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Monroe Capital Corporation's NII Rises - NAV Sinks

|About: Monroe Capital (MRCC)

Monroe Capital Corporation (MRCC) had a good quarter when it comes to "Accretion of discounts + amortization w/ interest" - resulting in $0.4182/share in NII. MRCC did have markdowns on the equity investment in Rockdale. Net markdowns were $0.3496/share. Thirty-five cents of markdown plus seven cents of NII over the dividend should result in a fall of twenty-eight cents of NAV. NAV fell from $13.77 to $13.49.

The projections for MRCC from Yahoo Finance:

Earnings Estimate Current Qtr. (Mar 2018) Next Qtr. (Jun 2018) Current Year (2018) Next Year (2019)
No. of Analysts 7 7 7 7
Avg. Estimate 0.35 0.36 1.46 1.55
Low Estimate 0.34 0.35 1.43 1.44
High Estimate 0.36 0.38 1.50 1.72
Year Ago EPS 0.35 0.35 1.39 1.46
Revenue Estimate Current Qtr. (Mar 2018) Next Qtr. (Jun 2018) Current Year (2018) Next Year (2019)
No. of Analysts 6 6 6 6
Avg. Estimate 14.61M 15.37M 62.41M 68.87M
Low Estimate 14.00M 14.40M 58.90M 64.40M
High Estimate 15.30M 16.65M 67.66M 74.07M
Year Ago Sales 12.01M 12.27M 51.11M 62.41M
Sales Growth (year/est) 21.70% 25.30% 22.10% 10.40%

My full set of spreadsheets on MRCC:

Q1-18 Q4-17 Q3-17 Q2-17 Q1-17 Q4-16 Q3-16 Q2-16 Q1-16 Q4-15 Q3-15 Q2-15 Q1-15 Q4-14 Q3-14 Q2-14 Q1-14 Q4-13 Q3-13 Q2-13 Q1-13
Realized & Unrealized Gains -7,075 -4,754 -569 -5,064 -3,465 2,155 -1,971 - 482 2,157 -793 242 285 -291 -419 -437 -848 538 -672 -447 438 1797
Realized & Unrealized Gains/share -0.3496 -0.2349 -0.0281 -0.2916 -0.2088 0.1300 -0.1267 -0.0371 0.1658 -0.0617 0.0193 -0.0006 -0.0304 -0.0440 -0.0459 -0.0885 0.0551 -0.06724 -0.0501 0.0761 0.3125


In April of 2015 MRCC did a public offering of 2,450,000 shares of its common stock at a public offering price of $14.85/share while the March ending NAV was $14.18. That event should have increased NAV - but MRCC does not disclose the specific amount of NAV increase per share for this event.
In July of 2013 MRCC did a public offering of 4,000,000 shares of its common stock at a public offering price of $14.05 per share while the June ending NAV was $14.01.

Q1-18 Q4-17 Q3-17 Q2-17 Q1-17 Q4-16 Q3-16 Q2-16 Q1-16 Q4-15 Q3-15 Q2-15 Q1-15 Q4-14 Q3-14 Q2-14 Q1-14
Interest income 12,626 10,969 12,557 10,701 10,338 10,000 8,914 8,930 8,604 9,046 8,588 8,178 7,049 7.405 6,889 6,544 5,929
Fee income 724 264 661 637 328 404 220 516 331 98 177 559 567 713 387 208 197
Prepayment gain (loss) included with interest 133 302 514 322 652 159 227 232 337 301 159 503 267 356 223 144 229
Accretion of discounts + amortization w/ interest 1,032 582 532 358 388 419 383 389 365 320 308 279 198 209 169 150 161
Dividend income 435 251 251 250 250 251 1,384 1,051 1,862
Total investment income 14,950 13,364 13,469 12,268 12,006 11,233 11,128 11,118 11,539 10,126 9,172 9,519 8,081 8,683 7,668 7,046 6,516
Percent of TII from Fee + Prepayment + Accretion 12.64% 8.59% 12.67% 10.73% 8.66% 8.74% 5.48% 10.23% 8.95% 7.10% 7.02% 14.09% 12.77% 14.72% 10.16% 7.12% 9.01%

Monroe Capital Q1-18 Q4-17 Q3-17 Q2-17 Q1-17 Q4-16 Q3-16 Q2-16 Q1-16 Q4-15 Q3-15 Q2-15 Q1-15 Q4-14 Q3-14 Q2-14 Q1-14 Q4-13 Q3-13 Q2-13 Q1-13
Total investment income 14.950 13.364 13.469 12.268 12.006 11.233 11.128 11.118 11.539 10.126 9.172 9.519 8.081 8.683 7.668 7.046 6.516 6.395 4.347 3.752 3.719
Net investment income 8.465 6.995 6.887 6.088 6.034 5.377 5.583 5.759 5.787 5.005 4.498 5.071 4.167 4.621 3.810 3.501 3.130 3.184 2.413 1.550 1.503
Adjusted NII before incentives 6.995 4.560 3.727 3.345 3.238 3.074 2.450 1.702 1.672
Investments @ fair value 0.496 0.494 0.431 0.446 0.418 0.413 0.376 0.343 0.343 0.341 0.330 0.283 0.253 0.234 0.235 0.238 0.225 0.208 0.169 0.144 0.134
Wt Av Share Count 20.240 20.240 20.240 17.369 16.594 16.578 15.559 13.008 13.008 12.861 12.545 11.718 9.562 9.518 9.527 9.582 9.761 10.000 8.922 5.765 5.751
TII/share $0.7386 $0.6603 $0.6655 $0.7063 $0.7235 $0.6776 $0.7152 $0.8547 $0.8871 $0.7873 $0.7311 $0.8123 $0.8451 $0.9123 $0.8049 $0.7353 $0.6676 $0.6935 $0.4872 $0.6508 $0.6467
Adjusted NII/share - my calc $0.4182 $0.3456 $0.4791 $0.3912 $0.3491 $0.3317 $0.3074 $0.2746 $0.2952 $0.2907
Adjusted NII/share - their calc $0.42 $0.35 $0.35 $0.35 $0.36 $0.35 $0.37 $0.43 $0.47 $0.40 $0.36 $0.43 $0.44 $0.49 $0.40 $0.37 $0.32 $0.32 $0.27 $0.27 $0.26
Incentive fee waiver 0.000 0.058 0.000 0.250 0.000 0.273 0.000 0.000
Incentive fee waiver/share .0029 .0144 .0165
Dividend/share $0.35 $0.35 $0.35 $0.35 $0.35 $0.35 $0.35 $0.35 $0.35 $0.35 $0.35 $0.35 $0.34 $0.34 $0.34 $0.34 $0.34 $0.34 $0.34 $0.34 $0.34
NII/share - my calculation $0.4182 $0.3456 $0.3403 $0.3505 $0.3636 $0.3243 $0.3588 $0.4427 $0.4449 $0.3892 $0.3585 $0.4328 $0.4358 $0.4855 $0.3999 $0.3654 $0.3207 $0.3184 $0.2704 $0.2689 $0.2613
NAV/share $13.49 $13.77 $14.01 $14.05 $14.34 $14.52 $14.42 $14.50 $14.45 $14.19 $14.21 $14.18 $14.11 $14.05 $13.95 $13.93 $13.99 $13.92 $14.01 $14.78 $14.54
Wt Av Yield 10.0% 9.8% 9.8% 9.4% 9.5% 9.7% 9.8% 9.9% 10.3% 10.5% 10.8% 11.1% 11.0% 10.8% 10.5% 10.2% 9.9% 9.5% 9.6% 9.8%
NII/TII Ratio 56.6% 52.3% 51.1% 49.6% 50.2% 47.87% 50.17% 51.80% 50.15% 49.43% 49.04% 53.27% 51.57% 53.22% 49.69% 49.69% 48.03% 49.79% 55.51% 41.31% 40.41%
PIK income YTD 329 1,970 1,363 1,018 613 2,027 1,430 830 370 1,980 1,494 1,040 530 1,054 621 329 130
PIK income Quarter 329 607 345 405 613 597 600 460 370 486 454 510 530 433 292 199 130
PIK/TII ratio 2.20% 4.54% 2.56% 3.30% 5.11% 5.31% 5.39% 4.14% 3.21% 4.80% 4.95% 5.36% 6.56% 4.99% 3.81% 2.82% 2.00%
MRCC's 'reported' adjusted NII is NII before capital gains incentive fees and excise taxes
Prepayment and amendment fees along with paydown gains added $0.05/share more than usual in Q4-14
Typically - 'adjustments' produce more real numbers. MRCC adjustments did the opposite. That stopped in Q1-15
On 4-20-15 MRCC announced the completion of a public offering of 2,450,000 shares of stock at $14.85/share, raising approx. $36.4 million.
On 7-22-13 MRCC announced the closing of a public offering of 4,000,000 shares at $14.05 per share, raising approximately $56.2 million.

Monroe Capital Q1-18 Q4-17 Q3-17 Q2-17 Q1-17 Q4-16 Q3-16 Q2-16 Q1-16 Q4-15 Q3-15 Q2-15 Q1-15 Q4-14 Q3-14 Q2-14 Q1-14
Debt 238.384 226.612 152.712 179.445 196.000 180.500 146.110 169.312 176.948 166.176 159.043 93.150 126.319 106.308 110.356 110.027 100.681
Debt/share 11.7779 11.1962 7.5451 10.3313 11.8115 10.8879 9.3907 13.0160 13.6030 12.9209 12.6778 7.9493 13.2105 11.1692 11.5835 11.4827 10.3146
Debt/share to NAV 87.31% 81.31% 53.85% 73.53% 82.37% 74.99% 65.12% 89.77% 94.14% 91.06% 89.22% 56.06% 93.62% 79.50% 83.04% 82.43% 73.73%
Interest expense 2.706 2.211 1.907 2.184 2.010 1.795 1.523 1.773 1.691 1.612 1.434 1.251 1.103 1.160 1.100 1.115 967
Interest expense/share 0.1337 0.1092 0.0942 0.1257 0.1211 0.1083 0.0979 0.1363 0.1300 0.1253 0.1143 0.1068 0.1154 0.1219 0.1155 0.1164 0.0991
Interest expense/TII 18.10% 16.54% 14.16% 17.80% 16.74% 15.98% 13.69% 15.95% 14.65% 15.92% 15.63% 15.48% 12.70% 15.13% 14.34% 15.82% 14.84%
Annualized Int exp/Debt 4.54% 3.90% 5.00% 4.87% 4.10% 3.98% 4.17% 4.19% 3.82% 3.88% 3.60% 5.37% 3.49% 4.36% 3.99% 4.05% 3.84%
PWAY - Int exp/Debt 546 bps 590 bps 480 bps 453 bps 540 bps 552 bps 553 bps 561 bps 608 bps 642 bps 690 bps 503 bps 761 bps 664 bps 681 bps 645 bps 636 bps

Port $ by line Q1-18 Q4-17 Q3-17 Q2-17 Q1-2017 Q4-2016 Q3-2016 Q2-2016 Q1-2016 Q4-2015 Q3-2015 Q2-2015 Q1-2015 Q4-2014
Senior Secured Loans @ fair value 380,115 387,874 327,984 351,491 300,223 275,253 240,520 201,002 202,268 190,599 185,436 163,434 148,660 124,161
Senior Secured Loans @ cost 395,936 399,770 338,448 358,418 307,532 280,324 248,881 206,626 206,282 189,854 183,423 161,048 146,873 122,213
Sr Secured value/cost ratio 96.0% 97.0% 96.9% 98.1% 97.6% 98.2% 96.6% 97.3% 98.1% 100.4% 101.1% 101.5% 101.2% 101.6%
Unitranche loans @ fair value 45,976 40,295 44,592 37,302 50,465 51,638 51,858 53,920 55,560 68,090 70,107 65,207 89,165 96,635
Unitranche loans @ cost 46,478 40,661 44,776 42,198 56,300 57,361 57,877 59,302 59,567 77,464 76,686 70,196 93,209 99,580
Unitranche value/cost ratio 98.9% 99.1% 99.6% 88.4% 89.6% 90.0% 89.6% 90.9% 93.3% 87.9% 91.4% 92.9% 95.7% 97.0%
Junior Secured Loans @ fair value 38,578 38,449 38,555 37,709 42,260 59,366 60,694 64,955 64,475 63,388 59,727 49,841 10,770 10,803
Junior Secured Loans @ cost 40,496 40,449 40,402 39,860 44,387 61,674 61,919 67,053 67,252 64,948 59,899 49,715 11,035 10,976
Junior Secured value/cost ratio 95.3% 95.1% 95.4% 94.6% 95.2% 96.3% 98.0% 96.9% 95.9% 97.6% 99.7% 100.3% 97.6% 98.4%
Equity securities @ fair value 15,032 17,780 19,966 19,047 25,201 26,663 23,584 22,931 21,165 19,054 14,461 4,031 1,936 1,936
Equity Securities @ cost 17,461 17,200 16,296 16,296 13,883 13,883 10,473 10,473 10,472 10,472 10,472 2,421 1,329 1,329
Equity Secs value/cost ratio 86.1% 103.4% 122.52% 116.88% 181.52% 192.06% 225.19% 218.95% 202.11% 181.95% 137.95% 166.50% 145.67% 145.67%
Equity $ value exceeds cost -2,429 580 3,670 2,751 11,318 12,780 13,111 12,458 10,693 8,582 3,989 1,610 607 607
Rockdale Blackhawk fair value 3,342 5,673 8,620 6,533 13,354 14,655 12,397 11,507 9,942 8,184 3,899 1,369 1,093 0
Rockdale Blackhawk cost 1,093 1,093 1,093 1,093 1,093 1,093 1,093 1,093 1,093 1,093 1,093 1,093 1,093 0
Total investments @ fair value 496,034 494,138 431,097 445,549 418,149 412,920 376,656 342,808 343,468 341,091 329,731 282,513 252,647 233,535
Total investments @ cost 516,121 507,580 439,922 456,772 422,102 413,242 379,150 343,454 343,573 342,738 330,480 283,380 253,539 234,098
Total value/cost ratio 96.1% 97.4% 98.0% 98.2% 99.1% 99.9% 99.3% 99.8% 100.0% 99.5% 99.8% 99.7% 99.6% 99.8%
NAV/share $13.49 $13.77 $14.01 $14.05 $14.34 $14.52 $14.42 $14.50 $14.45 $14.19 $14.21 $14.18 $14.11 $14.05

Disclosure: I am/we are long MRCC.