Executive Summary

Q4 2024 delivered solid operating performance but missed Street: Net investment income (NII) was $0.35 per share on total investment income (TII) of $33.5M; consensus was $0.42 EPS and $34.0M revenue, driven by lower floating-rate yields, more non-accruals, and lower dividend/fee income, partly offset by lower expenses . Against S&P Global consensus: EPS miss by $0.07 and revenue miss by ~$0.59M (6 and 5 estimates, respectively)*.
NAV per share rose sequentially to $15.53 (+$0.15 QoQ, +1.0%), and quarterly ROE annualized was 13.2%, supported by net unrealized appreciation in LMM and favorable tax items despite realized losses in select credits .
Balance sheet and funding improved: corporate facility upsized to $245M (accordion to $300M) and spread reduced; SPV facility spread cut to SOFR+2.20% with maturity extension; KBRA investment-grade BBB- affirmed with stable outlook .
Management set up catalysts for 2025-2026: NYSE listing, ~$91M equity raise, lower advisory fees, potential leverage expansion in Jan 2026, and an active deployment pipeline to lift NII and dividends over time .

What Went Well and What Went Wrong

What Went Well
- Sequential NAV growth and strong quarterly ROE: NAV per share increased to $15.53 (+$0.15 QoQ), with Q4 annualized ROE of 13.2% .
- Favorable non-GAAP dynamics and portfolio marks: Total net unrealized appreciation of $9.2M in Q4, led by LMM (+$8.6M), offsetting realized losses and underpinning the sequential NAV increase .
- Funding costs and capacity improved: Corporate facility spread cut and tenor extended; SPV facility repriced to SOFR+2.20% and extended to 2030; investment-grade rating reaffirmed (BBB-, stable) .
- “We believe…listing…provides increased liquidity and a clear path to additional debt capacity necessary to achieve significant growth in 2025 and 2026 and the potential for increased net investment income.” – CEO Dwayne Hyzak .
What Went Wrong
- Headline miss vs Street: NII per share $0.35 vs $0.42 consensus; TII $33.5M vs $34.0M consensus, reflecting lower floating-rate income, higher non-accruals, and weaker dividend/fee income (less non-recurring income) . EPS miss by $0.07; revenue miss by ~$0.59M*.
- Realized losses: Net realized loss of $8.0M, including a $5.0M loss on a private loan restructure, $3.6M loss on a full LMM exit, and $0.5M loss on a middle market exit .
- Revenue mix pressure: Dividend income fell $0.7M YoY; fee income fell $0.1M YoY; interest income declined $0.5M YoY with lower benchmark rates and more non-accruals; non-recurring income was $0.5M lower YoY .

Financial Results

Headline results vs prior year and vs estimates (Q4 2024)

Metric	Q4 2023	Q4 2024	YoY Δ	Street Consensus (Q4 2024)	Beat/Miss
Total Investment Income (“Revenue”) ($M)	$34.76	$33.46	-$1.31 (−4%)	$34.05*	Miss (−$0.59M)*
Net Investment Income ($M)	$15.04	$14.23	−$0.82 (−5%)	n/a	n/a
NII per Share ($)	$0.37	$0.35	−$0.02 (−5%)	$0.42*	Miss (−$0.07)*
Net Inc. in Net Assets from Ops per Share ($)	$0.53	$0.51	−$0.02 (−4%)	n/a	n/a
NAV per Share (end of period) ($)	$15.54	$15.53	−$0.01 (−0.1%) FY	—	—

Note: Street consensus from S&P Global Market Intelligence; values marked with * are from S&P Global and may not be independently verified here.

Sequential revenue trend (2024)

Metric	Q2 2024	Q3 2024	Q4 2024
Total Investment Income ($M)	$33.95*	$33.48*	$33.46

Note: Values marked with * are from S&P Global and may not be independently verified here.

Profitability and costs (Q4 2024)

Metric	Q4 2024
NII Margin (NII/TII)	~42.5% (14.227/33.455) computed from
Total Expenses, net of waivers ($M)	$19.23
OpEx-to-Assets Ratio (excl. incentive fees, annualized)	2.1%

Portfolio composition and yields (12/31/24)

Portfolio	# Companies	Fair Value ($M)	Cost ($M)	Debt at Cost (%)	Equity at Cost (%)	1st Lien (%)	Weighted Avg Yield
Private Loan	84	$677.9	$697.5	93.9%	6.1%	99.9%	12.0%
Lower Middle Market	57	$436.1	$357.1	67.8%	32.2%	99.9%	13.0%
Middle Market	10	$39.4	$66.3	87.8%	12.2%	99.9%	14.1%

KPIs and balance sheet

KPI	Q4 2024
Non-Accruals (% of portfolio)	1.5% FV; 5.6% cost
Portfolio FV/Cost	103%
Liquidity (Cash + Undrawn)	$77.7M ($28.4M cash; $49.3M undrawn)
Credit Facilities Outstanding	SPV: $266.7M @ 7.3%; Corporate: $149.0M @ 6.4% (as of Jan 1 reset)
Series A Notes	$150M @ 4.04%, due Oct 30, 2026
NAV ($M)	$624.9

Guidance Changes

No formal quantitative revenue/earnings guidance provided. Management emphasized growth in 2025–2026 via increased liquidity, fee reductions, and expanded leverage capacity.

Metric	Period	Previous Guidance	Current Guidance/Action	Change
Regular Quarterly Dividend	Q1 2025 payments	$0.35 per share (regular)	Declared $0.36 total regular quarterly dividends for Q1 2025 (timing across payments)	Maintained/Modestly higher vs Q1 2024 (2.9%)
Regular Dividend	Q2 2025	n/a	$0.35 per share (declared)	New declaration
Supplemental Dividend	Q2 2025	n/a	$0.01 per share supplemental (declared)	New declaration
Advisory Fee Structure	Post-listing	1.75% base; 20% NII incentive	Base cut to 1.5%; NII incentive to 17.5% with 50/50 catch-up; cap on internal admin expenses	Reduced
Leverage Capacity	Jan 2026	Standard BDC asset coverage	Board approved modified asset coverage effective Jan 29, 2026, effectively doubling regulatory leverage capacity	Increase
Corporate Facility	Feb 2025	$165M commitments; accordion to $200M; higher spreads	Upsized to $245M; accordion to $300M	Increased capacity, lower cost
SPV Facility	Mar 2025	SOFR+3.00%; earlier maturity	Repriced to SOFR+2.20%; maturity extended to Feb 2030	Lower cost, longer tenor

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q4 2024 call)	Trend
Leverage and Capital Structure	Focus on investment-grade funding; mix shifting towards private loans; portfolio 59% Private Loan / 35% LMM / 4% MM as of Q3’24	Listing and equity raise provide liquidity; expect leverage to “tick up closer to full capacity” heading into expanded capacity in early 2026	Positive
Deployment and Dilution	Active pipeline; priority on private loan originations (Q3’24 presentation) [link above]	Management acknowledged dilution risk from additional equity but expressed confidence in near-term deployment pipeline	Improving
Portfolio Mix Strategy	Continued wind-down of middle market; emphasis on private loan strategy (Q3’24) [link above]	New portfolio company investments solely in private loan strategy; continued reduction of MM exposure	Ongoing shift to PL
Macro/SOFR & Non-Accruals	Yield sensitivity to rates; diversified borrower base (Q3’24) [link above]	Lower SOFR and higher non-accruals weighed on interest income; non-accruals at 1.5% FV/5.6% cost	Headwind moderating with lower funding costs
Dividends Policy	Regular dividends; potential for supplements linked to taxable income [prior policy]	Declared Q2’25 regular $0.35 and supplemental $0.01; confidence in sustaining attractive total dividends	Supportive

Management Commentary

Strategic positioning: “We believe that the fourth quarter and full year performance provide visibility to significant opportunities in the future after the completion of the Fund’s successful listing on the New York Stock Exchange and the related equity offering in January 2025…a clear path to additional debt capacity necessary to achieve significant growth in 2025 and 2026 and the potential for increased net investment income.” – CEO Dwayne Hyzak .
Capital structure upgrades: Post-quarter actions increased the corporate facility to $245M with larger accordion, and reduced spreads/extended maturities on both corporate and SPV facilities, enhancing liquidity and lowering cost of capital .
Portfolio quality and marks: Total net unrealized appreciation of $9.2M led by LMM, offset by realized losses from a private loan restructure and exits in LMM and middle market; non-accruals remain low by FV .

Q&A Highlights

Leverage trajectory and timing: Management expects leverage to rise toward current capacity through 2025, with expanded regulatory capacity in early 2026 following board approval; confidence in adding lender capital to utilize capacity .
Deployment vs dilution: Team acknowledged that additional equity can be dilutive if not promptly deployed but expressed confidence in the Q1 pipeline and ongoing deployment plans .
ROE trajectory: Discussion indicated potential for ROE to improve into 2025/2026 driven by lower fee structure, greater leverage capacity, and deployment of post-listing liquidity .

Estimates Context

Q4 2024 vs S&P Global consensus: NII per share $0.35 vs $0.42 consensus (−$0.07); TII $33.46M vs $34.05M (−$0.59M). 6 EPS estimates; 5 revenue estimates*.
Drivers of the miss: Lower SOFR reduced floating-rate yields; more non-accruals; dividend and fee income down YoY; non-recurring income $0.5M lower YoY; partially offset by lower incentive and interest expense .
Revisions watch: With lower funding spreads and leverage capacity expanding, Street may revisit NII run-rate as deployment progresses; however, realized loss cadence and non-accrual trends remain key sensitivities .

S&P Global Market Intelligence disclaimer: Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

Near-term setup: Quality quarter operationally but headline miss; sequential NAV growth and strong annualized ROE bolster confidence. Watch deployment pace and non-accruals as primary near-term stock drivers .
Funding cost tailwind: Facility repricings and fee cuts post-listing lower the expense base and support NII as assets are deployed; this is a medium-term catalyst as leverage is prudently increased .
Strategy clarity: Continued pivot to private loans (first-lien, floating-rate) with de minimis middle market exposure reduces legacy risk while preserving attractive yields .
Dividend visibility: Regular dividend maintained with early supplemental declaration in Q2’25; sustainability hinges on deployment and credit performance .
2025–2026 growth path: Board-approved leverage framework effective Jan 2026, plus larger/cheaper credit lines, enable asset growth and potential NII/ROE uplift if the pipeline converts .
Risk checks: Monitor SOFR trajectory, realized loss cadence (especially from residual middle market exposures), and any uptick in non-accruals .
Actionable: Reassess NII run-rate as Q1/Q2 deployment is reported; track buyback authorization as a downside support if shares trade materially below NAV .

Appendix: Additional Data

Dividend actions

Q1 2025 regular dividends totaling $0.36 per share declared (paid in Q1’25) .
Q2 2025 dividends declared: $0.35 regular and $0.01 supplemental (payable May 1, 2025) .

Credit and liquidity

Liquidity at 12/31/24: $77.7M (cash $28.4M; undrawn $49.3M) .
Corporate facility: $245M commitments; accordion to $300M; lower spreads; extended maturities .
SPV facility: SOFR+2.20%; revolving period to Feb 2029; maturity Feb 2030 .
Investment-grade rating: KBRA BBB- stable reaffirmed .

Sources: Q4 2024 press release and 8-K (including financial tables) ; dividend and facility press releases ; Q4 2024 earnings call transcript excerpts . S&P Global Market Intelligence for consensus and certain actuals*.

MSC INCOME FUND, INC. (MSIF)·Q4 2024 Earnings Summary