MSC INCOME FUND ANNOUNCES SECOND QUARTER 2026 RESULTS
MSC INCOME FUND ANNOUNCES SECOND QUARTER 2026 RESULTS |
| [06-August-2026] |
Second Quarter 2026 Net Investment Income of $0.26 Per Share Second Quarter 2026 Adjusted Net Investment Income(1) of $0.33 Per Share Second Quarter 2026 Adjusted Net Investment Income Before Taxes(2) of $0.36 Per Share Net Asset Value of $16.51 Per Share HOUSTON, Aug. 6, 2026 /PRNewswire/ -- MSC Income Fund, Inc. (NYSE: MSIF) ("MSC Income" or the "Fund") is pleased to announce its financial results for the second quarter ended June 30, 2026. Second Quarter 2026 Highlights
In commenting on the Fund's operating results for the second quarter of 2026, Dwayne L. Hyzak, MSC Income's Chief Executive Officer, stated, "We are pleased with the Fund's performance in the second quarter, which resulted in an annualized return on equity of 15.9%. The positive results included significant net fair value appreciation of the Fund's investment portfolio, including net fair value appreciation of both the private loan and lower middle market investment portfolios and including the benefit of a material realized gain in the Fund's lower middle market investment portfolio. Based upon the quality of the Fund's existing investment portfolio, together with the favorable liquidity position and the current investment pipeline, we remain excited about our future expectations for the Fund." Second Quarter 2026 Operating Results The following table provides a summary of the Fund's operating results for the second quarter of 2026:
The $0.1 million increase in total investment income in the second quarter of 2026 from the comparable period of the prior year was principally attributable to (i) a $0.7 million increase in interest income, primarily due to higher average levels of income producing investment portfolio debt investments, partially offset by a decrease in interest rates, primarily resulting from decreases in benchmark index rates on floating rate investment portfolio debt investments, and the negative impact from investment portfolio debt investments on non-accrual status and (ii) a $0.5 million increase in fee income, primarily due to an increase in fee income from the refinancing and prepayment of investment portfolio debt investments. These increases were partially offset by a $1.1 million decrease in dividend income, primarily due to a $0.9 million decrease in dividend income from the Fund's LMM portfolio companies. The $0.1 million increase in total investment income in the second quarter of 2026 includes the impact of an increase of $1.4 million in certain income considered less consistent or non-recurring, primarily related to increases of (i) $0.7 million in such fee income and (ii) $0.5 million in such dividend income, in each case when compared to the same period in 2025. Total expenses, net of waivers, increased by $4.0 million, or 21.8%, to $22.3 million in the second quarter of 2026 from $18.3 million for the same period in 2025. This increase was principally attributable to (i) a $2.9 million increase in the ending accrual for the accrued capital gains incentive fee(3) as of June 30, 2026, (ii) a $1.2 million increase in interest expense and (iii) a $0.4 million increase in base management fees, partially offset by a $0.6 million decrease in incentive fee on income, net of waivers. The increase in the capital gains incentive fee accrual(3) was due to the net fair value appreciation of the Fund's investments in the second quarter of 2026. The increase in interest expense was primarily related to (i) an increase in average borrowings outstanding used to fund a portion of the growth of the Fund's investment portfolio and (ii) an increased weighted-average interest rate on the Fund's unsecured debt obligations, driven by the issuance of the May 2029 Notes in the first quarter of 2026, partially offset by a decreased weighted-average interest rate on the Credit Facilities due to decreases in benchmark floating index interest rates (with the May 2029 Notes and the Credit Facilities each defined in the Liquidity and Capital Resources section below). The increase in base management fees was primarily the result of the Fund's increased average total assets. The decrease in incentive fee on income, net of waivers, was the result of (a) a decrease in the gross calculated incentive fee on income of $0.3 million, primarily driven by a decrease in pre-incentive NII, and (b) a $0.3 million voluntary waiver of incentive fee on income by the Adviser (defined below). The Fund's ratio of total non-interest operating expenses, excluding incentive fees, net of waivers, as a percentage of quarterly average total assets, or the Operating Expenses to Assets Ratio, was 1.9% on an annualized basis for the second quarter of 2026, consistent with the second quarter of 2025. The $4.3 million decrease in NII in the second quarter of 2026 from the comparable period of the prior year was principally attributable to an increase in total expenses, net of waivers, partially offset by an increase in total investment income, each as discussed above. NII on a per share basis decreased by $0.09 per share for the second quarter of 2026 as compared to the second quarter of 2025, to $0.26 per share, reflecting the impact of the $0.07 per share capital gains incentive fee accrual(3) in the second quarter of 2026. The $1.4 million, or $0.02 per share, decrease in ANII(1) in the second quarter of 2026 to $14.9 million, or $0.33 per share, from $16.3 million, or $0.35 per share, in the second quarter of 2025 was principally attributable to the same factors noted above for the change in NII, but excluding the impact of the $2.9 million increase in the capital gains incentive fee accrual.(3) The per share changes in NII and ANII(1) in the second quarter of 2026 from the comparable period of the prior year include the impact of a 3.6% decrease in the weighted-average shares outstanding, primarily due to shares repurchased by the Fund, partially offset by shares issued through the dividend reinvestment plan, in each case since the beginning of the comparable period of the prior year. NII and ANII(1) on a per share basis in the second quarter of 2026 each include an increase of $0.03 per share resulting from an increase in investment income considered less consistent or non-recurring in nature compared to the second quarter of 2025, as discussed above. The $29.3 million net increase in net assets resulting from operations in the second quarter of 2026 represents a $13.0 million increase from the second quarter of 2025. This increase was primarily the result of an $18.1 million increase in the net fair value change of the Fund's portfolio investments resulting from the net impact of net realized gains/losses and net unrealized appreciation/depreciation, with the increase resulting from a net fair value increase of $19.0 million in the second quarter of 2026 compared to a net fair value increase of $0.9 million in the comparable period of the prior year, partially offset by (i) a $4.3 million decrease in NII as discussed above and (ii) a $0.8 million increase in the net tax provision on the net fair value change of the portfolio investments, resulting from a net tax provision of $1.7 million in the second quarter of 2026 compared to a net tax provision of $0.9 million in the comparable period of the prior year. The $19.0 million net fair value increase in the second quarter of 2026 was the result of a net realized gain of $9.9 million and net unrealized appreciation (including the reversal of net fair value appreciation recognized in prior periods due to the net realized gain in the quarter) of $9.1 million. The $0.9 million net fair value increase in the second quarter of 2025 was the result of a net realized gain of $4.8 million, partially offset by net unrealized depreciation of $3.9 million. The $9.9 million net realized gain from investments for the second quarter of 2026 was primarily the result of an $11.6 million realized gain on the full exit of a LMM portfolio investment, partially offset by a $1.9 million realized loss on the restructure of a private loan portfolio investment. The following table provides a summary of the total net unrealized appreciation of $9.1 million for the second quarter of 2026:
Liquidity and Capital Resources As of June 30, 2026, the Fund had aggregate liquidity of $210.5 million, including (i) $28.1 million in cash and cash equivalents and (ii) $182.4 million of aggregate unused capacity under the Fund's corporate revolving credit facility (the "Corporate Facility") and the Fund's special purpose vehicle revolving credit facility (the "SPV Facility" and, together with the Corporate Facility, the "Credit Facilities"), which the Fund maintains to support its investment and operating activities. Several details regarding the Fund's capital structure as of June 30, 2026 are as follows:
Share Purchase Plan In August 2026, the Fund's board of directors authorized a share repurchase plan pursuant to which the Fund may repurchase up to $20.0 million of shares of its common stock for a period beginning in September 2026 and ending in February 2027, at times when the market price per share of the common stock is trading below the most recently reported net asset value per share of the common stock by certain pre-determined levels. Pursuant to such authorization, the Fund intends to enter into a share repurchase plan (the "Fund Rule 10b5-1 Stock Repurchase Plan") to facilitate the repurchase of up to the full $20.0 million of shares of its common stock authorized under the share repurchase program. The repurchases of any shares pursuant to the Fund Rule 10b5-1 Stock Repurchase Plan will be implemented in accordance with Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934 (the "Exchange Act"). In August 2026, Main Street Capital Corporation (NYSE: MAIN) ("Main Street"), parent company of the Adviser, authorized a plan pursuant to which Main Street may purchase up to $20.0 million of shares of the Fund's common stock in the open market during the same time period, pursuant to the terms of a share purchase plan (the "Main Street Rule 10b5-1 Stock Purchase Plan") that Main Street intends to enter into in connection with the Fund Rule 10b5-1 Stock Repurchase Plan. The purchases of any shares pursuant to the Main Street Rule 10b5-1 Stock Purchase Plan will be implemented in accordance with Rule 10b5-1 and Rule 10b-18 under the Exchange Act. The terms and conditions of the Fund Rule 10b5-1 Stock Repurchase Plan and of the Main Street Rule 10b5-1 Purchase Plan will be substantially similar. Subject to the limitations under Rule 10b-18 under the Exchange Act and market conditions, the Fund expects that the aggregate amount of shares (i) repurchased under the Fund Rule 10b5-1 Stock Repurchase Plan and (ii) purchased under the Main Street Rule 10b5-1 Purchase Plan on any single trading day will be split among the Fund and Main Street on a pro rata basis (or as close thereto as reasonably possible) based upon the proportion of the aggregate $40.0 million repurchase/purchase commitment represented by the respective share repurchase/purchase program. There is no assurance that the Fund will repurchase or Main Street will purchase any shares of the Fund's common stock at any specific discount levels or in any specific amounts under the Fund Rule 10b5-1 Stock Repurchase Plan or the Main Street Rule 10b5-1 Purchase Plan, as applicable. There is also no assurance that the market price of the Fund's shares of common stock, either absolutely or relative to net asset value per share, will increase as a result of any share repurchases/purchases, or that the Fund Rule 10b5-1 Stock Repurchase Plan or the Main Street Rule 10b5-1 Purchase Plan will enhance stockholder value over the long term. Investment Portfolio Information as of June 30, 2026(5) The following table provides a summary of the investments in the Fund's private loan portfolio and LMM portfolio as of June 30, 2026:
The Fund's total investment portfolio at fair value consists of approximately 61% private loan, 36% LMM, 2% middle market and 1% other portfolio investments. The fair value of the Fund's LMM portfolio company equity investments was 202% of the related cost basis of such equity investments, and the Fund's LMM portfolio companies had a median net senior debt (senior interest-bearing debt through the Fund's debt position less cash and cash equivalents) to EBITDA ratio of 2.7 to 1.0 and a median total EBITDA to senior interest expense ratio of 3.0 to 1.0. Including all debt that is junior in priority to the Fund's debt position, these median ratios were 2.7 to 1.0 and 2.9 to 1.0, respectively.(5)(6) As of June 30, 2026, the Fund's investment portfolio also included:
As of June 30, 2026, investments on non-accrual status comprised 1.9% of the total investment portfolio at fair value and 5.8% at cost, and the Fund's total portfolio investments at fair value were 106% of the related cost basis. Second Quarter 2026 Financial Results Conference Call / Webcast MSC Income has scheduled a conference call for Friday, August 7, 2026 at 11:00 a.m. Eastern time to discuss the second quarter 2026 financial results.(7) You may access the conference call by dialing 412-902-0030 at least 10 minutes prior to the start time. The conference call can also be accessed via a simultaneous webcast by logging into the investor relations section of the Fund's website at https://www.mscincomefund.com. A telephonic replay of the conference call will be available through Friday, August 14, 2026 and may be accessed by dialing 201-612-7415 and using the passcode 13761585#. An audio archive of the conference call will also be available on the investor relations section of the Fund's website at https://www.mscincomefund.com shortly after the call and will be accessible until the date of MSC Income's earnings release for the next quarter. For a more detailed discussion of the financial and other information included in this press release, please refer to the MSC Income Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026 to be filed with the U.S. Securities and Exchange Commission (the "SEC") (www.sec.gov) and MSC Income's Second Quarter 2026 Investor Presentation to be posted on the investor relations section of the MSC Income website at https://www.mscincomefund.com. ABOUT MSC INCOME FUND, INC. The Fund (www.mscincomefund.com) is a principal investment firm that primarily provides debt capital to private companies owned by or in the process of being acquired by a private equity fund. The Fund's portfolio investments are typically made to support leveraged buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. The Fund seeks to partner with private equity fund sponsors and primarily invests in secured debt investments within its private loan investment strategy. The Fund also maintains a portfolio of customized long-term debt and equity investments in lower middle market companies, and through those investments, the Fund has partnered with entrepreneurs, business owners and management teams in co-investments with Main Street Capital Corporation (NYSE: MAIN) ("Main Street") utilizing the customized "one-stop" debt and equity financing solutions provided in Main Street's lower middle market investment strategy. The Fund's private loan portfolio companies generally have annual revenues between $25 million and $500 million. The Fund's lower middle market portfolio companies generally have annual revenues between $10 million and $150 million. ABOUT MSC ADVISER I, LLC MSC Adviser I, LLC (the "Adviser") is a wholly-owned subsidiary of Main Street that is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. The Adviser serves as the investment adviser and administrator of the Fund in addition to several other advisory clients. FORWARD-LOOKING STATEMENTS MSC Income cautions that statements in this press release which are forward‑looking and provide other than historical information, including but not limited to MSC Income's ability to successfully source and execute on new portfolio investments and deliver future financial performance and results, are based on current conditions and information available to MSC Income as of the date hereof and include statements regarding MSC Income's goals, beliefs, strategies and future operating results and cash flows. Although its management believes that the expectations reflected in those forward‑looking statements are reasonable, MSC Income can give no assurance that those expectations will prove to be correct. Those forward-looking statements are made based on various underlying assumptions and are subject to numerous uncertainties and risks, including, without limitation: MSC Income's continued effectiveness in raising, investing and managing capital; adverse changes in the economy generally or in the industries in which MSC Income's portfolio companies operate; the impacts of macroeconomic factors on MSC Income and its portfolio companies' businesses and operations, liquidity and access to capital, and on the U.S. and global economies, including impacts related to pandemics and other public health crises, global conflicts, risk of recession, tariffs and trade disputes, inflation, supply chain constraints or disruptions and changes in market index interest rates; changes in laws and regulations or business, political and/or regulatory conditions that may adversely impact MSC Income's operations or the operations of its portfolio companies; the operating and financial performance of MSC Income's portfolio companies and their access to capital; retention of key investment personnel by the Adviser; competitive factors; and such other factors described under the captions "Cautionary Statement Concerning Forward-Looking Statements" and "Risk Factors" included in MSC Income's filings with the SEC (www.sec.gov). MSC Income undertakes no obligation to update the information contained herein to reflect subsequently occurring events or circumstances, except as required by applicable securities laws and regulations.
Contacts: Dennard Lascar Investor Relations
SOURCE MSC Income Fund, Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company Codes: NYSE:MSIF,NYSE:MAIN | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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