Executive Summary

Q3 2025 was operationally solid: NII of $16.6M ($0.35/share), total investment income (TII) of $35.4M, ROE of 14.6% annualized, and NAV per share up to $15.54; non‑accruals improved to 1.4% of fair value.
Against S&P Global consensus, EPS (NII/share) modestly missed ($0.35 vs $0.376*) and revenue was essentially in line ($35.37M vs $35.38M*). Estimates are S&P Global; see Estimates Context.
Shareholder returns reinforced via a regular $0.35 dividend and $0.01 supplemental (declared Nov 11; payable Jan 30, 2026), maintaining the run‑rate set earlier in 2025; Q3 press text referenced Q4 payment but the dividend release clarified dates.
Catalysts: improving NAV, better asset quality (lower non‑accruals), reaffirmed BBB‑ with stable outlook (Oct 2025), and near‑term expanded regulatory leverage capacity effective end of January 2026.

What Went Well and What Went Wrong

What Went Well
- ROE accelerated to 14.6% annualized (TTM 11.6%), with NAV/share edging to $15.54; management highlighted portfolio quality, liquidity, and an attractive private loan pipeline.
- Asset quality improved: non‑accruals declined to 1.4% of FV (from 2.6% in Q2), and portfolio FV stood at 106% of cost.
- Funding and balance sheet: $183.5M liquidity, 0.72x debt-to-equity (below target), and BBB‑ rating reaffirmed with stable outlook in October 2025.
What Went Wrong
- Realized losses of $9.9M, largely tied to restructurings of two private loan investments and a full LMM exit (partially offset by a small realized gain).
- Sequential revenue modestly down (TII $35.37M vs $35.64M in Q2) and NII/share flat at $0.35, reflecting lower interest rate environment and incentive fees offsetting base fee and interest expense declines.
- Middle market sub‑segment showed net unrealized depreciation within the quarter; management continues to wind down legacy middle market exposure.

Financial Results

Metric	Q1 2025	Q2 2025	Q3 2025
Total Investment Income ($USD Millions)	$33.23	$35.64	$35.37
Net Investment Income ($USD Millions)	$16.79	$16.31	$16.58
NII per Share ($)	$0.38	$0.35	$0.35
Net Increase in Net Assets from Operations ($USD Millions)	$15.88	$16.29	$26.53
Net Increase in Net Assets per Share ($)	$0.36	$0.35	$0.56

Consensus vs Actual (S&P Global; estimates marked with *)

Metric	Q1 2025	Q2 2025	Q3 2025
EPS (NII/share) Actual ($)	0.38	0.35	0.35
EPS Consensus Mean ($)*	0.381	0.386	0.376
EPS Surprise ($)	-0.001	-0.036	-0.026
Revenue Actual ($USD Millions)	33.23	35.64	35.37
Revenue Consensus Mean ($USD Millions)*	34.17	35.99	35.38
Revenue Surprise ($USD Millions)	-0.94	-0.34	-0.01
Values retrieved from S&P Global.

Segment/Portfolio Mix and Yields (as of Q3 2025)

Segment	Fair Value ($USD Millions)	% of Portfolio (FV)	Count	Weighted Avg Annual Effective Yield
Private Loan	$750.9	~60%	81	11.3%
Lower Middle Market (LMM)	$466.7	~37%	55	12.9%
Middle Market	$26.6	~2%	8	—
Other	$16.0	~1%	6	—

Key KPIs and Balance Sheet

KPI	Q2 2025	Q3 2025
NAV per Share ($)	15.33	15.54
Net Assets ($USD Millions)	722.79	734.36
ROE (Quarterly, annualized)	9.0%	14.6%
Debt-to-Equity (x)	0.75x	0.72x
Liquidity ($USD Millions)	183.7	183.5
Non‑accruals (% FV)	2.6%	1.4%
Private Loan Yield (%)	11.5%	11.3%
LMM Yield (%)	13.1%	12.9%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Regular Quarterly Dividend	Next payment	$0.35/share (Q2 & Q3 declarations)	$0.35/share declared Nov 11, 2025; payable Jan 30, 2026	Maintained
Supplemental Dividend	Next payment	$0.01/share (Q2 & Q3 declarations)	$0.01/share declared Nov 11, 2025; payable Jan 30, 2026	Maintained
Regulatory Leverage Capacity	Effective date	Board approved in Jan 2025; to take effect Jan 29, 2026	Reiterated as near‑term expansion effective end of Jan 2026	No change (timing reaffirmed)

Note: Q3 earnings release referenced Q4 2025 pay timing, while the dividend press release specified Jan 30, 2026 payment dates (authoritative schedule).

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025, Q2 2025)	Current Period (Q3 2025)	Trend
Leverage and Regulatory Capacity	Target leverage 0.85–0.95x; expanded capacity effective Jan 29, 2026; below target at 0.79x in Q1; 0.75x in Q2	0.72x; reiterated expanded leverage effective end Jan 2026	Capacity expansion upcoming; leverage modestly lower
Dividend Policy	Regular + supplemental set at/near NII; goal to increase total dividends over time	Maintained $0.35 + $0.01; next payment Jan 30, 2026	Stable policy; consistent payouts
Private Loan Strategy and Pipeline	Sole focus for new companies; active pipeline; Q1 net +$89M cost add	$94.2M new/incremental commitments; $74.6M funded in Q3	Ongoing deployment; steady origination
Macro/Tariffs	Tariffs a watch item; expecting normalization to unlock activity	Risk factors include tariffs/trade disputes among macro items	Cautious but manageable
Spreads/Yields	Spreads stabilized; potential widening on uncertainty	Private loan yield 11.3% (down from 11.5% in Q2)	Slight yield drift lower
Asset Quality	Q1 non‑accruals 2.8% FV; Q2 2.6%	1.4% FV; FV at 106% of cost	Improvement in Q3

Management Commentary

CEO (Q3 release): “We are pleased with the Fund’s performance in the third quarter, which resulted in an annualized return on equity of 14.6% and favorable net investment income… existing liquidity, near-term expanded regulatory leverage capacity… and current attractive pipeline… provide the opportunity for increased net investment income and shareholder dividends.”
Strategy reaffirmed (Q1 call): Focus on private loans for new investments; listing-driven fee reductions; aim to optimize leverage and increase total dividends as portfolio grows.
Portfolio observations (Q3 release): Non‑accruals remain low; LMM equity FV at 197% of cost; median LMM credit metrics remain reasonable (net senior debt/EBITDA 2.9x; EBITDA/interest 2.8x).
Capital structure (Q3 release): BBB‑ rating reaffirmed; diversified credit facilities with lower SOFR-based rates; $183.5M liquidity.

Q&A Highlights

Note: A Q3 2025 transcript was scheduled but was not available in our document set. Highlights below reflect Q1 2025 Q&A for context.

Leverage path: Target net leverage 0.85–0.95x (not the high end until closer to Jan 2026); post‑listing equity proceeds temporarily depressed leverage below target.
M&A backdrop: Expect pent-up demand; long‑term resolution of tariff situation seen as catalyst for normalization of activity.
Spreads: Stabilized after prior tightening; could widen modestly amid elevated uncertainty.
Dividend income: Variable and performance‑driven; strong LMM contributions expected to continue near term (as of Q1 commentary).
Portfolio runoff: Middle market exits can be lumpy; realized losses often reflect prior marks; LMM wind‑down will be gradual with selective follow‑ons.

Estimates Context

Q3 2025: EPS (NII/share) of $0.35 vs $0.376* and revenue of $35.37M vs $35.38M*—a modest EPS miss and essentially in‑line revenue. Values retrieved from S&P Global.
Trend: Q2 also modestly missed EPS and revenue, while Q1 was broadly in line on EPS but below on revenue. Values retrieved from S&P Global.
Implications: With NII/share flat at $0.35 and lower non‑accruals, consensus may temper near‑term EPS expectations slightly while acknowledging improving asset quality and stronger ROE. Values retrieved from S&P Global.

Key Takeaways for Investors

Quality improving: Non‑accruals dropped to 1.4% of FV and NAV/share increased to $15.54; ROE improved to 14.6% annualized.
Earnings power steady: NII/share held $0.35 in a lower‑rate environment as base fees and interest expense declined, partially offset by higher incentive fees.
Deployment continues: $94.2M of new/incremental private loan commitments and $74.6M funded in Q3 support forward NII trajectory as leverage normalizes.
Balance sheet flexibility: $183.5M liquidity, 0.72x debt‑to‑equity, and BBB‑ stable rating provide room to invest through cycles.
Dividend visibility: Regular $0.35 and $0.01 supplemental maintained, next payable Jan 30, 2026; policy aligns total quarterly dividends with NII.
2026 catalyst: Expanded regulatory leverage capacity effective end of January 2026 should enhance capital deployment and earnings capacity.
Watch items: Realized losses ($9.9M) from restructurings and legacy positions, slight decline in yields, and macro risks (tariffs, rate path).

MSC INCOME FUND, INC. (MSIF)·Q3 2025 Earnings Summary