Fidus Investment Corp (FDUS) 2024 Q3 法說會逐字稿

Good day and welcome to the Fidus third-quarter 2024 earnings conference call. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Ms. Jody Burfening. Please go ahead, ma'am.

大家好，歡迎參加 Fidus 2024 年第三季財報電話會議。（操作員指示）請注意，此事件正在被記錄。現在，我想將會議交給喬迪·伯芬寧女士。請繼續，女士。

Thank you, Chuck, and good morning, everyone. And thank you for joining us for Fidus Investment Corporation's third-quarter 2024 earnings conference call. With me this morning are Ed Ross, Fidus Investment Corporation's Chairman and Chief Executive Officer; and Shelby Sherard, Chief Financial Officer.

謝謝你，查克，大家早安。感謝您參加 Fidus Investment Corporation 2024 年第三季財報電話會議。今天早上與我一起的還有 Fidus Investment Corporation 的董事長兼執行長 Ed Ross；以及財務長謝爾比·謝拉德（Shelby Sherard）。

Fidus Investment Corporation issued a press release yesterday afternoon with the details of the company's quarterly financial results. A copy of the press release is available on the Investor Relations page of the company's website at fdus.com.

Fidus Investment Corporation 昨天下午發布了一份新聞稿，詳細介紹了該公司的季度財務表現。新聞稿副本可在公司網站 fdus.com 的投資者關係頁面上查閱。

I'd also like to call your attention to the customary safe harbor disclosure regarding forward-looking information included on today's call. Conference call today will contain forward-looking statements including statements regarding the goals, strategies, beliefs, future potential, operating results, and cash flows of Fidus Investment Corporation.

我還想提請大家注意今天電話會議中包含的有關前瞻性資訊的常規安全港披露。今天的電話會議將包含前瞻性聲明，包括有關 Fidus Investment Corporation 的目標、策略、信念、未來潛力、經營績效和現金流的聲明。

Although management believes these statements are reasonable based on estimates assumptions and projections as of today, November 1, 2024, these statements are not guarantees of future performance. Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay. Actual results may differ materially as a result of risks, uncertainties, and other factors including but not limited to the factors set forth in the company's filings with the Securities and Exchange Commission. Fidus undertakes no obligation to update or revise any of the forward-looking statements.

儘管管理層認為這些聲明是基於截至 2024 年 11 月 1 日的估計假設和預測是合理的，但這些聲明並不能保證未來的表現。任何電話或網路廣播重播時，時間敏感資訊可能不再準確。由於風險、不確定性和其他因素（包括但不限於公司向美國證券交易委員會提交的文件中所述的因素），實際結果可能存在重大差異。Fidus 不承擔更新或修改任何前瞻性陳述的義務。

With that, I would now like to turn the call over to Ed. Good morning, Ed.

說完這些，我現在想把電話轉給艾德。早上好，艾德。

Good morning, Jody, and good morning, everyone. Welcome to our third-quarter 2024 earnings conference call. On today's call, I'll start with a review of our third-quarter performance and our portfolio at quarter end, and then share with you our outlook for the remainder of 2024. Shelby will cover the third quarter financial results in our liquidity position. After we have completed our prepared remarks, we'll be happy to take your questions.

早安，喬迪，大家早安。歡迎參加我們的 2024 年第三季財報電話會議。在今天的電話會議上，我將首先回顧我們第三季度的業績和季度末的投資組合，然後與大家分享我們對 2024 年剩餘時間的展望。謝爾比將在我們的流動性狀況中介紹第三季的財務表現。在我們完成準備好的演講後，我們將很樂意回答您的問題。

Despite lighter investment activity levels overall during the third quarter, we continue to build our portfolio through a combination of our strong relationships with deal sponsors; industry knowledge, and investment expertise in the lower middle market. Our debt portfolio, which has grown 20% over the past 12 months, generated record interest income of $33.7 million and continued to amply cover our base dividend.

儘管第三季整體投資活動水準較低，但我們仍透過與交易發起人建立牢固的關係來建立我們的投資組合；行業知識以及中低端市場的投資專業知識。我們的債務組合在過去 12 個月中增長了 20%，產生了創紀錄的 3,370 萬美元的利息收入，並繼續充分覆蓋我們的基本股息。

Through our strategy of selectively investing in high caliber companies that generate high levels of free cash flow have defensive characteristics and positive long-term outlooks. We continue to build a healthy and high-performing portfolio.

透過我們的策略，選擇性地投資那些能產生高水準自由現金流、具有防禦性特徵和積極長期前景的高素質公司。我們將持續打造健康、高效的投資組合。

At quarter end, net asset value stood at $658.8 million, 11.8% higher than net asset value of $589.5 million as of December 31, 2023. On a per share basis, that asset value was $19.42 per share at quarter end compared to $19.37 per share as of December 31, 2023.

截至季末，淨資產價值為 6.588 億美元，比 2023 年 12 月 31 日的淨資產價值 5.895 億美元高出 11.8%。以每股計算，該資產價值在季度末為每股 19.42 美元，截至 2023 年 12 月 31 日為每股 19.37 美元。

Before I start my review of our performance for the quarter, I am pleased to report that the SBA has approved our new SBIC license effective on the last day of the quarter, September 30, 2024. Adjusted net investment income for the quarter grew 12.3% to $20.4 million compared to $18.2 million last year, primarily reflecting higher interest and fee income for the quarter, along with a onetime dividend income lift.

在我開始回顧本季的業績之前，我很高興地報告，SBA 已批准我們的新 SBIC 許可證，該許可證將於本季度最後一天（2024 年 9 月 30 日）生效。本季調整後的淨投資收入從去年的 1,820 萬美元增長 12.3% 至 2,040 萬美元，主要反映了本季利息和費用收入的增加，以及一次性股息收入的增加。

On a per share basis, adjusted net investment income was $0.61 per share compared to $0.68 per share for the same period last year, which also reflects the higher average share count from ATM issuances. Adjusted NII per share amply covered the base dividend of $0.43 per share for the quarter. In addition, we paid a $0.14 per share supplemental dividend for a total dividend to shareholders of $0.57 per share. For the fourth quarter of 2024, the Board of Directors declared dividends totaling $0.61 per share consisting of a base dividend of $0.43 per share and a supplemental dividend of $0.18 per share, equal to 100% of the surplus and adjusted NII over the base dividend from the prior quarter, which will be payable on December 27, 2024, to stockholders of record as of December 17, 2024.

以每股計算，調整後的淨投資收益為每股 0.61 美元，而去年同期為每股 0.68 美元，也反映了 ATM 發行的平均股數較高。調整後的每股 NII 足以覆蓋本季每股 0.43 美元的基本股息。此外，我們還支付了每股 0.14 美元的補充股息，向股東支付的總股息為每股 0.57 美元。2024 年第四季度，董事會宣布派發股息總計每股 0.61 美元，包括基本股息每股 0.43 美元和補充股息每股 0.18 美元，相當於上一季度基本股息盈餘和調整後 NII 的 100%，將於 2024 年 12 月 27 日支付給截至 2024 年 12 月的股東。

Originations totaled $65.9 million for the third quarter, including $38.1 million in three new portfolio companies. The remaining $27.8 million in follow-on investment activity reflects a combination of portfolio company acquisitions and refinancings.

第三季的投資總額為 6,590 萬美元，其中包括對三家新投資組合公司的 3,810 萬美元。剩餘的 2,780 萬美元後續投資活動反映了投資組合公司收購和再融資的結合。

Debt investments totaled $62.7 million, the vast majority of which were in first-lien securities. Equity investments totaled $3.2 million, of which $2.3 million -- sorry, $3.2 million, of which $2.3 million was invested in three new portfolio companies. We continue to structure our debt investments with a high degree of equity cushion, which gives us a margin of safety, while our equity investments give us the potential for enhanced returns.

債務投資總額為 6,270 萬美元，其中絕大部分為優先留置權證券。股權投資總額為 320 萬美元，其中 230 萬美元——對不起，是 320 萬美元，這其中的 230 萬美元投資於三家新的投資組合公司。我們繼續以高度的股權緩衝來建立我們的債務投資，這為我們提供了安全邊際，而我們的股權投資則為我們提供了提高回報的潛力。

As expected, repayments were a larger portion of deal activity during the third quarter compared to the first half of the year. Proceeds from repayments and realizations totaled $50.8 million for the third quarter, including $8.6 million in proceeds from the monetization of equity investments. We've mentioned on previous calls this year that a number of our portfolio companies were evaluating strategic alternatives and that accounted for three of the exits this quarter.

正如預期的那樣，與上半年相比，第三季的還款佔交易活動的比重更大。第三季的償還和變現收益總計 5,080 萬美元，其中包括 860 萬美元的股權投資貨幣化收益。我們在今年之前的電話會議上提到，我們的一些投資組合公司正在評估策略替代方案，這佔本季退出的三家公司。

Subsequent to quarter end, we invested $21.1 million in first-lien debt and common equity in two new portfolio companies and received $18.5 million in proceeds from the exit of debt investments in two portfolio companies.

季度末之後，我們向兩家新的投資組合公司投資了 2,110 萬美元的優先債務和普通股，並從兩家投資組合公司的債務投資退出中獲得了 1,850 萬美元的收益。

Our portfolio stood at $1.1 billion on a fair value basis as of September 30, 2024, equal to 101.5% of cost and consisting of a debt portfolio totaling $959.4 million and an equity portfolio of $131.3 million at quarter end. With first-lien investments accounting for nearly all of debt originations for the third quarter, this security accounted for 73% of debt investments on a fair value basis at quarter end. We ended the quarter with 85 active portfolio companies. Overall, our portfolio remains healthy with sound credit quality and a well-positioned equity portfolio.

截至 2024 年 9 月 30 日，我們的投資組合以公允價值計算為 11 億美元，相當於成本的 101.5%，包括季末總額為 9.594 億美元的債務投資組合和 1.313 億美元的股票投資組合。由於第一個留置權投資佔第三季債務發起的幾乎所有份額，因此以公允價值計算，該證券在季末佔債務投資的 73%。截至本季度，我們共有 85 家活躍的投資組合公司。整體而言，我們的投資組合依然健康，信貸品質良好，股票投資組合定位良好。

Furthermore, the portfolio is structured to absorb losses through net realized gains on equity investments over the long term. As an example, in the third quarter, we realized a loss on a debt investment that was nearly offset by a realized gain on an equity investment for a net realized loss of $0.4 million. For the first nine months of this year, we've realized net gains of $10.6 million, well in excess of any realized losses, extending our track record of generating enhanced returns.

此外，此投資組合的結構是透過長期股權投資的淨實現收益來吸收損失。例如，在第三季度，我們實現了債務投資損失，但幾乎被股權投資的實現收益所抵消，淨實現損失為 40 萬美元。今年前九個月，我們實現了 1,060 萬美元的淨收益，遠遠超過任何已實現的損失，延續了我們創造高回報的記錄。

Nonaccruals on a fair value basis were unchanged from the first and second quarters of the year and remained under 1% for the third quarter. For the remainder of the year, we expect a modest yearend uptick in M&A activity levels, in other words, another quarter of reasonable investment activity. Having said that, as some portfolio companies are still evaluating strategic alternatives, we do still expect to see a higher level of repayments in the last quarter of the year.

以公允價值計算的不提費用與今年第一季和第二季相比沒有變化，第三季仍低於 1%。對於今年剩餘時間而言，我們預計年底併購活動水準將小幅上升，換句話說，又一個季度的投資活動將較為合理。話雖如此，由於一些投資組合公司仍在評估策略替代方案，我們仍然預計今年最後一個季度的還款水準會更高。

New originations may outpace repayments as they did in the third quarter. As we evaluate investment opportunities, we continue to apply our strict underwriting standards to investment selection, focusing on strong cash flow-generating businesses with resilient business models and positive long-term outlooks.

正如第三季的情況一樣，新發放貸款可能超過還款額。在評估投資機會時，我們繼續將嚴格的承保標準應用於投資選擇，並專注於具有強大現金流產生能力、業務模式靈活且長期前景樂觀的企業。

Our goal is to maintain a healthy portfolio that produces both high levels of current and recurring income and the potential for incremental returns from monetizing equity investments. Adhering to both our investment strategy and underwriting disciplines will enable us to stay focused on our long-term goals of generating attractive risk adjusted returns for our shareholders and growing net asset value over time.

我們的目標是維持一個健康的投資組合，既能產生高水準的當前收入和經常性收入，又能從股權投資貨幣化中獲得增量回報的潛力。堅持我們的投資策略和承保紀律將使我們能夠專注於我們的長期目標，即為股東創造有吸引力的風險調整回報並隨著時間的推移增加淨資產價值。

Now I'll turn the call over to Shelby to provide some details on our financial and operating results. Shelby?

現在我將把電話轉給謝爾比，提供有關我們的財務和營運表現的一些詳細資訊。謝爾比？

Thank you, Ed, and good morning, everyone. I'll review our third-quarter results in more detail and close with comments on our liquidity position. Please note I will be providing comparative commentary versus the prior quarter Q2 2024.

謝謝你，艾德，大家早安。我將更詳細地回顧我們第三季的業績，並對我們的流動性狀況發表評論。請注意，我將提供與 2024 年第二季相比的比較評論。

Total investment income was $38.4 million for the three months ended September 30, a $2.7 million increase from Q2 primarily driven by a $1.2 million increase in fee income, of which approximately $0.8 million was an increase in prepayment fees. In addition, we had a $1 million increase in dividend income related to the distribution from one of our equity investments.

截至 9 月 30 日的三個月的總投資收入為 3,840 萬美元，較第二季增加 270 萬美元，主要由於費用收入增加 120 萬美元，其中約 80 萬美元是預付費用的增加。此外，與我們的一項股權投資分配相關的股息收入增加了 100 萬美元。

Total expenses including income tax provision were $17 million for the third quarter, $1.7 million lower than Q2 driven primarily by a $2.4 million decrease in the capital gains fee accrual, offset by $1.1 million increase in base management fees and $1.5 million increase in income incentive fees.

第三季包括所得稅準備金在內的總支出為 1,700 萬美元，比第二季減少 170 萬美元，主要原因是資本利得費用減少 240 萬美元，但基本管理費增加 110 萬美元以及收入激勵費增加 150 萬美元。

Net investment income or NII for the three months ended September 30, was $0.64 per share, versus $0.53 per share in Q2. Adjusted NII, which excludes any capital gains incentive fee accruals or reversals, attributable to realized and unrealized gains and losses on investments, was $0.61 per share in Q3 versus $0.57 in Q2, which includes the increase in weighted average shares outstanding in Q3. For three months ended September 30, we recognized approximately $0.4 million of net realized losses primarily related to a $5.4 million realized loss on the exit of our debt investments in [Trelix], offset by a $5 million realized gain on the sale of our equity investment in Gurobi Optimization.

截至 9 月 30 日的三個月的淨投資收益或 NII 為每股 0.64 美元，而第二季為每股 0.53 美元。調整後的 NII（不包括任何資本利得激勵費用應計或逆轉，歸因於投資的已實現和未實現損益）第三季度為每股 0.61 美元，而第二季度為每股 0.57 美元，其中包括第三季度加權平均流通股數的增加。截至 9 月 30 日的三個月內，我們確認了約 40 萬美元的淨已實現損失，主要與退出 [Trelix] 債務投資的 540 萬美元已實現損失有關，但出售對 Gurobi Optimization 的股權投資所獲的 500 萬美元已實現收益抵消了這一損失。

We ended the quarter with $479 million of debt outstanding comprised of $175 million of SBA debentures, $250 million of unsecured notes, $40 million outstanding on the line of credit, and $14 million of secured borrowings. Our debt to equity ratio as of September 30, was 0.7 times or 0.5 times statutory leverage, excluding exempt SBA debentures. The weighted average interest rate on our outstanding debt was 4.6% as of September 30.

截至本季末，我們的未償債務為 4.79 億美元，其中包括 1.75 億美元的 SBA 債券、2.5 億美元的無擔保票據、4,000 萬美元的信用額度未償還金額以及 1,400 萬美元的有擔保借款。截至 9 月 30 日，我們的負債權益比率為法定槓桿的 0.7 倍或 0.5 倍（不包括豁免的 SBA 債券）。截至 9 月 30 日，我們未償還債務的加權平均利率為 4.6%。

Now turning to portfolio statistics as of September 30. Our total investment portfolio had a fair value of $1.1 billion. Our average portfolio company investment on a cost basis was $12.6 million, which excludes investments in five portfolio companies that sold their operations are in the process of winding down. We have equity investments in approximately 83.3% of our portfolio companies with average fully diluted equity ownership of 3.6%.

現在來看看截至 9 月 30 日的投資組合統計數據。我們總投資組合的公平價值為 11 億美元。我們對投資組合公司的平均投資（以成本為基礎）為 1,260 萬美元，其中不包括對已出售業務並處於清盤過程中的五家投資組合公司的投資。我們對投資組合中約 83.3% 的公司進行了股權投資，平均完全稀釋股權持股比例為 3.6%。

Weighted average effective yield on debt investments was 13.8% as of September versus 14% at the end of Q2. The weighted average yield is computed using effective interest rates for debt investments at cost, including the accretion of original issue discount and loan origination fees but excluding investments on nonaccrual, if any.

截至 9 月份，債務投資的加權平均有效收益率為 13.8%，而第二季末為 14%。加權平均收益率是使用債務投資的實際利率按成本計算的，包括原始發行折扣和貸款發放費用的累積，但不包括非應計投資（如果有）。

Now, I'd like to briefly discuss our available liquidity. In Q3, we issued approximately 1.7 million shares at an average price of $20.01 per share, generating $14.1 million in net proceeds. As of September 30, our liquidity and capital resources included cash of $54.4 million and $100 million of availability on our line of credit, resulting in total liquidity of approximately $154.4 million.

現在，我想簡單討論一下我們的可用流動性。第三季度，我們以每股 20.01 美元的平均價格發行了約 170 萬股，產生了 1,410 萬美元的淨收益。截至 9 月 30 日，我們的流動性和資本資源包括 5,440 萬美元的現金和 1 億美元的可用信用額度，總流動性約為 1.544 億美元。

Further, as Ed mentioned, the SBA has approved our request for a new SBIC license, giving us access to $175 million in additional SBA debentures subject to regulatory requirements and conditions.

此外，正如 Ed 所提到的，SBA 已經批准了我們申請新的 SBIC 許可證的申請，使我們能夠根據監管要求和條件獲得價值 1.75 億美元的額外 SBA 債券。

Now I turn the call back to Ed for concluding comments.

現在我將電話轉回給 Ed，請他發表最後評論。

Thanks, Shelby. As always, I'd like to thank our team and the Board of Directors at Fidus for their dedication and hard work and our shareholders for their continued support. I will now turn the call over to Chuck for Q&A. Chuck?

謝謝，謝爾比。像往常一樣，我要感謝我們團隊和 Fidus 董事會的奉獻和辛勤工作，以及我們股東的持續支持。現在我將把電話轉給查克進行問答。查克？

(Operator Instructions) Robert Dodd, Raymond James.

（操作員指示）羅伯特·多德、雷蒙德·詹姆斯。

Hi. I'm looking at the outlook, that's about Q4, right? I mean, you said -- you still gave some pretty good color on that, but are you seeing any increase in -- early stage? I mean, if you see a new deal approach today, it's not closing this year, obviously. So, well, probably not.

你好。我正在看前景，大約是第四季度，對嗎？我的意思是，你說過 - 你仍然對此給出了相當好的定義，但是你是否看到 - 早期階段有任何增長？我的意思是，如果你今天看到一項新的交易，那麼顯然它不會在今年完成。所以，很可能不是。

How's the early-stage indicators looking for '25? Because I mean, we've heard from several BDCs now. They're pushing their expectations from a strong end of the year to a strong 2025. Is that consistent with what you're seeing in early-stage opportunities or is that just too early to tell?

25 年的早期指標看起來怎麼樣？因為我的意思是，我們現在已經聽到了幾個 BDC 的聲音。他們將對今年年底強勁成長的期望延後至 2025 年。這是否與您在早期階段看到的機會一致，還是現在說還為時過早？

Great question, Robert. I wish I knew the answer to that one in a definitive manner. What I would say, what we're seeing in the market today, be candid, quality continues to be hit or miss, Q3 deal flow has been decent, M&A activity from our perspective is still relatively lackluster in nature, but we are seeing your typical Q4 uptick this quarter. And then, obviously, competition is relatively robust as you well know.

很好的問題，羅伯特。我希望我能明確地知道這個問題的答案。我想說的是，坦白說，就我們今天在市場上看到的情況來看，質量仍然時好時壞，第三季度的交易量還不錯，從我們的角度來看，併購活動的性質仍然相對低迷，但我們看到本季度第四季度出現了典型的上漲。顯然，正如你們所知，競爭相對激烈。

So for us, we are seeing -- we expect Q4 to be a pretty active investment quarter relative to Q3, for instance. And we do have an uptick going on right now. We are very hopeful that 2025 will be much more robust from an M&A perspective. And that's our expectation but we're not really seeing that yet. I think it's too early to tell from our perspective.

因此對我們來說，我們看到——例如，我們預計第四季相對於第三季將是一個相當活躍的投資季度。我們現在確實正在經歷一個上升趨勢。我們非常希望 2025 年從併購角度來看會更加強勁。這是我們的期望，但我們還沒有真正看到這一點。我認為從我們的角度來看現在下結論還為時過早。

Got it. Thank you. Yeah, that is helpful.

知道了。謝謝。是的，這很有幫助。

On the competitive side, I mean spreads, I mean, it's been a theme, obviously, compressing spreads. But the biggest -- for the one of the new platform ones that you put on, I looked it up, I mean, the spreads on the first lien on that are right in line with your overall average spread the first-lien portfolio for everything on board before. So, I mean, has spread compression -- is it still there? Has it stabilized? Can you give us any color on that? Is there any increasing momentum on spread compression in areas of the market that maybe you stayed away from or any color on that?

從競賽方面來說，我的意思是利差，顯然壓縮利差是一個主題。但最大的——對於您所推出的新平台之一，我查了一下，我的意思是，第一留置權的利差與您之前所推出的所有產品的總體平均第一留置權投資組合利差一致。那麼，我的意思是，擴散壓縮 - 它還存在嗎？穩定了嗎？您能給我們一些詳細資訊嗎？在您可能避開的市場領域中，價差壓縮的動能是否正在增強？ 或對此有何影響？

Sure. It's a great question. And as you know, it has moved over the last 12 to 18 months in a meaningful way depending on the quality of the credit, right, anywhere from 50 to, let's say, 150 basis points. We are -- it's not accelerating from our perspective. No, but it's a pretty tight spread.

當然。這是一個很好的問題。如你所知，在過去的 12 到 18 個月裡，它根據信貸品質發生了顯著變化，從 50 個基點到 150 個基點不等。從我們的角度來看，它並沒有加速。不，但是價差相當小。

If I look at the third quarter, obviously, our overall yields were at 13.8%, which is down 20 basis points. And I think that comes from net originations generally being a little bit lower. So our new originations were at 13.2%. And those are variable rate loans. So they will come down a little bit from there, but also our repayments were 13.4% on average. So that gives you a little sense of what is going on in the market today. But definitely, there's plenty of competition. I don't know that I see it going down in a material manner from where we are. I would hope not and expect not, quite frankly. But it is competitive, and that's just kind of the state of the market.

如果我看第三季度，顯然我們的整體收益率為 13.8%，下降了 20 個基點。我認為這是因為淨發起額通常略低。因此我們的新發起率為 13.2%。這些都是浮動利率貸款。因此它們會從那裡稍微下降，但我們的平均還款額是 13.4%。這可以讓您稍微了解當今市場的狀況。但可以肯定的是，競爭非常激烈。從我們現在的情況來看，我不知道它是否會以物質方式下降。坦白說，我希望不會，也不期望不會。但競爭是激烈的，這就是市場的現況。

Got it. Thank you. And then the last one, if I can. I mean, it would not take in amendment fees, the score about $400,000, not huge. But I mean, is there anything we should read into that? I mean, are those normal course amendments or anything -- because obviously, your credit qualities very good. [Medicals] have moved. You haven't had a new medical since the beginning of last year. But is this a sign that with amendments, there's any indicators on the horizon?

知道了。謝謝。如果可以的話，這是最後一個。我的意思是，它不會收取修改費，金額大約是 40 萬美元，不是很多。但我的意思是，我們該解讀一下其中的涵義嗎？我的意思是，這些都是正常的課程修正還是其他什麼——因為顯然您的信用品質非常好。 [醫護人員]已調動。從去年年初以來，您還沒有接受過新的體檢。但這是否表明，隨著修正案的出台，前景將有任何跡象？

Well, it's interesting. It was a pretty healthy fee quarter, some from prepayments, right? That was a big number, I think, $800,000, if I'm not mistaken. Shelby can correct me, if so.

嗯，很有趣。這是一個相當健康的費用季度，有些來自預付款，對嗎？我認為這是一個很大的數字，如果我沒記錯的話，是 80 萬美元。如果是這樣的話，謝爾比可以糾正我。

That's correct.

沒錯。

And then, amendments also, which I think just speaks to the level of activity. You know, we've got 85 portfolio companies in terms of debt investments in their high 60s. And it's a very active portfolio. So with regards to amendments or acquisitions, what have you, there are different occurrences that are driving that.

然後還有修正案，我認為這只是說明了活動的水平。您知道，我們有 85 家投資組合公司的債務投資額高達 ​​60 億多美元。這是一個非常活躍的投資組合。因此，關於修改或收購，有不同的事件推動著這一點。

What I would say is we have an active portfolio. So there's just a lot going on. In terms of credit quality, I think we feel good about it but as there's always some companies that are exceeding expectations and some that are underperforming. And we have been in a high-interest rate environment. We are in a -- from a geopolitical perspective and other issues, there is a higher-risk level out there. And so it's -- we're weathering those storms as well.

我想說的是，我們擁有活躍的投資組合。所以有很多事情發生。就信用品質而言，我認為我們對此感覺良好，但總有一些公司超出預期，而有些公司表現不佳。我們一直處於高利率環境。從地緣政治角度和其他問題來看，我們面臨的風險程度更高。所以，我們也正在經歷這些風暴。

Overall, the economy feels pretty good, overall. But there are pockets of softness, if you think about the consumer discretionary purchases are down, you think about manufacturing industrial companies. And those are, I'd say, areas -- there are areas within those markets that are softer in nature, not recessionary and that's not what we're seeing but definitely softer. So there are things to work through as a result. And so that's part of it. Overall, we feel good about it, but there are things to work through.

整體而言，經濟情勢整體良好。但也存在一些疲軟的領域，如果你想到可自由支配的消費者購買力下降，你就會想到製造工業公司。我想說，這些是——這些市場中的一些領域本質上是比較疲軟的，不是衰退的，而且這不是我們所看到的，但肯定是比較疲軟。因此，還有一些事情需要解決。這就是其中的一部分。總體而言，我們對此感覺良好，但仍有一些事情需要解決。

Paul Johnson, KBW.

保羅·約翰遜，KBW。

Yeah. Good morning. Thanks for taking my questions. So on the -- congrats on the SBIC approval. For timing on issuing on that license, how are you thinking about that? Would you be able to start ramping on that license and showing some debentures, maybe possibly buying a little time next year to act on tapping the unsecured market?

是的。早安.感謝您回答我的問題。所以 — — 恭喜 SBIC 獲得批准。對於該許可證的發放時間，您是如何考慮的？您是否可以開始擴大該許可證並展示一些債券，也許可能在明年爭取一些時間來開拓無擔保市場？

Sure, great question. Shelby, do you want to take that one?

當然，這個問題問得好。謝爾比，你想拿那個嗎？

Sure. I think the punch line is you're right. It does give us access to additional debt capital. So it buys us time. We don't have a need to tap the secured debt markets. I mean, opportunistically, it's something we could consider with some heftier repayments coming down the pike. But back to the SBA program, for Q4, we're obviously looking for eligible investments. We'll need to fund the first several with equity capital contributed from the parents. So I wouldn't expect to see a lot of borrowing on the SBA debentures here in Q4, but it does set us up in the first half of next year to start expanding our debt capital stack with additional SBA debentures.

當然。我認為妙處在於你是對的。它確實使我們能夠獲得額外的債務資本。因此這為我們贏得了時間。我們沒有必要利用有擔保債務市場。我的意思是，從機會主義的角度來看，這是我們可以考慮的事情，因為一些更高的還款即將來臨。但回到 SBA 計劃，對於第四季度，我們顯然正在尋找合格的投資。我們需要利用父母注入的股本為前幾個孩子提供資金。因此，我預計第四季度不會出現大量的 SBA 債券借款，但這確實為我們在明年上半年開始透過額外的 SBA 債券擴大我們的債務資本堆疊做好了準備。

Thanks for that. That's very helpful. And then maybe just higher level, I mean, how would you describe -- I mean, credit is stable obviously this quarter. It's positive. But how would you describe quarter over quarter or maybe just generally this year the migration of credit or company performance in the portfolio?

謝謝。這非常有幫助。然後可能只是更高的水平，我的意思是，你會如何描述 - 我的意思是，本季度信貸顯然是穩定的。這是積極的。但是您如何描述季度環比變化情況，或總體上如何描述今年投資組合中的信貸或公司表現的變化？

Sure, it's a great, question. But I'd say company performance, it's been generally healthy this year. This quarter, if I look at just let's say growth in EBITDA, it's up, but it's really flattish in nature. I think 45% of our portfolio companies in the core lower middle market grew EBITDA this quarter, so a little bit less robust than others. And that's, I think, reflective of a little bit slower economic environment, if you will.

當然，這是一個很好的問題。但我想說，今年公司的業績大致上是健康的。本季度，如果我只看 EBITDA 的成長，它是上升的，但本質上實際上是持平的。我認為，我們投資組合中位於核心中低端市場的公司中，有 45% 的公司本季實現了 EBITDA 成長，因此其成長勢頭略遜於其他公司。我認為這反映出經濟環境略微放緩，如果你願意的話。

And then when I think about credit, I think there are those companies that maybe have been in the portfolio for a little while and dealing with underperformance type situations. Interest rates are still relatively high. And in those cases, there are things to work through. And so we feel really good about our portfolio and the positioning of the portfolio, but we're not immune to issues and things we got to work through. And so we are -- and so I would say in those cases, there's been some migration towards maybe issues to navigate and deal with relative to nine months ago.

然後，當我考慮信貸時，我認為這些公司可能已經在投資組合中存在了一段時間，並且正在應對業績不佳的情況。利率仍然相對較高。在這些情況下，有一些事情需要解決。因此，我們對我們的投資組合和投資組合的定位感到非常滿意，但我們也無法免受需要解決的問題和事情的影響。所以我想說，在這些情況下，與九個月前相比，可能需要解決和處理的問題有所轉變。

But overall, I still think it's a very sound and solid credit portfolio and a very, very healthy equity portfolio. So we feel good about things. But clearly, there's stuff to work through as always, quite frankly.

但總體而言，我仍然認為這是一個非常穩健且堅固的信貸投資組合和一個非常非常健康的股票投資組合。因此，我們對事物感覺良好。但坦白說，顯然，像往常一樣，還有一些工作需要解決。

I appreciate the answer. They're very helpful. And I'm also just curious on maybe kind of one trend in the market, at least one, in the larger end of the market you're seeing, more examples of secondaries transactions and such. I mean, has that been anything that you've seen, I guess, in the lower middle market with private equity, secondary fund, sort of interest in portfolio companies that any sort of potential option there for perhaps more exit activity in the portfolio?

我很感激你的回答。他們非常有幫助。我也很好奇市場上可能存在的趨勢，至少在你所看到的較大的市場中，有更多二級交易的例子等等。我的意思是，我想，您是否看到過在中低端市場中私募股權、二級基金對投資組合公司產生興趣，是否存在任何潛在的選擇，或許可以在投資組合中進行更多的退出活動？

I want to make sure I understand your question. You're talking about just refinancing, generally speaking, of our existing portfolio companies or --?

我想確認我理解了你的問題。你說的只是一般意義上的我們現有投資組合公司的再融資，或者--？

Or more on for the equity co-investments. In the past, you've done at least one transaction where you've sold a sleeve of companies to another investor. So I'm just curious if there's anything similar to that or secondary fund interest as well in the market? Anything that you've seen.

或更多地了解股權共同投資。過去，您至少進行過一次交易，將一些公司出售給另一位投資者。所以我只是好奇市場上是否有類似的東西或二級基金利益？任何你見過的事物。

Got you. Got you. The answer to that is, from our perspective, I don't -- we aren't planning on a transaction like that in the near future and not working on one at all. We do, having said that, feel very good about our equity portfolio. And we also -- and think it's, in some cases, mature and right for activity over the next, whether it's 3, 6, or 12 months in som. And it's a portfolio that's been built over time and so some companies are further along than others. But it's a big part of our strategy, kind of a 90% debt, 10% equity. And I think on a cost basis, we have 8% equity today. But it's well positioned for episodic, is what I would say, events and realizations.

明白了。明白了。答案是，從我們的角度來看，我們沒有計劃在不久的將來進行這樣的交易，而且根本沒有在進行這樣的交易。話雖如此，我們確實對我們的股票投資組合感到非常滿意。而且我們也認為，在某些情況下，它已經成熟，適合在接下來的 3 個月、6 個月或 12 個月內進行活動。這是一個隨著時間的推移而建立起來的投資組合，因此有些公司比其他公司走得更遠。但這是我們策略的重要組成部分，大概是 90% 為債務，10% 為股權。我認為以成本計算，我們今天擁有 8% 的股權。但我想說的是，它非常適合情節性事件和實現。

So that's probably how I would answer that. I don't think we're looking to sell a bunch of them on a proactive basis. We're more doing it on a -- kind of, as transactions take place. Hopefully, that gets to your question, I think.

這可能就是我的回答。我認為我們不會主動出售大量產品。我們更多是在交易發生時這樣做。我希望這能解答你的問題。

Bryce Rowe, B Riley.

布萊斯·羅，B·萊利。

Thanks a lot. Good morning.

多謝。早安.

Good morning, Bryce.

早上好，布萊斯。

Ed, maybe first just I want to hit on the concept of some of the portfolio companies exploring strategic processes. You noted that three of the exits in the third quarter were the result of that. Have you seen more portfolio companies, I guess, step up to the plate to explore those processes. And maybe give us an update in terms of three or there more out there continuing to go through that process? Just trying to get a feel for what kind of churn we might get within the portfolio.

艾德，也許首先我只想談談一些投資組合公司探索策略流程的概念。您注意到第三季的三次退出都是由此造成的。我想，您是否看過更多的投資組合公司站出來探索這些流程？能否請您向我們介紹一下還有哪三位或更多人正在繼續進行這項流程？只是想了解我們可能會在投資組合中遭遇什麼樣的流失。

Sure. Sure. It's a great question. And what I'd say, I mean, I think, going back to last quarter, I think we had seven or eight companies that we were exploring at that time. Obviously, three have transacted. I don't know if we've had a bunch of new additions, but some of these processes were early on and so they're kind of taking place as we speak.

當然。當然。這是一個很好的問題。我想說的是，回顧上個季度，我們當時正在探索七、八家公司。顯然，有三人已經完成交易。我不知道我們是否有了許多新內容，但其中一些流程還處於早期階段，因此它們正在我們說話的時候進行。

Not sure what will transpire this quarter versus next and which ones will kind of not transpire, which happens as well. But it is -- I think, it gives you a sense that in the lower middle market, there continues to be activity from an M&A perspective. It's just not at robust levels. But we do expect some churn in the portfolio and we also do expect quite frankly some refinancing of some of our debt investments. So when I think about kind of portfolio growth, I think it's going to be an active new investment quarter, it's going to be active within our portfolio as well, which -- and then it'll be active from a realization and repayment perspective. And it's kind of hard to handicap whether we'll grow the portfolio or not, just given the level of activity on both ends of the coin, if that makes sense.

不確定本季和下個季度會發生什麼以及哪些不會發生，這也會發生。但我認為，這讓你感覺到，從併購的角度來看，中低階市場仍在持續活躍。只是還沒有達到強勁的水平。但我們確實預期投資組合會出現一些波動，而且坦白說，我們也確實預期部分債務投資會進行再融資。因此，當我考慮投資組合成長時，我認為這將是一個活躍的新投資季度，它在我們的投資組合中也將活躍，從實現和償還的角度來看它將是活躍的。而且，考慮到硬幣兩端的活動水平，我們很難判斷我們是否會擴大投資組合，如果這說得通的話。

Okay. Yeah, that's helpful. There was some discussion around the yield compression quarter over quarter; not a not a big surprise to see that. I was kind of curious; of the 20 basis point of yield compression, how much was that tied to spread compression and how much of it was tied to the drop in SOFR that we saw in the third quarter?

好的。是的，這很有幫助。有關於季度環比收益率壓縮的一些討論；看到這一幕並不奇怪。我有點好奇；在殖利率壓縮的 20 個基點中，有多少與利差壓縮有關，有多少與我們在第三季看到的 SOFR 下降有關？

Yeah, I mean, I'll give a quick answer. Shelby wants to add on. The quick answer is very little was tied to SOFR. Most of those resets, if you will, take place early in the fourth quarter in October, so very little took place. And so it is really just the fact that we had new originations at lower rates, and in that -- but though, it was comparable to what the repayments were.

是的，我的意思是我會快速回答。謝爾比想要補充。簡單的回答是，很少有內容與 SOFR 掛鉤。大多數重置都發生在十月初的第四季度，因此重置很少。所以事實上我們以較低的利率獲得了新的貸款，儘管如此，它還是與償還金額相當。

Yeah. Okay. Maybe last one for me and we've talked about credit within the portfolio, stable nonaccruals, as Robert mentioned, nothing added for quite some time. I did notice, I guess, that a change in the internal risk ratings with more three rated credits this quarter versus last. Anything to add there, relative to that and especially relative to what you've already said here on the call. I mean, you might have already exhausted it and explained it, but just curious if there's anything else to read into that.

是的。好的。也許對我來說這是最後一個了，我們討論了投資組合中的信貸、穩定的不計提費用，正如羅伯特所提到的，相當長一段時間內沒有增加任何費用。我想，我確實注意到，本季的內部風險評級與上季相比發生了變化，增加了三個評級信用。與此相關，特別是與您在通話中已經說過的內容相關，還有什麼需要補充的嗎？我的意思是，你可能已經窮盡並解釋過了，但只是好奇是否還有其他內容可以解讀。

I don't know that there's anything to read into it other than I do think we've obviously got a mature portfolio and there's -- there are ups and downs that take place all the time in every portfolio company. And so we did have a couple additions to the Grade III portfolio. And for us, that means that there's underperformance relative to expectations, and probably, the risk has gone up.

我不知道這還有什麼可解讀的，除了我認為我們顯然有一個成熟的投資組合，並且每個投資組合公司總是會有起伏。因此，我們確實對三級投資組合進行了一些補充。對我們來說，這意味著業績表現低於預期，而且風險可能已經上升。

Overall, the risk in our portfolio, as a portfolio. we feel really good about. I think loan to values are still in the low 40%s. I think they're at 42% or so. So we feel great overall, but you always have idiosyncratic issues within a portfolio. And we're -- and that's what I see. I don't see -- it's not economic driven, really. It's just you have issues within a specific portfolio company that you got to work through. And so risk levels are elevated a little bit as a result.

整體而言，作為一個投資組合，我們的投資組合存在風險。我們感覺非常好。我認為貸款價值比仍然在 40% 以下。我認為這個比例是 42% 左右。因此，我們整體感覺很好，但投資組合中總是會存在一些特殊問題。我們——這就是我所看到的。我看不出來——實際上這不是由經濟驅動的。只是你在特定的投資組合公司內部遇到了一些問題，需要你去解決。因此風險等級會因此略有上升。

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Ed Ross, our CEO. Please go ahead for any closed remarks, sir.

我們的問答環節到此結束。我想將會議交還給我們的執行長艾德·羅斯先生。先生，如果還有任何閉門言論，請繼續發言。

Thank you, Chuck, and thank you, everyone, for joining us this morning. We look forward to speaking with you on our fourth-quarter call in early March 2025. Have a great day and a great weekend.

謝謝你，查克，也謝謝大家今天早上加入我們。我們期待在 2025 年 3 月初的第四季度電話會議上與您交談。祝您有個愉快的一天和週末。

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。