Capital Southwest Corp (CSWC) 2024 Q4 法說會逐字稿

Thank you for joining today's Capital Southwest Fourth Quarter and Fiscal Year 2024 Earnings Call. Participating on today's call are Bowen Diehl, CEO; Michael Sarner, CFO; Josh Weinstein, CIO; and Chris Rehberger, EVP, Finance.

感謝您參加今天的 Capital Southwest 第四季和 2024 財年財報電話會議。參加今天電話會議的有執行長 Bowen Diehl；麥可‧薩納，財務長；喬許‧韋恩斯坦，資訊長；以及財務執行副總裁 Chris Rehberger。

I will now turn the call over to Chris Rehberger.

我現在將把電話轉給克里斯·雷伯格。

Thank you. I would 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. For information concerning these risks and uncertainties, see Capital Southwest's publicly available filings with the SEC.

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，並且受到許多風險、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。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。

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.

除非法律要求，否則本公司不承擔更新或修改任何前瞻性聲明的義務，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。

I will now hand the call to our President and Chief Executive Officer, Bowen Diehl.

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, everyone, for joining us for our fourth quarter and fiscal year-end 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 over the last quarter as well as highlights of our performance over the last year.

謝謝 Chris，也謝謝大家參加我們的第四季和 2024 財年終財報電話會議。我們很高興今天早上與您在一起，並期待向您介紹我們公司和我們的投資組合上一季的業績最新情況以及我們去年業績的亮點。

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.

在我們準備好的發言中，我們將參考收益演示中的各種幻燈片，這些幻燈片可以在我們網站 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。

Before we begin, I would like to take the opportunity to mention two recent promotions, which will broaden our executive team here at Capital Southwest. Josh Weinstein, who joined Capital Southwest in 2015, and manages all our deal sourcing and underwriting activity, has been promoted to Chief Investment Officer; and Chris Rehberger, who also joined Capital Southwest in 2015, and manages all our treasury and valuation activities, has been promoted to Executive Vice President, Finance and Treasury.

在我們開始之前，我想藉此機會提及最近的兩次晉升，這將擴大我們在 Capital Southwest 的執行團隊。喬許‧韋恩斯坦 (Josh Weinstein) 於 2015 年加入 Capital Southwest，負責管理我們所有的交易採購和承銷活動，現已晉升為首席投資長； Chris Rehberger 也於 2015 年加入 Capital Southwest，負責管理我們所有的財務和估值活動，現已晉升為財務和財務執行副總裁。

Both of these gentlemen have been integral contributors to Capital Southwest in generating our strong track record over the last 9-plus years. Core of our culture is continually cultivating talent up and down our organization. And these additions to our executive team illustrates the deep bench strength that our company has developed over the years.

在過去九年多的時間裡，這兩位先生都是首都西南航空不可或缺的貢獻者，為我們創造了良好的業績記錄。我們文化的核心是在組織上下不斷培養人才。我們執行團隊的這些新增成員說明了我們公司多年來所發展的深厚後備力量。

We'll now begin on Slide 6 of the earnings presentation where we have summarized some of the key performance highlights for the March 31, 2024 fiscal year. During the fiscal year, we grew our total investment portfolio at fair value by 22%, to $1.5 billion, up from $1.2 billion at the end of the prior fiscal year, while increasing our pretax net investment income by 18% to $2.72 per share, up from $2.30 per share in the prior fiscal year.

現在，我們將從收益簡報的第 6 投影片開始，其中我們總結了 2024 年 3 月 31 日財年的一些關鍵業績亮點。在本財年中，我們以公允價值計算的總投資組合成長了22%，從上一財年末的12 億美元增至15 億美元，同時稅前淨投資收益成長了18%，達到每股2.72美元。

We increased our regular dividends paid to shareholders to $2.24 per share for the fiscal year, representing an increase of 10% compared to $2.03 per share regular dividend paid in the prior fiscal year. We continued our strong track record of covering our regular dividend with pretax net investment income, achieving coverage for the year of 121%.

本財政年度我們向股東支付的定期股息增加至每股 2.24 美元，與上一財年支付的每股定期股息 2.03 美元相比增加了 10%。我們繼續保持用稅前淨投資收入支付定期股息的良好記錄，全年覆蓋率達到 121%。

In addition to our regular dividend, we paid a total of $0.23 per share in supplemental dividends during the fiscal year, compared to $0.10 per share in supplemental dividends paid in the prior fiscal year.

除了定期股息外，本財年我們還支付了每股 0.23 美元的補充股息，而上一財年支付的補充股息為每股 0.10 美元。

For our March 2024 fiscal year, assuming reinvestment of our quarterly dividends, we generated a total return for our shareholders of 56%, which was among the top-performing public BDC during this time period.

對於我們 2024 年 3 月的財年，假設對季度股息進行再投資，我們為股東創造了 56% 的總回報率，是該時期表現最好的公共 BDC 之一。

During the year, we strengthened our balance sheet through a variety of capital markets activities, which raised over $500 million in additional capital while reducing our regulatory leverage to 0.82 debt to equity as of the end of the fiscal year. Capital raised during the year included $184 million in gross equity proceeds through our Equity ATM Program, a new senior secured SPV credit facility led by Deutsche Bank, and an increase in commitments on our existing corporate credit facility led by ING.

年內，我們透過各種資本市場活動強化了資產負債表，籌集了超過 5 億美元的額外資本，同時截至本財年末，我們的監管槓桿率已降至 0.82 的債務股本比。年內籌集的資本包括透過我們的 Equity ATM 計劃、由德意志銀行牽頭的新的高級擔保 SPV 信貸安排以及 ING 牽頭的對我們現有企業信貸安排的承諾的增加獲得的 1.84 億美元總股本收益。

During the fiscal year, we also completed an underwritten (inaudible) offering, we obtained approval for the final amount of leverage on our first SBIC license, and we began the licensing process for our second SBIC license. Michael will discuss further details around these capital-raising activities later in our prepared remarks.

在本財年中，我們也完成了承銷（聽不清楚）發行，我們獲得了第一個 SBIC 許可證的最終槓桿金額的批准，並開始了第二個 SBIC 許可證的許可流程。邁克爾稍後將在我們準備好的演講中討論有關這些融資活動的更多細節。

Turning to Slide 7 of the earnings presentation, we have summarized key performance highlights specific to the March quarter. During the quarter, we generated pretax net investment income of $0.68 per share, which more than covered both our regular dividend of $0.50 per share and our supplemental dividend of $0.06 per share paid during the quarter.

轉向收益簡報的幻燈片 7，我們總結了 3 月份季度的主要業績亮點。本季度，我們產生了每股 0.68 美元的稅前淨投資收益，這超出了本季度支付的每股 0.50 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. And as of the end of the quarter, we estimate that our undistributed taxable income was $0.64 per share. Net asset value per share ended the fiscal year at $16.77, which was flat compared to the prior quarter and up $0.40 per share compared to the year ago quarter.

投資組合收益持續強勁。截至本季末，我們估計未分配的應稅所得為每股 0.64 美元。本財年結束時每股資產淨值為 16.77 美元，與上一季持平，與去年同期相比每股成長 0.40 美元。

As we look forward to the June quarter, we are pleased to announce today that our Board of Directors has declared a regular dividend of $0.57 per share and a supplemental dividend of $0.06 per share, bringing total dividends declared for the June quarter of 2024 to $0.63 per share.

在我們展望 6 月季度之際，我們今天很高興地宣布，董事會已宣布派發每股 0.57 美元的定期股息和每股 0.06 美元的補充股息，使 2024 年 6 月季度宣派的股息總額達到 0.63 美元每股。

Deal quality and activity in the lower middle market during the March quarter continued at a healthy pace as private equity firms and business owners continue to transact, and we continue to source attractive investment opportunities. While we are continuing to source and close deals at comfortable loan-to-value levels averaging approximately 40% and leverage level of approximately 3.5x debt-to-EBITDA, competition in the lower middle market has increased, resulting in spreads tightening to levels last seen over 18 months ago. The increased competition for quality deals has come from both nonbank lenders and to some degree, traditional banks.

隨著私募股權公司和企業主繼續進行交易，並且我們繼續尋找有吸引力的投資機會，三月季度中低端市場的交易品質和活動繼續保持健康的步伐。雖然我們繼續以平均約 40% 的舒適貸款價值比水平和約 3.5 倍債務與 EBITDA 的槓桿水平尋找和完成交易，但中低端市場的競爭加劇，導致利差收緊至去年的水平18 個月前看過。對優質交易的日益激烈的競爭既來自非銀行貸款機構，在某種程度上也來自傳統銀行。

Over the past decade, our team has done an excellent job generating attractive returns for our shareholders in all competitive environments, and I'm highly confident we will continue to (inaudible) record in the current environment. Portfolio growth during the quarter was driven by $157.5 million in new commitments to 6 new portfolio companies and 5 existing portfolio companies, offset by $13.7 million in proceeds from 2 debt prepayments, which generated a weighted average realized IRR of 16.5%.

在過去的十年中，我們的團隊在所有競爭環境中都表現出色，為我們的股東創造了有吸引力的回報，我非常有信心我們將在當前環境中繼續（聽不清楚）記錄。本季投資組合成長的推動因素是對6 家新投資組合公司和5 家現有投資組合公司的1.575 億美元新承諾，抵消了2 筆債務預付款項的1,370 萬美元收益，從而產生了16.5% 的加權平均已實現IRR。

On the capitalization front, during the quarter, in addition to closing the (inaudible) credit facility, we raised nearly $50 million in gross equity proceeds during the quarter through our Equity ATM Program, at a weighted average price of $23.80 per share or 142% of the prevailing NAV per share.

在資本化方面，本季除了關閉（聽不清楚）信貸安排外，我們還透過股權 ATM 計畫籌集了近 5,000 萬美元的總股權收益，加權平均價格為每股 23.80 美元，即 142%現行每股資產淨值。

Finally, consistent with our communication on last quarter's conference call, the I-45 senior loan fund was (inaudible) and the assets were distributed to the joint venture partners in accordance with their respective ownership percentages.

最後，與我們在上季度電話會議上的溝通一致，I-45 高級貸款基金已（聽不清楚），資產根據合資夥伴各自的所有權百分比分配給合資夥伴。

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 BDC leverage and balance sheet liquidity, managing leverage to the lower end of our target range while ensuring strong balance sheet liquidity, affords us the ability to continue to invest in new platform companies and to grow our balance sheet even in periods of evolving capital markets when risk-adjusted returns can be particularly attractive. Additionally, it allows us the ability to support our portfolio companies by either providing growth capital or by financing add-on acquisitions, all while maintaining the ability to opportunistically repurchase our stock if it were to trade meaningfully below NAV.

我們一直努力確保擁有強勁的資產負債表流動性，同時透過增發股票發行為我們投資活動的重要部分提供資金。我們繼續對 BDC 槓桿率和資產負債表流動性保持保守心態，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，使我們有能力繼續投資新平台公司並增加餘額即使在資本市場不斷變化的時期，風險調整後的回報也特別有吸引力。此外，它使我們能夠透過提供成長資本或融資附加收購來支持我們的投資組合公司，同時保持在股票交易價格大幅低於資產淨值時機會性回購股票的能力。

On Slides 8 and 9, we illustrate our continued track record of producing steady dividend growth, consistent dividend coverage and solid value creation since the launch of our credit strategy back in January of 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 pretax net investment income. Additionally, over the same time period, we have paid or declared 24 special or supplemental dividends, totaling $3.95 per share, all generated through excess earnings and realized gains from our investment portfolio.

在幻燈片8 和9 中，我們展示了自2015 年1 月推出信貸策略以來，我們在實現穩定股息增長、一致的股息覆蓋率和堅實的價值創造方面的持續記錄。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。此外，在同一時期，我們還支付或宣布了 24 筆特別或補充股息，總計每股 3.95 美元，全部來自我們投資組合的超額收益和已實現收益。

Dividend sustainability, strong credit performance and continued access to capital from multiple capital sources are all core to our overall business strategy. Our track record in all these areas demonstrates 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.

股息可持續性、強勁的信用表現以及持續從多個資本來源獲取資本都是我們整體業務策略的核心。我們在所有這些領域的業績記錄證明了我們投資和資本管理策略的實力，以及我們所有決策與股東利益的絕對一致。

Turning to Slide 10. As a reminder, we lay out our core tenets of our investment strategy. Our core strategy of 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 a potential source of new (inaudible) capital support if needed.

轉向投影片 10。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（聽不清楚）資本支持的潛在來源。

In the lower middle market, we often have the opportunity to invest on a minority basis in the portfolio company equity (inaudible) 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 65 investments with a total fair value of $132 million, which was marked at 141% of our costs, representing $38.5 million in embedded unrealized depreciation or $0.85 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的形式投資於投資組合公司股權（聽不清楚）的私募股權公司。截至本季末，我們的股權聯合投資組合由 65 項投資組成，公允價值總額為 1.32 億美元，占我們成本的 141%，相當於嵌入未實現折舊 3,850 萬美元或每股 0.85 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 of these growing lower middle market businesses, which will come in the form of NAV per share growth and supplemental dividends over time.

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空間，這將以資產淨值的形式出現隨著時間的推移每股增長和補充股息。

As illustrated on Slide 11, our on-balance sheet credit portfolio ended the quarter at $1.3 billion, representing year-over-year growth of 30% from $1 billion as of the end of March 23 quarter. In the current quarter, 100% of the new portfolio company debt originations were first lien senior secured, and as of the end of the quarter, 97% of the credit portfolio was first lien senior secured.

如投影片 11 所示，我們的表內信貸投資組合本季末達到 13 億美元，較 3 月 23 日季末的 10 億美元年增 30%。在本季度，100% 的新投資組合公司債務起源是第一留置權優先擔保，截至本季度末，97% 的信貸投資組合是第一留置權優先擔保。

During the year, we improved the granularity in our portfolio as the average investment exposure per portfolio company ended the fiscal year at 0.9%, compared to 1.3% as of the end of the prior fiscal year. 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 expect that this metric will continue to improve as our asset base grows.

這一年，我們改進了投資組合的粒度，本財年結束時，每家投資組合公司的平均投資風險為 0.9%，而上一財年結束時為 1.3%。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。我們預計，隨著我們資產基礎的成長，這項指標將繼續改善。

On Slide 12, we detailed the $157.5 million in capital invested in and committed to portfolio companies during the quarter. Capital compared to this quarter included $123.5 million in first lien senior secured committed to 6 new portfolio companies in which we also invested $2.8 million in equity. In addition, we committed a total of $31.1 million in first lien senior secured debt and $143,000 in equity to 5 existing portfolio companies.

在投影片 12 中，我們詳細介紹了本季向投資組合公司投資和承諾的 1.575 億美元資本。與本季相比，資本包括向 6 家新投資組合公司提供的 1.235 億美元優先留置權擔保，我們也向其中投資了 280 萬美元的股權。此外，我們也向 5 家現有投資組合公司承諾提供總計 3,110 萬美元的第一留置權優先擔保債務和 143,000 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 consistency of our origination activity in the broad array of relationships across the country from which our team is sourcing quality opportunities.

我們對我們的團隊作為主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廣泛的關係中發起活動的一致性就證明了這一點。機會。

As a point of reference, currently, there are 70 different private equity firms represented across our investment portfolio. Since the launch of our credit strategy back in January 2015, we have completed transactions with over 100 private equity firms across the country, including over 25% of which we have completed multiple transactions.

作為參考，目前我們的投資組合中有 70 家不同的私募股權公司。自2015年1月推出信貸策略以來，我們已與全國100多家私募股權公司完成了交易，其中超過25%的私募股權公司完成了多筆交易。

Turning to Slide 13. We continued our track record of strong returns on our exits with 2 debt prepayments during the quarter. In total, these exits generated $13.7 million in total proceeds, generating weighted IRR of 16.5%. Since the launch of our credit strategy, we have realized 74 company exits, representing $919 million in proceeds that have generated a cumulative weighted average IRR of 14%.

轉向投影片 13。這些退出總共產生了 1,370 萬美元的總收益，加權 IRR 為 16.5%。自推出信貸策略以來，我們已實現 74 家公司退出，收益達 9.19 億美元，累計加權平均 IRR 為 14%。

On Slide 14, we detail key statistics for our portfolios in the end of the quarter. The total portfolio fair value ended the quarter weighted 88.7% with first lien senior secured debt, 2.3% to second lien senior secured debt, 0.1% of sub debt and 8.9% to equity co-investments. The credit portfolio had a weighted average yield of 13.3% and weighted average leverage through our security of 3.6x EBITDA.

在投影片 14 中，我們詳細介紹了季度末投資組合的關鍵統計數據。本季末投資組合公允價值總額中，第一留置權優先擔保債務佔 88.7%，第二留置權優先擔保債務佔 2.3%，次級債務佔 0.1%，股權共同投資佔 8.9%。信貸投資組合的加權平均收益率為 13.3%，我們的證券的加權平均槓桿率為 3.6 倍 EBITDA。

Overall, we are quite pleased with the portfolio company performance across the portfolio. Cash flow coverage of debt obligations across the portfolio remains at a healthy 3.2x despite the higher base rate environment. And quarter-over-quarter revenue and EBITDA growth on a weighted average basis was 3% and 5%, respectively.

整體而言，我們對投資組合公司在整個投資組合中的表現感到非常滿意。儘管基本利率環境較高，但整個投資組合的債務現金流覆蓋率仍維持在 3.2 倍的健康水準。以加權平均計算，季度環比營收和 EBITDA 成長率分別為 3% 和 5%。

As seen on Slide 15, our total investment portfolio continues to be broadly diversified across industries with an asset mix, which provides strong security for our shareholders' capital.

如投影片 15 所示，我們的總投資組合繼續廣泛地跨行業多元化，資產組合為股東的資本提供了強有力的安全保障。

On Slide 16, we have laid out the ratings migration across our portfolio during the quarter. As a reminder, all loans upon origination are initially assigned an investment rating of 2 on a 4-point scale, with 1 being the highest rating and 4 being the lowest rating. We had 4 loans representing almost $30 million in fair value upgraded this quarter, while having 4 loans representing about $14 million in fair value, downgraded this quarter. The portfolio remains healthy with 94.7% of the portfolio at fair value rated in 1 of the top 2 categories (inaudible).

在投影片 16 中，我們列出了本季我們投資組合的評級遷移情況。提醒一下，所有貸款在發放時最初都會被分配 2 級投資評級（共 4 分制），其中 1 為最高評級，4 為最低評級。本季度，我們有 4 筆貸款的公允價值升級為近 3,000 萬美元，而本季有 4 筆貸款的公允價值被下調，其公允價值約為 1,400 萬美元。投資組合保持健康，94.7% 的投資組合以公允價值評級屬於前 2 個類別之一（聽不清楚）。

I will now hand the call over to Michael to review some specifics of our financial performance for the quarter.

我現在將把電話轉交給邁克爾，以審查我們本季財務表現的一些細節。

Thanks, Bowen. Specific to our performance for the quarter, as summarized on Slide 17, pretax net investment income was $29.8 million or $0.68 per share as compared to $29.8 million or $0.72 per share in the prior quarter.

謝謝，鮑文。具體到我們本季的業績，如投影片 17 所示，稅前淨投資收益為 2,980 萬美元，即每股 0.68 美元，而上一季為 2,980 萬美元，即每股 0.72 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 a supplemental dividend of $0.06 per share for the June quarter. Maintaining a consistent track record of meaningfully covering our dividend with pretax 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 6 月季度的定期股息為每股 0.57 美元，補充股息為每股 0.06 美元。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 continued our strong track record of regular dividend coverage with 121% coverage for the 12 months ended March 31, 2024, and 111% 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 pretax 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 $0.64 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 $0.85 per share in unrealized depreciation on the equity portfolio.

我們持續維持定期股利覆蓋率的良好記錄，截至2024 年3 月31 日的12 個月覆蓋率為121%，自2015 年1 月推出信貸策略以來累積覆蓋率為111%。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 0.64 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未實現折舊每股0.85 美元會帶來收益。

For the quarter, total investment income decreased to $46.4 million from $48.6 million in the prior quarter. The prior quarter's investment income included a significant onetime dividend from one of our portfolio companies. The quarter-over-quarter decrease in dividend income was offset by an increase in interest income from the growth in our credit portfolio. As of the end of the quarter, our loans on nonaccrual represented 2.3% of our investment portfolio at fair value and the weighted average yield in the portfolio on all investments was 12.7%.

本季總投資收入從上一季的 4,860 萬美元降至 4,640 萬美元。上一季的投資收入包括我們投資組合公司之一的大量一次性股息。股息收入環比下降被我們信貸投資組合成長帶來的利息收入增加所抵銷。截至本季末，我們的非應計貸款占我們以公允價值計算的投資組合的 2.3%，所有投資組合的加權平均收益率為 12.7%。

As seen on Slide 18, LTM operating leverage ended the quarter at 1.7%, which compares favorably to the BDC industry average of approximately 3%. 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 as we continue to build a best-in-class BDC. As we look forward, we expect further improvements in operating leverage as we continue to grow our balance sheet over time.

如投影片 18 所示，本季結束時，LTM 營運槓桿率為 1.7%，優於 BDC 產業約 3% 的平均值。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，同時在我們繼續建立一流的 BDC 的過程中，也允許大量資源投資於人員和基礎設施。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。

Turning to Slide 19. The company's NAV per share at the end of the quarter was $16.77, which was flat from the prior quarter and up $0.40 per share from the year ago March 2023 quarter.

轉向幻燈片 19。

Turning to Slide 20. We are pleased to report that we have significant balance sheet liquidity with approximately $398 million in cash and undrawn leverage commitments on our 2 credit facilities and our SBA debenture commitments, which altogether represented 2.8x the $140 million unfunded commitments we had across our portfolio as of the end of the quarter.

轉向幻燈片20。億美元無資金承諾的2.8 倍截至本季末我們的投資組合。

As Bowen mentioned, during the quarter, we raised a new senior secured (inaudible) credit facility led by Deutsche Bank. The facility has $150 million in initial commitments, which will contractually increase to $200 million of total commitments, by June 2024.

正如 Bowen 所提到的，在本季度，我們籌集了一項由德意志銀行牽頭的新優先擔保（聽不清楚）信貸安排。該基金的初始承諾額為 1.5 億美元，到 2024 年 6 月，承諾總額將根據合約增加至 2 億美元。

In addition, based on the current borrowing base, we have access to the full $460 million in total commitments for the ING-led corporate credit facility, which has (inaudible) feature allowing for the further increase in total commitments in this facility 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.

此外，根據目前的借款基礎，我們可以獲得 ING 主導的企業信貸安排的全部 4.6 億美元承諾總額，該安排具有（聽不清楚）功能，允許進一步增加該安排的總承諾額，最高可達總計7.5億美元，使我們能夠隨著整體資產負債表的成長而繼續擴大左輪手槍產能。

We are actively working to further increase commitments in the corporate credit facility and provide updates on that process in the coming months. In March 2024, we submitted a MAC application to the SBA, which has begun the process towards the second SBIC license. We look forward to providing updates on this process as they become available.

我們正在積極努力進一步增加對企業信貸安排的承諾，並在未來幾個月提供有關該流程的最新資訊。 2024 年 3 月，我們向 SBA 提交了 MAC 申請，該申請已開始申請第二個 SBIC 許可證。我們期待在該流程可用時提供更新。

Finally, as of the end of the March quarter, 46% of our capital structural liabilities were in unsecured covenant-free bonds with our earliest debt maturity in January 2026. As Bowen alluded to earlier, during the quarter, the I-45 Board of Managers approved the dissolution of the fund, which included a full repayment of the I-45 credit facility and the distribution of the I-45 assets to the joint venture partners in accordance with their ownership percentages. The assets distributed to Capital Southwest from the I-45 fund are now included on the schedule of investments in our financial statements.

最後，截至3 月季度末，我們46% 的資本結構性負債是無擔保無契約債券，最早債務到期日為2026 年1 月。委員會管理人員批准解散該基金，其中包括全額償還 I-45 信貸額度以及根據合資夥伴的所有權比例將 I-45 資產分配給合資夥伴。從 I-45 基金分配給 Capital Southwest 的資產現已包含在我們財務報表的投資表中。

Our regulatory leverage as seen on Slide 21, ended the quarter at a debt-to-equity ratio of 0.82:1, down from 0.88:1 as of the year ago March quarter. 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 and conservative leverage with adequate covenant cushions.

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 0.82:1，低於去年 3 月季度的 0.88:1。我們將繼續透過 ATM 計劃有條不紊地、機會主義地籌集有擔保和無擔保債務資本以及股本資本，以確保我們繼續保持大量流動性和保守的槓桿率，並具有足夠的契約緩衝。

Despite not having any maturities within our debt structure until 2026, we are always proactively planning our path forward to mitigate the risk of capital markets volatility. Finally, we are very pleased that both Moody's and Fitch have recently affirmed our investment-grade ratings.

儘管我們的債務結構在 2026 年之前沒有任何到期日，但我們始終積極規劃未來的道路，以減輕資本市場波動的風險。最後，我們非常高興穆迪和惠譽最近都確認了我們的投資等級。

I will now hand the call back to Bowen for some final comments.

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. As always, we appreciate the opportunity to provide you with an update on our business, our portfolio and the market environment.

謝謝，麥可。再次感謝大家今天加入我們。一如既往，我們很高興有機會為您提供有關我們業務、產品組合和市場環境的最新資訊。

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. We believe we have prepared our company well for future growth and performance. The overall health and security of our portfolio is strong. Our credit portfolio is predominantly made up of first lien senior secured loans allocated across a broad array of companies and industries, the vast majority of which are backed by private equity firms. Further, interest coverage on the debt obligations across our portfolio is a strong 3.2x with our loans across our portfolio averaging approximately 40% of the portfolio company enterprise value.

我們的公司和投資組合繼續展現出強勁的業績，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。我們相信，我們已經為公司未來的成長和業績做好了充分的準備。我們投資組合的整體健康狀況和安全性很強。我們的信貸投資組合主要由分配給眾多公司和行業的第一留置權優先擔保貸款組成，其中絕大多數由私募股權公司支持。此外，我們投資組合中債務的利息覆蓋率高達 3.2 倍，我們投資組合中的貸款平均約佔投資組合公司企業價值的 40%。

Additionally, our equity co-investment portfolio gives our shareholders participation in the equity upside of many of these growing lower middle market businesses, providing further enhancement to our long-term shareholder returns.

此外，我們的股權共同投資組合使我們的股東能夠參與許多不斷增長的中低端市場業務的股權上漲，從而進一步提高我們的長期股東回報。

Last but not least, we have a very well-capitalized balance sheet with multiple capital sources, strong liquidity, a flexible capital structure and an exciting runway to continue to grow our company, generating strong shareholder returns for years to come.

最後但並非最不重要的一點是，我們擁有資本充足的資產負債表，擁有多種資本來源、強大的流動性、靈活的資本結構和令人興奮的跑道，可以繼續發展我們的公司，在未來幾年產生強勁的股東回報。

This concludes our prepared remarks. Operator, we are ready to open the lines for Q&A.

我們準備好的演講到此結束。接線員，我們已準備好開通問答線路。

(Operator Instructions) And our first question is going to come from the line of Mickey Schleien with Ladenburg.

（操作員說明）我們的第一個問題將來自 Mickey Schleien 和 Ladenburg 的線路。

Bowen, you mentioned spreads tightening, which is certainly consistent with everything we're hearing across the space. When you look at the vintages of your portfolio, how much refinancing risk do you see going forward?

Bowen，您提到利差收緊，這當然與我們在整個領域聽到的一切一致。當您查看投資組合的年份時，您認為未來的再融資風險有多大？

Yes. Thanks, Mickey. I mean, look, as we think about the strengthening of the market, the liquidity in the market and if you look at our rated #1 -- companies rated #1, companies have significantly outperformed, they're clearly in most all cases, refinancing candidates.

是的。謝謝，米奇。我的意思是，當我們考慮市場的加強、市場的流動性時，如果你看看我們排名第一的公司——排名第一的公司，它們的表現明顯優於大盤，在大多數情況下，它們顯然都表現出色，再融資候選人。

All that said, I mean, there are some things you should -- (inaudible) should understand. I mean there are ways that we can defend against in some respects, refinancing risk on outperforming companies. And obviously, we can go proactively if the risk has materially changed. We can go proactively and reduce interest rate on our loan to make it less incentive (inaudible). We can do dividend recaps. We can add additional debt on the business that's still well underneath what you'd be comfortable with leveraging a very well-performing business that we understand.

綜上所述，我的意思是，有些事情你應該－－（聽不清楚）應該要理解。我的意思是，我們可以在某些方面採取一些方法來防範表現優異的公司的再融資風險。顯然，如果風險發生重大變化，我們可以主動採取行動。我們可以主動降低貸款利率，以減少其誘因（聽不清楚）。我們可以進行股利回顧。我們可以為企業增加額外的債務，但該債務仍遠低於您願意利用我們了解的業績良好的企業的債務。

And in some cases, in one case, where the leverage is so low and the company's cash flowing so well, we actually have a situation where we let the sponsor take cash dividends out each quarter, and we take a little money to pay back the debt. They take a little money to put in their pockets. And it kind of removes the incentive for them to refinance this out in a very, very safe credit.

而且有的時候，有一種情況，槓桿這麼低，公司現金流這麼好，我們其實有一種情況，我們每個季度讓保薦人拿出現金分紅，我們拿一點錢來償還。他們拿一點錢裝進口袋。這在某種程度上消除了他們以非常非常安全的信貸進行再融資的動力。

So there's things you can do and anyone else in our position to defend against those refinancing risks. But clearly, when the market strengthens, and you have companies that are outperforming, you definitely have refinancing risk. And so that's kind of just give you a flavor of some of the ways we manage it.

因此，您和處於我們位置的任何其他人都可以採取一些措施來防範這些再融資風險。但顯然，當市場走強，而且你的公司表現出色時，你肯定會面臨再融資風險。所以這只是讓您了解我們的一些管理方式。

Yes. And also, I mean just to quantify, so it's about $200 million, we would say, of the portfolio as loan grade 1 that fall in that category, many of which have been originated in the past 18 months. So to them, still have call protection on many of those loans. And then the other piece to note is our all-in yield is 8% spread over so far on our portfolio, which is obviously robust. So if we have a portion of that $200 million we're not able to retain when it comes back, we don't feel like it's a material downdraft to earnings going forward.

是的。而且，我的意思是只是為了量化，我們可以說，屬於該類別的 1 級貸款投資組合約為 2 億美元，其中許多是在過去 18 個月內產生的。因此，對他們來說，其中許多貸款仍然享有贖回保護。另一件值得注意的事情是，到目前為止，我們的投資組合的總收益率為 8%，這顯然是穩健的。因此，如果我們無法保留這 2 億美元的一部分，我們並不認為這會對未來的獲利造成重大影響。

That's very helpful. Could you give us some highlights on what caused the net realized loss this quarter?

這非常有幫助。您能否向我們介紹一些導致本季已達到淨虧損的原因？

So predominantly, it was the I-45 (inaudible) so when you think about it, we had depreciation embedded in I-45 that was unrealized as an equity position. And when I-45 dissolved, that became a realized event into retained earnings. So that was about, I think, $16 million of it.

因此，主要是 I-45（聽不清楚），所以當你考慮一下時，我們在 I-45 中嵌入了折舊，而該折舊並未作為股權頭寸實現。當 I-45 解散時，這成為留存收益中已實現的事件。我認為這大約是 1600 萬美元。

I understand. I also saw that the fair value of your nonaccruals went up a little bit. Was that caused by a new nonaccrual? Or was that valuation adjustments of the previous nonaccruals?

我明白。我還發現您的非應計費用的公允價值略有上升。這是由新的非應計利息引起的嗎？還是之前非應計費用的估值調整？

Yes. We had two new names, ones that are very highly talked about syndicated name and another one is a small company in the education space, where we had (inaudible). And so yes, we have two new nonaccrual names. And Mickey, both from the watch list. So is it really a degradation of portfolio, just sort of two names that had some issues.

是的。我們有兩個新名稱，一個是備受關注的聯合名稱，另一個是教育領域的小公司，我們在那裡（聽不清楚）。是的，我們有兩個新的非應計名稱。還有米奇，都在觀察名單上。那麼，這真的是投資組合的退化嗎？

What we'd also say is -- when you look at our nonaccrual, we have -- our granularity in the total portfolio is about 0.9%, down from 13%. So when you look at our portfolio, a very granular portfolio, so nonaccruals are painful and we don't hope to like seeing them up. We do say that the impact to earnings is quite small. Those two nonaccruals accounted for about a penny of earnings for the quarter.

我們還要說的是——當你看看我們的非應計費用時，我們發現——我們在總投資組合中的粒度約為 0.9%，低於 13%。因此，當您查看我們的投資組合時，這是一個非常細粒度的投資組合，因此非應計費用是痛苦的，我們不希望看到它們。我們確實說對獲利的影響很小。這兩項非應計費用約佔本季收益的一便士。

Yes, I appreciate that. And that's certainly something I watch carefully. Lastly, Michael, the new SPV credit facility has a higher spread than the existing corporate credit facility. So notwithstanding that, what are the advantages of putting that into place?

是的，我很欣賞這一點。這當然是我仔細觀察的事情。最後，Michael，新的 SPV 信貸便利性比現有的企業信貸便利性具有更高的利差。儘管如此，這樣做有什麼好處呢？

Sure. Well, first, I would tell you this, so the spread in and of itself, is higher, but the fees and the unused are lower. So they're actually at parity of the two facilities. So the other benefit is, I would tell you, we wanted to expand our diversity of our sources. Some banks, we've been told over the last few years were looking for something of an SPV variety because it's better from a capital charge perspective rather than the on-balance sheet credit facility. So that's one of the reasons why we were pursuing an SPV structure.

當然。好吧，首先，我會告訴你這一點，因此價差本身較高，但費用和未使用的費用較低。所以這兩個設施其實是平等的。所以，我想告訴你，另一個好處是，我們希望擴大來源的多樣性。過去幾年我們被告知，一些銀行正在尋找某種 SPV 品種，因為從資本要求的角度來看，它比表內信貸便利更好。這就是我們追求 SPV 結構的原因之一。

The other thing we would tell you is that the lenders that were involved in I-45, who once it was dissolved, were still very interested in doing business with Capital Southwest. So they were looking for a way to get back in. So this was one way. Deutsche took down the $150 million plus the additional $50 million that's coming on board in June. But the other lenders in there have some interest as well.

我們要告訴您的另一件事是，參與 I-45 的貸方在 I-45 解散後仍然對與 Capital Southwest 開展業務非常感興趣。所以他們正在尋找一種重新進入的方法。德意志銀行拿下了 1.5 億美元以及 6 月追加的 5,000 萬美元。但那裡的其他貸方也有一些興趣。

So when we're looking forward, we're looking at our maturities out in 2026, and we're thinking about it today. So we'd like to build up a secured -- dry powder secured facilities that allow us, if need be, to take down portions of those -- the debt and those maturities if the capital markets were closed.

因此，當我們展望未來時，我們會考慮 2026 年的成熟度，並且今天就會考慮這一點。因此，我們希望建立一個有擔保的——乾粉擔保的設施，使我們能夠在需要時減少其中的一部分——債務以及資本市場關閉時的到期債務。

We do anticipate probably paying it down prior to getting within 6 or 12 months. But having diversity of secured sources that we can draw, especially to refinance is really helpful in terms of flexibility.

我們確實預計可能會在 6 或 12 個月內還清。但是，我們可以利用多種安全來源，尤其是再融資，這在靈活性方面確實很有幫助。

Yes, I understand. And that makes sense. Those are all my questions this morning. I appreciate your time, as always.

是的我明白。這是有道理的。這些都是我今天早上的問題。我一如既往地感謝您的寶貴時間。

And 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)。

I wanted to ask about the mix of originations in the March quarter. It looks like the top 3 about $70 million or so in fundings were Consumer Products and Consumer Services. Can you update us on just how you're feeling about more cyclical industries. And in general, what kind of internal framework you might have on managing industry concentrations across the portfolio?

我想問三月季度的起源組合。看起來融資金額約 7000 萬美元的前三名是消費品和消費者服務。您能否向我們介紹一下您對週期性產業的最新看法？一般來說，您可能有什麼樣的內部框架來管理整個投資組合的產業集中度？

Yes. Well, first I'll say we look at economic sensitivity, the same across all our companies. We look at past recessions and what that customer base or that type companies in that industry did from an economic, from a earnings volatility. So that's the same way we look at consumers. And so I think -- and we lever accordingly. So these consumer companies, I mean, they're kind of interesting names, is to lower leverage, high free cash flow, high variable cost component of their cost structure. In one case is an enthusiast type product. In the other case, it's an incubator for new fragrance lines and things in the industry.

是的。好吧，首先我要說的是，我們會考慮經濟敏感性，我們所有公司都是如此。我們研究過去的經濟衰退，以及該行業的客戶群或此類公司從經濟、獲利波動中所做的事情。這就是我們看待消費者的方式。所以我認為——我們會相應地進行槓桿調整。所以這些消費公司，我的意思是，他們是一些有趣的名字，是為了降低槓桿率，高自由現金流，其成本結構的高變動成本組成。一種情況是發燒友型產品。另一方面，它是新香水系列和行業事物的孵化器。

So interesting consumer plays in the consumer services company (inaudible) franchise that basically both of their businesses moving renters from apartment to apartment in local markets. And so obviously a segment that may perhaps less cyclical.

消費者在消費者服務公司（聽不清楚）特許經營權中扮演著如此有趣的角色，基本上他們的兩家公司都在當地市場上將租戶從一個公寓轉移到另一個公寓。很明顯，這個細分市場的周期性可能不太明顯。

But ultimately, we look at the businesses as we match leverage to potential economic volatility. So with respect to your question on sectors, we -- look at that. I mean, clearly, I'd say we're -- consumer is an area that is probably close to the top of what we'd be doing from a weighted perspective. But we're constantly -- John and I and Michael are constantly looking at that from a risk management perspective. We don't want something in the market existential in the market to basically move the credit picture of our portfolio meaningfully.

但最終，我們會在將槓桿與潛在的經濟波動相匹配時審視這些業務。因此，關於你關於行業的問題，我們會考慮一下。我的意思是，很明顯，我會說我們——從加權的角度來看，消費者是一個可能接近我們所做工作的頂部的領域。但我們一直——約翰、我和麥可一直從風險管理的角度來看這個問題。我們不希望市場上存在的某些東西從根本上有意義地改變我們投資組合的信用狀況。

Got it. You don't necessarily have any hard ceilings in terms of concentration for particular industries, right?

知道了。在特定行業的集中度方面不一定有任何硬性上限，對吧？

No, I don't think so. I mean, look, I think our sectors, we've got some of the larger concentration sectors around a relative basis. You probably would look at increasing those meaningfully. But I don't feel -- we don't feel like there's like -- of course, it's not just the sector, it's the actual companies that are in there, and what they do within that sector. But we don't think we're overweighted in any sector.

不，我不這麼認為。我的意思是，看，我認為我們的行業，我們在相對基礎上有一些較大的集中行業。您可能會考慮有意義地增加這些。但我不覺得——我們不覺得有——當然，這不僅僅是這個行業，而是那裡的實際公司，以及他們在該行業所做的事情。但我們認為我們在任何行業都沒有增持。

And to these sectors that certainly the consumer is something that has a higher bar, I think Bowen mentioned earlier in the statement just now that our leverage levels on those really in the 2 to 3x with loan to values in sub-40%. So these are companies that we feel like the financial profile and their cash flow history would withstand cycle well.

對於這些行業來說，消費者肯定是一個更高的標準，我認為鮑文在剛才的聲明中提到，我們對這些行業的槓桿水平實際上是 2 到 3 倍，貸款價值低於 40%。因此，我們認為這些公司的財務狀況和現金流歷史能夠很好地承受週期。

Given -- I mean, obviously, we all have sensitivity to the consumer sectors. I mean it starts with us having sensitivity in that as well. I think it is interesting to point out I think all 3 of these consumer names are with private equity firms that virtually all they do is consumer. So they're very deep.

鑑於——我的意思是，顯然我們都對消費領域很敏感。我的意思是，這始於我們對此也有敏感度。我認為有趣的是，我認為這 3 個消費者名稱都屬於私募股權公司，而它們實際上所做的一切都是消費者。所以他們的深度非常深。

And what's interesting about a sponsor who has deep expertise in the sector, especially like consumers is if you look across their portfolio, they have relationships across customers or suppliers or sales channels like retail or whatever across the other companies that they use to leverage to support and enhance the consumer company that they're buying. And so it's interesting. I mean, you really can't say that about a generalist private equity firm necessarily, but one that's deeply rooted in the consumer sector or health care sector, but consumer especially they can really leverage their relationships across their portfolio to enhance, and that's kind of part of their playbook care to leverage those relationships to enhance each new platform they buy.

對於在該行業擁有深厚專業知識的贊助商來說，有趣的是，尤其是像消費者一樣，如果你縱觀他們的投資組合，他們在客戶或供應商或銷售管道（如零售或他們用來支持的其他公司）之間建立了關係。這很有趣。我的意思是，你真的不能說這是一家綜合型私募股權公司，而是一家深深植根於消費者領域或醫療保健領域的私募股權公司，但消費者尤其是他們可以真正利用他們在投資組合中的關係來增強，這很好 他們的策略之一是利用這些關係來增強他們購買的每個新平台。

Got it. Okay. That's helpful. And my next question is -- yes, so I appreciate your remarks on competition and spread tightening. Has there been any impact to structure that you're seeing at this point? And is it any harder now to get the equity co-invest than in the past?

知道了。好的。這很有幫助。我的下一個問題是——是的，所以我很欣賞你關於競爭和利差收緊的言論。您目前看到的結構是否受到任何影響？現在要取得股權跟投是不是比以前更難了？

So on the structure, I would tell you, if you got the market increases in competition. You have some erosion of structure. But the good news is we always talk about and I know you know this, but like in the lower middle market, I mean, our documents are tight. Our covenants are tight, reasonable. The EBITDA add-backs were very sensitive to that. So sometimes credit performance -- obviously, credit -- I mean it's wrong to say it doesn't change at all when the market gets more competitive. But in our market, I mean, it's already well within what one would be comfortable with. And so it doesn't really deteriorate that much, but it's not 0.

因此，在結構上，我會告訴你，如果市場競爭加劇。你的結構受到了一些侵蝕。但好消息是我們總是談論這一點，我知道你知道這一點，但就像在中低端市場一樣，我的意思是，我們的文件很緊張。我們的契約是嚴格的、合理的。 EBITDA 回加對此非常敏感。所以有時信用表現——顯然是信用——我的意思是，當市場競爭變得更加激烈時，說它根本不會改變是錯誤的。但我的意思是，在我們的市場上，這已經完全在人們可以接受的範圍內。所以它並沒有真正惡化那麼多，但它不是0。

And then what is the other question?

那麼另一個問題是什麼？

So equity co-investment...

那麼股權跟投...

Yes. The equity co-investment is usually a function of that private equity firms, the size of their check versus the size of their fund and where they are in their fund life and that type of thing. It's not necessarily a function of how competitive the market is. It's more of a function of the individual private firm and where they are on their liquidity profile.

是的。股權共同投資通常取決於私募股權公司、其支票規模與基金規模以及其在基金生命週期中的位置等因素。它不一定是市場競爭程度的函數。這更取決於個體私人公司及其流動性狀況。

And then you will see, though, is our checks -- we haven't really grown our whole site that much. Obviously, we talked about the granularity. But to the extent we have -- or maybe our debt goes up from $12 million to $15 million or maybe $18 million. You're not seeing the equity check. It's still difficult to get a large equity co-investment from (inaudible) Bowen's indicated.

然後你會看到，我們的支票——我們的整個網站並沒有真正發展那麼多。顯然，我們討論了粒度。但就我們而言，或者我們的債務可能從 1200 萬美元增加到 1500 萬美元，甚至可能是 1800 萬美元。您沒有看到股權檢查。鮑文表示，從（聽不清楚）獲得大筆股權聯合投資仍然很困難。

In another case, obviously places where we get the debt store, if we don't get the equity story. So that all being said, I mean we'd expect our equity hold as a portfolio would probably be in the 8% to 10%, probably not going to be able to grow up beyond 10%.

在另一種情況下，如果我們沒有獲得股權故事，顯然我們會在哪裡獲得債務儲存。綜上所述，我的意思是我們預期我們作為投資組合持有的股權可能會在 8% 到 10% 之間，可能不會成長超過 10%。

And our next question is going to come from the line of Bryce Rowe with B. Riley.

我們的下一個問題將來自 Bryce Rowe 和 B. Riley。

Maybe I wanted to start on -- with a couple of more questions about I-45. I'm just curious what was the impact on the debt portfolio from that resolution, or dissolution and just trying to understand the quarter-over-quarter increase in the debt portfolio. What percentage of that or what dollar amount was coming from the I-45 asset?

也許我想先問幾個有關 I-45 的問題。我只是好奇該決議或解散對債務投資組合有何影響，並試圖了解債務投資組合的季度環比增長。其中多少百分比或金額是多少來自 I-45 資產？

Sure. So there were 17 portfolio companies that came over for approximately $80 million. And just the yield on those were about (inaudible) so not materially lower than our portfolio. But obviously, the $80 million is a very small percentage. So it had a very little impact. And I've mentioned on other calls that the impact to earnings is a net positive because we're getting rid of a lot of frictional costs associated with trustees and audits, et cetera. So this is -- you can consider this a net impact to earnings to CSWC.

當然。因此，共有 17 家投資組合公司以約 8,000 萬美元的價格收購。這些產品的收益率大約（聽不清楚），因此並不比我們的投資組合低很多。但顯然，8000萬美元只是一個很小的比例。所以影響非常小。我在其他電話會議中提到，對收益的影響是淨正的，因為我們正在消除與受託人和審計等相關的大量摩擦成本。因此，您可以將其視為對 CSWC 收益的淨影響。

Okay. And Michael, I mean what's the inclination to hold those or just to be opportunistic if you see an opportunity to get out? I assume you're not in control of the situation, so to speak. So you're more along for the ride. Is that the right way to think about it?

好的。邁克爾，我的意思是，如果你看到有機會退出，你會傾向於持有這些股票還是只是投機取巧？可以這麼說，我認為你無法控制局勢。所以你比較願意順風順水。這是正確的思考方式嗎？

That would be the right way to look. That's right (inaudible).

這才是正確的看待方式。沒錯（聽不清楚）。

Okay. Okay. And then Bowen and Michael, you mentioned the dividend income for the quarter and it being more onetime in nature. Can -- any color around the source of that dividend? And then help us quantify how much the impact was?

好的。好的。然後鮑文和邁克爾，你們提到了本季的股息收入，它本質上是一次性的。股利來源有什麼顏色嗎？然後幫助我們量化影響有多大？

Yes, so actually, what I was indicating was last quarter, we had a $2.4 million onetime dividend, that's for the 12/31 quarter. And in this quarter, we had some dividends, but we certainly didn't have anything of that materiality. So I think dividend income came down about $2 million quarter-over-quarter.

是的，實際上，我所說的是上個季度，我們有 240 萬美元的一次性股息，即 12/31 季度的股息。在本季度，我們獲得了一些股息，但我們當然沒有任何實質的股息。因此，我認為股息收入環比下降了約 200 萬美元。

But at the same time, our interest income, one, because you had assets coming over from I-45 into the portfolio, as we just noted, there was additional interest income there, plus we had net portfolio growth during the quarter.

但同時，我們的利息收入，一是因為你有資產從 I-45 轉移到投資組合中，正如我們剛才指出的，那裡有額外的利息收入，而且我們在本季度有淨投資組合增長。

Okay. And so was there any I-45 dividend income in the quarter? I assume there's not, but maybe there was?

好的。那麼本季有 I-45 股息收入嗎？我認為沒有，但也許有？

Yes. There was a bit of it. I think it was around $500,000. It wasn't significant for the quarter.

是的。有一點。我想大約是50萬美元。這對於本季來說並不重要。

Okay. Okay. Last one for me. The comp line down a bit. It sounds like from the press release that there was just a difference in bonus accrual quarter-over-quarter. Any thoughts on kind of what a good run rate might be from a comp perspective?

好的。好的。最後一張給我。比較線下降了一點。從新聞稿來看，似乎季度與季度之間的獎金應計有所不同。從比較的角度來看，什麼是好的運作率，有什麼想法嗎？

Sure, sure. So cash comp, I would expect for this coming quarter -- fiscal year to be on a quarterly basis around $2.8 million for cash comp. Probably (inaudible) expense around $1.5 million, and G&A is about $2.5 million a quarter. So the total, you'd expect about $6.8 million as a run rate quarterly.

一定一定。因此，我預計下一個季度（財年）的現金補償將按季度計算在 280 萬美元左右。大概（聽不清楚）費用約 150 萬美元，每季 G&A 約 250 萬美元。因此，您預計每季的營運費用總計約為 680 萬美元。

That will obviously vacillate up and down, but that's what you should expect maybe (inaudible) annualized amount.

這顯然會上下波動，但這就是您應該期望的（聽不清楚）年化金額。

Okay. And what was the reason for the lower bonus accrual in the quarter?

好的。本季應計獎金較低的原因是什麼？

Sure. So in that previous quarter, they indicated that we had that $2.4 million dividend. And to that point, we accrued additional bonus accrual above the target. And then in the fourth quarter, we had accrued probably above where we decided to pay out for the company. And so there was a back out of some accrual for the (inaudible)

當然。因此，在上一季度，他們表示我們有 240 萬美元的股息。至此，我們在目標之上累積了額外的獎金。然後在第四季度，我們的應計費用可能高於我們決定為公司支付的費用。因此，（聽不清楚）的一些應計費用被收回

Our next question is going to come from the line of Erik Zwick with Hovde Group.

我們的下一個問題將來自 Hovde Group 的 Erik Zwick。

Just one question for me today. One, it was nice to see that the kind of the dollar value of investment upgrades was a little bit more (inaudible) downgraded in the quarter. I guess my question is more towards those downgrades (inaudible) relationships you have there. If you could just talk maybe about the circumstances or characteristics that led to those downgrades in terms of company performance or whether they're facing some industry challenges or anything you could provide there would be interesting.

今天只有一個問題想問我。第一，很高興看到本季投資升級的美元價值被下調了一點（聽不清楚）。我想我的問題比較是針對那些降級（聽不清楚）的關係。如果您能談談導致公司業績降級的情況或特徵，或者他們是否面臨一些行業挑戰，或者您可以提供的任何內容都會很有趣。

Yes. No, I mean, Erik, I'm just looking at the list here. I mean, they're all pretty idiosyncratic. Two of them were our non-accruals. One was another company that's relatively idiosyncratic. So hard to really put -- there's a point on the economy that we see one of them was broad and one of the large syndicated deals seems to be overlevered. So there are not really any trends in those names that I can point to.

是的。不，我的意思是，埃里克，我只是在看這裡的清單。我的意思是，他們都很獨特。其中兩項是我們的非應計費用。其中一家是另一家相對特殊的公司。很難真正說清楚——在經濟方面，我們看到其中一項交易範圍很廣，其中一項大型銀團交易似乎槓桿過高。所以我可以指出這些名字實際上沒有任何趨勢。

Okay. No, that's helpful. I appreciate it. And then maybe then kind of one quick follow-up on that point now. If we look at the interest rate futures curve, it seems that we're likely to be in this higher for longer interest rate environment for a while. And I guess, how are your companies coping with this? Were there any that were holding out, hoping that we would see a decline in interest rates or most managed well and have continued to be able to grow EBITDA and hopefully delever over time, how are they handling this interest rate environment?

好的。不，這很有幫助。我很感激。然後也許是對這一點的快速跟進。如果我們看一下利率期貨曲線，我們似乎可能會在這種長期較高的利率環境中停留一段時間。我想，你們的公司是如何應對這個問題的？是否有任何人堅持不懈，希望我們看到利率下降，或者大多數管理良好，並能夠繼續增長 EBITDA，並希望隨著時間的推移去槓桿化，他們如何應對這種利率環境？

Yes. A couple of comments I'll make on that. On the last 12 months of -- or 12, 18 months of this kind of interest rate cycle, we've kind of commented on some of the things we've seen these private equity firms do and cutting operational costs because their interest burden is going up. And they've been doing that. And if you look at our -- and then we're also leverage levels that we're levering companies up and fixed charge coverage is a very important metric, right, obviously. And so as rates come up, leverage on new loans can come down.

是的。我將對此發表幾點評論。在這種利率週期的最後 12 個月，或者說 12、18 個月，我們對這些私募股權公司所做的一些事情以及削減營運成本進行了評論，因為他們的利息負擔往上走。他們一直在做這件事。如果你看看我們的槓桿水平，我們正在提高公司的槓桿水平，固定費用覆蓋率顯然是一個非常重要的指標。因此，隨著利率上升，新貸款的槓桿率可能會下降。

And so if you look at -- ultimately, if the zone out and say, okay, what's the health of the engine that's generating earnings and dividends for our shareholders, things like EBITDA to interest coverage metrics on a weighted average basis of 3.2x is pretty healthy, especially in the current interest rate environment and the average loan to values, which is not tax charge issue, but it's an absolute leverage issue, 40% is pretty healthy. So we feel like as a portfolio, we look at narratively, we look at what the private equity firms are doing in the portfolio to manage the business in a higher interest rate environment and we look at the kind of portfolio level test metrics and you feel pretty good.

因此，如果你看看——最終，如果你停下來說，好吧，為我們的股東產生收益和股息的引擎的健康狀況如何，比如 EBITDA 與利息覆蓋率指標的加權平均比為 3.2 倍相當健康，尤其是在當前的利率環境和平均貸款價值下，這不是稅收問題，而是絕對槓桿問題，40% 是相當健康的。因此，我們覺得作為一個投資組合，我們從敘述角度來看，我們看看私募股權公司在投資組合中正在做什麼，以在更高的利率環境下管理業務，我們看看投資組合水平測試指標的類型，你會覺得不錯。

I mean there's small problems here or there, a small handful of companies that we talked about. But overall, our portfolio looks pretty good from an engine creating earnings for our shareholders' perspective.

我的意思是，我們談到的少數公司到處都有小問題。但整體而言，從為股東創造收益的引擎來看，我們的投資組合看起來相當不錯。

And then the longer we go into this, the longer the industries, companies, private equity firms have kind of gotten (inaudible), if you will, in the higher interest rate environment and they've managed the business. The longer you are in this environment, the less you kind of wake up the middle of the night, thinking something is going to blow up, kind of thing. That means you're going to have -- the one thing I will say is interest rates are higher, it brings problems to the table faster and our deal teams can get in front of the private equity firms and insist that they put money in the business and support anything from liquidity, but also they want to continue to increase their CapEx budgets may be higher than what we have in our credit agreement.

然後我們研究這個問題的時間越長，產業、公司、私募股權公司在更高的利率環境中（如果你願意的話）管理業務的時間就越長。你在這種環境中待的時間越長，你就越不會在半夜醒來，想著有東西會爆炸之類的事情。這意味著我要說的一件事是利率更高，它更快地帶來問題，我們的交易團隊可以站在私募股權公司面前，堅持要求他們將資金投入業務並從流動性中支持任何東西，但他們也希望繼續增加其資本支出預算可能高於我們在信貸協議中的預算。

We have sponsors that have put equity in, so they can continue to focus on their growth. Those types of things. And so when the system gets tighter because the interest burden is going up, it tightens the whole system and brings conversations to the table faster before there's kind of a material problem or a shift in the thesis of the business that makes sense.

我們有贊助商投入了股權，因此他們可以繼續專注於自己的成長。那些類型的事情。因此，當系統因利息負擔上升而變得更加嚴格時，它會收緊整個系統，並在出現某種實質問題或有意義的業務論點轉變之前更快地進行對話。

And we always -- I think the lever that's available probably to all BDCs is (inaudible). We haven't seen that across the portfolio, but certainly, there's probably one or 2 where that has come into play (inaudible) number came down significantly from the previous quarter. So we're still at a very low level. But again, that's a lever you can utilize if companies have a short-term issue with interest coverage.

我們總是——我認為所有 BDC 都可以使用的槓桿是（聽不清楚）。我們還沒有在整個投資組合中看到這種情況，但可以肯定的是，可能有一兩個發揮作用的（聽不清楚）數字比上一季大幅下降。所以我們仍然處於一個非常低的水平。但同樣，如果公司在利息保障方面有短期問題，那麼這是一個可以利用的槓桿。

Yes. And I can't really -- I think some of the analysts have asked us questions about that view early on, like 18 months ago, like what do we expect? I can -- would have expected more (inaudible) in a rising interest rate environment than we've seen. And I think some of that is the profitability of our companies. But -- or in the sponsor's willingness to support the businesses rather than take on additional kind of interest burden on the business that -- but Michael is right.

是的。我真的不能——我認為一些分析師很早就（例如 18 個月前）就這一觀點向我們提出了問題，例如我們的預期是什麼？在利率上升的環境中，我可以預期（聽不清楚）會比我們所看到的更多。我認為其中一部分是我們公司的獲利能力。但是——或者說贊助商願意支持企業而不是承擔企業的額外利益負擔——但邁克爾是對的。

Well, also, a lot of the deals, I would say the majority of the deals that we originate, the interest coverage is well above 3 to 5x at close. So the fact that ours is 3.2 right now, it's -- and that's had degradation because of base rates, but you compare that to the syndicated market where those guys are living at 2x in a normal environment. And so they're going to get crushed a lot harder and a lot sooner than our lower middle office portfolio has or will.

嗯，還有很多交易，我想說的是我們發起的大多數交易，收盤時的利息覆蓋率遠高於 3 到 5 倍。事實上，我們現在的利率是 3.2，而且由於基本利率而有所下降，但你可以將其與那些在正常環境下以 2 倍利率生活的聯合市場進行比較。因此，與我們的中低層辦公室投資組合相比，他們將受到更嚴重、更早的打擊。

And our next question is going to come from the line of Robert Dodd with Raymond James.

我們的下一個問題將來自羅伯特·多德和雷蒙德·詹姆斯。

This is Sean-Paul Adams on the line for Robert Dodd. On the downgrades and the risk ratings in the portfolio, it looks like it was primarily driven by the nonaccruals. I'm just asking for a little bit more color on the nonaccruals. It seems like the education Phase 1 could be related to the Student Resource Center. Is that just an accreditation issue? Or is there a path forward for getting that back on accrual?

我是肖恩·保羅·亞當斯，正在接聽羅伯特·多德的電話。就投資組合的降級和風險評級而言，看起來主要是由非應計項目驅動的。我只是要求對非應計費用有更多的了解。看起來教育第一階段可能與學生資源中心有關。這只是認證問題嗎？或是有辦法讓其重新計入應計費用？

So I would summarize the challenges there as the education partner, one of the education partners that they do work with and place students in -- and there were some (inaudible) involved as well in that deal. And so it's a little bit idiosyncratic to that particular company and situation.

因此，我總結了作為教育夥伴所面臨的挑戰，他們是與他們合作並安置學生的教育合作夥伴之一，而且這筆交易中也涉及到一些（聽不清楚）。因此，對於特定的公司和情況來說，這有點特殊。

Got you. And...

明白你了。和...

The other one was Research Now, which was obviously broadly held in BDC portfolios across the board. That's when we have limited information because the first lien lenders are negotiating. It doesn't look like it's going to be a great outcome for the second lien lenders. But...

另一個是 Research Now，它顯然在 BDC 投資組合中廣泛持有。那時我們的資訊有限，因為第一留置權放款人正在談判。對於第二留置權放款人來說，這似乎不會是一個好的結果。但...

We'll end up with a small equity ownership in the business (inaudible) second lien lender probably most of these situations work out. And we will also...

我們最終將在企業（聽不清楚）第二留置權貸款人中擁有少量股權，可能大多數情況都能解決。而我們也將...

To your question, I also tell you, we just had our watch list meeting literally 2 days ago, and we went through all the list of companies and on that watch list, what we actually saw is that a lot of these companies are either stable, is slightly positive. And there is a hope. And I wouldn't say it's in the next one or 2 quarters, but where some of the nonaccrual as might have actually turned around to go back on accrual rather than seeing any of those watch list names in the near future going on nonaccrual. That's not a prediction or projection, but that's just an observation based upon the information we reviewed the other day.

對於你的問題，我還告訴你，我們兩天前剛剛召開了觀察名單會議，我們瀏覽了所有公司名單，在觀察名單上，我們實際看到的是，其中很多公司要么是穩定的，略呈正值。還有希望。我不會說這是在接下來的一兩個季度，但一些非應計項目實際上可能會轉向應計項目，而不是在不久的將來看到這些觀察名單中的任何一個名稱繼續非應計專案.這不是預測或預測，而只是基於我們前幾天審查的資訊的觀察。

Got it. Got it. That's perfect. And on the outlook for the next fiscal year, have there been any shifts in the long-term target range concerning leverage, given like changes in the forward curve. It seems like you guys just tapped the lower end of the short-term target you guys were talking about last quarter for leverage.

知道了。知道了。那很完美。關於下一財年的前景，考慮到遠期曲線的變化，有關槓桿的長期目標範圍是否有任何變化。看來你們只是利用了你們上個季度談論的短期目標的下限作為槓桿。

Yes. I mean I wouldn't say it's a change. And I think what I would tell you is that leverage is going to be probably as low as 0.8 on a regulatory basis or as high as 0.95. That's probably where our comfort level is. And we're at 0.82 at the moment.

是的。我的意思是我不會說這是一個改變。我想我要告訴你的是，監管槓桿率可能會低至 0.8，也可能高達 0.95。這可能就是我們的舒適度。目前我們的值為 0.82。

I would anticipate based on how we feel about our portfolio that we might lever that up closer to the middle of the range. But as we've shown during the course of the last few years, we're mindful of where the economy is and (inaudible) same rhythm of the economy itself.

我預計，根據我們對投資組合的看法，我們可能會將其調整至更接近範圍的中間位置。但正如我們在過去幾年中所表明的那樣，我們關注經濟的現狀以及經濟本身的（聽不清楚）節奏。

Our next question is a follow-up question with Vilas Abraham with UBS.

我們的下一個問題是瑞銀集團維拉斯亞伯拉罕 (Vilas Abraham) 的後續問題。

Just one more follow-up here. More of a high-level question. And we've talked about this a little bit before in the past. But as you guys think about the internal management structure and the flexibility it provides, can you give us any thoughts on how you might be thinking about any potential partnership (inaudible) that kind of thing?

這裡還有一個後續行動。更多的是一個高層次的問題。我們過去已經討論過這個問題。但是，當您考慮內部管理結構及其提供的靈活性時，您能否告訴我們您如何考慮任何潛在的合作夥伴關係（聽不清楚）之類的事情？

I mean that's obviously something that we've been thinking about and honestly, probably working on behind the scenes. As our portfolio has grown, our hold size can grow as well. There's a lot of deals that we share with other partners where that we could be putting -- maybe having a separate account, separately managed account, where they would be -- we manage that capital it'd be a portion of what origination we hold. That obviously would earn a fee and intent to carry.

我的意思是，這顯然是我們一直在考慮的事情，說實話，可能正在幕後進行工作。隨著我們投資組合的成長，我們的持有規模也會成長。我們與其他合作夥伴分享了很多交易，我們可以把這些交易放在哪裡——也許有一個單獨的帳戶，單獨管理的帳戶，它們會在哪裡——我們管理這些資本，這將是我們持有的起源的一部分。這顯然會賺取費用和攜帶意願。

So it would be -- honestly, it would be strategic, but it'll also be -- it would work well within what we're already doing today. So it wouldn't require us to go up balance sheet. So that is something we're considering. I think that that's kind of a -- I hear people say, (inaudible) in that -- in those ventures in order to actually meet and kind of close on a partnership. So I don't think that's a calendar year 2024 event, but we would definitely expect that, that to be something in the future that we would be able to incorporate into the balance sheet.

因此，老實說，這將是戰略性的，但它也將在我們今天已經在做的事情中發揮良好作用。所以它不需要我們增加資產負債表。所以這是我們正在考慮的事情。我認為這就是——我聽到人們說，（聽不清楚）——在這些企業中，為了真正見面並建立密切的合作關係。因此，我認為這不是 2024 年的事件，但我們肯定希望將來能夠將其納入資產負債表中。

Yes. It's an interesting opportunity for us. There's definitely institutions out there investing in our track record of our asset class, but don't want to pay above net asset value, so if they can partner with us in a fund concept and investing in some of our deals directly. It's interesting. But it's all -- those types of things are always for us. I mean we're all about the long-term shareholder returns. And candidly, there's a lot of opportunity just organically doing what we're doing and continuing to basically -- slightly higher hold sizes by sharing less of deals and as our guys get even our mid-level and they were growing up in the industry and increasing their franchise personally of relationships, it's really broadening the top end of our funnel of deals we look at.

是的。這對我們來說是一個有趣的機會。肯定有機構投資我們的資產類別記錄，但不想支付高於資產淨值的費用，因此如果他們可以與我們在基金概念上合作並直接投資我們的一些交易。這真有趣。但僅此而已——這些類型的事情總是適合我們的。我的意思是，我們都關心股東的長期回報。坦白說，有很多機會有機地做我們正在做的事情，並繼續基本上- 通過分享更少的交易來稍微提高持有規模，並且隨著我們的人員甚至達到中級水平，他們在行業中成長，並且增加他們個人的關係特許經營權，這確實拓寬了我們所關注的交易管道的頂端。

There's a lot of organic growth really in front of us. And we don't want to distract ourselves from that, but it's actually an opportunity.

我們面前確實有很多有機成長。我們不想分散自己的注意力，但這實際上是一個機會。

Thank you. And I would like to hand the conference back over to Bowen Diehl for closing remarks.

謝謝。我想將會議交還給鮑文·迪爾 (Bowen Diehl) 致閉幕詞。

Thanks, operator, and thanks for all the questions today, and we appreciate the opportunity to update you on the business. So we look forward to continuing to execute and talking to you all next quarter. Thank you.

謝謝接線員，感謝今天提出的所有問題，我們很高興有機會向您介紹業務最新情況。因此，我們期待下個季度繼續執行並與大家交談。謝謝。

This concludes today's conference call. Thank you for participating, and you may now disconnect.

今天的電話會議到此結束。感謝您的參與，您現在可以斷開連接。