MAIN | Q3 2024

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Overview

• Distributable NII of $1.06 beats by $0.05.

• Total investment income of $136.82M (+11.0% Y/Y) in-line.

Takeaways

Main Street Capital (MAIN) delivered an impressive Q3 2024, with strong financial performance and strong shareholder returns.

The company achieved an annualized return on equity of 18.8% and hit a new record for net asset value (NAV) per share at $30.57, marking its ninth straight quarterly increase.

Total investment income climbed to $136.8 million, up 11% year-over-year and 3.5% from the prior quarter. Interest income was responsible for much of this growth, driven by increased investment activity.

Distributable net investment income (DNII) per share once again outpaced the dividends, reinforcing the company’s ability to generate consistent income. Shareholders certainly benefitted through a $0.30 supplemental dividend that was declared for December, bringing total supplemental dividends for the past year to $1.20 per share.

With that, regular monthly dividends are also set to increase by 4% in Q1 2025 to $0.25 per share, a show of confidence from the company. Over the last 12 months, MAIN has delivered a total of over $4 per share in dividends, resulting in a shareholder yield of roughly 8%.

The lower middle market portfolio, a key focus for MAIN, showed decent growth during the quarter.

Total investments reached $52 million, which resulted in a net increase of $2 million after repayments. While below expectations, the company quickly bounced back with two big platform investments worth $116 million in early October.

MAIN is confident it will close more deals in this area by year-end. Meanwhile, its private loan portfolio saw more robust activity, with $309 million in new investments and a $163 million net increase. A key moment this quarter came from a $26 million realized gain on one of their equity investments, which delivered a 5.6x return on invested capital.

Across the board, MAIN’s portfolio remains very well-diversified, with investments in 193 companies across a wide range of industries. With the largest holding accounting for just 3.6% of total income over the last year, it’s fair to say that no single company dominates the portfolio.

Overall, MAIN continues to be a beacon of stability and reliable (and growing) income. With a conservative strategy and strong momentum, things are looking good for both the company and its investors.

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