Capital Southwest Corp (CSWC) 2024 Q3 法說會逐字稿

Thank you for joining today's Capital Southwest Third Quarter Fiscal Year 2024 Earnings Call. Participating on the call today are Bowen Diehl CEO; Michael Sarner, CFO; and Chris Rehberger, VP Finance. I will now turn the call over to Chris Rehberger.

感謝您參加今天的 Capital Southwest 2024 財年第三季財報電話會議。參加今天電話會議的有執行長 Bowen Diehl；麥可‧薩納，財務長；和財務副總裁 Chris Rehberger。我現在將把電話轉給克里斯·雷伯格。

Thank you. I'd like to remind everyone that in the course of this call, we will be making certain forward-looking statements. These statements are based on current conditions, currently available information and management's expectations, assumptions and beliefs. They are not guarantees of future results and are subject to numerous risks, uncertainties and assumptions that could cause actual results to differ materially from such statements.

謝謝。我想提醒大家，在這次電話會議中，我們將做出某些前瞻性陳述。這些陳述是基於當前狀況、目前可獲得的資訊以及管理層的期望、假設和信念。它們不是對未來結果的保證，並受到許多風險、不確定性和假設的影響，可能導致實際結果與此類陳述有重大差異。

For information concerning these risks and uncertainties, see Capital Southwest's publicly available filings with the SEC. The company does not undertake any obligation to update or revise any forward-looking statements. Whether as a result of new information, future events, changing circumstances or any other reason after the date of this Press Release, except as required by law. I will now hand the call off to our President and Chief Executive Officer, Bowen Diehl.

有關這些風險和不確定性的信息，請參閱 Capital Southwest 向 SEC 公開提交的文件。該公司不承擔更新或修改任何前瞻性陳述的義務。無論是由於新資訊、未來事件、情況變化或本新聞稿發布後的任何其他原因，法律要求的情況除外。現在我將把電話轉給我們的總裁兼執行長 Bowen Diehl。

Thanks, Chris, and thank you to everyone for joining us for our third quarter, fiscal year 2024 earnings call. We are pleased to be with you this morning and look forward to giving you an update on the performance of our company and our portfolio, as we continue to diligently execute our investment strategy as stewards of your capital.

謝謝克里斯，也謝謝大家參加我們的 2024 財年第三季財報電話會議。我們很高興今天早上與您在一起，並期待向您提供有關我們公司和我們的投資組合的最新業績，因為我們將作為您資本的管理者，繼續努力執行我們的投資策略。

Throughout our prepared remarks, we will refer to various slides in our Earnings Presentation, which can be found in the Investor Relations section of our website at www.capitalsouthwest.com. You will also find our quarterly earnings press release issued last evening on our website. We'll begin on Slide 6 of the Earnings Presentation, where we have summarized some of the key performance highlights for the quarter.

在我們準備好的發言中，我們將參考收益簡報中的各種投影片，這些投影片可以在我們網站 www.capitalsouthwest.com 的投資者關係部分找到。您也可以在我們的網站上找到我們昨晚發布的季度收益新聞稿。我們將從收益簡報的幻燈片 6 開始，其中我們總結了本季的一些關鍵業績亮點。

During the quarter, we generated pre-tax net investment income of $0.72 per share, which represented 20% growth over the $0.60 per share generated a year ago in the December quarter. The $0.72 per share, more than covered both our regular dividend of $0.57 per share and our supplemental dividend of $0.06 per share, paid during the quarter.

本季度，我們產生了每股 0.72 美元的稅前淨投資收益，比去年同期的每股 0.60 美元成長了 20%。每股 0.72 美元，超過了本季支付的每股 0.57 美元的定期股息和每股 0.06 美元的補充股息。

Portfolio earnings continue to be strong as of the end of the quarter. As of end of quarter, we estimate that our undistributable taxable income was $0.52 per share. Additionally, net asset value per share increased 1.9% for the quarter to $16.77 per share, from the $16.46 per share as of the end of the prior quarter. This increase represented the fourth consecutive quarterly NAV per share increase for Capital Southwest.

截至本季末，投資組合收益持續強勁。截至本季末，我們估計不可分配的應稅收入為每股 0.52 美元。此外，本季每股資產淨值成長 1.9%，從上一季末的每股 16.46 美元增至每股 16.77 美元。這一成長標誌著 Capital Southwest 的每股資產淨值連續第四個季度成長。

We are also pleased to announce today that our Board of Directors has declared a regular dividend of $0.57 per share for the March '24 quarter. This represents 7.5% growth over the $0.53 per share, paid a year ago in the March quarter. In addition, due to the excess earnings being generated by our floating debt investment portfolio in this high interest rate environment, our Board has again declared a supplemental dividend of $0.06 per share for the March '24 quarter, bringing total dividends declared for the March '24 quarter, to $0.63 per share, which in total represents 9% growth over total dividends paid out in the year ago quarter.

今天我們也很高興地宣布，我們的董事會已宣布 24 月 24 日季度的定期股息為每股 0.57 美元。這比一年前第三季支付的每股 0.53 美元增加了 7.5%。此外，由於我們的浮動債務投資組合在這種高利率環境下產生了超額收益，我們的董事會再次宣派24年3月季度每股0.06美元的補充股息，使3月份宣派的股息總額達到預期。24 季度 每股股息增至 0.63 美元，較去年同期支付的股息總額增長 9%。

While future dividend declarations are at the discretion of our Board of Directors, it is our intent and expectation that Capital Southwest will continue to distribute quarterly supplemental dividend for the foreseeable future. While base rates are above historical averages and we have meaningful UTI, which is generated by earnings in excess of our dividends and realized gains from our equity co-investment portfolio. During the quarter, deal quality and activity in the lower than market continued at a healthy pace, and we continue to be able to source attractive investment opportunities. Private equity firms and business owners continue to transact, while nonbank lenders like Capital Southwest continue to provide more certainty to closing than traditional bank financing structures.

雖然未來的股息宣派由我們的董事會酌情決定，但我們的意圖和期望是，Capital Southwest 將在可預見的未來繼續派發季度補充股息。雖然基本利率高於歷史平均水平，並且我們有有意義的 UTI，這是由超過我們的股息的收益和我們的股權共同投資組合的已實現收益產生的。本季度，低於市場水平的交易品質和活動繼續保持健康的步伐，我們繼續能夠尋找有吸引力的投資機會。私募股權公司和企業主繼續進行交易，而像 Capital Southwest 這樣的非銀行貸款機構繼續為成交提供比傳統銀行融資結構更多的確定性。

That said, competition from other nonbank lenders for quality lower middle market opportunities has largely returned to the more normal levels seen 12 to 18 months ago, resulting in tighter pricing spreads as well as slightly higher leverage and loan-to-value in the closing capital structures. In the larger end of the lower middle market, which is typically where we exit our investments, M&A activity picked up during the quarter as well, resulting in increased prepayments across our portfolio.

儘管如此，來自其他非銀行貸款機構對優質中低端市場機會的競爭已基本恢復到12 至18 個月前的正常水平，導致定價利差收窄，槓桿率和期末資本中的貸款價值比略有上升結構。在中低階市場的較大端（通常是我們退出投資的地方），本季併購活動也有所增加，導致我們投資組合的預付款增加。

Portfolio growth during the quarter was driven by $116.3 million in new commitments, consisting of $70.7 million in commitments to 4 new portfolio companies and $45.6 million in commitments to 12 existing portfolio companies. This was offset by $79 million in proceeds from 5 debt prepayments and 1 equity exit during the quarter, generating a weighted average IRR of 12.2%.

本季投資組合成長由 1.163 億美元的新承諾推動，其中包括對 4 家新投資組合公司的 7,070 萬美元承諾和對 12 家現有投資組合公司的 4,560 萬美元承諾。這被本季 5 筆債務預付和 1 筆股權退出的 7,900 萬美元收益所抵消，加權平均 IRR 為 12.2%。

On the capitalization front, we are pleased to announce that during the quarter, we successfully upsized our corporate revolving credit facility to $460 million from $435 million, with the addition of one new lender to the bank syndicate. We also raised $66.5 million in gross equity proceeds during the quarter, through our equity ATM program, at a weighted average price of $21.92 per share or 133% of the prevailing NAV per share.

在資本化方面，我們很高興地宣布，在本季度，我們成功地將企業循環信貸額度從 4.35 億美元擴大到 4.6 億美元，並為銀團增加了一個新貸款人。本季我們也透過股權 ATM 計畫籌集了 6,650 萬美元的總股權收益，加權平均價格為每股 21.92 美元，佔當前每股資產淨值的 133%。

In addition, subsequent to quarter end, the I-45 credit facility was repaid in full and we are currently in the process of winding down the I-45 Senior Loan Fund. As most of you know, I-45 was initially created to invest in small pieces of large syndicated loans. That I-45 has been a success through the years. The market for syndicated loans have evolved, and we no longer view this market as a favorable place to generate attractive risk-adjusted returns for our shareholders. Michael will discuss the timing and mechanics of the dissolution of I-45 in further detail in a moment.

此外，季度末後，I-45 信貸額度已全額償還，我們目前正在逐步減少 I-45 高級貸款基金。正如大多數人所知，I-45 最初是為了投資小額大型銀團貸款而創建的。多年來，I-45 公路一直取得成功。銀團貸款市場已經發展，我們不再認為該市場是為股東創造有吸引力的風險調整回報的有利場所。麥可稍後將更詳細地討論 I-45 解散的時間和機制。

We have remained diligent in ensuring we have strong balance sheet liquidity, while also funding a meaningful portion of our investment activity with accretive equity issuances. We continue to maintain a conservative mindset to both balance sheet liquidity and BDC leverage, managing the company with a full economic cycle mentality. While this starts with our underwriting of new investment opportunities, it also applies to how we manage the BDC's capitalization and liquidity, managing leverage to the lower end of our target range, while ensuring strong balance sheet liquidity, affords us the ability to invest in new platform companies even in periods of volatile capital markets, when risk-adjusted returns can be particularly attractive.

我們一直努力確保擁有強勁的資產負債表流動性，同時透過增值股票發行為我們投資活動的重要部分提供資金。我們對資產負債表流動性和BDC槓桿繼續保持保守心態，以全經濟週期的心態來管理公司。雖然這始於我們承銷新的投資機會，但它也適用於我們如何管理BDC 的資本化和流動性，將槓桿率控制在目標範圍的下限，同時確保強勁的資產負債表流動性，使我們能夠投資新的投資機會。即使在資本市場波動時期，風險調整後的回報也特別有吸引力。

Additionally, it allows us to support our portfolio companies while also opportunistically repurchasing our stock if it were to trade meaningfully below NAV. On Slide 7 and 8, we illustrate our continued track record of producing strong dividend growth, consistent dividend coverage and solid value creation, since the launch of our credit strategy back in January 2015. Since that time, we have increased our quarterly regular dividend 28x and have never cut the regular dividend, all while maintaining strong coverage of our regular dividend with pre-tax net investment income.

此外，它使我們能夠支持我們的投資組合公司，同時如果我們的股票交易價格明顯低於資產淨值，我們也可以趁機回購我們的股票。在幻燈片7 和8 中，我們展示了自2015 年1 月推出信貸策略以來，我們在實現強勁股息增長、持續股息覆蓋率和穩健價值創造方面的持續記錄。自那時起，我們將季度定期股息增加了28 倍並且從未削減定期股息，同時保持我們的定期股息與稅前淨投資收益的強勁覆蓋。

Additionally, over the same period, we have paid or declared 23 special or supplemental dividends, totaling $3.89 per share, including the $0.06 per share the Board has declared for the March '24 quarter. All generated from excess earnings and realized gains from our investment portfolio. We believe our track record of thoughtfully growing our dividend, a consistently solid performance in our portfolio, as well as our company's sustained access to multiple capital sources has demonstrated the strength of our investment and capitalization management strategies, as well as the absolute alignment of all our decisions with the interest of our shareholders.

此外，在同一時期，我們還支付或宣布了 23 筆特別或補充股息，總計每股 3.89 美元，其中包括董事會為 24 月 24 日季度宣布的每股 0.06 美元。所有這些都來自我們投資組合的超額收益和已實現收益。我們相信，我們深思熟慮地增加股息的記錄、我們投資組合一貫穩健的業績，以及我們公司持續獲得多種資本來源的能力，都證明了我們投資和資本管理策略的實力，以及所有投資組合的絕對一致性。我們的決策符合股東的利益。

Turning to Slide 9, we lay out the core tenets of our investment strategy. Our core strategy is lending and investing in the lower middle market, the vast majority of which is in first lien senior secured loans to companies backed by private equity firms. In fact, approximately 92% of our credit portfolio is backed by private equity firms, which provide important guidance and leadership to the portfolio companies, as well as the potential for new junior capital support if needed.

轉向投影片 9，我們列出了投資策略的核心原則。我們的核心策略是在中低端市場進行貸款和投資，其中絕大多數是向私募股權公司支持的公司提供的第一留置權優先擔保貸款。事實上，我們大約 92% 的信貸投資組合得到私募股權公司的支持，這些公司為投資組合公司提供重要的指導和領導，並在需要時提供新的初級資本支持的潛力。

In the lower middle market, we often have the opportunity to invest on a minority basis, in the equity [carry] pursuit with the private equity firm, when we believe the equity thesis is compelling. As of the end of the quarter, our equity co-investment portfolio consisted of 62 investments with a total fair value of $129.1 million, which was marked at 143% of cost, representing $38.5 million in embedded unrealized appreciation or $0.90 per share.

在中低端市場，當我們相信股權論點令人信服時，我們經常有機會以少數股權為基礎進行投資，與私募股權公司一起追求股權[持有]。截至本季末，我們的股權共同投資組合由 62 項投資組成，公允價值總額為 1.291 億美元，以成本的 143% 計算，相當於嵌入未實現增值 3,850 萬美元，即每股 0.90 美元。

Our equity portfolio, which represented approximately 9% of our total portfolio at fair value, as of the end of the quarter, continues to provide our shareholders participation in the attractive upside potential of these growing lower middle market businesses. Which will come in the form of NAV per share growth and supplemental dividends over time. As illustrated on Slide 10, our on-balance sheet credit portfolio ended the quarter at $1.2 billion, representing year-over-year growth of 19%, from $990 million as of the December 2022 quarter.

截至本季末，我們的股票投資組合以公允價值計算約占我們總投資組合的 9%，繼續讓我們的股東參與這些不斷增長的中低端市場業務的有吸引力的上行潛力。隨著時間的推移，這將以每股資產淨值增長和補充股息的形式出現。如投影片 10 所示，我們的表內信貸投資組合本季末達到 12 億美元，年增 19%，而截至 2022 年 12 月季為 9.9 億美元。

For the current quarter, 100% of our new portfolio company debt originations were first lien senior secured. And as of the end of the quarter, 97% of our credit portfolio was first lien senior secured. The weighted average credit exposure per company remains granular at 1.2%. We believe our portfolio granularity speaks to our continued investment discipline of maintaining a conservative posture to overall risk management as we grow our balance sheet. We fully expect that this metric will continue to improve as our asset base growth.

在本季度，我們新投資組合公司債務的 100% 均由優先留置權擔保。截至本季末，我們 97% 的信貸投資組合均獲得優先留置權擔保。每家公司的加權平均信用風險仍維持在 1.2%。我們相信，我們的投資組合粒度說明了我們在擴大資產負債表的過程中對整體風險管理保持保守態度的持續投資紀律。我們完全預計，隨著我們資產基礎的成長，這項指標將繼續改善。

On Slide 11, we detailed the $116.3 million of capital invested in and committed to portfolio companies during the quarter. Capital committed this quarter included $66.7 million in first lien senior secured debt committed to 4 new portfolio companies, in which we also invested a total of $4 million in equity. We also committed a total of $43.5 million in first lien senior secured debt and $2.1 million in equity to 12 existing portfolio companies.

在投影片 11 中，我們詳細介紹了本季向投資組合公司投資和承諾的 1.163 億美元資本。本季承諾的資本包括向 4 家新投資組合公司承諾的 6,670 萬美元第一留置權優先擔保債務，我們也向其中投資了總計 400 萬美元的股權。我們也向 12 家現有投資組合公司承諾提供總計 4,350 萬美元的第一留置權優先擔保債務和 210 萬美元的股本。

We are pleased with the strong market position that our team has established in the lower middle market as a premier debt and equity capital provider, as evidenced by the broad array of relationships across the country from which our team is sourcing quality opportunities, as well as the consistency of our origination activity. In fact, deal activity post quarter end has continued at a healthy pace, and we expect solid net portfolio growth in the coming quarter.

我們對我們的團隊作為首要債務和股權資本提供者在中低端市場建立的強大市場地位感到高興，我們的團隊在全國範圍內尋找優質機會的廣泛關係就證明了這一點。我們的原創活動的一致性。事實上，季末後的交易活動持續保持健康的步伐，我們預計下一季投資組合淨成長將穩健。

Turning to Slide 12, as I mentioned earlier, increased M&A and refinancing activity during the quarter resulted in greater than average prepayment activity. We continued our track record of strong returns on our exits, with 5 debt prepayments and 1 equity exit during the quarter. In total, these exits generated approximately $79 million in total proceeds, generating a weighted average IRR of 12.2%.

轉向投影片 12，正如我之前提到的，本季併購和再融資活動的增加導致預付款活動高於平均水準。我們繼續保持退出的強勁回報記錄，本季有 5 筆債務提前償還和 1 筆股權退出。總的來說，這些退出產生了約 7,900 萬美元的總收益，加權平均 IRR 為 12.2%。

Since the launch of our credit strategy 9 years ago, we have realized 73 portfolio company exits, representing $885 million in proceeds, that have generated a cumulative weighted average IRR of 13.9%.

自 9 年前推出信貸策略以來，我們已實現 73 家投資組合公司退出，收益達 8.85 億美元，累計加權平均 IRR 為 13.9%。

On Slide 13, we detail some key steps for our on-balance sheet portfolio as of the end of the quarter, excluding our I-45 joint venture. As of the end of the quarter, the total portfolio at fair value was weighted 87.5% to first lien senior secured debt, 2.6% to second lien senior secured debt, 0.1% to subordinated debt and 9.8% to equity co-investments. The credit portfolio had a weighted average yield of 13.5% and weighted average leverage through our security of 3.6x. Cash flow coverage of debt obligations across our portfolio continued to be strong despite the high base rate environment. With weighted average interest coverage of 3x and weighted average fixed charge coverage of 2.5x.

在投影片 13 中，我們詳細介紹了截至本季末資產負債表內投資組合的一些關鍵步驟，不包括我們的 I-45 合資企業。截至本季末，以公允價值計算的總投資組合中，第一留置權優先擔保債務佔87.5%，第二留置權優先擔保債務佔2.6%，次級債務佔0.1%，股權共同投資佔9.8% 。信貸投資組合的加權平均收益率為 13.5%，我們證券的加權平均槓桿率為 3.6 倍。儘管基準利率較高，但我們投資組合中債務的現金流量覆蓋率仍然強勁。加權平均利息覆蓋率為 3 倍，加權平均固定費用覆蓋率為 2.5 倍。

As seen on Slide 14, a our total investment portfolio continues to be well diversified across industry with an asset mix, which provides strong security for our shareholders' capital. Turning to Slide 15. We have laid out the rating migration within our portfolio during the quarter. As a reminder, all loans upon origination are initially signed an investment rating of 2, on a 4-point scale, with 1 being the highest rating and 4 being the lowest rating. We feel very good about the performance of our portfolio with 95% of the portfolio at fair value, rated in 1 of the top 2 categories of 1 or a 2. In fact, the portfolio generated weighted average revenue growth of 3% and weighted average EBITDA growth of 7%, during the quarter. I will now hand the call over to Michael to review more specifics of our financial performance for the quarter.

如投影片 14 所示，我們的總投資組合持續在各行業中實現多元化，資產組合為股東的資本提供了強有力的保障。轉向投影片 15。我們已經列出了本季投資組合中的評級遷移。提醒一下，所有貸款在發放時最初都會簽署 2 級投資評級，共 4 分制，其中 1 為最高評級，4 為最低評級。我們對投資組合的表現感到非常滿意，95% 的投資組合以公允價值評級，評級為1 或2 的前2 個類別之一。事實上，該投資組合產生了3% 的加權平均收入增長和3 % 的加權平均收入成長本季 EBITDA 成長 7%。我現在將把電話轉交給邁克爾，以審查我們本季財務業績的更多細節。

Thanks, Bowen. Specific to our performance for the quarter, as summarized on Slide 17, we increased pre-tax net investment income by 13% quarter-over-quarter to $29.8 million or $0.72 per share, compared to $26.4 million or $0.67 per share in the prior quarter.

謝謝，鮑文。具體到我們本季的業績，如幻燈片17 所示，我們的稅前淨投資收益環比增長13%，達到2980 萬美元，即每股0.72 美元，而上一季為2640 萬美元，即每股0.67 美元。

During the quarter, we paid out a $0.57 per share regular dividend and a $0.06 per share supplemental dividend. As mentioned earlier, our Board has declared a regular dividend of $0.57 per share and declared a $0.06 per share supplemental dividend for the March quarter. Maintaining a consistent track record of meaningfully covering our dividend with pre-tax net investment income is important to our investment strategy.

本季度，我們支付了每股 0.57 美元的定期股息和每股 0.06 美元的補充股息。如前所述，我們的董事會已宣布派發每股 0.57 美元的定期股息，並宣布 3 月季度派發每股 0.06 美元的補充股息。保持用稅前淨投資收入有意義地覆蓋股息的一貫記錄對我們的投資策略很重要。

We continue our strong track record of regular dividend coverage with 123% coverage for the last 12 months ended December 31, 2023, and 110% cumulative coverage since the launch of our credit strategy in January 2015. As a reminder, our intent is to continue to distribute a portion of the excess of our quarterly pre-tax NII over our regular dividend to our shareholders in a quarterly supplemental dividend. We are confident in our ability to continue to distribute quarterly supplemental dividends for the foreseeable future based upon our current UTI balance of $0.52 per share, our ability to grow UTI each quarter organically by over earning our total dividend and the expectation that we will harvest gains over time from our existing $0.90 per share in unrealized appreciation on the equity portfolio.

我們持續維持定期股利覆蓋率的良好記錄，截至2023 年12 月31 日的過去12 個月覆蓋率為123%，自2015 年1 月推出信貸策略以來累積覆蓋率為110%。謹提醒您，我們的目的是繼續將季度稅前 NII 超出定期股息的部分作為季度補充股息分配給我們的股東。基於我們目前每股 0.52 美元的 UTI 餘額、我們透過超額賺取總股息來有機增長 UTI 的能力以及我們將收穫收益的預期，我們對在可預見的未來繼續分配季度補充股息的能力充滿信心隨著時間的推移，我們現有的股票投資組合將實現每股0.90 美元的未實現升值。

For the quarter, we increased total investment income to $48.6 million, representing 14% growth quarter-over-quarter and 48% growth from a year ago. Weighted average yields in the portfolio on all investments was 13.7%. Total investment income was $5.8 million higher this quarter primarily driven by an increase in the weighted average cost basis of our debt investments, as well as an increase in dividend and fee income. As of the end of the quarter, we had 3 portfolio companies with loans on nonaccrual, representing 2.2% of our Investment portfolio at fair value.

本季度，我們將總投資收入增加至 4,860 萬美元，季增 14%，年增 48%。所有投資組合的加權平均收益率為 13.7%。本季總投資收入增加了 580 萬美元，主要是由於我們債務投資的加權平均成本基礎的增加，以及股息和費用收入的增加。截至本季末，我們有 3 家投資組合公司擁有非應計貸款，占我們以公允價值計算的投資組合的 2.2%。

As seen on Slide 18, we maintained LTM operating leverage at 1.8% for the current quarter. To put this metric in perspective, our 1.8% operating leverage is the second best in the entire BDC industry. We believe this metric speaks to the benefits of the internally managed BDC model and our absolute alignment with shareholders. The internally managed model has and will continue to produce real fixed cost leverage, while also allowing for significant resources to invest in people and infrastructure to continue to build a best-in-class BDC.

如投影片 18 所示，本季我們將 LTM 營運槓桿維持在 1.8%。從這個指標來看，我們 1.8% 的營運槓桿在整個 BDC 產業中排名第二。我們相信這項指標說明了內部管理的 BDC 模式的好處以及我們與股東的絕對一致。內部管理模式已經並將繼續產生真正的固定成本槓桿，同時也允許大量資源投資於人員和基礎設施，以繼續建立一流的 BDC。

As we look forward, we expect further improvements in operating leverage, as we continue to grow the balance sheet over time. Turning to Slide 19. The company's NAV per share at the end of the quarter increased by $0.31 per share to $16.77, representing an increase of 1.9%, compared to the prior quarter. The primary drivers of the NAV per share increase for the quarter were earnings in excess of our total dividends paid for the quarter and accretion from the issuance of common stock at a premium to NAV per share, partially offset by net unrealized depreciation on our Investment portfolio.

展望未來，隨著我們不斷擴大資產負債表，我們預計營運槓桿將進一步改善。轉向投影片 19。該公司季末每股資產淨值增加 0.31 美元，達到 16.77 美元，較上一季成長 1.9%。本季每股淨值成長的主要驅動因素是收益超過我們本季支付的總股息，以及以每股資產淨值溢價發行普通股而增加，部分被我們投資組合的未實現淨折舊所抵銷。

Turning to Slide 20. We are pleased to report that we have significant balance sheet liquidity with approximately $333 million in cash and undrawn leverage commitments on both our revolving credit facility and SBA debentures, as of the end of the quarter. We recently completed an increase to our revolving credit facility. adding one new lender and bringing total revolver credit facility commitments to $460 million from $435 million in the prior quarter.

轉向幻燈片 20。我們很高興地報告，截至本季度末，我們擁有大量的資產負債表流動性，包括約 3.33 億美元的現金以及循環信貸安排和 SBA 債券的未提取槓桿承諾。我們最近完成了循環信貸額度的增加。增加一個新貸款機構，使循環信貸額度承諾總額從上一季的 4.35 億美元增至 4.6 億美元。

Based on our current borrowing base, we have access to the full $460 million revolver capacity. The facility has an accordion feature allowing for the further increase of total commitments up to an aggregate of $750 million, allowing us to continue to grow our revolver capacity in lockstep with the growth of our overall balance sheet. In addition, during the quarter, we received an additional leverage commitment in the amount of $45 million from the FDA from which we can draw upon in the future.

根據我們目前的借款基礎，我們可以使用全部 4.6 億美元的左輪融資能力。該設施具有手風琴功能，可將總承諾進一步增加至總計 7.5 億美元，使我們能夠隨著整體資產負債表的增長而繼續擴大左輪手槍產能。此外，在本季度，我們還從 FDA 獲得了 4500 萬美元的額外槓桿承諾，我們可以在未來使用。

As of the end of the December quarter, 53% of our capital structure liabilities were in unsecured covenant-free bonds with our earliest debt maturity in January 2026. Finally, as Bowen mentioned earlier, subsequent to quarter end, the I-45 credit facility was repaid in full at the option of the joint venture partners. We are currently in the process of winding down the I-45 fund by allocating the residual assets in the fund to the joint venture partners. Assets from the fund will be allocated from the financing subsidiary to the balance sheet of each joint venture partner, consistent with their invested capital.

截至 12 月季度末，我們 53% 的資本結構負債是無擔保無契約債券，最早債務到期日為 2026 年 1 月。最後，正如 Bowen 之前提到的，在季度末之後，I-45 信貸便利合資夥伴可選擇全額償還。我們目前正在透過將基金中的剩餘資產分配給合資夥伴來結束 I-45 基金。該基金的資產將從融資子公司分配到每個合資夥伴的資產負債表中，與其投資資本一致。

The impact to Capital Southwest will be a small increase in assets, slightly higher leverage due to the pay down of the I-45 credit facility and a modest increase in earnings, as we eliminate frictional costs related to the fund. Our regulatory leverage, as seen on Slide 21, ended the quarter at a debt-to-equity ratio of 0.77 to 1, down meaningfully from 0.91 to 1, as of the year ago December quarter. We opportunistically brought leverage slightly below our target range, as of the end of the December quarter, in part to accommodate the I-45 credit facility payoff and I-45's fund wind down.

隨著我們消除與基金相關的摩擦成本，對 Capital Southwest 的影響將是資產小幅增加，由於 I-45 信貸額度的還款而導致槓桿率略有上升，以及收益小幅增長。如投影片 21 所示，我們的監管槓桿在本季末的負債股本比為 0.77 比 1，較去年 12 月季度的 0.91 比 1 大幅下降。截至 12 月季度末，我們機會主義地使槓桿率略低於我們的目標範圍，部分原因是為了適應 I-45 信貸便利的償還和 I-45 基金的縮減。

We will continue to methodically and opportunistically raise secured and unsecured debt capital, as well as equity capital through our ATM program, to ensure we continue to maintain significant liquidity, conservative leverage and adequate covenant cushions throughout all economic cycles. I will now hand the call back to Bowen for some final comments

我們將繼續有條不紊地、機會主義地透過我們的 ATM 計劃籌集有擔保和無擔保債務資本以及股本資本，以確保我們在整個經濟週期中繼續保持大量流動性、保守的槓桿率和充足的契約緩衝。我現在將把電話轉回鮑文以徵求一些最終意見

Thanks, Michael. And again, thank you, everyone, for joining us today. We appreciate the opportunity to provide you an update on our business, our portfolio and the market environment. Our company and portfolio continue to demonstrate strong performance, and we continue to be impressed by the job our team has done in building a robust asset base deal origination and portfolio management capability, as well as a flexible capital structure.

謝謝，麥可。再次感謝大家今天加入我們。我們很高興有機會向您提供有關我們業務、產品組合和市場環境的最新資訊。我們的公司和投資組合繼續表現出強勁的業績，我們的團隊在建立強大的資產基礎交易發起和投資組合管理能力以及靈活的資本結構方面所做的工作繼續給我們留下了深刻的印象。

We believe we have prepared our company well for future growth and performance, and we feel very good about how our shareholders' capital is positioned in the market. In summary, we have a credit portfolio predominantly made up of first lien senior secured debt, allocated across a broad array of companies and industries. Over 90% of which is backed by private equity firms. While also enjoying participation in the equity upside of many of these growing lower middle market businesses.

我們相信，我們已經為公司未來的成長和業績做好了充分準備，並且我們對股東資本在市場上的定位感到非常滿意。總之，我們的信貸投資組合主要由第一留置權優先擔保債務組成，分佈在廣泛的公司和產業中。其中90%以上由私募股權公司支持。同時也享受許多這些不斷成長的中低端市場企業的股票上漲的機會。

Further, we have a well-capitalized balance sheet with multiple capital sources, very strong liquidity and a flexible capital structure. This concludes our prepared remarks, operator. We are ready to open the lines up for Q&A.

此外，我們的資產負債表資本充足，資金來源多樣，流動性很強，資本結構靈活。操作員，我們準備好的發言到此結束。我們已準備好開放問答環節。

(Operator Instructions) Our first question comes from the line of Mike Schleien with Latin Burg Alan.

（操作員說明）我們的第一個問題來自 Mike Schleien 和 Latin Burg Alan 的路線。

Bowen, there was this theory that M&A volumes really wouldn't pick up until there was certainty that the Fed would cut rates and I'm in the camp that we don't know and inflation is still not at their target. And obviously, rates have not come down yet. So from your perspective, what's driving this increase, which you mentioned has spilled over into the first quarter?

鮑文，有一種理論認為，只有確定聯準會會降息，併購交易量才會真正回升，而我屬於我們不知道的陣營，而且通膨仍未達到目標。顯然，利率還沒有下降。那麼，從您的角度來看，是什麼推動了這種成長，您提到這種成長已經蔓延到第一季？

Yes, it's interesting. I mean if you look at our 5 exits, 3 of them were sales and 2 of them are refinancings. On the sales, I mean these are private equity-backed firms. There's strategic interest in the assets. I think they were all strategic sales looking at them. So they were just -- it was just candidly, it's private equity firms trying to prep gains in companies that are performing. So -- and there is strategic interest in the assets. And so I don't know, we have the same press clippings as you do. Those trends are probably true as you laid out, but it's a little random. I mean our portfolio just had a number of sales in it. I attribute part of that to a general increase in M&A activity that we've seen out there. We also see our deal flow as well being really strong.

是的，這很有趣。我的意思是，如果你看看我們的 5 次退出，其中 3 次是銷售，其中 2 次是再融資。關於銷售，我的意思是這些都是私募股權支持的公司。這些資產具有戰略利益。我認為他們都是策略銷售人員在關注他們。所以他們只是——坦白說，私募股權公司試圖為表現良好的公司帶來收益。因此，這些資產具有戰略利益。所以我不知道，我們有跟你一樣的新聞剪報。正如您所闡述的那樣，這些趨勢可能是正確的，但它有點隨機。我的意思是我們的產品組合中只有一些銷售。我將部分原因歸因於我們所看到的併購活動的普遍增加。我們也看到我們的交易流也非常強勁。

We've also seen in the top half of our portfolio, the loan grade ones. These companies, we have a significant number of companies that have delevered underneath 2x even to the extent that our half turn to 1.5 turn. And so those guys will find potentially a lower-yielding option, than where maybe they were when we originated them.

我們還在投資組合的上半部看到了貸款等級的投資。在這些公司中，有大量公司的去槓桿率低於 2 倍，甚至達到了 1.5 倍。因此，這些人可能會發現一個可能比我們最初創建它們時更低收益的選擇。

Yes. That's more of a company performance aspect. That's true, for sure. But the M&A activity, just looking at these names, I mean, there just has been interest in those assets. and those private equity firms, obviously, they don't get paid until they sell and monetize, pay their carry. So they hit the bid.

是的。這更多的是公司業績的問題。確實如此。但是併購活動，只要看看這些名字，我的意思是，人們對這些資產產生了興趣。顯然，那些私募股權公司只有在出售並貨幣化、支付其利差後才能獲得報酬。於是他們就得標了。

I understand. That's helpful. I noticed there were a couple of 2 -- there were 2 credit downgrades during the quarter. Can you describe general trends in credit quality in the portfolio? And in particular, what these 2 were about?

我明白。這很有幫助。我注意到本季有兩次信用評級被下調。您能描述一下投資組合中信用品質的整體趨勢嗎？特別是，這兩個是關於什麼的？

Yes. I mean if you can just take a step back and look at trends in our portfolio, if you look at revenue and EBITDA growth, if you look at the number of upgrades versus downgrades, I'd say credit performance in our portfolio as a whole is excellent. The 2 downgrades, one was already not (inaudible) took a challenge. We basically had a term loan B and a downgrade -- and we downgraded the term loan A. And the other one was a company that's kind of bumping along and we decided to go ahead and upgrade it. So it's a new downgrade, not an existing.

是的。我的意思是，如果你能退一步看看我們投資組合的趨勢，如果你看看收入和 EBITDA 成長，如果你看看升級與降級的數量，我會說我們投資組合的整體信用表現非常好。兩次降級，其中一次已經沒有（聽不清楚）接受了挑戰。我們基本上有一筆定期貸款 B 和降級——我們降級了定期貸款 A。另一家是一家正在穩步發展的公司，我們決定繼續升級它。所以這是一個新的降級，而不是現有的降級。

But again, if you look at 60 something million of upgrades and 30 million downgrades, I'd say it's a general trend perspective, it looks okay.

但同樣，如果你看看 60 幾百萬的升級和 3000 萬的降級，我會說這是一個總體趨勢的角度，看起來還不錯。

Fair enough. And my last question, more housekeeping. Can you help me understand the net realized loss because on Page 12 of the Investor Presentation, there's a realized gain, but there's a much more meaningful net realized loss on the income statement. Can you just reconcile that?

很公平。我的最後一個問題是，更多的內務管理。您能否幫助我了解已實現的淨損失，因為在投資者簡報的第 12 頁上，有已實現的收益，但損益表上有更有意義的已實現的淨損失。你能調和一下嗎？

One of our portfolio companies had a restructuring, which a portion of their debt was converted to equity. And so from an accounting perspective, that's going to -- you'll see that show up as a realized loss for the quarter. And you'll see when the 10-Q comes out, you'll see a full reconciliation of -- for the quarter of kind of what happened to each of the companies.

我們的一家投資組合公司進行了重組，將其部分債務轉換為股權。因此，從會計角度來看，您將看到這將顯示為該季度的已實現虧損。當 10-Q 出來時，你會看到，你會看到每家公司在該季度發生的情況的全面對帳。

And that was one of our nonaccruals, it's been nonaccrual, and we -- I think we voiced on a prior earnings call that we expected to have that restructuring in the calendar year and in fact, it happened...

這是我們的非應計項目之一，它一直是非應計項目，我們——我想我們在之前的財報電話會議上表示，我們預計將在日曆年進行重組，事實上，它發生了…

And Michael, the Q is coming out tonight?

邁克爾，《Q》今晚就會上映嗎？

Yes.

是的。

(Operator Instructions) Our next question comes from the line of Robert Dodd with Raymond James.

（操作員說明）我們的下一個問題來自羅伯特·多德（Robert Dodd）和雷蒙德·詹姆斯（Raymond James）的線路。

You might be on mute, Robert.

你可能處於靜音狀態，羅伯特。

Yes. I apologize. I was on mute. Yes, that's my bad. So on the leverage, right? You see you're below the bottom end of your target range. Obviously, some of that is planning for I-45. I mean, could you give us any -- do you still feel more comfortable at the bottom or below the bottom of the target range for leverage? Or can you give us an update on where you think if the economies may be doing better than you thought? Your credit quality is certainly hanging in very well. So I mean, can you give us some thoughts on where you see that in the medium term? conceptually I-45 adjusted.

是的。我道歉。我當時處於靜音狀態。是的，那是我的錯。那麼關於槓桿，對吧？您會發現您低於目標範圍的下限。顯然，其中一些是為 I-45 規劃的。我的意思是，您能否給我們一些資訊——您是否仍然對槓桿目標範圍的底部或底部以下感到更舒適？或者您能否向我們介紹一下您認為經濟表現是否會比您想像的更好的最新情況？您的信用品質肯定保持得很好。所以我的意思是，您能否給我們一些關於您在中期的看法？ I-45 概念上進行了調整。

Sure, of course. So I-45 was adjusted. I think we were more at 0.83x. I think for a go-forward basis, our -- I would give you the range of 0.8x to really 0.95x that's essentially where we'd like to stay in. And at the moment, like you said, we'd see kind of clear skies ahead at the moment, portfolio is performing well, you could see us tick up closer to the higher end in the next several quarters. But we're -- honestly, if you look at our earnings related to our NAV, we are one of the more productive companies in the BDC space, we're able to produce $0.272 on $0.77 leverage. So we don't really need to press the gas pedal. So you probably see us somewhere along the middle of that range.

當然，當然。於是對45號州際公路進行了調整。我認為我們的回報率為 0.83 倍。我認為，在未來的基礎上，我們的——我會給你 0.8 倍到 0.95 倍的範圍，這基本上是我們希望保持的水平。目前，正如你所說，我們會看到目前前景晴朗，投資組合表現良好，您可能會看到我們在未來幾季接近高端。但老實說，如果你看看我們與資產淨值相關的收益，我們是 BDC 領域生產力最高的公司之一，我們能夠以 0.77 美元的槓桿產生 0.272 美元的收益。所以我們真的不需要踩油門。所以你可能會看到我們處於該範圍的中間位置。

Got it. Got it. Then on I-45, I mean, it's got $27 million, I think, in unrealized depreciation in it currently. When it's -- when the assets are onboarded, are they going to be onboarded at the existing cost and fair value basis, i.e., the unrealized depreciation of stay? Or is any of that going to be crystallized during the onboarding process?

知道了。知道了。然後，我的意思是，在 I-45 上，我認為目前未實現的折舊額為 2700 萬美元。當資產投入使用時，它們是否會以現有成本和公允價值基礎（即未實現的停留折舊）投入？或者這些內容會在入職過程中具體化嗎？

Sure. So a portion of the assets that are being assigned to each of our balance sheets will come over at cost and fair value, the amount of losses or gains that have been incurred in the portfolio of companies that have already exited that will just get reclassified from unrealized equity to retained earnings.

當然。因此，分配到我們每個資產負債表的部分資產將以成本和公允價值計量，即已退出的公司投資組合中發生的損失或收益金額，這些損失或收益將被重新分類為未實現權益轉留存收益。

Got it. And then -- sorry, go ahead.

知道了。然後——抱歉，請繼續。

No, go ahead, I apologize.

不，請繼續，我道歉。

Yes. last one is kind on housekeeping, the dividend income was quite like. It looks like there was maybe a $2 million nonrecurring maybe to do with one of the portfolio company sales or is it going to be anything. Can you give us any color -- I mean, was it a onetime kind of $2 million or has something changed in one of the performance -- you get the highly performing portfolio companies where it's going to start paying your consistent dividend? Or was that one-off?

是的。最後一個是看家的好，股息收入還蠻喜歡的。看起來可能有 200 萬美元的非經常性資金可能與投資組合公司之一的銷售有關，或者可能是什麼。你能給我們任何顏色嗎——我的意思是，它是一次性的200萬美元還是其中一項業績發生了變化——你得到了表現出色的投資組合公司，它將開始支付你的持續股息？還是那是一次性的？

No. So yes. So this quarter, we had one portfolio company. It's probably one of our most successful portfolio companies that had essentially levered less than 1x to the dividend recap. We have an equity position with significant appreciation on the company. And so we participated in that dividend to the tune of $2.3 million, and that's a onetime occurrence.

不，所以是的。所以本季度，我們有一家投資組合公司。它可能是我們最成功的投資組合公司之一，其股息回顧的槓桿率基本上低於 1 倍。我們擁有該公司大幅升值的股權。因此，我們參與了 230 萬美元的股息，這只是一次性事件。

Our next question comes from the line of Kyle Joseph with Jefferies.

我們的下一個問題來自凱爾·約瑟夫和傑弗里斯的對話。

Most have been answered, but just -- I know the Q is coming out, but just do you mind running through any inflows or outflows to nonaccrual. I know you mentioned there was a restructuring there and on a fair value basis, I think it ticked up 20 basis points or whatever, but just help us out in terms of the inflows and outflows.

大多數問題已經得到回答，但只是——我知道問題即將出現，但您介意將任何流入或流出轉為非應計利息嗎？我知道你提到那裡進行了重組，在公允價值的基礎上，我認為它上漲了 20 個基點或其他什麼，但只是在流入和流出方面幫助我們。

Yes. So for the nonaccruals, we had one portfolio company that came off, and I think we noted earlier, the portfolio company that was restructured that had the realized loss, that portion came off. And then we had a term loan A, another portfolio company that -- where the B is already on nonaccrual. I think Cowen mentioned it earlier. It went on nonaccrual. So I think it was $15 million at a cost basis coming off and $12 million coming on. So a slight reduction on the cost basis and then the fair value was slightly higher.

是的。因此，對於非應計項目，我們有一家投資組合公司被剝離，我想我們之前註意到，重組後的投資組合公司有已實現的損失，該部分被剝離。然後我們有一筆定期貸款 A，另一家投資組合公司 - 其中 B 已經是非應計利息。我想考恩之前有提到過。它繼續是非應計的。因此，我認為按成本計算，支出為 1500 萬美元，支出為 1200 萬美元。因此，成本基礎上略有下降，然後公允價值略有上升。

Got it. And then as you're thinking about the dividend going forward, obviously, the forward curve has adjusted pretty dramatically since the last time we spoke. But -- and I know you guys are have strong coverage, especially over the run rate dividend, but how you're thinking about the dividend from here?

知道了。然後，當您考慮未來的股息時，顯然，自我們上次談話以來，遠期曲線已經發生了相當大的調整。但是——我知道你們有很強的報道，特別是在運行率股息方面，但你們如何看待這裡的股息？

Yes. So obviously, we bifurcated between the regular dividend and the supplemental dividend. So on the regular dividend, obviously, we had $0.72 this quarter, which we would tell you the run rate absent that dividend, cash dividend was really like $0.69. So we compare that $0.69 to $0.57 we pay. So it's still significant coverage there. You noted we're still kind of in a wait-and-see approach to see what the Fed does, to see the pace of rate reductions. We feel comfortable that if the rates come down to a neutral -- a neutral spot in the next 18 to 24 months, we would expect that our NII would trough in the low 60s, so there's still plenty of room for growth on the regular dividend.

是的。顯然，我們將定期股息和補充股息分開。因此，就定期股息而言，顯然，本季度我們有 0.72 美元，我們會告訴您沒有該股息的運行率，現金股息實際上約為 0.69 美元。因此，我們將支付的 0.69 美元和 0.57 美元進行比較。所以它仍然有很大的覆蓋範圍。您指出，我們仍然採取觀望態度，看看聯準會會做什麼，看看降息的步伐。我們感到放心的是，如果利率降至中性——未來 18 至 24 個月內的中性點，我們預計我們的 NII 將降至 60 左右的低點，因此定期股息仍有很大的成長空間。

And having said that, we will wait to just see how things play out. On the supplemental dividend, we continue to bank UTI by over-earning our dividend. We have $0.90 of unrealized depreciation on the balance sheet that we would hope to exit a portion of either something between $0.24 or beyond. And so that, coupled with the $0.52 of UTI we have, currently, we feel very comfortable that this program will continue into the future at $0.06 today, that may vacillate up or down, but we feel comfortable about that program going forward.

話雖如此，我們還是拭目以待，看看事情會如何發展。在補充股息方面，我們繼續透過超額賺取股息來儲存UTI。我們的資產負債表上有 0.90 美元的未實現折舊，我們希望退出 0.24 美元或以上的部分。因此，加上我們目前擁有的 0.52 美元的 UTI，我們感到非常放心，該計劃將在今天的 0.06 美元的未來繼續下去，這可能會上下波動，但我們對該計劃的未來感到放心。

Got it. Helpful. And then last one for me. We talked about credit. We talked about the ratings. But just in terms of classified with revenue or EBITDA growth and any sort of changes in, since we last spoke?

知道了。有幫助。然後是我的最後一張。我們談論了信用。我們討論了收視率。但自我們上次談話以來，僅就收入或 EBITDA 成長以及任何形式的變化進行分類？

Yes. I mean as I noted in our remarks, we had across the portfolio, we had revenue growth quarter-over-quarter at 3% and EBITDA growth quarter-over-quarter of 7%. So the portfolios feel pretty good about some of the portfolio's general performance for sure.

是的。我的意思是，正如我在發言中指出的那樣，我們整個投資組合的收入環比增長 3%，EBITDA 環比增長 7%。因此，投資組合對某些投資組合的整體表現肯定感覺相當不錯。

Our next question comes from the line of Bryce Rowe with B. Riley.

我們的下一個問題來自 Bryce Rowe 和 B. Riley 的對話。

Maybe, Bowen, wanted to start on some of the exit activity. You've got, I guess, a couple of equity investment stubs that remain after those exits. What's the plan there? Is the plan to stay in those equity investments? Or are those potential exit opportunities here over the near term?

鮑文也許想開始一些退出活動。我想，在這些退出之後，你還剩下一些股權投資存根。那裡有什麼計劃？是否計劃繼續保留這些股權投資？或者這些是短期內潛在的退出機會嗎？

Yes. Thanks for the question. I mean, as a general matter, obviously, there are companies, the vast majority of them are owned by private equity firms. And so the obviously sell the company, then we don't have an equity stuff. So the equity stuffs are ones that we've been refinanced out of. And so just -- it's pretty much the rule that we will ride the liquidity curve, if you will, with the private equity firm. So private equity firms, as we all know, don't really get paid their carry until they exit. And so they're looking to maximize value and then looking to exit when it's prudent to exit.

是的。謝謝你的提問。我的意思是，總的來說，顯然有一些公司，其中絕大多數是私募股權公司擁有的。所以顯然賣掉了公司，那我們就沒有股權了。所以我們已經從股權中獲得了再融資。所以，如果你願意的話，這幾乎是我們將與私募股權公司一起駕馭流動性曲線的規則。因此，眾所周知，私募股權公司在退出之前並沒有真正獲得收益。因此，他們尋求價值最大化，然後在謹慎退出的情況下尋求退出。

And we kind of ride that train with them. So long-winded answer to, yes. I mean, those are equity stubs or potential future exits. And usually, the company has been refinanced, it's probably growing and doing really well. And so just because it's marked at X today, I would say private equity firm owning it for another year or 2, probably is the exit could be little to X, but it's pretty highly likely to be higher than X. But we ride that curve or ride that train with the private equity firm and exit when they exit.

我們和他們一起坐火車。這麼囉嗦的回答，是的。我的意思是，這些是股權存根或未來潛在的退出。通常情況下，該公司已經進行了再融資，它可能正在成長並且做得非常好。因此，僅僅因為它今天的標記為X，我想說私募股權公司再持有它一年或兩年，可能退出對X 來說可能很小，但它很有可能高於X。但我們沿著這條曲線行駛或與私募股權公司一起乘坐火車，並在他們退出時退出。

Got it. Okay. That's helpful. And then maybe a couple more for me. In terms of the assets that come on your balance sheet from I-45 obviously, have a different profile than what you might like to put in your portfolio today -- do you look for an opportunity to exit those to create some liquidity? Or will you, in fact, ride those out as well?

知道了。好的。這很有幫助。然後也許還有一些對我來說。顯然，就 I-45 資產負債表上的資產而言，它們的概況與您今天可能希望放入投資組合中的資產不同——您是否尋找機會退出這些資產以創造一些流動性？或者事實上，你也會擺脫這些嗎？

Well, I would say, they're over in I-45, but there's still assets that generate returns in shareholders, so that won't change. Certainly, there are bigger companies, for the most part, syndicated credits for the most part. the one we don't need the liquidity. But on the other hand, yes, we'll look for opportunities to exit those names at attractive values. And over time, those names will get refinanced out, of course, as those companies grow and sell. But I hope for that.

好吧，我想說，I-45 已經結束了，但仍然有資產為股東帶來回報，所以這一點不會改變。當然，大多數情況下都有更大的公司，大部分都是銀團貸款。我們不需要流動性。但另一方面，是的，我們會尋找機會以有吸引力的價格退出這些名字。當然，隨著時間的推移，隨著這些公司的發展和出售，這些名字將會再融資。但我希望如此。

And the spread to LIBOR on these assets is 6.5%, which is maybe on the slightly lower end of our yield continuum, but it's certainly on the fairway.

這些資產與倫敦銀行同業拆借利率 (LIBOR) 的利差為 6.5%，這可能處於我們收益率連續體的略低端，但肯定處於合理範圍內。

Yes, that's good. Okay. That's helpful. And maybe one more for you, Michael. You kind of laid out the potential, I guess, regulatory debt-to-equity range with the I-45 assets coming on balance sheet. Can you kind of give us a feel for what the economic leverage range might look at? And I'm kind of thinking about the ability to now draw $45 million more of SBA debentures and kind of how that works in to the equation?

是的，那很棒。好的。這很有幫助。也許還有一份給你，麥可。我想，您已經列出了資產負債表上 I-45 資產的潛在監管債務股本範圍。您能否讓我們了解一下經濟槓桿範圍可能會是什麼樣子？我正在考慮現在是否有能力再提取 4500 萬美元的 SBA 債券，以及這如何融入這個等式中？

Yes. I mean, kind of what I said earlier, and I would say it's not -- I don't have anything to add to it is that it will probably be in the midpoint 8. We'll finish up this the $45 million on the SBA probably by the summer. And so I think our leverage -- economic leverage will be around 1x with the regulatory something in the 285 range. It will vacillate. Look, there's opportunities to raise capital at premium to book today. And, so you'd be at certain points in time, delever a bit when the opportunities are there and then pull back the range at other times.

是的。我的意思是，有點像我之前所說的，我會說它不是 - 我沒有任何補充，它可能會在 8 的中點。我們將完成這 4500 萬美元SBA 可能會在夏天到來。因此，我認為我們的槓桿率——經濟槓桿率將約為 1 倍，監管槓桿率將在 285 倍左右。它會動搖。看，今天有機會以溢價籌集資金進行預訂。而且，所以你會在某些時間點，當機會出現時稍微去槓桿化，然後在其他時間縮小範圍。

I was just saying just -- one of the things you just asked, I mean, we have a lot of liquidity on the balance sheet. So the ability to fund into the SBIC subsidiary and borrow net leverage commitments, that's not hard to do.

我只是說——你剛才問的一件事，我的意思是，我們的資產負債表上有大量的流動性。因此，向 SBIC 子公司提供資金並借入淨槓桿承諾的能力並不難做到。

So. Yes. One other point I'd probably make just on longer term is like we have an eye to the future. We look at our '26 ability to be repaid, there's clip maturities. That's obviously 2 years away, but we're starting that planning today. So the collateral that comes back from I-45 comes on balance sheet, and we're going to look for opportunities to increase our secured financing. So you give us that, if and when we want to pay down those bonds, if we don't like what's going on in the capital markets in terms of unsecured market, you can always fund it with unsecured facility.

所以。是的。我可能會從長遠角度提出的另一點是，我們著眼於未來。我們看看我們 26 年的償還能力，有剪輯期限。這顯然是兩年後的事，但我們今天就開始計劃。因此，從 I-45 獲得的抵押品會出現在資產負債表上，我們將尋找機會增加我們的擔保融資。所以你告訴我們，如果我們想要償還這些債券，如果我們不喜歡資本市場上無擔保市場的情況，你總是可以用無擔保設施為其提供資金。

The I-45 consolidation gives us additional collateral to work with to really continue to diversify our capital sources.

I-45 合併為我們提供了額外的抵押品，可以真正繼續實現我們資本來源的多元化。

Our next question comes from the line of Erik Zwick with Hovde Group.

我們的下一個問題來自 Hovde Group 的 Erik Zwick。

I may have missed this in the earlier comments, but just in terms of the winding down of I-45, did you provide a time frame? Will that be done at the end of this current quarter? Or would it take a little bit longer? I may have I'm not sure if I caught that earlier.

我可能在之前的評論中錯過了這一點，但就 I-45 的結束而言，您是否提供了時間框架？這會在本季末完成嗎？或會需要更長一點的時間嗎？我可能有，我不確定我是否早些時候發現了這一點。

Our expectation is that it would be done at the end of the quarter. But having said that, with some of these credits, when we do the -- we essentially do the allocation and we put in for assignment, some of the agents work faster than others. And so to the extent that we are not able to get every asset assigned, it could live on a very small basis for another quarter, but we are working in earnest at the moment to try to get that all accomplished.

我們的預期是在本季末完成。但話雖如此，有了其中一些學分，當我們基本上進行分配並進行分配時，一些代理的工作速度比其他代理更快。因此，如果我們無法分配所有資產，那麼它可能會在一個非常小的基礎上再維持一個季度，但我們目前正在認真工作，努力實現這一切。

That's helpful. And then I just noticed that the PIK income increased to just above about $4 million or so in the quarter, higher run rate than we've seen recently, is there something -- I wonder if you could just talk about kind of what drove that higher? And if there was anything kind of onetime or should we expect something along that run rate going forward?

這很有幫助。然後我剛剛注意到，本季 PIK 收入增加到略高於 400 萬美元左右，運行率比我們最近看到的要高，是否有什麼原因 - 我想知道您是否可以談談推動這一趨勢的因素更高？如果有什麼一次性的事情，或者我們應該期待未來的運行率會發生什麼？

Yes. So I mean it's a little bit higher this quarter, but just to put it in perspective, I mean, 2 of the companies in the portfolio options up to PIK -- they have picked one. We don't have a lot of PIK toggles in our portfolio, but we've got a small handful. And so a couple of them picked. One of them was company affected by the rider strike, that's obviously behind us. And so the company is obviously turning around, it was actually one for the rider strike.

是的。所以我的意思是，這個季度的價格有點高，但從長遠來看，我的意思是，在 PIK 的投資組合選項中，有 2 家公司——他們選擇了一家。我們的產品組合中沒有很多 PIK 開關，但我們有一小部分。所以他們中的幾個人選擇了。其中之一是受到騎手罷工影響的公司，這顯然是我們身後的事情。因此，該公司顯然正在扭轉局面，這實際上是為了騎手罷工而進行的。

So it's a very healthy company. It did PIK toggle. The other one is the company that is very effective in the next few years. And so it's going to have a big -- you should have a very big year this year. So they picked a quarter. So if you took those 2, those are pick income aspects. But if you were to look at what's the trend? If you were to look at the rest of the PIK income, it's about 5% of our income. And so the cash portion is 95%. If you look back over the last several quarters, it's kind of where we've been in 95%, 96% cash. And so just to help put that in perspective is kind of how we're trending.

所以這是一家非常健康的公司。它進行了 PIK 切換。另外一家是未來幾年非常有成效的公司。所以今年將會是非常重要的一年。所以他們選擇了四分之一。因此，如果您選擇這兩個，那麼這些就是收入方面的選擇。但如果你看看趨勢是什麼？如果你看看 PIK 的其餘收入，它大約占我們收入的 5%。所以現金部分是95%。如果你回顧過去幾個季度，我們的現金比例是 95%、96%。因此，我們的趨勢是幫助人們正確看待這一點。

And also the cash -- the PIK pay toggles are generally only for a few quarters. Those are not indefinite for the loan. So those will either roll off because they've reached the end or they will be choosing to take a lot of cash along the way.

還有現金——PIK 薪資切換通常只持續幾個季度。這些對於貸款來說不是無限期的。因此，這些要么會因為已經到達終點而消失，要么會選擇沿途拿走大量現金。

Got it. And then one just last one for you. You seem fairly optimistic about the opportunity to make new commitments and fund new loans, at least for the next quarter. So wondering if you -- as you look at the pipeline, if you could just provide a little commentary, is there any commonalities in terms of kind of the industries where you're seeing strength today? Or is it more broad-based at this point?

知道了。然後是最後一張給你的。您似乎對做出新承諾和為新貸款提供資金的機會相當樂觀，至少在下個季度是如此。所以想知道，當您查看管道時，是否可以提供一些評論，您今天看到的優勢行業是否有任何共同點？或者目前它的基礎更加廣泛？

It's pretty broad-based. It's an interesting question. It's pretty broad-based. The activity is pretty robust right now, which is a good thing. The vast majority as we talked about, the vast majority of our business is family-owned, entrepreneur businesses that are selling to private equity firms, that are buying controlling interest in the business and heavy rollovers from the founders situations. But it's pretty broad. The other thing -- the other thing is we've got a decent amount of add-ons going on in the portfolio, too, which is kind of a steady drumbeat over the last several quarters and should be continuing in the future.

它的基礎相當廣泛。這是一個有趣的問題。它的基礎相當廣泛。目前活動非常活躍，這是一件好事。正如我們所討論的，我們的絕大多數業務都是家族所有的企業家企業，這些企業正在出售給私募股權公司，這些公司正在購買企業的控股權，並從創始人的情況下進行大量展期。但它的範圍相當廣泛。另一件事 - 另一件事是我們的產品組合中也有相當數量的附加組件，這在過去幾個季度中是一種穩定的鼓聲，並且應該在未來繼續下去。

I mean just add-ons are probably 1/3 of our originations on kind of a regular basis. So the activity this quarter since quarter end is definitely on the (inaudible) but is also up as well.

我的意思是，附加元件可能占我們常規產品的 1/3。因此，自季度末以來本季的活動肯定是在（聽不清楚），但也在上升。

And that's been a trend. We've seen that over the last probably 4 quarters. And I think with the portfolio of the size it is today, we expect that to continue.

這已經成為一種趨勢。我們在過去大概四個季度就看到了這一點。我認為，以目前的投資組合規模，我們預期這種情況將會持續下去。

Yes, it's and aspect of the business model. I mean these prime equity firms buy a controlling interest in the founder or family-owned business and the family -- our founder rolls over a big chunk of their equity to the business, as we talked about. And then one of the things that the founders and families like is the ability to then have a private equity firm by 3 or 4 of their competitors. And it's one of the reasons they want to roll over and keep that equity in the business because of the accretion and opportunity that entails. And so because that's generally a nature of our deal flow we should expect to continue to always kind of see a meaningful amount of add-ons. And that's great because it's additional credit commitment in businesses that we know. It's not new platforms that we have to learn about. But it's business we know we've seen performance. And so it's a very attractive portion of deal flow in general.

是的，這是商業模式的一個面向。我的意思是，這些主要股權公司購買了創始人或家族企業和家族的控股權——正如我們所討論的，我們的創始人將其大部分股權轉入企業。然後，創辦人和家族喜歡的事情之一就是能夠由 3 到 4 個競爭對手擁有一家私募股權公司。這也是他們想要展期並保留業務股權的原因之一，因為這會帶來增值和機會。因此，因為這通常是我們交易流程的本質，所以我們應該期望繼續看到大量的附加元件。這很好，因為這是我們所知道的企業的額外信貸承諾。這不是我們需要學習的新平台。但我們知道我們已經看到了業績，這是生意。因此，總體而言，這是交易流中非常有吸引力的部分。

And these are generally not delayed draw term loans, i.e., we are doing diligence on these add-ons to making a new investment decision.

這些通常不是延遲提取定期貸款，也就是說，我們正在對這些附加項目進行盡職調查，以做出新的投資決策。

Yes. That's right.

是的。這是正確的。

Our next question comes from the line of Vilas Abraham with UBS.

我們的下一個問題來自瑞銀集團的維拉斯亞伯拉罕 (Vilas Abraham)。

Hey, everybody. Just one for me. You guys mentioned in your prepared remarks, competition coming back to where it was about 12 to 18 months ago. Can you just give a little bit more color on the nature of that competition and how you think that translates into a spread over the next few quarters?

嘿，大家。只給我一個。你們在準備好的發言中提到，競爭又回到了大約 12 到 18 個月前的水準。您能否進一步介紹一下這場競爭的性質，以及您認為這將如何轉化為未來幾季的傳播？

Yes. I mean the competition has definitely strengthened the market. It's just a reflection of just overall health in the financial markets. It is mainly from nonbank lenders. But it's kind of like I said, it's kind of back to where it was 18 months ago, which is competition we've been dealing with for 8 years. So it's not really necessarily new players. And so I feel pretty good about the spreads.

是的。我的意思是競爭肯定增強了市場。這只是金融市場整體健康狀況的反映。它主要來自非銀行貸款機構。但就像我說的那樣，這有點回到了 18 個月前的狀態，這是我們 8 年來一直在應對的競爭。所以不一定是新玩家。所以我對點差感覺很好。

I mean, kind of where they are this quarter is kind of where they'll stay. And so it's not like they're tightening to a point where we have an earnings issue or anything like that. It just I wanted to express that for the last several quarters, I mean, the competition has been lighter, and it's starting to -- it's coming back, which I don't necessarily think the bad thing. We've certainly -- based on our cost of capital and our institution we can compete fine for quality deals and so and generate nice risk-adjusted returns. But -- but I would say spreads are kind of where we should expect them to be kind of the next few quarters.

我的意思是，他們本季所處的位置就是他們將停留的位置。因此，他們並沒有收緊政策，導致我們出現獲利問題或類似問題。我只是想表達，在過去的幾個季度裡，競爭變得更加激烈，而且它開始捲土重來，我並不認為這一定是壞事。當然，基於我們的資本成本和我們的機構，我們可以在優質交易方面進行良好的競爭，從而產生良好的風險調整回報。但是，但我想說的是，利差是我們應該預期的未來幾季的情況。

Yes, we actually looked at like the last 12 months, we had 24 deals that closed, and the spread was essentially 750-ish but the last 9 deals of September have been just a little over 700. And the LTVs for the whole year were around -- well, in the first half of the year were 25% to 30% and the overall is around 30% now. So we saw maybe the LTV is kicking up to 35% and 40%. So it's just things -- I think Bowen is correct, it's about where it usually is. It was significantly lower for a period of time.

是的，我們實際上看看過去 12 個月，我們完成了 24 筆交易，價差基本上為 750 筆左右，但 9 月的最後 9 筆交易剛剛超過 700 筆。全年的 LTV 為大約——嗯，今年上半年是25% 到30%，現在整體是30% 左右。所以我們看到 LTV 可能會上升到 35% 和 40%。所以這只是事情——我認為鮑文是正確的，這與它通常在哪裡有關。在一段時間內明顯較低。

Thank you I'm showing no further questions in the I would now like to turn the call back over to Bowen Diehl for closing remarks.

謝謝，我沒有再提出任何問題，現在我想將電話轉回鮑文·迪爾 (Bowen Diehl) 作結束語。

Well, thank you, everyone. As always, we enjoy talking about our business, your business and your questions. And so we appreciate everybody's time and look forward to continuing to give you all quarterly updates.

嗯，謝謝大家。一如既往，我們喜歡談論我們的業務、您的業務和您的問題。因此，我們感謝大家的時間，並期待繼續為您提供所有季度更新。

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

女士們、先生們，今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。