Investcorp Credit Management BDC, Inc. Announces Financial Results for the Quarter and Fiscal Year Ended June 30, 2024, and Quarterly Distribution

NEW YORK--(BUSINESS WIRE)--Investcorp Credit Management BDC, Inc. (NASDAQ: ICMB) (“ICMB” or the “Company”) announced its financial results today for its fourth quarter and fiscal year ended June 30, 2024.

HIGHLIGHTS

• On September 18, 2024, the Company’s Board of Directors (the “Board”) declared a distribution of $0.12 per share for the quarter ending September 30, 2024, payable in cash on November 6, 2024, to stockholders of record as of October 16, 2024.
• During the quarter, ICMB made investments in two new portfolio companies and three existing portfolio companies. These investments totaled $17.9 million, at cost. The weighted average yield (at origination) of debt investments made in the quarter was 10.23%.
• ICMB fully realized its investments in three portfolio companies during the quarter, totaling $22.1 million in proceeds. The internal rate of return on these investments was 11.27%.
• During the quarter, the Company had net repayments of $0.41 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, 2024, was 12.33%, compared to 12.36% for the quarter ended March 31, 2024.
• Net asset value decreased $0.28 per share to $5.21, compared to $5.49 as of March 31, 2024. Net assets decreased by $4.1 million, or 5.17%, during the quarter ended June 30, 2024 compared to March 31, 2024.

Portfolio results, as of and for the three months ended June 30, 2024:

Total assets	$192.2mm
Investment portfolio, at fair value	$184.6mm
Net assets	$75.01mm
Weighted average yield on debt investments, at cost ^(1)	12.33%
Net asset value per share	$5.21
Portfolio activity in the current quarter:
Number of investments in new portfolio companies during the period	2
Number of portfolio companies invested in, end of period	41
Total capital invested in existing portfolio companies ^(2)	$8.5mm
Total proceeds from repayments, sales, and amortization ^(3)	$23.5mm
Net investment income (NII)	$1.3mm
Net investment income per share	$0.09
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 June 30, 2024	$0.15
(1) Represents weighted average yield on total debt investments for the three months ended June 30, 2024. 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.
(2) Includes gross advances to existing revolving credit commitments to portfolio companies and PIK interest
(3) Includes gross repayments on existing delayed draw and revolving credit commitments to portfolio companies

Mr. Suhail A. Shaikh said “During the quarter, we navigated a persistently challenging market environment characterized by subdued new deal activity and heightened competition for high-quality assets. Despite these headwinds, we remained disciplined in our investment approach, focusing on opportunities that align with our rigorous underwriting standards. While refinancing activity provided some avenues for capital deployment, we are maintaining a highly selective stance on new deals. Our priority continues to be preserving the stability of our portfolio and positioning the company for long-term growth as market conditions evolve.”

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 September 18, 2024, the Board declared a distribution for the quarter ended September 30, 2024 of $0.12 per share payable on November 6, 2024 to stockholders of record as of October 16, 2024.

This distribution represents a 14.29% yield on the Company’s $3.36 share price as of market close on June 28, 2024. 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, 2024, 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 two new portfolio companies and three existing portfolio companies. The aggregate capital invested during the quarter totaled $17.9 million, at cost, and the debt investments were made at a weighted average yield of 10.23%.

The Company received proceeds of $23.5 million from repayments, sales and amortization during the quarter, primarily related to the realization of Empire Office Inc., Northstar Group Services, Inc., and Potpourri Group, Inc.

During the quarter, the Company had net repayments of $0.4 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 approximately $3.8 million, or $0.26 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 June 30, 2024, the Company’s investment portfolio consisted of investments in 41 portfolio companies, of which 85.02% were first lien investments and 14.98% were equity, warrants, and other investments. The Company’s debt portfolio consisted of 97.4% floating rate investments and 2.6% fixed rate investments.

Capital Resources

As of June 30, 2024, the Company had $5.1 million in cash, of which $4.95 million was restricted cash, and $57.0 million of unused and available capacity under its revolving credit facility with Capital One, N.A.

Subsequent Events

Subsequent to June 30, 2024 and through September 25, 2024, the Company invested a total of $12.9 million, which included investments in three new portfolio companies and two existing portfolio companies. As of September 25, 2024, the Company had investments in 44 portfolio companies.

Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Statements of Assets and Liabilities
	June 30, 2024			June 30, 2023
Assets
Non-controlled, non-affiliated investments, at fair value (amortized cost of $189,319,802 and $219,319,251, respectively)	$	181,948,376		$	210,150,018
Affiliated investments, at fair value (amortized cost of $15,149,238 and $23,979,565, respectively)		2,621,154			9,961,311
Total investments, at fair value (amortized cost of $204,469,040 and $243,298,816, respectively)		184,569,530			220,111,329
Cash		158,768			1,093,758
Cash, restricted		4,950,036			8,057,458
Principal receivable		50,609			93,581
Interest receivable		1,301,516			2,041,877
Payment-in-kind interest receivable		66,625			46,088
Long-term receivable		631,667			—
Escrow receivable		97,173			—
Other receivables		—			1,050
Prepaid expenses and other assets		411,821			361,719
Total Assets	$	192,237,745		$	231,806,860
Liabilities
Notes payable:
Revolving credit facility	$	43,000,000		$	71,900,000
2026 Notes payable		65,000,000			65,000,000
Deferred debt issuance costs		(1,654,870	)		(1,220,556	)
Unamortized discount		(124,443	)		(195,553	)
Notes payable, net		106,220,687			135,483,891
Payable for investments purchased		7,425,000			1,795,297
Dividend payable		—			2,590,520
Income-based incentive fees payable		128,876			576,023
Base management fees payable		816,777			906,218
Interest payable		1,950,925			2,293,766
Directors' fees payable		—			15,755
Accrued expenses and other liabilities		685,271			445,082
Total Liabilities		117,227,536			144,106,552
Commitments and Contingencies (see Note 6)
Net Assets
Common stock, par value $0.001 per share (100,000,000 shares authorized and 14,403,752 and 14,391,775 shares issued and outstanding, respectively)		14,404			14,392
Additional paid-in capital		203,103,263			203,327,714
Distributable earnings (loss)		(128,107,458	)		(115,641,798	)
Total Net Assets		75,010,209			87,700,308
Total Liabilities and Net Assets	$	192,237,745		$	231,806,860
Net Asset Value Per Share	$	5.21		$	6.09

Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Statements of Operations (unaudited)
	For the Years Ended June 30,
	2024			2023			2022
Investment Income:
Interest income
Non-controlled, non-affiliated investments	$	20,271,776		$	23,822,181		$	22,641,798
Affiliated investments		12,451			(20,611	)		29,813
Total interest income		20,284,227			23,801,570			22,671,611
Payment in-kind interest income
Non-controlled, non-affiliated investments		2,028,744			1,250,169			102,720
Affiliated investments		77,680			70,070			208,470
Total payment-in-kind interest income		2,106,424			1,320,239			311,190
Dividend income
Non-controlled, non-affiliated investments		54,138			101,755			—
Affiliated investments		—			—			296,126
Total dividend income		54,138			101,755			296,126
Payment in-kind dividend income
Non-controlled, non-affiliated investments		784,854			691,972			282,952
Affiliated investments		—			—			—
Total payment-in-kind dividend income		784,854			691,972			282,952
Other fee income
Non-controlled, non-affiliated investments		648,659			768,617			868,727
Affiliated investments		—			—			759
Total other fee income		648,659			768,617			869,486
Total investment income		23,878,302			26,684,153			24,431,365
Expenses:
Interest expense		8,606,309			8,413,409			6,633,587
Base management fees		3,800,693			4,201,394			4,594,588
Income-based incentive fees		(72,942	)		401,597			(348,670	)
Provision for tax expense		267,150			294,330			270,618
Professional fees		1,239,122			984,290			1,302,513
Allocation of administrative costs from Adviser		1,360,194			966,045			1,247,205
Amortization of deferred debt issuance costs		576,475			693,333			621,111
Amortization of original issue discount - 2026 Notes		71,110			71,110			71,110
Insurance expense		479,502			506,963			512,347
Directors' fees		294,907			302,500			302,500
Custodian and administrator fees		316,128			292,267			334,214
Other expenses		713,789			516,160			446,330
Total expenses		17,652,437			17,643,398			15,987,453
Waiver of base management fees		(365,225	)		(387,311	)		(480,032	)
Waiver of income-based incentive fees		—			—			—
Net expenses		17,287,212			17,256,087			15,507,421
Net investment income		6,591,090			9,428,066			8,923,944
Net realized and unrealized gain/(loss) on investments:
Net realized gain (loss) from investments
Non-controlled, non-affiliated investments		(7,731,553	)		(26,890,095	)		(6,198,762	)
Affiliated investments		(6,239,984	)		-			(8,196,669	)
Net realized gain (loss) from investments		(13,971,537	)		(26,890,095	)		(14,395,431	)
Net change in unrealized appreciation (depreciation) in value of investments
Non-controlled, non-affiliated investments		1,797,807			21,966,347			2,898,538
Affiliated investments		1,490,170			(1,269,815	)		5,159,579
Net change in unrealized appreciation (depreciation) on investments		3,287,977			20,696,532			8,058,117
Total realized gain (loss) and change in unrealized appreciation (depreciation) on investments		(10,683,560	)		(6,193,563	)		(6,337,314	)
Net increase (decrease) in net assets resulting from operations	$	(4,092,470	)	$	3,234,503		$	2,586,630
Basic and diluted:
Net investment income per share	$	0.46		$	0.66		$	0.62
Earnings per share	$	(0.28	)	$	0.22		$	0.18
Weighted average shares of common stock outstanding		14,396,201			14,389,163			14,304,641
Distributions paid per common share	$	0.60		$	0.63		$	0.60

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 December 31, 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.