Executive Summary

Q4 2024 delivered record NAV per share ($31.65), annualized ROE of 25.4%, and strong distributable NII per share ($1.08), with total investment income rising 9% YoY to $140.4M .
Dividend trajectory remains a key positive: regular monthly dividends were raised to $0.25 for Q1 2025 and Q2 2025, and a $0.30 supplemental dividend was declared for March 2025; DNII continues to exceed total dividends paid .
Portfolio quality and diversification remain strong: non‑accruals at 0.9% of fair value (3.5% cost); fair value is 116% of cost, with LMM equity fair value at 208% of cost, and external asset manager value accreting with AUM growth .
Near‑term headwinds include lower floating base rates and modest spread compression in private loans; management still expects another strong earnings quarter in Q1 2025 with DNII of at least $1.05 per share and continued supplemental dividends .

What Went Well and What Went Wrong

What Went Well
- Record ROE (25.4% annualized) and record NAV per share; management emphasized “sustainable strength” of a diversified platform and asset management contributions .
- Pearl Meyer exit generated a $53.7M realized gain and $31.6M cumulative dividends, highlighting LMM equity upside and best‑in‑class return profile .
- External Investment Manager AUM reached $1.6B; MSC Income Fund completed NYSE listing and equity offering, positioning the asset management business for future fee growth .
What Went Wrong
- Interest expense rose $9.6M YoY in Q4 on higher borrowings and higher weighted‑average debt costs (offset partially by lower SOFR on credit facilities); cash comp also increased $1.3M .
- Private loan portfolio saw net fair value depreciation from specific underperformance; management cited spread compression of ~75–100 bps YoY and ~25 bps QoQ since Q3 .
- Dividend/incentive fee contributions from the External Investment Manager were modestly lower vs Q4 2023 ($8.7M contribution, down $0.5M), impacting DNII mix .

Financial Results

Quarterly progression (QoQ)

Metric	Q2 2024	Q3 2024	Q4 2024
Total Investment Income ($USD Millions)	$132.2	$136.8	$140.4
Net Investment Income ($USD Millions)	$87.3	$87.6	$90.4
NII per Share ($)	$1.01	$1.00	$1.02
Distributable NII ($USD Millions)	$92.3	$93.0	$95.3
DNII per Share ($)	$1.07	$1.06	$1.08
Net Increase in Net Assets ($USD Millions)	$102.7	$124.0	$174.2
Net Inc. in Net Assets per Share ($)	$1.19	$1.42	$1.97
Operating Expenses to Assets Ratio (annualized %)	1.3%	1.3%	1.3%
NAV per Share ($)	$29.80	$30.57	$31.65

Year-over-year (Q4 2024 vs Q4 2023)

Metric	Q4 2023	Q4 2024
Interest Income ($USD Millions)	$100.7	$110.0
Dividend Income ($USD Millions)	$23.8	$24.5
Fee Income ($USD Millions)	$4.8	$6.0
Total Investment Income ($USD Millions)	$129.3	$140.4
Net Investment Income ($USD Millions)	$90.1	$90.4
NII per Share ($)	$1.07	$1.02
Distributable NII ($USD Millions)	$94.8	$95.3
DNII per Share ($)	$1.12	$1.08
Net Increase in Net Assets ($USD Millions)	$139.1	$174.2
Net Inc. in Net Assets per Share ($)	$1.65	$1.97

Notes on drivers: YoY TII increased $11.1M primarily from higher interest income (larger debt portfolio), higher fee income (investment activity), and slightly higher dividends; offset by lower non‑recurring income and higher expenses (interest and cash comp) .

Segment breakdown (portfolio)

Lower Middle Market (LMM)

Metric	Sep 30, 2024	Dec 31, 2024
Number of Portfolio Companies	84	84
Fair Value ($USD Billions)	$2.469	$2.503
Cost ($USD Billions)	$1.925	$1.938
% Debt at Cost	72.2%	70.8%
% First Lien (Debt)	99.2%	99.2%
Weighted-Average Effective Yield	13.0%	12.8%
Average EBITDA ($USD Millions)	$9.6	$10.2
LMM Equity FV / Cost	211%	208%

Private Loan

Metric	Sep 30, 2024	Dec 31, 2024
Number of Portfolio Companies	92	91
Fair Value ($USD Billions)	$1.883	$1.904
Cost ($USD Billions)	$1.938	$1.952
% Debt at Cost	95.9%	95.4%
% First Lien (Debt)	99.9%	99.9%
Weighted-Average Effective Yield	12.4%	11.8%
Average EBITDA ($USD Millions)	$35.0	$30.5

Middle Market

Metric	Sep 30, 2024	Dec 31, 2024
Number of Portfolio Companies	17	15
Fair Value ($USD Millions)	$178.2	$155.3
Cost ($USD Millions)	$218.3	$195.0
% Debt at Cost	88.0%	86.5%
% First Lien (Debt)	97.6%	97.2%
Weighted-Average Effective Yield	12.6%	12.3%
Average EBITDA ($USD Millions)	$53.1	$53.4

Key KPIs

KPI	Q2 2024	Q3 2024	Q4 2024
Annualized ROE (%)	16.1%	18.8%	25.4%
Non‑Accruals (% FV)	1.2%	1.4%	0.9%
Non‑Accruals (% Cost)	3.6%	3.9%	3.5%
Regulatory Debt-to-Equity (x)	N/A	0.69x	0.64x
Asset Coverage (x)	N/A	2.44x	2.56x
Aggregate Liquidity ($USD Billions)	$0.946	$1.334	$1.404

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
DNII per Share	Q4 2024	“At least $1.08”	$1.08 actual	Achieved
DNII per Share	Q1 2025	N/A	“At least $1.05”	New
Regular Monthly Dividend	Q1 2025	$0.245/month (Q4 2024)	$0.25/month	Raised
Regular Monthly Dividend	Q2 2025	N/A	$0.25/month	Maintained at higher level
Supplemental Dividend	Mar 2025	Expect continued supplemental dividends	$0.30 declared	Maintained

Dividend coverage comment: Management reiterated DNII exceeds total dividends paid and expects continued supplemental dividends given portfolio strength and stable-to-positive NAV .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3)	Current Period (Q4)	Trend
AI/Technology initiatives	Presidents’ Meeting emphasized AI best practices and cybersecurity; sharing third‑party resources to improve operations	Not a core theme in Q4 remarks	Stable background focus
Tariffs/Macro	Spread compression ~75–100 bps YoY; lower base rates; cautious M&A activity	Tariff exposure monitored; domestic focus helps mitigate; active planning with portfolio companies	Macro headwinds persistent
Private loan market dynamics	Strong origination in Q2–Q3; pricing tightening; banks occasionally refinancing at lower spreads	Continued sporadic bank competition; terms driven by idiosyncratic bank relationships	Competitive pressure consistent
Asset management business (MSC Income Fund)	Exploring listing; aligning fee structure; AUM $1.6B	NYSE listing and offering completed; platform positioned for future fee growth	Strengthening
Dividends policy	$0.30 supplemental in Sep & Dec 2024; regular monthly increases	$0.30 supplemental in Mar 2025; regular monthly $0.25 in Q1 & Q2 2025	Sustained shareholder returns
Leverage and funding	Plan to lean more on debt; ATM usage expected to decline	Under‑target leverage (0.64x); plan to increase toward targets in 2025	Gradual normalization

Management Commentary

“We are extremely pleased with our performance in the fourth quarter… highlighted by a record annualized return on equity of 25.4%… strong levels of net investment income per share and distributable net investment income per share… and a record net asset value per share.” — CEO Dwayne Hyzak .
“Our continued positive performance allowed us to increase the total dividends paid… and we currently expect to recommend that our Board continues to declare future supplemental dividends… we remain excited about the current opportunities in our lower middle market and private loan investment strategies.” — CEO Dwayne Hyzak .
“We are very pleased that… MSC Income Fund… successfully completed a listing on the New York Stock Exchange and a public equity offering… provides significant future benefits… through the opportunity to grow the asset management fees.” — CEO Dwayne Hyzak .
“Looking forward, we expect headwinds on top line earnings related to the decrease in floating market index rates… we expect another strong earnings quarter in the first quarter of 2025, with expected DNII of at least $1.05 per share.” — CFO Ryan Nelson .
On LMM equity realization benefits: “A realized gain of $54 million on the exit of our equity investment in Pearl Meyer… plus $32 million total dividends… 7.7x MOIC and 69% IRR on equity; 33% IRR including all debt and equity.” — President David Magdol .

Q&A Highlights

Tariff exposure: Portfolio is diversified and largely domestic; impact expected to be less than broader U.S. economy; proactive planning with management teams .
Leverage outlook: Under‑levered exiting Q4; expect leverage to rise closer to long‑term targets via net investment activity and less ATM issuance; Pearl Meyer exit timing impacted year‑end ratios .
Realization pipeline: Increased buyer interest in several LMM companies; partnership approach with management to maximize value; process confidentiality limits detail .
Competition from banks: Occasional refinancings by local/regional banks at materially lower spreads; typically idiosyncratic, not systemic .
Non‑accruals: Consumer‑focused names remain the primary source; expect progress on at least one case over the next few months .

Estimates Context

Wall Street consensus (S&P Global) for Q4 2024 EPS/Revenue was not retrievable at this time due to data access limits; company materials did not reference consensus comparisons [GetEstimates error].
Given Main Street’s BDC model, NII and DNII per share are the primary earnings measures; actual Q4 DNII per share of $1.08 met prior guidance (“at least $1.08”) .
Implication: Without consensus datapoints, estimate revisions likely focus on dividend sustainability (regular + supplemental), NAV trajectory, and NII sensitivity to lower base rates.

Key Takeaways for Investors

Dividend durability: DNII exceeded total dividends; regular monthly raised to $0.25 and supplemental $0.30 continues—supporting income thesis and potential premium valuation persistence .
NAV momentum and ROE: Tenth consecutive record NAV per share with Q4 ROE at 25.4% annualized—signals strong underwriting and LMM equity upside realization capacity .
Asset management optionality: MSC Income Fund listing and offering should underpin future fee growth, diversifying earnings and supporting DNII over time .
Rate/spread headwinds: Expect some NII pressure from lower base rates and modest spread compression; management still guides to strong Q1 DNII (≥$1.05), mitigating near‑term risk .
Credit quality: Non‑accruals remain low (0.9% FV; 3.5% cost); portfolio FV at 116% of cost, with LMM equity FV at 208% of cost, highlighting embedded gains .
Leverage runway: At 0.64x regulatory debt/equity, Main Street has capacity to fund growth via debt toward long‑term targets, potentially enhancing NII if origination remains disciplined .
Catalysts: Further LMM realizations, continued supplemental dividends, fee growth at the asset manager, and accretive deployment into private loans and LMM debt/equity .

Main Street Capital CORP (MAIN)·Q4 2024 Earnings Summary