Monroe Capital Reports Financial Performance for Year Ended December 31, 2024

Monroe Capital Corporation (MRCC), a Maryland corporation operating as a business development company (BDC), reported its financial performance for the year ended December 31, 2024, in its recent 10-K filing. Total investment income reached $60.5 million, compared to $64.3 million in 2023. Net investment income for 2024 was $24.5 million, a decrease from $23.2 million in the previous year. The decrease in investment income was primarily attributed to lower interest and PIK interest income due to lower average invested assets and a rise in non-accrual portfolio companies, partially offset by an increase in other income. Net realized gain on investments was $1.4 million, a significant improvement from a net realized loss of $37.1 million in 2023. The net increase (decrease) in net assets resulting from operations was $9.7 million in 2024, compared to $0.4 million in 2023.

Significant changes in the portfolio occurred during 2024. The company invested $30.4 million in seven new portfolio companies and $57.2 million in 53 existing companies, while realizing $115 million in sales and principal repayments, resulting in a net decrease in investments of $27.4 million. As of December 31, 2024, the portfolio consisted of 91 portfolio companies, with approximately 78.3% in senior secured loans, 0.8% in unitranche secured loans, 6.5% in junior secured loans, and 14.4% in equity securities. Ten borrowers had loans or preferred equity investments on non-accrual status, totaling $15.7 million at fair value (3.4% of total investments). The weighted average annualized contractual coupon yield on the portfolio was 10.2% at year-end 2024, down from 12.1% at the end of 2023.

Operationally, MRCC relies heavily on MC Advisors for investment management and MC Management for administrative services. Both are affiliates of Monroe Capital. On October 22, 2024, Monroe Capital announced that certain affiliates entered into an equity purchase agreement with Wendel SE, resulting in a change of control of MC Advisors. This triggered the need for a new investment advisory and management agreement, which was subsequently approved by stockholders on February 21, 2025. The terms of the new agreement remain substantially the same as the previous one. The company also amended its revolving credit facility on February 27, 2025, to enhance flexibility for refinancing its 2026 Notes.

The company's financial condition at year-end 2024 included $9.0 million in cash and cash equivalents, $163.9 million in debt outstanding under its revolving credit facility, and $130.0 million in outstanding 2026 Notes. The company's asset coverage ratio was 165%, exceeding the 150% minimum required under the 1940 Act. Total distributions to stockholders for 2024 were $21.7 million ($1.00 per share), none of which was a return of capital. The company's 10-K filing also details various risk factors, including those related to its business structure, investments, common stock, and 2026 Notes, as well as its valuation process and compliance with regulatory requirements.

The company's outlook is tied to market conditions and its ability to originate and manage investments. While the 2024 results show some improvement in realized gains, the decrease in net investment income and the increase in non-accrual loans highlight ongoing challenges. The company's future performance will depend on its ability to navigate a competitive market, manage interest rate risk, and maintain its RIC status. The acquisition of a 75% interest in Monroe Capital's affiliates by Wendel SE is expected to close in the first quarter of 2025, subject to customary closing conditions.