First Quarter 2024 Net Investment Income of $1.05 Per Share First Quarter 2024 Distributable Net Investment Income(1) of $1.11 Per Share Net Asset Value of $29.54 Per Share HOUSTON, May 9, 2024 /PRNewswire/ -- Main Street Capital Corporation (NYSE:MAIN) ("Main Street") is pleased to announce its financial results for the first quarter ended March 31, 2024. Unless otherwise noted or the context otherwise indicates, the terms "we," "us," "our" and the "Company" refer to Main Street and its consolidated subsidiaries. First Quarter 2024 Highlights Net investment income of $89.8 million (or $1.05 per share) Distributable net investment income(1) of $94.4 million (or $1.11 per share) Total investment income of $131.6 million An industry leading position in cost efficiency, with a ratio of total non-interest operating expenses as a percentage of quarterly average total assets ("Operating Expenses to Assets Ratio") of 1.3% on an annualized basis Net increase in net assets resulting from operations of $107.1 million (or $1.26 per share) Return on equity(2) of 17.2% on an annualized basis for the quarter and 19.3% for the trailing twelve-month period Net asset value of $29.54 per share at March 31, 2024, representing an increase of $0.34 per share, or 1.2%, compared to $29.20 per share at December 31, 2023 Declared regular monthly dividends totaling $0.72 per share for the second quarter of 2024, or $0.24 per share for each of April, May and June 2024, representing a 6.7% increase from the regular monthly dividends paid in the second quarter of 2023 Declared and paid a supplemental dividend of $0.30 per share, resulting in total dividends paid in the first quarter of 2024 of $1.02 per share and representing a 20.0% increase from the total dividends paid in the first quarter of 2023 and a 4.1% increase from the total dividends paid in the fourth quarter of 2023 Completed $91.8 million in total lower middle market ("LMM") portfolio investments, including an investment of $12.8 million in a new LMM portfolio company, which after aggregate repayments of debt principal and return of invested equity capital from several LMM portfolio investments resulted in a net increase of $67.0 million in the total cost basis of the LMM investment portfolio Completed $154.5 million in total private loan portfolio investments, which after aggregate repayments of debt principal from several private loan portfolio investments, return of invested equity capital from a private loan portfolio investment and a decrease in cost basis due to realized losses on several private loan portfolio investments resulted in a net increase of $54.9 million in the total cost basis of the private loan investment portfolio Net decrease of $21.9 million in the total cost basis of the middle market investment portfolio from net investment activity Further diversified our capital structure by issuing $350.0 million of 6.95% senior unsecured notes due March 1, 2029 (the "March 2029 Notes") In commenting on the Company's operating results for the first quarter of 2024, Dwayne L. Hyzak, Main Street's Chief Executive Officer, stated, "We are extremely pleased with our performance in the first quarter, which resulted in continued strong operating results highlighted by a return on equity of 17.2%, net investment income per share and distributable net investment income per share that significantly exceeded the dividends paid to our shareholders and a new record for net asset value per share for the seventh consecutive quarter. These results demonstrate the continued and sustainable strength of our overall platform, the benefits of our differentiated and diversified investment strategies, the unique contributions of our asset management business and the continued underlying strength and quality of our portfolio companies. We are also pleased that we generated growth in both our lower middle market and private loan investment portfolios in the first quarter and ended the quarter with attractive investment pipelines in both investment strategies, which we believe will be helpful as we work to maintain our positive momentum from the last few quarters into the future." Mr. Hyzak continued, "Our distributable net investment income in the first quarter significantly exceeded the dividends paid to our shareholders, with our distributable net investment income exceeding the monthly dividends paid to our shareholders by 54% and the total dividends paid to our shareholders by 9%. This level of dividend coverage is after we increased the total dividends paid to our shareholders in the first quarter of 2024 by 20% when compared to the comparable period in the prior year. This strong performance allowed us to deliver significant value to our shareholders, while still conservatively retaining a meaningful portion of our income and growing our net asset value per share for the future benefit of our shareholders. In addition, our strong first quarter results and favorable outlook for the second quarter resulted in the declaration of an increase to our monthly dividends for the third quarter of 2024 and a $0.30 per share supplemental dividend to be paid in June 2024, representing our eleventh consecutive quarterly supplemental dividend, to go with the seven increases to our regular monthly dividends in the same time period. Additionally, with the continued support from our long-term lender relationships, and the benefits of our recent investment grade debt offering in January 2024, we continue to maintain very strong liquidity and a conservative leverage profile, which we believe is important in the current economic environment, and we remain excited about the current opportunities in both our lower middle market and private loan investment strategies." First Quarter 2024 Operating Results The following table provides a summary of our operating results for the first quarter of 2024: Three Months Ended March 31, 2024 2023 Change ($) Change (%) Interest income $     100,106 $       93,392 $           6,714 7 % Dividend income 22,791 24,222 (1,431) (6) % Fee income 8,709 2,640 6,069 230 % Total investment income $     131,606 $     120,254 $         11,352 9 % Net investment income $       89,807 $       80,967 $           8,840 11 % Net investment income per share $           1.05 $           1.02 $             0.03 3 % Distributable net investment income(1) $       94,372 $       85,443 $           8,929 10 % Distributable net investment income per share(1) $           1.11 $           1.07 $             0.04 4 % Net increase in net assets resulting from operations $     107,147 $       79,592 $         27,555 35 % Net increase in net assets resulting from operations per share $           1.26 $           1.00 $             0.26 26 % The $11.4 million increase in total investment income in the first quarter of 2024 from the comparable period of the prior year was principally attributable to (i) a $6.7 million increase in interest income, primarily due to an increase in interest rates on floating rate investment portfolio debt investments primarily resulting from increases in benchmark index rates and from higher average levels of income producing investment portfolio debt investments and (ii) a $6.1 million increase in fee income, primarily related to an increase in fees received from the refinancing and prepayment of debt investments and fees related to higher originations of portfolio investments, partially offset by a $1.4 million decrease in dividend income, primarily due to decreased dividend income from certain of our LMM portfolio companies. The $11.4 million increase in total investment income in the first quarter of 2024 included the impact of a net decrease of $1.8 million in certain income considered less consistent or non-recurring, including a $5.3 million decrease in dividend income, partially offset by a $3.5 million increase in income from accelerated prepayment, repricing and other activity related to portfolio debt investments, in both cases when compared to the same period in 2023. Total cash expenses(3) increased $2.4 million, or 7.0%, to $37.2 million in the first quarter of 2024 from $34.8 million for the same period in 2023. This increase in total cash expenses was principally attributable to (i) a $1.8 million increase in interest expense, (ii) a $1.1 million increase in cash compensation expenses(3) and (iii) a $0.1 million increase in general and administrative expense, partially offset by a $0.6 million increase in expenses allocated to the External Investment Manager (defined below). The increase in interest expense is primarily related to (i) an increased weighted average interest rate on our debt obligations resulting from the addition of the March 2029 Notes and an increased average interest rate on our Credit Facilities (defined below) due to increases in benchmark index rates and (ii) increased average outstanding borrowings. The increase in cash compensation expenses(3) is primarily related to (i) increased incentive compensation accruals and (ii) increased headcount to support our growing investment portfolio and asset management activities. Non-cash compensation expenses(3) increased $0.1 million in the first quarter of 2024 from the comparable period of the prior year, primarily driven by an increase in deferred compensation expense. Our Operating Expenses to Assets Ratio (which includes non-cash compensation expenses(3)) was 1.3% for both the first quarters of 2024 and 2023, on an annualized basis. The $8.8 million increase in net investment income and the $8.9 million increase in distributable net investment income(1) in the first quarter of 2024 from the comparable period of the prior year were both principally attributable to the increase in total investment income, partially offset by increased expenses, each as discussed above. Net investment income and distributable net investment income(1) on a per share basis for the first quarter of 2024 increased by $0.03 per share and $0.04 per share, respectively, compared to the first quarter of 2023, to $1.05 per share and $1.11 per share, respectively. These increases include the impact of a 7.0% increase in the average shares outstanding compared to the first quarter of 2023 primarily due to shares issued since the beginning of the comparable period of the prior year through our (i) at-the-market ("ATM") equity issuance program, (ii) dividend reinvestment plan and (iii) equity incentive plans. Net investment income and distributable net investment income(1) on a per share basis in the first quarter of 2024 included a net decrease of $0.03 per share resulting from a decrease in investment income considered less consistent or non-recurring in nature compared to the first quarter of 2023, as discussed above. The $107.1 million net increase in net assets resulting from operations in the first quarter of 2024 represents a $27.6 million increase from the first quarter of 2023. This increase was primarily the result of (i) a $16.0 million decrease in net realized loss from investments resulting from a net realized loss of $12.4 million in the first quarter of 2024 compared to a net realized loss of $28.4 million in the first quarter of 2023, (ii) an $8.8 million increase in net investment income and (iii) a $5.5 million increase in net unrealized appreciation from portfolio investments (including the impact of accounting reversals relating to realized gains/income (losses)), partially offset by a $2.8 million increase in income tax provision. The $12.4 million net realized loss from investments for the first quarter of 2024 was primarily the result of (i) a $7.1 million realized loss on the full exit of an other portfolio investment, (ii) a $3.8 million realized loss on the full exit of a middle market investment, (iii) a $1.1 million realized loss on the restructure of a private loan investment and (iv) a realized loss of $0.9 million on the restructure of a middle market investment, partially offset by net realized gains of $0.5 million on other activity across the investment portfolio. The following table provides a summary of the total net unrealized appreciation of $40.6 million for the first quarter of 2024: Three Months Ended March 31, 2024 LMM (a) Private Loan Middle Market Other Total (dollars in millions) Accounting reversals of net unrealized (appreciation)depreciation recognized in prior periods due to net realized (gains / income) losses recognized during the current period $       (0.4) $         0.2 $         4.6 $         6.8 (b) $       11.2 Net unrealized ...