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

NEW YORK--(BUSINESS WIRE)--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.