BCP Investment Corp (BCIC) 2020 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Portman Ridge Finance Corporation Fourth Quarter and Full Year 2020 Financial Results Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to hand the conference to your speaker today, Jeehae Linford. Please go ahead, ma'am.

Thank you. Good morning, and welcome to Portman Ridge Finance Corporation's Fourth Quarter and Full Year 2020 Earnings Conference Call. An earnings press release was distributed yesterday, March 11, after market closed. A copy of the release, along with an earnings presentation is available on the company's website at www.portmanridge.com in the Investor Relations section and should be reviewed in conjunction with the company's Form 10-K filed yesterday with the SEC.

As a reminder, this conference call is being recorded for replay purposes. Please note that today's conference call may contain forward-looking statements, which are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in the company's filings with the SEC. Portman Ridge Finance Corporation assumes no obligation to update any such forward-looking statements unless required by law.

With that, I would now like to turn the call over to Ted Goldthorpe, Chief Executive Officer of Portman Ridge. Please go ahead, Ted.

Thank you. Welcome, and good morning. Thank you for joining us today, and we hope everyone is healthy and doing well. I'm joined this morning by our Chief Financial Officer, Jason Roos; and our Chief Investment Officer, Patrick Schafer.

For those of you who are new to Portman Ridge, our investment strategy is to focus on direct origination of senior secured debt investments to the middle market. We are affiliated with BC Partners, a leading global alternative asset manager with more than $40 billion of assets under management and over 30 years of operating history in the U.S.

BC Partners credit was launched in February of 2017, and has pursued a strategy focused on identifying attractive opportunities in any market environment across sectors and across sectors by leveraging the deal sourcing and infrastructure made available to us by BC partners.

Yesterday afternoon, Portman Ridge announced its fourth quarter and full year 2020 fiscal year financial results. We had an active and successful year in 2020, and we are very pleased with the progress we've made in managing and growing Portman Ridge.

I'll focus my remarks today on 3 areas: first, an update on our M&A activity in general; second, an overview of our quarterly and full year results; and finally, our perspective of current market conditions, including our general outlook for the first quarter of 2021. Following that, Jason will provide additional detail on our portfolio -- on our financial results, and Patrick will do the same on the investment portfolio.

On October 28, we closed our merger with Garrison Capital. This transaction, which has been the largest merger we've executed to date, essentially doubled our asset base and as we've discussed in previous conference calls, it is expected to result in a number of benefits to Portman Ridge shareholders.

Accordingly, at year-end, total assets was $600 million compared to total assets of $300 million as at September 30, 2020. As we stated before, our approach heading into the closing of the merger was to immediately begin reducing portfolio risk and the combined leverage levels. We did this through the opportunistic selling of acquired assets immediately after close. By year-end, we proactively monetized an aggregate of $92.4 million of assets originated by Garrison at or above fair value and used the proceeds to delever the portfolio within our targeted leverage range. We ended the year with a leverage ratio of 1.36 on a net cash basis compared to net leverage ratio of 1.8x when we acquired the Garrison assets, which is a full 2 quarters ahead of our guidance.

Our top priority was getting our combined leverage ratio to our target level, and we're able to accomplish this without sacrificing valuations and did not have to take any kind of timing risk.

Broadly speaking, the addition of the Garrison assets resulted in a substantial increase in the percentage of senior secured loans and particularly first-lien senior secured debt and our investment portfolio, which is in line with our long-term strategy of having the overall Portman Ridge portfolio being comprised primarily of senior loans with a focus on first-lien investments.

Our investment portfolio increased from $279 million at September 30 to $488 million at year-end. And by far, the largest component of the change was the addition of $204 million in senior secured loans from Garrison. First-lien investments comprised 61% of the debt securities portfolio at September 30, and at year-end, this percentage was 81%.

The addition of Garrison assets also improved our overall diversification. And at year-end, we reported 109 portfolio companies across 28 different industries. On the liability side, we assumed an on-balance sheet CLO, which had a principal balance outstanding of $252 million at year-end and serves to diversify our funding sources.

As previously stated, we expect the merger to be accretive to Portman Ridge's net investment income per share, driven in the near-term by the spreading of fixed costs across a much larger AUM base. Over time, we expect to continue rotating legacy assets, including those originated by Garrison into higher-yielding directly originated loans.

In summary, we're very pleased with the progress we've made so far in terms of the integration of Garrison into our platform, and we remain well ahead of plan in terms of execution.

In December, we announced our plan to merge with Harvest Capital Credit Corporation. The Harvest transaction makes sense for Portman Ridge for many of the same reasons we've noted on our previous mergers. We are adding further size and diversification to the existing platform, increasing the leveraging of public company expenses immediately, while improving trading liquidity, visibility and the capability and flexibility to speak for larger deals in the longer term.

The Harvest portfolio will also continue to shift our portfolio composition to first-lien assets. We're working towards an expecting closing to occur in the second quarter of this year.

Taking a step back, I want to briefly comment on Portman Ridge's M&A activities and provide some big picture commentary. Since April of 2019, when we assumed management of the company, we've acquired 2 investment portfolios with 1/3 hopefully to be closed and integrated sometime in the second quarter of this year. As we embarked on these transactions in each instance, we've made a clear set of objectives namely to immediately take action opportunistically, to rotate assets in order to derisk each transaction, and also shift the portfolio composition towards high-quality senior secured debt investments.

Along the way, we've also worked to gradually reduce the percentage of noncore assets, such as our CLO equity and second-lien investments, which both -- occurred both naturally as we acquired the Garrison portfolio and also as a result of proactive asset sales and wind downs. We are now able to discuss our track record to date in more tangible terms. We closed the OHAI transaction in late 2019 and assumed a book of largely liquid second-lien investments.

Very shortly after close, we immediately monetized approximately 40% of the book. The remaining portfolio performed at or above our expectations throughout 2020 despite COVID, which I believe is a testament to the underwriting assumptions we made when we acquired this portfolio.

With respect to Garrison, as I mentioned before, we monetized close to $100 million of assets at or above fair value shortly after close and reduced leverage to within our target ratio. Certainly, we have benefited from the overall economy and market strengthening compared to when we announced the transaction, but our work -- our ability to work quickly and managing a portfolio the size of Garrison's is important to note.

In summary, we believe we've been able to demonstrate an ability to close transactions, quickly reposition the portfolios as necessary and immediately begin to capture synergies. And now with the passage of time, we're beginning to demonstrate a track record and that our underwriting in each of these transactions has been accurate.

Shifting gears now to our financial performance for the fourth quarter and full year. For the fourth quarter of 2020, we generated net investment income per share of $0.14. Excluding the impact of gains realized in connection with the Garrison merger, adjusted net investment income per share in the fourth quarter was $0.08 per share. This adjusted net investment income per share of $0.08 compares to net investment income per share of $0.06 in the third quarter and reflects our continued coverage of our quarterly distributions, which were also $0.06 per share in the fourth quarter.

Net asset value per share at year-end was $2.88 compared to net asset per share of $2.85 at September 30, $2.71 at June 30 and $2.69 at March 31. Jason will go into further detail, but the primary drivers of this NAV increase per share, where the broad-based strengthening of our portfolio due to middle market spreads continuing to tighten throughout the quarter as well as the improving portfolio company performance, offset partially by transaction costs associated with the Garrison merger. Excluding the Garrison transaction costs, net asset per share -- value per share increased by 2.5% as compared to September 30.

Overall, we're very pleased where we stand from both an investment portfolio perspective and we are comfortable with our financial position. As previously discussed, our portfolio composition continues to shift towards first-lien investments and will continue to do so pro forma for the Harvest assets.

Subsequent to year-end, we exited one of our CLO equity positions at fair value, further reducing our exposure to this asset class. As a percentage of our total investment portfolio, pro forma for the sale, CLO equity -- CLO securities now comprise less than 4% of our total portfolio, down from 16% when we execute the KCAP transaction.

I've commented on this before, but I want to reiterate that Portman Ridge's liability structure is extremely flexible. We have $77 million in unsecured bonds that are callable and a secured revolving credit facility that can be flexed up or down. With the Garrison merger, we now also have $252 million of par value of subordinated notes in connection with the CLO. These notes become callable in November. And during February, we made an $88 million pay down, consistent with the initial Garrison investment thesis.

On March 8, 2021, Portman Ridge received a corporate investment grade rating of BBB- with a stable outlook from Egan-Jones. We are currently assessing our options with respect to the ideal mix of debt. We would like to hold on our balance sheet relative to our assets and investment strategy going forward.

Turning briefly to market conditions. As many people on this call know, market conditions gradually improved throughout the year. We remarked last quarter, we were seeing spreads tighten to nearly pre-COVID levels, which remains unchanged. We also noted that we were seeing spreads remain wider in direct loan origination market relative to liquid credit market, and this situation has also continued.

Transaction volume was strong in the fourth quarter but has slowed down since the beginning of the year, which we note is a relatively normal pattern for our business. In addition to M&A activity, refinancing activity is robust. Repayments for the quarter were typically -- were higher than typical, spurred largely by pent-up capital markets transactions during most of 2020.

Looking ahead to the end of the first quarter of 2021, which will occur very shortly at this point, given current market conditions, we expect our current portfolio will continue to exhibit stable performance, and we remain focused on continuing to ensure that we cover our dividend each quarter. Given we're at our target leverage level, we are being very discerning in terms of making new investments and continuing to avoid sectors that have been directly impacted by COVID-19.

In other corporate news, we have previously discussed the $10 million stock repurchase program that we announced in March of 2020 and the 10b5-1 plan that we subsequently entered into during the summer. This program expired on March 5, 2021, And on March 11, 2021, the Board of Directors approved a new $10 million stock repurchase program with substantially the same terms as the prior program. We continue to believe that buying back our stock makes sense for shareholders. We continue to be impacted by blackout periods and restrictions around some of the M&A we have done, but we will buy equity when we have windows to legally do so.

And now I'd like to make a brief introduction. We're joined today by our new Chief Financial Officer, Jason Roos. Jason joins the company after nearly 20 years of experience and financial leadership positions, including at Wells Fargo Securities and PricewaterhouseCoopers. Jason brings to Portman Ridge a wealth of technical and controllership expertise that will help us drive the process needs within our organization as we continue to grow. We're fortunate to have someone with Jason's experience and background joining our team.

With that, I will turn over the call to Jason for an overview of financial results; and then Patrick Schafer, our Chief Investment Officer, for a review of our investment activity before concluding the call with some additional remarks.

Great. Thanks, Ted, and good morning, everyone. I'm very happy to have joined the team, especially during such a dynamic time in the company's development. I look forward to getting better acquainted with all of you soon.

I will now recap the financial results and our financial position for the fourth quarter and full year 2020. Given the Garrison merger, I wanted to take a moment to describe the impact of merger accounting to our financial statements this quarter. Under GAAP, the merger was accounted for as an asset acquisition, whereby the value of the consideration paid for the assets that Garrison resulted in a purchase price discount in the amount of approximately $40 million. This discount is a function of the accounting and setting the value of consideration paid based in part on the Portman Ridge share price at the closing date of the acquisition. The total value of consideration paid is used to set the new cost basis and the assets acquired by allocating the value to each asset based on the relative fair value of the assets acquired upon the closing date of the transaction. This purchase price discount resulted in a onetime unrealized gain as those acquired assets were marked to their fair values immediately upon close, which is a noncash event.

This discount will accrete in the net investment income over the remaining lives of the debt instruments and will be accelerated through any sales or pay downs that may occur. The discount allocated to equity instruments will be recognized in net investment income only upon a realization event, such as a sale transaction. This will not have an impact on our NAV per share.

GAAP net investment income for fourth quarter was $8.9 million or $0.14 per share, which put our full year net investment income at $0.34 per share. Adjusting for the Garrison purchase accounting that I just described, our adjusted net income -- net investment income for fourth quarter was $0.08 per share. This compares to net investment income of $0.06 per share in Q3.

At year-end, we had total investments, excluding derivatives of $488 million and net assets of $216 million or $2.88 per share compared to total investments of $279 million and net assets of $126 million or $2.85 per share in the third quarter of 2020. This marks the third straight quarter that we have increased NAV per share.

The increase in NAV per share for the quarter was mainly attributable to unrealized gains across our investment portfolio, including the acquisition -- the acquired Garrison asset. The primary components contributing to total Q4 unrealized gains of $29 million included $24 million on our debt securities portfolio, $1.2 million in our legacy CLO equity positions and $2.6 million on our investments in joint ventures.

As Ted mentioned, we continued to observe strengthening market conditions, which resulted in the continued improvement in our valuations.

On the liability side of the balance sheet, there was a substantial change from the prior quarter as we assumed the Garrison CLO in connection with the merger. As a result, we recognized $252 million in par value of senior secured notes that are due at the end of 2029. In addition to these notes, we also had $49 million in borrowings under our credit facility and $77 million and the 6.125% notes due 2022 for a total of $378 million in debt.

With respect to liquidity and unfunded commitments, our aggregate unfunded commitment stood at $32.9 million at December 31, 2020, and we reported $7 million in unrestricted cash and cash equivalents with an additional $66 million of available borrowing capacity under the credit facility.

As of December 31, 2020, our debt-to-equity ratio was 1.7x. From a regulatory perspective, our asset coverage ratio as of December 31, 2020 was 156%, which is above the statutory requirement for BDCs of 150%.

As Ted mentioned, during the first quarter of 2021, we repaid $88 million of the Garrison CLO debt. Our objective has been and will continue to be focused on maintaining overall leverage to a range of 1.25 to 1.4x. In terms of distributions in 2020, we paid a consistent $0.06 per share each quarter, resulting in $0.24 per share paid for the year. We recently announced the quarterly distribution of $0.06 on February 12 for shareholders of record on February 22 and was paid on March 2. Our overarching goal is to continue to cover our distribution each quarter and keep this relationship as stable and consistent as possible.

We repurchased a total of 734,403 shares of stock during the year at an average price of $1.17 per share under the stock repurchase program, which, as Ted noted, expired on March 5, 2021, and on March 11, 2021, the Board of Directors approved a new $10 million stock repurchase program under substantially the same terms.

Also, as previously mentioned, on December 23, we announced our intention to merge with Harvest Credit Capital Corporation under the terms of the proposed transaction and was the case with our transactions of OHAI and Garrison. This transaction will be done on a NAV-for-NAV basis whereby HCAP stockholders will receive aggregate consideration equal to HCAP's net asset value at closing, consisting of newly issued shares of Portman Ridge stock valued at 100% of NAV per share.

To the extent that the number of Portman Ridge shares exceed 19.9% of the total issued in outstanding shares of Portman's pre-transaction shares, cash consideration in the amount of such excess will be paid. Based on December 31, 2020, net asset values for Portman on September 30, 2020, for Harvest, the current excess cash amount is expected to be $15.4 million.

Furthermore, HCAP stockholders will also receive an additional cash payment of $2.15 million from our investment adviser, Sierra Crest. This will result in HCAP shareholders receiving total aggregate value of approximately 104% of NAV net of estimated transaction expenses. We remain on track with the current process and expect closing to occur in the second quarter.

Finally, I'd like to note that we will be transitioning to Deloitte as our audit firm, effective as of the end of the first quarter. While we had no issues or disagreements with KPMG, the broader BC Partners organization is moving audit functions to Deloitte, and Portman Ridge is included as part of this change. We look forward to working with the Deloitte team, and thank the KPMG team for their partnership with us today.

With that, I would like to turn the call over to Patrick Schafer, our Chief Investment Officer.

Thanks, Jason. The fourth quarter was relatively quiet for us in terms of new investment activity, given the merger with Garrison and our intention is to derisk the balance sheet following closing.

During the quarter, we made investments into 6 borrowers, 1 of which was the BCP Great Lakes joint venture and 5 of which were brand-new borrowers, all of which were completed alongside other BC Partners entities. In aggregate, these 6 investments totaled $24.2 million of face value, 88% of which were first-lien securities and the remaining 12% being net add-on to the Great Lakes joint venture. The weighted average spread on the new investments, excluding the Great Lakes joint venture was 648 basis points.

As to be expected, given both the Garrison merger and overall improvement in the capital markets, we are very active during the quarter with dispositions. In total, we exited or were repaid on 45 positions, 3 of which were proactive sales of legacy Garrison assets. In aggregate, these exits represented a carrying value of $135.4 million and resulted in a gain of approximately $1.1 million. Specifically related to the proactive Garrison asset sales, these 30 positions represented an aggregate carrying value of $92.4 million and resulted in a gain of approximately $0.6 million.

Excluding the impact of the Garrison merger and associated purchase price accounting as well as the reversal of previously unrecognized income on Roscoe Medical, our debt and equity securities accounted for an approximately $2.1 million unrealized gain, while sale equity positions accounted for a $1.2 million unrealized gain and our 2 joint ventures accounted for the remaining $2.6 million of unrealized gains.

On an equivalent basis, as of December 31, Portman Ridge had $437.7 million of debt securities marked at 92.4% of par and yielding a stated spread to LIBOR of 679 basis points on accruing debt securities. This compares to $226.2 million of debt securities marked at 90.4% of par and yielding a stated spread to LIBOR of 715 basis points on accruing debt securities as of September 30, 2020, and $165.7 million of debt securities portfolio marked at a blended price of 91.9% of par and stated spread to LIBOR of 658 basis points when Sierra Crest took over management of the Portman Ridge on April 1, 2019.

Turning to Slide 12. Nonaccruals, as of December 31, 2020, represented 2.4% of cost and 0.8% of fair value on the investment portfolio as compared to 3.2% and 1.2%, respectively, as of September 30. Eight investments were on nonaccrual status as of December 31, 2020.

With that, I'll turn the call back over to Ted Goldthorpe.

Thank you, Patrick. In closing, I wanted to again state how pleased we are with the progress we've made with Portman Ridge. We believe we're off to a strong start in 2021 and are optimistic for a more normalized operating conditions through the rest of the year.

Looking ahead, we are working towards hopefully another successful closing with the Harvest Capital merger, and we expect to continue our work on portfolio integration and rotation as well. Our transactions to date have brought about significant changes to the Portman Ridge profile in terms of size, capital structure and portfolio composition over these many months. In the long run, however, our ultimate goal remains steadfast, which to deliver strong and sustainable risk-adjusted returns to shareholders. We believe the successful execution of these transactions are key to achieving this goal.

I'd like to thank all of our shareholders for your ongoing support and confidence in us. And I'd now like to turn it over to the operator for any kind of -- for any questions.

(Operator Instructions) Our first question comes from Ryan Lynch with KBW.

First one I had was related to Slide #5. You guys accelerated, I would say, the pace of exiting some of the legacy Garrison investments in the quarter. I assume part of that was driven by kind of the elevated leverage range. But now that you all are in kind of your targeted leverage range today, should we expect the pace of that rotation out of those Garrison assets to slow down meaningfully?

Yes. I mean, that's a great question. I'll turn it over to Patrick. But what I would say is we really -- we spent a lot of time before these transaction closes, lining up asset sales. And so as you recall, we did 40% of OHAI and about -- in the first couple of weeks, and same with Garrison. We just didn't feel comfortable with the leverage range. But we would expect to see elevated repayments and reductions in the Garrison portfolio, but nothing like we saw in the fourth quarter. I mean, we were very, very proactive about monetizing a big chunk of the book. And I don't think you're going to see that pace continue.

Yes. Just to add on that. I think that's right, Ted. And there are few things I would note on the Garrison portfolio is, one, it tends to be a little bit more liquid still even than the legacy -- our legacy Portman portfolio. So as we think about optimizing our risk-return within the portfolio, theoretically, those Garrison assets might be a higher priority in terms of asset sales. And then number two, the Garrison portfolio, generally speaking, is a little bit more mature than the Portman portfolio just given that BC Partners has been originating assets over the last several years. So it would be likely to expect that the Garrison portfolio would be subject to greater repayments just in the ordinary course. But I don't think it would be anything intentionally strategic on our part.

Okay. Understood. And then, well, congratulations on the investment-grade rating from Egan-Jones, number one. And then, on that point, longer term, I know it may look a little bit -- it may be a little bit transitional with the Harvest merger coming up. But longer term, what sort of composition do you think is ideal for your liability structure in terms of unsecured debt, credit facility debt and then another pieces of debt like you guys currently have a securitization, which I think is probably going to be winding down, especially with the repayment? But just longer term, what do you see is the ideal fit for the composition of your liability structure?

Yes. So great question, Ryan. I think we're still sorting out a little bit -- this is Patrick, by the way. I think going forward, even in the long term, unsecured bonds will remain a very integral part of our financing strategy, given the flexibility that they provide. I think bigger picture, we would probably look ultimately to consolidate our revolving facility as well as the CLO liabilities in the longer term. So we still have a fairly long reinvestment period on that CLO. So there's nothing imminent on the horizon there or that we would need to do, but I do think that's probably the area where we would look to try and consolidate from the liability side.

Okay. And the only thing I'd add is we do have a number of near-term maturities coming up on the bond side, and we also have near-term maturities on -- pro forma for the Harvest transaction, there's also some near-term maturities. So this is something we're very focused on and given where unsecured debt is pricing these days, we think we can realize significant savings for our shareholders, and it all drops to the bottom line. So we've been hurt obviously by reductions in LIBOR in the last -- or rates in the last 12 to 18 months. So there's no reason why we shouldn't benefit it from as well by locking in cheaper liabilities as well.

Okay. And then just one last one from me. How active are you guys in the market as far as deploying new capital into new portfolio companies? Obviously, you guys have been very active on the M&A front. Deal flow was basically shut off for several quarters there in the spring and summer months. But now with that markets picking back up, how active should we expect you as far as deploying new capital given all the M&A that you guys have going on in the background?

Yes. I mean, our primary -- I mean, we have never seen the level of deal activity that we saw in the fourth quarter of last year, and we expect this year to be very robust as well. There's a lot private equity activity.

Most of our activity that we're seeing now is on the sponsor side. The non-sponsor businesses continue to be consistent, I would say. But on the sponsor side, a lot of pressure on private equity firms to return capital to their investors. So a lot of portfolio companies up for sale, a lot of expedited processes. And so yes, I mean, the deal environment was very robust in the fourth quarter, and we've kind of seen it spill over into this year. So we'll see what happens. I wouldn't be surprised if it slowed down in the next couple of quarters, but it still continues to be very active.

From our perspective, we're kind of lucky. We came into this year very invested. And the benefit of that is, I think you're going to see -- I don't think you're going to see us massively increase our net investment activity, but our gross investment activity you'll see has picked up a lot. So a lot of our, I would say, weaker credits were proactively trying to get refinanced out of and replace them with what we would view as higher quality credits at similar spreads.

So I think we've done a really good job the last 3 months, probably faster than we expected of what I would call, high-grade in our portfolio. Like we think we've taken a lot of risk out of our portfolio while maintaining spreads. And so I don't think you're going to see -- we're at a pretty elevated leverage level now, meaning we're within our range, but I don't think we want to go up that much. So I think you're going to see high gross, low net, with the way I would phrase it.

Patrick, do you want to add anything to that or?

No. I think the only one thing I would add is BC Partners as a platform has remained very active. So while Portman as an entity has been relatively muted, given the M&A activity, our platform is still very much active and involved in the market, which makes it relatively easy to get Portman back in. So we're still maintaining our dialogues within our sponsor relationships and intermediaries and things like that. So that's just the one thing I would add.

(Operator Instructions) And our next question comes from Christopher Nolan with Ladenburg Thalmann.

Ted, is it correct, following up Ryan's question that for 2021, you expect mostly improved economics from Portman Ridge to be from the restructuring of liabilities?

Yes. I mean, we expect -- we would expect to see savings to our shareholders from the various things we're going to do on the liability side over the course of the next couple of quarters.

Great. And I guess as a follow-up on Roscoe Medical, just that was accrued and that's back accruing?

Yes, that's correct. The -- it started paying cash interest as of September month and is paying monthly cash interest. There was a bit of a timing mismatch around the accrued interest that ultimately got capitalized as part of a renegotiation in October, so kind of lead over from Q3 into Q4. But yes, as of September month, it's accruing and paying cash interest.

Final question on operating expenses. Any sort of guidance you can give, Jason, in terms of what we should expect in terms of quarterly run rates for operating expenses?

Yes. Sure. Yes. So you'll see Q4 is a little bit higher than normal across the downtrading expense profile in part because of the professional fees. There is an upside uptick in that space, given that Q3 was a little bit undersized given some positive negotiations we had with vendor pricing in Q3. So it's a little bit higher of an uptick there because of that. But I would expect once the M&A starts to stabilize a little bit, that number will start to come down on a run rate basis.

The admin services, you'll see that ticked up a bit as well as the other G&A, in part because of, I would say, onetime expenses popping up because of the M&A activity associated with Garrison. And just to give a little color on that, I would expect to see about 25% to 30% of that come off of that increase going forward.

(Operator Instructions) I'm not showing any further questions at this time. I would now like to turn the call back over to Ted Goldthorpe for closing remarks.

Again, we'd like to thank everybody for dialing in this morning, and we would like to thank our shareholders for their continuing support. And we wish everybody remains healthy and safe. And if you have any questions at all, call any member of management at any time. Thank you very much.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.