ICMB

INVESTCORP CREDIT MANAGEMENT BDC INC

Financial Services | Micro Cap

$0.14

EPS Forecast

$6.53

Revenue Forecast

The company already released most recent quarter's earnings. We will publish our AI's next quarter's forecast around 2024-10-10
EX-99.1 2 d697710dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Investcorp Credit Management BDC, Inc. Announces Financial Results for the Quarter Ended June 30, 2022, and Quarterly Distribution

Investcorp Credit Management BDC, Inc. (NASDAQ: ICMB) (“ICMB” or the “Company”) announced its financial results today for its fiscal fourth quarter ended June 30, 2022.

HIGHLIGHTS

 

   

On August 25, 2022, the Company’s Board of Directors (the “Board”) declared a distribution of $0.15 per share for the quarter ending September 30, 2022, payable in cash on October 14, 2022, to stockholders of record as of September 23, 2022.

 

   

During the quarter, ICMB made investments in three new portfolio companies and one existing portfolio company. These investments totaled $28.7 million, at cost. The weighted average yield (at origination) of debt investments made in the quarter was 10.41%.

 

   

ICMB fully realized four portfolio companies during the quarter, totaling $29.7 million in proceeds. The internal rate of return on these investments was 23.74%.

 

   

During the quarter, the Company had net advances of $0.9 million on its existing delayed draw and revolving credit commitments to portfolio companies.

 

   

The weighted average yield on debt investments, at cost, for the quarter ended June 30, 2022 was 10.01%, compared to 8.14% for the quarter ended March 31, 2022.

 

   

Net asset value decreased $0.43 per share to $6.50, compared to $6.93 as of March 31, 2022. Net assets decreased by $6.2 million, or 6.26%, during the quarter ended June 30, 2022.

Portfolio results, as of and for the three months ended June 30, 2022:

 

Total assets

   $ 246.4mm  

Investment portfolio, at fair value

   $ 233.7mm  

Net assets

   $ 93.5mm  

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

     10.01

Net asset value per share

   $ 6.50  

Portfolio activity in the current quarter:

  

Number of new investments

     3  

Total capital invested

   $ 28.7mm  

Proceeds from repayments, sales, and amortization

   $ 33.8mm

Number of portfolio companies, end of period

     35  

Net investment income (NII)

   $ 2.5mm  

Net investment income per share

   $ 0.17  

Net decrease in net assets from operations

   $ 4.1mm  

Net decrease in net assets from operations per share

   $ 0.28  

Quarterly per share distribution paid on July 8, 2022

   $ 0.15  

 

(1)

Represents weighted average yield on total debt investments for the three months ended June 30, 2022. 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 “We continue to invest in what we believe to be high-quality transactions with strong protections for our capital, despite the volatility of the broader market. While our NAV declined due to volatility in market spreads and equity valuation levels, we expect a recovery as loan spreads tighten and the equity market recovers from the summer lows. Our portfolio is diversified and invested with the goal of downside protection, including in a recessionary environment.”


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 August 25, 2022, the Board declared a distribution of $0.15 per share for the quarter ending September 30, 2022, payable in cash on October 14, 2022, to stockholders of record as of September 23, 2022.

This distribution represents a 14.15% yield on the Company’s $4.24 share price as of market close on June 30, 2022. 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 June 30, 2022, 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 three new portfolio companies and one existing portfolio company. The aggregate capital invested during the quarter totaled $28.7 million, at cost, and the debt investments were made at a weighted average yield of 10.41%.

The Company received proceeds of $33.8 million from repayments, sales and amortization during the quarter, primarily related to the realizations of Adaptive Spectrum and Signal Alignment, GS Operating, LLC, Klein Hersh, LLC, and Patriot MMG Buyer, Inc.

During the quarter, the Company had net advances of $0.9 million on its existing delayed draw and revolving credit commitments to portfolio companies.

The Company’s net realized, and unrealized gains and losses accounted for a decrease in the Company’s net investments of $6.6 million, or $0.46 per share. The total net decrease in net assets resulting from operations for the quarter was $4.1 million, or $0.28 per share.

As of June 30, 2022, the Company’s investment portfolio consisted of investments in 35 portfolio companies, of which 91.9% were first lien investments and 8.1% were equity, warrants, and other investments. The Company’s debt portfolio consisted of 99.6% floating rate investments and 0.4% fixed rate investments.

The Company continues to assess the impact of the COVID-19 pandemic on its portfolio companies and will continue to closely monitor its portfolio companies throughout this period, including assessing portfolio companies’ operational and liquidity exposure and outlook. For additional information about the COVID-19 pandemic and its potential impact on the Company’s results of operations and financial condition, please refer to the disclosure in the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2022 to be filed with the Securities and Exchange Commission.

Capital Resources

As of June 30, 2022, the Company had $9.2 million in cash, of which $6.6 million was restricted cash, and $31.0 million unused capacity under its revolving credit facility with Capital One, N.A.

 

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Subsequent Events

Subsequent to June 30, 2022 and through September 2, 2022, the Company invested a total of $19.6 million, which included investments in four new portfolio companies and received $9.4 million in repayments. As of September 2, 2022, the Company had investments in 38 portfolio companies.

 

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Investcorp Credit Management BDC, Inc. and Subsidiaries

Consolidated Statements of Assets and Liabilities

 

 

     June 30, 2022     June 30, 2021  

Assets

    

Non-controlled, non-affiliated investments, at fair value (amortized cost of $254,172,763 and $268,225,819, respectively)

   $ 223,037,183     $ 234,559,549  

Affiliated investments, at fair value (amortized cost of $23,395,242 and $29,571,937, respectively)

     10,646,803       11,296,071  
  

 

 

   

 

 

 

Total investments, at fair value (amortized cost of $277,568,005 and $297,797,756, respectively)

   $ 233,683,986     $ 245,855,620  

Cash

     2,550,021       5,845,249  

Cash, restricted

     6,605,056       6,759,954  

Receivable for investments sold

     835,043       5,875,293  

Interest receivable

     2,298,443       2,501,591  

Payment-in-kind interest receivable

     2,137       41,747  

Other receivables

     —         427,208  

Prepaid expenses and other assets

     410,401       376,197  
  

 

 

   

 

 

 

Total Assets

   $ 246,385,087     $ 267,682,859  
  

 

 

   

 

 

 

Liabilities

    

Notes payable:

    

Term loan

   $ —       $ 102,000,000  

Revolving credit facility

     84,000,000       —    

2026 Notes payable

     65,000,000       65,000,000  

Deferred debt issuance costs

     (1,913,889     (1,235,000

Unamortized discount

     (266,663     (337,773
  

 

 

   

 

 

 

Notes payable, net

     146,819,448       165,427,227  

Payable for investments purchased

     246,984       —    

Dividend payable

     2,157,872       2,088,265  

Income-based incentive fees payable

     182,095       647,885  

Base management fees payable

     1,054,063       1,070,580  

Interest payable

     1,574,356       949,360  

Directors’ fees payable

     20,780       28,859  

Accrued expenses and other liabilities

     820,097       1,114,834  
  

 

 

   

 

 

 

Total Liabilities

     152,875,695       171,327,010  

Net Assets

    

Common stock, par value $0.001 per share (100,000,000 shares authorized, 14,385,810 and 13,921,767 shares issued and outstanding, respectively)

     14,386       13,922  

Additional paid-in capital

     203,590,126       200,657,892  

Distributable earnings (loss)

     (110,095,120     (104,315,965
  

 

 

   

 

 

 

Total Net Assets

     93,509,392       96,355,849  
  

 

 

   

 

 

 

Total Liabilities and Net Assets

   $ 246,385,087     $ 267,682,859  
  

 

 

   

 

 

 

Net Asset Value Per Share

   $ 6.50     $ 6.92  

See notes to consolidated financial statements.

 

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Investcorp Credit Management BDC, Inc. and Subsidiaries

Consolidated Statements of Operations

 

 

     For the years ended June 30,  
     2022     2021     2020  

Investment Income:

      

Interest income

      

Non-controlled, non-affiliated investments

   $ 22,641,798     $ 22,716,304     $ 28,485,264  

Affiliated investments

     29,813       97,293       —    
  

 

 

   

 

 

   

 

 

 

Total interest income

     22,671,611       22,813,597       28,485,264  

Payment in-kind interest income

      

Non-controlled, non-affiliated investments

     473,609       2,334,246       1,959,679  

Affiliated investments

     120,533       155,780       2,669,354  
  

 

 

   

 

 

   

 

 

 

Total payment-in-kind interest income

     594,142       2,490,026       4,629,033  

Dividend income

     296,126       —         —    

Other fee income

      

Non-controlled, non-affiliated investments

     868,727       1,383,850       1,346,307  

Affiliated investments

     759       1,502       —    
  

 

 

   

 

 

   

 

 

 

Total other fee income

     869,486       1,385,352       1,346,307  
  

 

 

   

 

 

   

 

 

 

Total investment income

     24,431,365       26,688,975       34,460,604  

Expenses:

      

Interest expense

     6,633,587       7,359,079       9,535,751  

Base management fees

     4,594,588       4,716,233       5,385,814  

Income-based incentive fees

     (348,670     —         832,472  

Provision for tax expense

     270,618       268,992       144,709  

Professional fees

     1,302,513       1,514,186       1,530,314  

Allocation of administrative costs from Adviser

     1,247,205       1,397,069       1,402,422  

Amortization of deferred debt issuance costs

     621,111       1,107,497       135,262  

Amortization of original issue discount – 2026 Notes

     71,110       17,777       —    

Insurance expense

     512,347       454,324       375,753  

Directors’ fees

     302,500       312,500       270,000  

Custodian and administrator fees

     334,214       333,168       373,034  

Offering expense

     —         —         433,089  

Other expenses

     446,330       473,385       483,488  
  

 

 

   

 

 

   

 

 

 

Total expenses

     15,987,453       17,954,210       20,902,108  

Waiver of base management fees

     (480,032     (366,951     (269,815

Waiver of income-based incentive fees

     —         —         (336,971
  

 

 

   

 

 

   

 

 

 

Net expenses

     15,507,421       17,587,259       20,295,322  
  

 

 

   

 

 

   

 

 

 

Net investment income

     8,923,944       9,101,716       14,165,282  

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

      

Net realized gain (loss) from investments

      

Non-controlled, non-affiliated investments

     (6,198,762     (5,776,334     (7,632,194

Affiliated investments

     (8,196,669     —         —    
  

 

 

   

 

 

   

 

 

 

Net realized loss from investments

     (14,395,431     (5,776,334     (7,632,194

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

      

Non-controlled, non-affiliated investments

     2,898,538       525,501       (23,533,655

Affiliated investments

     5,159,579       (6,164,708     (7,655,908
  

 

 

   

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on investments

     8,058,117       (5,639,207     (31,189,563
  

 

 

   

 

 

   

 

 

 

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

     (6,337,314     (11,415,541     (38,821,757
  

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

   $ 2,586,630     $ (2,313,825   $ (24,656,475
  

 

 

   

 

 

   

 

 

 

Basic and diluted:

      

Net investment income per share

   $ 0.62     $ 0.65     $ 1.03  

Earnings per share

   $ 0.18     $ (0.17   $ (1.79

Weighted average shares of common stock outstanding

     14,304,641       13,908,612       13,741,743  

Distributions paid per common share

   $ 0.60     $ 0.69     $ 0.93  

See notes to consolidated financial statements.

 

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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 $50mm and earnings before interest, taxes, depreciation, and amortization of at least $15mm. 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 June 30, 2022, 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, the impact of the COVID-19 pandemic, 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.

Contacts

Investcorp Credit Management BDC, Inc.

Investor Relations

Email: icmbinvestorrelations@investcorp.com

Phone: (646) 690-5034

 

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