MRCC - Earnings call transcript Q3 2017 | Monroe Capital Corporation

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Operator

Welcome to the Monroe Capital Corporation Third Quarter 2017 Earnings Conference Call.

Before we begin, I would like to take a moment and remind our listeners that remarks made during this call today may contain certain forward-looking statements, including statements regarding our goals, strategies, beliefs, future potential, operating results or cash flows.

Although, we believe these statements are reasonably based on management's estimates assumptions and projections as of today, November 8, 2017, these statements are not guarantees of future performance. Further, time-sensitive information may no longer be accurate as of the time of any replay or listening. Actual results may differ materially as a result of risks, uncertainty or other factors, including but not limited to the factors described from time-to-time in the Company's filings with the SEC. obligation or no statements. these takes Capital to revise update forward-looking Monroe will over Monroe Officer conference turn Capital. Ted I the Executive to now Koenig, Chief of

Ted Koenig

Hello third CFO to Aaron first XX-Q I then turning over and will joined will to an Investment Officer. the in filed who today. and some our results we with with we the earnings Chief to issued press evening, our and overview our turn I'm our provide questions. remarks, closing back will go SEC. before quarter on XXXX to more provide call has of Peck, call me He Aaron Last the to thank ask and through you quarter call detail. the the us everyone release

to results. We quarter another have are strong very of pleased financial

investment This have able covered our maintain income For we $X.XX continue their to our we many careful dividend and share our $X.XX dividend unique was NII. team represents peers of to have been quarter challenging net per a a third announce of continue investment $X.XX we capabilities, share, the per testament per by the process. to origination proud income quarter very generated adjusted performance fully cuts our underwriting environment are when our and This In to an share. consecutive dividend, of to quarter, to our adjusted XXth dividend. net equal covered and

during million in of our per valuation the decreased XXth Our the at decreased September More share mark-to-market September net $XXX.X to million book June very gains due XXth. $XX.XX the from excess NAV quarter. as primarily slightly value of period per $XXX.X to specifically, unrealized during to at losses XXth, net quarter share during unrealized

company was quarter, sold the portfolio our acquirer. strategic During for Fabco

of the recovery in also loss in unrealized a excess quarter, mark previous MRCC created The second of While Rockdale Fabco end of the mark-to-market original Blackhawk. at was sold a of saw on the our value the equity investments, value loss. it the for increase our fair realized sale of which a reversal an in resulted principal a at in quarter

received of senior across for was in As secured had therefore Rockdale our debt and this a XX cash the quarter in equity value not we million make as highly different and part equity. portfolio we end, financing free $XXX.X of XX reminder, diversified a investments in classifications. companies a fair At any invested industry did

X.X% largest represented of and positions the XX XX% of portfolio Our the our largest were portfolio. position

concentrated secured loans. heavily in and was portfolio first portfolio secured particular Our in loans consists our of of first is lien loans, XX% senior approximately secured secured. XX% lien

balance result received declined was the quarter. second of pay-downs from the end quarter, end the as of portfolio our this of While a primarily the near

net of fact, we approximately average quarter. outstanding Aaron portfolio In third the $XX the prepayments. more for since quarter, second of the investments call. quarter provide the portfolio this the to about of balance will later end And have the increased the in million added from details

with As are Group. we joint new we announced excited last venture National week, our about very Life

million. regulatory to the $XXX equity fund With in total of capital million for fund senior committed each periods. other in new one, of middle $XX venture investment to have all future close of nationalized should We should secured market leverage without in things MRCC believe, this capital formation earnings loans and available to MRCCs MRCC’s be $XXX our a level. equal, leveraged, loan million joint that being Once any this increase accretive invest in

rate well invested positioned portfolio MRCC increases. rate floors. in with the future of for past, in all is debt As floating our rate we have Most very interest discussed is loan

on virtually meaningfully our going benefit in floors have we the interest believe loans. is level, situated therefore, forward. LIBOR we And current increase the all short-term the any MRCC to Given of from LIBOR of rates, surpassed well level

is which turn our capital. allow $XX.X and favorable detail. we to increase going the rates consistent financial interest maintain to million discuss over will very addition, rate undistributed to results significant outstanding continue share In the view, in in income, without dividend fixed in in us going any $X.XX SBA debentures in now debt LIBOR call significant our cushion returning arbitrage to provide per our of the Aaron to am payment shareholders to future. quarterly which I a ability who net rates, investment more from to Currently, maintain our at

Aaron Peck

Thank you, Ted.

grow average continues portfolio Our to investment in quarter. the

prepayments near to to portfolio approximately third million. of at prior end. as of end million the was decrease fair the at prepayments September $XX.X However, of the continued grow end $XXX.X the a quarter $XX since in the value, million funding have the quarter, of quarter, have portfolio approximately Since due had of and we the XXth, the

growth credit a the the the borrowing debentures by total $XX.X the which offset due debentures reduction of on other and of repayments total aggregated partial increase The complete the are to add-on and of we under and $XX At eight and new result the on SBA fundings borrowings deals of the quarter, funded deals. on third of during as sales September result existing which the During million prepayments XXth, revolver million. and near This was six revolver growth million, quarter. portfolio $XX.X payable revolving end the several deals, we was million facility quarter. of $XX.X in SBA in portfolio and had assets, our under prepayments

As which $XXX.X as was XXth. June in net the net of was $XXX.X million value of asset from our million, unchanged value asset relatively September XXth,

slightly from per per September $XX.XX $XX.XX Our June at as share per decreased to XXth. NAV XXth share of share

amount. the per was an share. dollar dividend At income, quarter per Turning investment $X.XX million measure, to adjusted non-GAAP of ended level, compared adjusted the quarter our $X.XX this XXth, increase equaled September or results, per to quarterly for prior share our a $X net share, when NII

Looking prior in increase operations. of of investment during the investment statement investment compared million growth primarily in quarter portfolio yields. the an Company’s and income the portfolio the quarter, effective of Total is was result The income million for $XX.X average quarter. the to in as increase in size a to $XX.X our the the

the $X.X in debt in expenses $X.X most million million million During and and general $X.X investment $X.X prior of excise million recent in quarter, $X.X Total to the compared other average base expenses, administrative $XXX million was in quarter. management quarter million expense, by interest driven in included million accrual incentive fees, balance a facility million and $X for $XXX of increase of other credit financing expenses our as debt increase million by in fees our lower Total fees, average portfolio $X.X the during quarter partially recent our a result in the in the revolving interest of the cost accruals. excise tax, capital incentive tax raise. during primarily the for decrease a driven by quarter, expenses decline offset an an and and

As during there quarter. we incentive of the raised a second quarter, the necessary and during reminder, third $XXX,XXX was waiver such incentive fee no fees

as under had our As of capacity our approximately credit of million liquidity, facility. revolving we $XXX.X XXth, September for

line now the million $XX.X will for remarks of questions. We access closing to Ted I back had open for call quarter to additional before some debentures turn also the end. at SBA we

Ted Koenig

Thanks, Aaron.

investment dividend. our $X.XX to income for generated summarize, of quarterly $X.XX We net the adjusted So quarter. paid we

has We the in Fabco of have recovered in that our our We've Blackhawk debt no quarter. in the stated increased have Rockdale on non-accruals termination a new investments occurred of in equity mark quarter. excess and in investments,

for So shareholders of public on that reinvestment on by basis, market in delivered XXXX, for and shares our our a IPO in BDC on our in level on we peers the maintain favorably that investors and these on believe our cash return remainder new committed we no a for On industry price have the core this of NAV represents compare based BDCs in stockholders continue cash-on-cash year annual the and of XXXX. return, an those IPO growth of very and and on joint to X% performance return anticipated of changes Xth, level since performance our returns and paid November our going new MRCC puts our assuming portfolio approximately pipeline basis. XX% our dividends assuming performance generated purchased expect deals, both shareholders, our with for of preceding since that both no the have with very XX% venture. deliver the to annualized of the to since in dividends. cash in Based current We closing momentum Based our IPO reinvestment group dividends. quarter in small elite and this investment again of stock have achieved

that investors. with our supported all the going prepared yield external And joint fund manager, for our loan to senior my best be investment a other trading Thank stock time I’m National that, shareholders should dividend stable ask Monroe at your net by to you very questions. over adjusted MRCC with operator a new believe With attractive the open concluded the shareholders in for fully Capital XX%, provides to class a our Life NAV and and and Our call investment income Corporation opportunity venture accretive we remarks today. a for long-term. I’ve around and

Operator

from first Chris [Operator Oppenheimer. comes Certainly Instructions]. And question our Kotowski of

open. is line Your

Chris Kotowski

Will it kind a little thirdly, earnings the vehicle syndicated? you and go build an co-invest is out about or do then this yield retain anticipate similar on BDC loans or bit curious to which values overtime I could I’m fund. wonder do itself, you in as if And talk pay equity in more net of your plan investment. you net that guess they or loan a more then and return will And theoretically senior basis, up you I on could all as nationally you be overtime? on as what

Aaron Peck

secured It type invest mostly that club opportunities the in will on through middle invest So advantage function of the be we’ll of middle BDC we take originate the loans, focused deal loans. in. that our here. substantial some of market We’ll market similar market capital assets

we’ll what XXX market in were a syndicated be invest loan this is within fund. is syndicated -- plus close to loan fund, for lenders we deals But one careful is that about It means. to middle and can't the a yes, really Monroe that’s a that’s also by we’ve market makes that markets, feature co-investment see can’t XXX co-invest understanding distinguishing able place really regulation with other LIBOR these It they larger loan So most that the to some lot the likely funds SEC. in more means that not the for it negotiating of more that sense is or key because can co-invest market that doing, be agent not Monroe we’ll facility alongside then principal be club partnering The other invest Monroe market. credit deals, the broadest that are with But where the and funds. deals. not mostly the agent. broadly we’ll invest fund the what And deals all of other in amongst

easy yield, we’ll it's So math. do a mid loan forecast we the as expecting for provide XXX. LIBOR to don’t mean, XXX LIBOR leverage but deals you And of of we’re from this to for anywhere fund up. invest get ROE cost really in I plus plus in and the

will be question, low we loans So Does basis BDC are creating its quarterly that we’ll Chris? all fund expectation available provide your of that all the earnings, attractive a pretty vehicle. will the on double-digit cover that will on And that NII our ROE for the payout distribution. to so us is be it expecting

Chris Kotowski

Yes, for it thank you. me. That’s

Operator

And Dodd Robert question of James. from our comes next Raymond

open. line Your is

Robert Dodd

we out just on paying When will one. basis? quarterly a follow on it’ll NII up earnings, of it all say that all or GAAP quick earnings its all be of of payout its its a So

Aaron Peck

of more function GAAP an a function. NII It's than

Ted Koenig

will earnings, it and I paying portion it for to BDC then pay our up what therefore yields going our and available that mean, to for its permanent they’re on be and distribution. NII will be then

Robert Dodd

us give obviously, pay pretty up again a obviously, didn’t slug you mean, a for update you across of a I Rockdale, mark dividend while on just the had in quarter, an then can platform now. the that Monroe equity. big on, just And

you're didn’t lot So for in of think a good that obviously value, And you for up what's so speak, a feel investment, going us color equity the so to sense nice the is keep with general, gain give I on equity review dispose any it, pent in Can process business what that you pay it, in whether on of there. that to doing, business. on through, how et the going cetera? that

Ted Koenig

questions. Sure, all good

which up material wasn’t any earlier more stable in path because were quarter, the period on of reason They company we The in Rockdale, provided on the change. from improvement some year. in doings a fairly to equity mark hasn’t the from material in to There that it has in the liquidity that of was equity the with quarter. consequence liquidity were actually enterprise the with Rockdale previous injunction a been in in last additional so, So their main awarded seem been they was help we there value to more And same able some marching the that change of the were to need. that the fact funding. company we current was be

the quarter larger in than value. fact of Monroe reflection more the a So the enterprise percentage did now rather the they previous that is of increasing the than mark value taking own of pie up the a funds in

the In fact, period. this value mark enterprise in there in up was no

there what why that’s see the of of in the you and has So the really an gone the market equity. with increase rest value on

As making EBITDA think of but and strategic profitable consider a long-term and in have in I point question, its the necessarily aware that all guess management so thought will position point, best I'm is of process in valuation. continue for may be at areas, what's the can’t the its around point a But our they current that along the decision is businesses of and a minority where of of to drive monetization we is their get a business control in other path this We're at review And there its to existing still plan, investor hope stability less that still move the to that your then Rockdale. of part company. profitable growth no to of. and don’t their

Robert Dodd

the an internal Obviously, expenses, could current flip SLS and think long-term. I if this hard and to can an outsized real see it equity obviously, its be to interest? could be would some expectation, it’s actually to quick. I And -- an I accretive do it's capital what’s get going then Initially, back stock deliver than the and to start issue. to the timeframe your What’s really can it just ROE levied how again have to deploy put understand. But four -- initial rather potentially undersized you leverage and

Aaron Peck

ramp. capital time deals take do They all, right. see deals. get points, and flow close. time to It we deal good function engine very and question here. good Very take you’re some approve will have substantial us to in some material a market We our We a pretty

do And very we are the as opportunities so we selective a platform. across lot of see but we’re

within to can. and give So think internal set the real just we’re months I for internally that, is XX we reasonable milestones. that’s difficult best it’s leverage it We funding as how we doing that’s guess, best to to it difficult and you But that to estimate. quarter-to-quarter to equity put the about it’s having because any a to to to want said guidance, months timing my be for want sure milestones and me assume work sooner. able hopefully we that think we make the but should don’t But XX

Ted Koenig

this is quite something is This at we’ve Robert, while. Ted. that for looked a

a from for of the I about BDCs with. really than you venture some noticed different competitors senior other finding the is joint the someone joint that us, our right have grow market. and And cultural and done And can this. it if much secured our partner, we was most venture, of our mean, fit

a desire we both really for joint Most reflects alignment XX.XX. that together venture firms of work and are interest XX-XX complete have this or -- a with long-term venture. joint markets grow the XX.X the to is The here Ours of XX.X business.

and would this at I all a short-term driver this. may look MRCC, been. So not as trade tend of long-term a some should like intended to think I real view others you value as for have That’s

Robert Dodd

the cetera. XX.X, does notice didn’t XX.XX I don’t of one I I Do and obviously, or And that well. that, mean et National they Life on very the know and appreciate I obviously Actually, -- XX-XX. that bring,

arguments partner without you to many these but One the origination speaking [indiscernible] talk actually -- is does of bring realistic actually can partners bring capabilities table this capabilities? origination the don’t there to of

Ted Koenig

think don’t as to you this at realistic should capabilities. our look I add No, a origination

even do we across plenty have more that XXX have and this And capital things our What platform. will our national And long-term Capital us, of be employees highly a first fit. We other across firm. the our Monroe with be that much is other Monroe cultural as platform. almost very with brings like believe life partner capabilities important as because to origination I’m doing minded likely partner were within that’s this of for I a far will it’s things we strategic concerned,

Operator

Napoli And question of our comes next William from Blair. Bob

open. Your line is

Bob Napoli

line -- questions, for Company. to I potentially obviously value the senior Just to drive on follow up -- causes is in you allowing stock fund. the expect Is good to to that the the more of return loan above meant those things. above equity, it be, average Ted, -- therefore, ROE ability on incremental that add is is or book to to guess, book this and to value, the Monroe, on above all This trade this

Ted Koenig

We needed it to cultural yes. some targeted And our but we a ago. a me would opposed strong The one more, was on. We together we're short as we would laboratory got sooner that frankly, could ROE view to be financial quite this put it of that lots fit. have here -- fit was time in And this answer from to our we’ve much a unless question accretive to your MRCC. done this not that this be things is Bob have had at working

our announced I ROE. it. I you long-term think we We a be expect did this, basis, can that’s now. So And it to told why to on as accretive Robert, current

Aaron Peck

about think to baskets. our we're ROE. leverage And as remember, it, it regulatory use doesn’t before we is, Bob said of way One any double-digit low targeting

ROE earn to available. opportunity regular compared leverage Monroe might a with up double-digit that loan using when that the So of be in some would

as X.X get So, want our changed -- we when X.X to haven't you we at we about to view where to think regulatory leverage. run if to

in get So we that leverage won't the be that to point future, when impacting this calculation.

equal, should being according all it be should it else to accretive. math, the So be

Bob Napoli

I low. mean, leverage your pretty is

Are is environment is your still of several to regulatory according next wanted be difficult several irrational low competitive as that? pretty you to be earned least Do not your dividend. Your going get able competitors. pretty you quarters? competitive competition leverage and view you The to your to to environment Is you to difficult? leverage the the do over where too at to allow the you

Ted Koenig

fact. number that Bob, credit the that funds fund-to-funds credit There platforms. a think Again, that’s competitive, The that have prior many established hedge to I some have The lots established about equity that is fund a key this There platforms is market platform. have debt we’ve the we strong the come have have talked market. There There platform. of arms. is is is new private on into calls. established that a is platforms of difference

the in have relationships We longstanding industry.

We name. have a brand

company, really through cycles. stands We business think, lots for I of that years and for something is been have around XX a

over of portfolio a borrowers have today. We XXX

a portfolio. trying not create to we're So

transactions of a our deals our within have XX% We from and portfolio. our portfolio. come

and for has with the got have franchise compete the we here market, things the that these that effectively longstanding that doing the years, last the money we’ve history fact allows at come in new that into that all new same the the people all the have us same think XX and Monroe very space. the we to I platforms So

XX be is the confident we’ll we to there levels risk. XXXX done isn’t and have I’m quarters put sit risk we where that in over is we’re to target transactions at answer the So your short going as seen a we a that to don’t quarter firm types right like at. quarter-to-quarter right years our to leverage two be get very of a next sprint. work where for a adjusted haven’t we quarters here. or on we’d will sidelines. returns, that work the the and Again, we If question the long-term or that to will is the point This this this the We’ve today capital several

compelled to fund-raise. in to further to money just not to other ground show work, feel We’re put justify capital work to put to like able they’re platforms, money that put going to to the

We some a we best for to. will we put including work we to appropriate. shareholders, we’ll of risk generates return feel pace the When And that me shareholder. capital when raise think capital the at need it’s and adjusted our

Operator

comes our from next Securities. question National And Christopher Testa,

line is Your open.

Christopher Testa

into senior was Just what secured curious, million first, the $XX.X from reclassification [Unicom]?

Ted Koenig

what close is we’ll secured Chris running capital. cash us for senior use revolver revolving not includes sometimes efficient a facility. deal So do of basis And lot our credit that on a and we’ll is of as particularly

time-to-time, a that revolver. yield that, sell and we a handle into and to will of us enter have that. outs that allows the bank. the let we’ll off from slightly bank And revolver last bank out with the do ins higher So we And out when when a the first we to do

adjust revolver. deals we revolver. we loan, the quarter, in that happened I this with Occasionally, we And sell couple term was revolver, I this of think really think, just most it a sold during them that’s cases funded. quarter So in but for we’ll what the case, the off

increase unitranche, senior way doesn’t it's does from straight loan. a because really secured materially report that lasted it So risk, the require we to But the because us move first to time small. unitranche our for that represents very out us things

Christopher Testa

on little you a have economics of punching disproportionately XX-XX to speaking compared the guys what was And about. better bit Life? out to the you going originations. are this you get and National Obviously, just commitments. Are doing And Rob SLS, the ones

Aaron Peck

to heads really same a both it doesn’t up if really in There return. No, an XX-XX matter There we’re both is It's partners. with XX-XX difference just you’re or the partnership. fees. equal regards economics. is make that. no We And no

You’re on dollar those The just is you -- that is ROEs wherever the JVs, this -- clearly dollars. have into ROE though here dollars compliance, these the Chris. difference not

Some of insurance Company XX% game. those XX%, that in lot of to the doesn’t have are skin a JVs the

of good got And to so partner to knowledgeable, wants an that like invest significant that’s us, because here partner a a our And commitment that make we’ve us, with insurance deals credit that testament process. originate who like at significant amount deals originate. very a is we fact to capital the put with that and the want we the the us to to they quality work platform they they I and think, it’s a our can of

Ted Koenig

a I -- need these completely said this what everything to JVs to be be And is takes very firm is a pro on negotiable on that to arrangement. supplement not basis. done how just think, has very, Aaron rata established. is view SEC The there Chris, a

something So for open negotiation. not that’s that’s

expressed that the will signals is over to XX-XX MRCC, and from nicest be and not this and trade. only together. that others market the that long-term, mean continue expand accretive Life National signals intention I is note do partners, to This you as standpoint guys what it's we venture, the allows think this the is go in us. have desire this about accretive, to deeper the that future what reason to a compliance tough will shareholders take it should think National business an this I is this to this think potential Life interest be your of both is a a and is And got And prospective expand very an as a business. the by it's grow that not mentioned, long-term from thing as we certainly it that joint one interest the thing I has an Aaron as but

Christopher Testa

unchanged were. what this was I was where it up just quarters. the But were sales acceleration, the OIB and if of retains prepayment extremely in much first -- add as I higher less And it the half from look the at than high as than past well effectively quarter of fees, quarter, repayments clearly if they sales

if is quarter? the late into appreciated. there wondering Just because the fees the current in any carried-over quarter were prepayments color some Just

Aaron Peck

remember no prepayment chunk but a part fees It’s carryovers that. at sold are of the that then stages different their or [indiscernible] there different anything So of a pretty with loss were just of no because was like capital. realized Fabco, the deals Fabco But big associated lifecycle. that. was or And we there of sale

And so some of this portfolio the paid the been deals in longer. off quarter that

no fees. a impact or also which forward revolver, improve it sales doesn’t on that lower any. anything spread And which They There revolver and go some in does fee some And the there -- as was much nuance out forward up-selling made repayments basis, then of have an is it if first immediate carry it that was so those just but we made, our penalties, but that prepayment is sale nothing intentionally. weren’t as other that. we than

Ted Koenig

higher have Chris, think, quarters prepayment is have some going others. I this, episodic. where you to to more there this look I mean, at we're than activity is

our standpoint mentioned, timing we of with very and officers strategic we staff value a results was Fabco position special and the managers, of and attractive asset be access. portfolio and multiple determine exit to a because account we’ve market We very on got that purchaser. add we're a do can the encouraged patient and as And because Here, timing large standpoint and high earnings, it. Aaron very, company able a favorable from had hold very, the company at where we a it to

would But again, So all I not think, going of to that going it depends level I of we're on bet forward, market. prepayment. see a as high

Christopher Testa

FDA more issuing of the that? guys When a revolver really happens, out terms up ramped that And last maybe not upsizing that to any that It’s have instead? bond soon. debt you’ll unsecured you. are are baby happy, max in obviously, subsequent potentially one for point some upon the me, at you thoughts available debenture there to at guys conceivable Or you

Ted Koenig

So, question. good a

there to to of things time opportunities all at all say shareholders to interest that’s of structure, when what are with focused out issuing look including revolver. best will get potential the for be at considering and nothing is to horizon in we’ll look I’d the in executions at time the But the this the look right the right we’re is if us at options time there all at are of things terms we’re do. what do will and to there all closer time continuing available out bond, moment time. on best a portfolio nothing parties the specific opportunistic We to and the the in that on thing comes. comes to our think But our the in But issuing of when determine our paper now considering capital there terms and And optimized we grow talk we on at definitively. table. leverage the and is the folks we

Operator

our question from from And comes next Meijer. [indiscernible]

Your line is open.

Unidentified Analyst

of or question. looks kind bigger numbers at proposal disallow this expense that house negate I just like is strategic to Ted, When EBITDA. amount. the a is bill, XX% read or that it the It EBITDA, that to expense through any run interest interest and the of shows tax is

at in that be or that like an to them and to with with that total times, as you fill not MRCC. looking -- all flow going back equity fill preferred the these since the forward? plan going So values, to out, -- isn’t companies gap? on companies question stock? first shortage. portfolio, into look it, these well, anything is preferred you that impact coming a problematic. And I be there plan do then stock how I’m when and you as the of do entire that law in enterprise discussions of put down X.X And EBITDA second I you XXX Is looks companies curious were this there you think to but create opportunity an will is, yet, cash that But And like pipe? begin realized looks debt over realized I the it’s it strategically, How becomes to might free

Ted Koenig

administration the I from types York New the dozen The Bloomberg of media, of And And Times you same I’ve answer I will Journal, it’s or my the tell or think gotten consistent questions. asking S&P, probably is; that or whether to half calls think that are I early because one, proposed even that fruition they to fruition differently. this to think are things it’s that necessarily always are fruition coming proposed come and too number by come people tell, don’t things really to

one. tend tax doesn’t cuts that’s really deals to business and there the year. change quarter number M&A with fourth tax slower of to into So, pace pushed get year versus a play considerations, materially rate to Number one to philosophically, another standpoint, deal M&A, about, is that, sometimes the tax has next a the other get accelerated tend the tends market deals be reasons. really into for than same two talked be because year When the everyone But and due to change doesn’t rules. from

a in only MRCC think lot specifically. I So slower that a I philosophically quarter, years Number fourth discussion seen the tax of that occur last because is and and that make to may quarter we’ve than seeing there I’ll we're think, quarter or may in cuts portfolio, the and three generally is not the concern about with respect potential our last point three, XXXX. this

is entire points average attachment portfolio around average X.X Our leverage across our weighted debt. times leverage

a at EBITDA not attaching X, like we're other X turns standpoint. So X.X, firms of debt from

carries on right we, that’s waiting four is proposal capital there And start. I equity because associated spared able than raised is in is potential as on been of that lot proffered this we're very a a under industry the change tax be The that’s favorably we PE MRCC, any to significantly that typical of sidelines a been of at capital turns capital void. structure there than seems at impacted fill and do been to So will don’t work stock industry, less with put capital more companies of this in in current lots this think our the to looking of actually then to those to interests. way a now historically. by to industry, full all has players with that in believe PE be to And the leverage and that they’ve

little transfers, middle don’t end a than put deal together, a to lower there to you where is over the remember I done middle which terms in year to public, middle amount private long-term, the PE, buy-outs. market pace have get see because market I that you’re the particularly market. bit of generally is in years, activity, for you the transactions, think play of -- or see broadly So the think while middle installation may two tends change There generational M&A change private to place in be that quarter-to-quarter next PE syndicated in in when deals particularly huge the you management market, transfers, at public that reasons all be we going family, a sibling to market to the

given to questions. about I’ve at to your think hopefully, answer enough least So you

Aaron Peck

I to platform to a leverage just X.X the starting put minute couple across to The for Ted not It’s is of CFO average. clarify specific on leverage need for Monroe said. on head just things BDC. times my

to starting be anywhere in borrowers. terms our put the a head… basis, CFO on leverage my leverage, average And portfolio of that’s disclosed should average for actually haven't consistent weighted We across but it the

Unidentified Analyst

equity? interest you. you if the is of might that -- are bearing XX additional lot disclose a or don’t or there The across total XX, And then more debt But just straight the to lien the don’t behind that’s more, your be this and sponsor the whole rest its then exposure. debt which that up have second or Could little want you in deal platform, is to. you

Aaron Peck

focused exposure really on we’re levels -- at our and coverage. looked fixed We charge

indebtedness lot see on fixed charges, to our of in just We more of don’t So it's as be cover earnings tonnage a capital tends an Company is in your a the to sufficient space, just anecdote. in long Generally, behind deals. there form as a amount generates the equity.

form As into capital and see tend up you $XX over, million junior move the larger size indebtedness. you in food of the companies, to the more chain EBITDA

Unidentified Analyst

does be how to this affected. it if looking is become going just So, we’re at long,

total there, roughly is we exposure XX flow the rough could assume run denial. parameter, if interest and from a free the Just there debt be across the cash platform would

Ted Koenig

I a very, we with mean, entire I when don’t safe of today imagine the business. future our very what attach in will the change deal how I we I do going we And laws the where platform, And are we we’ll just they’re much be. new enacted. at rate. think you But way tax across tell we’ll to think things in do

Unidentified Analyst

question. X% or healthy around you they platform, X% you X%? just last or are then industry, quick look across the some by at growth the And seeing to rates, muddling When EBITDAs entire

Ted Koenig

generally seen I entire is you EBITDA that across some we’ve industries than We specific. will on trends at the other declines our that are any our tell look some seen certain perhaps good I EBITDA platform, growth. which have not way business, and in stability industry

think retail place. tough has been I a

and think oil has isolated than tough exploration industries. other a certain I gas been place,

And I we think generally forward we good we play industries entire feel where and our trying going about to portfolio. in. be what thoughtful, and we’re play

Operator

this remarks. for no the I’m to And Koenig call turn Ted now like would closing showing further time. to questions, at I back

Ted Koenig

they focused and let our team, forward in we look our management, being I thank to also our and you we Board to vigilant call for to our that for our do, then today thank And following everything next we’ll you continue to very infrastructure us. to all know you in want I speaking for again be business. our and want quarter.

if you have free will speak to analysts feel directly. looming shareholders. individual questions, speak He’s and always to contact all that, we nice has So and And anyone any to further afternoon Aaron please with to a soon.

the So thanks call today. for

Operator

Ladies a gentlemen, participation your this and concludes you conference. have and today’s Thank wonderful day. for

Monroe Capital (MRCC) 8 Nov 172017 Q3 Earnings call transcript