MSC INCOME FUND ANNOUNCES 2024 FOURTH QUARTER AND ANNUAL RESULTS
Fourth Quarter 2024 Net Investment Income of $0.35 Per Share
Net Asset Value of $15.53 Per Share
HOUSTON, March 19, 2025 /PRNewswire/ -- MSC Income Fund, Inc. (NYSE:MSIF) ("MSC Income") is pleased to announce its financial results for the fourth quarter and full year ended December 31, 2024. Unless otherwise noted or the context otherwise indicates, the terms the "Company" and the "Fund" refer to MSC Income and its consolidated subsidiaries.
Fourth Quarter 2024 Highlights(1)
Net investment income of $14.2 million (or $0.35 per share)
Total investment income of $33.5 million
Net increase in net assets resulting from operations of $20.5 million (or $0.51 per share)
Return on equity(2) of 13.2% on an annualized basis
Net asset value of $15.53 per share as of December 31, 2024, representing an increase of $0.15 per share, or 1.0%, compared to $15.38 per share as of September 30, 2024
Declared regular quarterly dividends totaling $0.36 per share payable in the first quarter of 2025, representing a 2.9% increase from the regular quarterly dividends paid in the first quarter of 2024
Completed $29.5 million in total private loan portfolio investments, which after aggregate repayments of private loan portfolio debt investments and a decrease in cost basis due to a realized loss on a private loan portfolio investment resulted in a net decrease of $5.5 million in the total cost basis of the private loan investment portfolio
Completed $30.5 million in total lower middle market ("LMM") portfolio investments, including investments of $16.6 million in two new LMM portfolio companies, which after aggregate repayments of LMM portfolio debt investments and a decrease in cost basis due to a realized loss on a LMM portfolio investment resulted in a net increase of $16.4 million in the total cost basis of the LMM investment portfolio
Net decrease of $7.5 million in the total cost basis of the middle market investment portfolio
Kroll Bond Rating Agency, LLC ("KBRA") reaffirmed the Fund's investment grade issuer and senior unsecured debt rating of BBB- with a stable outlook
Further enhanced the Fund's capital structure and liquidity position by amending the Fund's Corporate Facility (as defined in the Liquidity and Capital Resources section below), which provided extensions of the revolving period to November 2028 and the final maturity date to May 2029 and decreased the interest rate for outstanding borrowings to, subject to the Company's election, on a per annum basis, a rate equal to (i) SOFR plus 2.05% (from 2.50%) or (ii) the base rate plus 1.05% (from 1.40%)
Full Year 2024 Highlights(1)
Net investment income of $57.3 million (or $1.43 per share)
Total investment income of $134.8 million
Net increase in net assets resulting from operations of $56.6 million (or $1.41 per share)
Return on equity(2) of 9.1%
Net asset value of $15.53 per share as of December 31, 2024, representing a decrease of $0.01 per share, or 0.1%, compared to $15.54 per share as of December 31, 2023
Paid regular quarterly dividends totaling $1.44 per share, representing a 5.1% increase from prior year
Completed $241.8 million in total private loan portfolio investments, which after aggregate repayments of private loan portfolio debt investments, return of invested equity capital from several private loan portfolio equity investments and a decrease in cost basis due to realized losses on several private loan portfolio investments resulted in a net increase of $102.1 million in the total cost basis of the private loan investment portfolio
Completed $80.7 million in total LMM portfolio investments, including investments totaling $44.5 million in seven new LMM portfolio companies, which after aggregate repayments of LMM portfolio debt investments, return of invested equity capital from several LMM portfolio equity investments and a decrease in cost basis due to a realized loss on a LMM portfolio investment resulted in a net increase of $40.7 million in the total cost basis of the LMM investment portfolio
Net decrease of $51.5 million in the total cost basis of the middle market investment portfolio
In commenting on the Company's operating results for the fourth quarter and full year of 2024, Dwayne L. Hyzak, MSC Income's Chief Executive Officer, stated, "We are pleased with the Fund's performance in the fourth quarter and the full year, which closed another good year for MSC Income Fund in its final full year as an unlisted entity. We believe that the fourth quarter and full year performance provide visibility to significant opportunities in the future after the completion of the Fund's successful listing on the New York Stock Exchange and the related equity offering in January 2025, activities which provide the Fund the increased current liquidity and a clear path to additional debt capacity necessary to achieve significant growth in 2025 and 2026 and the potential for increased net investment income."
Fourth Quarter 2024 Operating Results(1)
The following table provides a summary of the Fund's operating results for the fourth quarter of 2024:
Three Months Ended December 31,
2024
2023
Change ($)
Change (%)
(dollars in thousands, except per share amounts)
Interest income
$ 29,662
$ 30,186
$ (524)
(2) %
Dividend income
2,731
3,393
(662)
(20) %
Fee income
1,062
1,182
(120)
(10) %
Total investment income
$ 33,455
$ 34,761
$ (1,306)
(4) %
Net investment income
$ 14,227
$ 15,042
$ (815)
(5) %
Net investment income per share
$ 0.35
$ 0.37
$ (0.02)
(5) %
Net increase in net assets resulting from operations
$ 20,462
$ 21,342
$ (880)
(4) %
Net increase in net assets resulting from operations per share
$ 0.51
$ 0.53
$ (0.02)
(4) %
The $1.3 million decrease in total investment income in the fourth quarter of 2024 from the comparable period of the prior year was principally attributable to (i) a $0.7 million decrease in dividend income, primarily due to a decrease in dividend income from the Fund's other portfolio investments and (ii) a $0.5 million decrease in interest income, primarily due to an increase in investments on non-accrual status and a decrease in interest rates on floating rate investment portfolio debt investments primarily resulting from decreases in benchmark index rates, partially offset by higher average levels of income producing investment portfolio debt investments. The $1.3 million decrease in total investment income in the fourth quarter of 2024 includes the impact of a net decrease of $0.5 million in certain income considered less consistent or non-recurring, primarily related to (i) a $0.4 million decrease in such interest income from accelerated prepayment, repricing and other activity related to certain investment portfolio debt investments and (ii) a $0.1 million decrease in such fee income when compared to the same period in 2023.
Total expenses, net of waivers, decreased by $0.5 million, or 2.5%, to $19.2 million in the fourth quarter of 2024 from $19.7 million for the same period in 2023. This decrease was principally attributable to (i) a $0.5 million decrease in incentive fees and (ii) a $0.3 million decrease in interest expense, partially offset by a $0.3 million increase in base management fees. The decrease in incentive fees is due to the decreased pre-incentive fee net investment income resulting from the less favorable operating results for the quarter compared to the corresponding period of the prior year. The decrease in interest expense is primarily related to decreased weighted-average interest rates on the Fund's Credit Facilities (as defined in the Liquidity and Capital Resources section below) based upon the decreases in benchmark index rates for these floating rate debt obligations, partially offset by higher weighted-average outstanding borrowings used to fund the growth in the Fund's investment portfolio. The increase in base management fees was due to an increase in average total assets in the current year.
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, was 2.1% and 2.2% for the fourth quarter of 2024 and 2023, respectively, on an annualized basis.
The $0.8 million decrease in net investment income in the fourth quarter of 2024 from the comparable period of the prior year was principally attributable to the decrease in total investment income, partially offset by decreased expenses, each as discussed above. Net investment income decreased by $0.02 per share for the fourth quarter of 2024 as compared to the fourth quarter of 2023, to $0.35 per share. Net investment income on a per share basis in the fourth quarter of 2024 included a net decrease of $0.01 per share resulting from a decrease in investment income considered less consistent or non-recurring in nature compared to the fourth quarter of 2023, as discussed above.
The $20.5 million net increase in net assets resulting from operations in the fourth quarter of 2024 represents a $0.9 million decrease from the fourth quarter of 2023. This decrease was primarily the result of (i) a $6.7 million decrease in net unrealized appreciation from portfolio investments (including the impact of accounting reversals relating to realized gains/income (losses)) and (ii) a $0.8 million decrease in net investment income, partially offset by (i) a $5.6 million increase in income tax benefit and (ii) a $1.0 million improvement in net realized loss from investments resulting from a net realized loss of $8.0 million in the fourth quarter of 2024 compared to a net realized loss of $9.0 million in the fourth quarter of 2023. The $8.0 million net realized loss from investments for the fourth quarter of 2024 was primarily the result of (i) a $5.0 million realized loss on the restructure of investments in a private loan portfolio company, (ii) a $3.6 million realized loss on the full exit of investments in a LMM portfolio company and (iii) a $0.5 million realized loss on the full exit of a middle market portfolio investment.
The following table provides a summary of the total net unrealized appreciation of $9.2 million for the fourth quarter of 2024:
Three Months Ended December 31, 2024
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
$ 4.5
$ 3.3
$ 0.5
$ (0.1)
$ 8.2
Net unrealized appreciation (depreciation) relating to portfolio investments
(3.5)
5.3
(0.4)
(0.4)
1.0
Total net unrealized appreciation (depreciation) relating to portfolio investments
$ 1.0
$ 8.6
$ 0.1
$ (0.5)
$ 9.2
(a)
Includes unrealized appreciation on 30 LMM portfolio investments and unrealized depreciation on 13 LMM portfolio investments.
Liquidity and Capital Resources
As of December 31, 2024, the Fund had aggregate liquidity of $77.7 million, including ...
