quarter.
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NAV Per Share: $15.38 at the end of June, down $0.04 from March.
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Net Assets: Increased by approximately 44% due to mergers, totaling $1.45 billion.
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New Investment Commitments: $285 million across 28 borrowers in the June quarter.
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Weighted Average Yield at Cost: 12% for the corporate lending portfolio.
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Net Leverage: 1.45 times at the end of June.
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Special Cash Distribution: $0.20 per share declared in connection with mergers.
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Quarterly Dividend: $0.38 per share declared for shareholders of record as of September 10, 2024.
Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Successful completion of mergers with Apollo Senior Floating Rate Fund Inc. and Apollo Tactical Income Fund Inc., enhancing MFIC's portfolio diversification and operational synergies.
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Net investment income per share for the June quarter was $0.45, corresponding to an annualized return on equity of 11.8%.
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MFIC's net assets increased by approximately 44% due to the mergers, providing significant investment capacity.
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Strong recurring interest income from a predominantly floating rate portfolio, with a weighted average yield at cost of 12%.
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MidCap Financial's extensive origination track record and large data set provide MFIC with significant deal flow and attractive investment opportunities.
Negative Points
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Net asset value per share decreased by $0.04 from the end of March to $15.38 at the end of June.
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The weighted average spread on the corporate lending portfolio decreased by 20 basis points compared to the end of March.
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Investments on non-accrual were 1.8% of the total portfolio at fair value, indicating some credit quality concerns.
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The blended yield across the total investment in Merx is less than 4%, which is lower than the overall portfolio yield.
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The process of selling non-directly originated assets acquired from the mergers is ongoing and may take several quarters to complete.
Q & A Highlights
Q: Can you provide more details on the portfolio rotation strategy and any constraints around the pace of sales for non-directly originated assets? A: Tanner Powell, CEO: We've made good progress, selling roughly $125 million since the mergers. The strategy isn't contingent on selling every asset, especially those less liquid, like certain structured credits and high-yield bonds. We aim to avoid discounts to fair market value, so not all $400 million will be sold. The focus is on reinvestment yield and avoiding unnecessary discounts.