February 26, 2024

Investcorp Credit Management BDC, Inc. Announces Financial Results for the Quarter Ended December 31, 2023, and Quarterly and Supplemental Distribution

Contacts

Investcorp Credit Management BDC, Inc.

Investor Relations

Email: [email protected]

Phone:(646) 690-5047

Investcorp Credit Management BDC, Inc. (NASDAQ: ICMB) (“ICMB” or the “Company”) announced its financial results today for its fiscal first quarter ended December 31, 2023.

HIGHLIGHTS

  • On February 8, 2024, the Company’s Board of Directors (the “Board”) declared a distribution of $0.12 per share for the quarter ending March 31, 2024, payable in cash on April 5, 2024, to stockholders of record as of March 15, 2024 and a supplemental distribution of $0.03 per share, payable on April 5, 2024, to stockholders of record as of March 15, 2024.
  • During the quarter, ICMB made investments in five new portfolio companies and one existing portfolio company. These investments totaled $18.1 million, at cost. The weighted average yield (at origination) of debt investments made in the quarter was 12.13%.
  • ICMB fully realized four portfolio companies during the quarter, totaling $29.2 million in proceeds. The internal rate of return on this investment was 14.2%.
  • During the quarter, the Company had net advances of $0.3 million on its existing and new delayed draw and revolving credit commitments to portfolio companies.
  • The weighted average yield on debt investments, at cost, for the quarter ended December 31, 2023, was 11.46%, compared to 11.01% for the quarter ended September 30, 2023.
  • Net asset value decreased $0.33 per share to $5.50, compared to $5.83 as of September 30, 2023. Net assets decreased by $4.7 million, or 5.6%, during the quarter ended December 31, 2023 compared to September 30, 2023.

Portfolio results, as of and for the three months ended December 31, 2023:

Total assets

$224.3mm

Investment portfolio, at fair value

$207.4mm

Net assets

$79.2mm

Weighted average yield on debt investments, at cost (1)

11.46%

Net asset value per share

$5.50

Portfolio activity in the current quarter:

 

Number of new investments

5

Number of portfolio companies, end of period

44

Total capital invested

$18.1mm

Proceeds from repayments, sales, and amortization

$31.1mm

Net investment income (NII)

$2.0mm

Net investment income per share

$0.14

Net decrease in net assets from operations

$(2.5)mm

Net decrease in net assets from operations per share

$(0.17)

Quarterly per share distribution paid on December 31, 2023

$0.15

(1) Represents weighted average yield on total debt investments for the three months ended December 31, 2023. Weighted average yield on total debt investments is the annualized rate of interest income recognized during the period divided by the average amortized cost of debt investments in the portfolio during the period. The weighted average yield on total debt investments reflected above does not represent actual investment returns to the Company’s stockholders.

Mr. Michael C. Mauer, the Company’s Chief Executive Officer, said “Over the past quarter, we saw LBO activity begin to pick up at the sponsor level that has not entirely worked its way into the financing flow yet. We expect to see this activity pick up in March. Even with reduced LBO activity, our pipeline continues to improve, and we believe the market continues to present attractive opportunities.”

The Company’s dividend framework provides a quarterly base dividend and may be supplemented, at the discretion of the Board, by additional dividends as determined to be available by the Company’s net investment income and performance during the quarter.

On February 8, 2024, the Board declared a distribution for the quarter ended March 31, 2024 of $0.12 per share payable on April 5, 2024 to stockholders of record as of March 15, 2024 and a supplemental distribution of $0.03 per share, payable on April 5, 2024, to stockholders of record as of March 15, 2024.

This distribution represents a 16.85% yield on the Company’s $3.56 share price as of market close on December 29, 2023. Distributions may include net investment income, capital gains and/or return of capital, however, the Company does not expect the dividend for the quarter ending December 31, 2023, to be comprised of a return of capital. The Company’s investment adviser monitors available taxable earnings, including net investment income and realized capital gains, to determine if a return of capital may occur for the year. The Company estimates the source of its distributions as required by Section 19(a) of the Investment Company Act of 1940 to determine whether payment of dividends are expected to be paid from any other source other than net investment income accrued for the current period or certain cumulative periods, but the Company will not be able to determine whether any specific distribution will be treated as taxable earnings or as a return of capital until after at the end of the taxable year.

Portfolio and Investment Activities

During the quarter, the Company made investments in five new portfolio companies and one existing portfolio company. The aggregate capital invested during the quarter totaled $18.1 million, at cost, and the debt investments were made at a weighted average yield of 12.13%.

The Company received proceeds of $31.1 million from repayments, sales and amortization during the quarter, primarily related to the realization of Cook & Boardman Group LLC, Advanced Solutions International, NWN Parent Holdings LLC and Archer Systems LLC.

During the quarter, the Company had net advances of $0.3 million on its existing and new delayed draw and revolving credit commitment to portfolio companies.

The Company’s net realized, and unrealized gains and losses accounted for a decrease in the Company’s net investments of approximately $4.4 million, or $0.31 per share. The total net decrease in net assets resulting from operations for the quarter was $2.5 million, or $(0.17) per share.

As of December 31, 2023, the Company’s investment portfolio consisted of investments in 44 portfolio companies, of which 84.97% were first lien investments and 15.03% were equity, warrants, and other investments. The Company’s debt portfolio consisted of 99.7% floating rate investments and 0.3% fixed rate investments.

Capital Resources

As of December 31, 2023, the Company had $14.7 million in cash, of which $11.6 million was restricted cash, and $30.0 million of unused and available capacity under its revolving credit facility with Capital One, N.A.

Subsequent Events

From January 1, 2024 through February 12, 2024, the Company made advances of approximately $0.4 million on one existing revolving credit commitment to one portfolio company, and received approximately $4.7 million from the repayment of two positions for one portfolio company.

 

Investcorp Credit Management BDC, Inc. and Subsidiaries

Consolidated Statements of Assets and Liabilities

 

 

 

December 31, 2023

 

 

 

 

 

 

 

(Unaudited)

 

 

June 30, 2023

 

Assets

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments, at fair value (amortized cost of

$208,587,401 and $219,319,251, respectively)

 

$

 

198,904,947

 

 

$

 

210,150,018

 

Affiliated investments, at fair value (amortized cost of $23,866,290 and

$23,979,565, respectively)

 

 

 

8,476,606

 

 

 

 

9,961,311

 

Total investments, at fair value (amortized cost of $232,453,691 and $243,298,816,

respectively)

 

 

 

207,381,553

 

 

 

 

220,111,329

 

Cash

 

 

 

3,092,224

 

 

 

 

1,093,758

 

Cash, restricted

 

 

 

11,572,138

 

 

 

 

8,057,458

 

Principal receivable

 

 

 

89,224

 

 

 

 

93,581

 

Interest receivable

 

 

 

1,346,541

 

 

 

 

2,041,877

 

Payment-in-kind interest receivable

 

 

 

152,406

 

 

 

 

46,088

 

Due from affiliate

 

 

 

515,361

 

 

 

 

 

Other receivables

 

 

 

 

 

 

 

1,050

 

Prepaid expenses and other assets

 

 

 

160,442

 

 

 

 

361,719

 

Total Assets

 

$

 

224,309,889

 

 

$

 

231,806,860

 

Liabilities

 

 

 

 

 

 

 

 

Notes payable:

 

 

 

 

 

 

 

 

Revolving credit facility

 

$

 

70,000,000

 

 

$

 

71,900,000

 

2026 Notes payable

 

 

 

65,000,000

 

 

 

 

65,000,000

 

Deferred debt issuance costs

 

 

 

(961,761

)

 

 

 

(1,220,556

)

Unamortized discount

 

 

 

(159,998

)

 

 

 

(195,553

)

Notes payable, net

 

 

 

133,878,241

 

 

 

 

135,483,891

 

Payable for investments purchased

 

 

 

5,500,000

 

 

 

 

1,795,297

 

Dividend payable

 

 

 

2,159,237

 

 

 

 

2,590,520

 

Income-based incentive fees payable

 

 

 

128,876

 

 

 

 

576,023

 

Base management fees payable

 

 

 

871,955

 

 

 

 

906,218

 

Interest payable

 

 

 

2,268,212

 

 

 

 

2,293,766

 

Directors' fees payable

 

 

 

4,843

 

 

 

 

15,755

 

Accrued expenses and other liabilities

 

 

 

256,848

 

 

 

 

445,082

 

Total Liabilities

 

 

 

145,068,212

 

 

 

 

144,106,552

 

Net Assets

 

 

 

 

 

 

 

 

Common stock, par value $0.001 per share (100,000,000 shares authorized 14,394,916

and 14,391,775 shares issued and outstanding, respectively)

 

 

 

14,395

 

 

 

 

14,392

 

Additional paid-in capital

 

 

 

203,338,613

 

 

 

 

203,327,714

 

Distributable earnings (loss)

 

 

 

(124,111,331

)

 

 

 

(115,641,798

)

Total Net Assets

 

 

 

79,241,677

 

 

 

 

87,700,308

 

Total Liabilities and Net Assets

 

$

 

224,309,889

 

 

$

 

231,806,860

 

Net Asset Value Per Share

 

$

 

5.50

 

 

$

 

6.09

 

 

Investcorp Credit Management BDC, Inc. and Subsidiaries

Consolidated Statements of Operations (unaudited)

 

 

 

For the three months ended

December 31,

 

 

For the six months ended

December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Investment Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

$

 

5,153,599

 

 

$

 

6,260,515

 

 

$

 

10,618,887

 

 

$

 

11,869,627

 

Affiliated investments

 

 

 

540

 

 

 

 

 

 

 

 

540

 

 

 

 

(20,611

)

Total interest income

 

 

 

5,154,139

 

 

 

 

6,260,515

 

 

 

 

10,619,427

 

 

 

 

11,849,016

 

Payment in-kind interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

 

586,119

 

 

 

 

17,933

 

 

 

 

667,500

 

 

 

 

182,667

 

Affiliated investments

 

 

 

19,280

 

 

 

 

17,443

 

 

 

 

38,080

 

 

 

 

34,447

 

Total payment-in-kind interest income

 

 

 

605,399

 

 

 

 

35,376

 

 

 

 

705,580

 

 

 

 

217,114

 

Dividend income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

 

 

 

 

 

101,755

 

 

 

 

 

 

 

 

101,755

 

Affiliated investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total dividend income

 

 

 

 

 

 

 

101,755

 

 

 

 

 

 

 

 

101,755

 

Payment in-kind dividend income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

 

194,182

 

 

 

 

171,693

 

 

 

 

382,433

 

 

 

 

338,142

 

Affiliated investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total payment-in-kind dividend income

 

 

 

194,182

 

 

 

 

171,693

 

 

 

 

382,433

 

 

 

 

338,142

 

Other fee income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

 

289,468

 

 

 

 

210,578

 

 

 

 

433,454

 

 

 

 

572,428

 

Affiliated investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other fee income

 

 

 

289,468

 

 

 

 

210,578

 

 

 

 

433,454

 

 

 

 

572,428

 

Total investment income

 

 

 

6,243,188

 

 

 

 

6,779,917

 

 

 

 

12,140,894

 

 

 

 

13,078,455

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

2,259,936

 

 

 

 

2,160,336

 

 

 

 

4,475,119

 

 

 

 

3,952,344

 

Base management fees

 

 

 

980,260

 

 

 

 

1,057,104

 

 

 

 

1,959,179

 

 

 

 

2,161,085

 

Income-based incentive fees

 

 

 

(72,942

)

 

 

 

 

 

 

 

(72,942

)

 

 

 

(147,145

)

Provision for tax expense

 

 

 

109,497

 

 

 

 

65,858

 

 

 

 

210,244

 

 

 

 

110,188

 

Professional fees

 

 

 

311,731

 

 

 

 

271,782

 

 

 

 

539,138

 

 

 

 

543,563

 

Allocation of administrative costs from Adviser

 

 

 

287,683

 

 

 

 

375,900

 

 

 

 

551,058

 

 

 

 

751,800

 

Amortization of deferred debt issuance costs

 

 

 

97,961

 

 

 

 

173,334

 

 

 

 

271,294

 

 

 

 

346,667

 

Amortization of original issue discount - 2026 Notes

 

 

 

17,778

 

 

 

 

17,778

 

 

 

 

35,555

 

 

 

 

35,555

 

Insurance expense

 

 

 

112,984

 

 

 

 

137,820

 

 

 

 

225,968

 

 

 

 

275,641

 

Directors' fees

 

 

 

73,375

 

 

 

 

75,625

 

 

 

 

146,750

 

 

 

 

151,250

 

Custodian and administrator fees

 

 

 

68,694

 

 

 

 

71,828

 

 

 

 

137,986

 

 

 

 

143,516

 

Other expenses

 

 

 

127,843

 

 

 

 

136,334

 

 

 

 

252,120

 

 

 

 

275,815

 

Total expenses

 

 

 

4,374,800

 

 

 

 

4,543,699

 

 

 

 

8,731,469

 

 

 

 

8,600,279

 

Waiver of base management fees

 

 

 

(108,265

)

 

 

 

(112,481

)

 

 

 

(194,895

)

 

 

 

(206,627

)

Waiver of income-based incentive fees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net expenses

 

 

 

4,266,535

 

 

 

 

4,431,218

 

 

 

 

8,536,574

 

 

 

 

8,393,652

 

Net investment income

 

 

 

1,976,653

 

 

 

 

2,348,699

 

 

 

 

3,604,320

 

 

 

 

4,684,803

 

Net realized and unrealized gain/(loss) on investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized gain (loss) from investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

 

(5,871,039

)

 

 

 

 

 

 

 

(5,871,039

)

 

 

 

 

Affiliated investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized gain (loss) from investments

 

 

 

(5,871,039

)

 

 

 

 

 

 

 

(5,871,039

)

 

 

 

 

Net change in unrealized appreciation (depreciation) in value of investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

 

1,654,277

 

 

 

 

(1,649,361

)

 

 

 

(513,221

)

 

 

 

(2,113,636

)

Affiliated investments

 

 

 

(226,899

)

 

 

 

(82,479

)

 

 

 

(1,371,430

)

 

 

 

(296,801

)

Net change in unrealized appreciation (depreciation) on investments

 

 

 

1,427,378

 

 

 

 

(1,731,840

)

 

 

 

(1,884,651

)

 

 

 

(2,410,437

)

Total realized gain (loss) and change in unrealized appreciation (depreciation) on investments

 

 

 

(4,443,661

)

 

 

 

(1,731,840

)

 

 

 

(7,755,690

)

 

 

 

(2,410,437

)

Net increase (decrease) in net assets resulting from operations

 

$

 

(2,467,008

)

 

$

 

616,859

 

 

$

 

(4,151,370

)

 

$

 

2,274,366

 

Basic and diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income per share

 

$

 

0.14

 

 

$

 

0.16

 

 

$

 

0.25

 

 

$

 

0.33

 

Earnings per share

 

$

 

(0.17

)

 

$

 

0.04

 

 

$

 

(0.29

)

 

$

 

0.16

 

Weighted average shares of common stock outstanding

 

 

 

14,394,081

 

 

 

 

14,388,242

 

 

 

 

14,393,398

 

 

 

 

14,387,526

 

Distributions paid per common share

 

$

 

0.15

 

 

$

 

0.15

 

 

$

 

0.30

 

 

$

 

0.30

 

About Investcorp Credit Management BDC, Inc.

The Company is an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940. The Company’s investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation through debt and related equity investments by targeting investment opportunities with favorable risk-adjusted returns. The Company seeks to invest primarily in middle-market companies that have annual revenues of at least $50 million and earnings before interest, taxes, depreciation, and amortization of at least $15 million. The Company’s investment activities are managed by its investment adviser, CM Investment Partners LLC. To learn more about Investcorp Credit Management BDC, Inc., please visit www.icmbdc.com.

Forward-Looking Statements

Statements included in this press release and made on the earnings call for the quarter ended September 30, 2023, may contain “forward-looking statements,” which relate to future performance, operating results, events and/or financial condition. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. Any forward-looking statements, including statements other than statements of historical facts, included in this press release or made on the earnings call are based upon current expectations, are inherently uncertain, and involve a number of assumptions and substantial risks and uncertainties, many of which are difficult to predict and are generally beyond the Company’s control.

Investors are cautioned not to place undue reliance on these forward-looking statements. Any such statements are likely to be affected by other unknowable future events and conditions, which the Company may or may not have considered, including, without limitation, changes in base interest rates and the effects of significant market volatility on our business, our portfolio companies, our industry and the global economy. Accordingly, such statements cannot be guarantees or assurances of any aspect of future performance or events. Actual results may differ materially from those anticipated in any forward-looking statements as a result of a number of factors and risks. More information on these risks and other potential factors that could affect actual events and the Company’s performance and financial results, including important factors that could cause actual results to differ materially from plans, estimates or expectations included herein or discussed on the earnings call, is or will be included in the Company’s filings with the Securities and Exchange Commission, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. All forward-looking statements speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

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