Main Street Capital Corp (MAIN) 2019 Q3 法說會逐字稿

Greetings, and welcome to the Main Street Capital Corporation Third Quarter Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

您好，歡迎參加主街資本公司第三季財報電話會議。（操作員指示）謹此提醒，本次會議正在錄製中。

It is now my pleasure to introduce your host, Zach Vaughan with Dennard Lascar, Investor Relations. Thank you, Mr. Vaughan, you may begin.

現在我很高興向大家介紹主持人 Zach Vaughan 和投資者關係部丹納德拉斯卡 (Dennard Lascar)。謝謝您，沃恩先生，您可以開始了。

Thank you, operator, and good morning, everyone. Thank you for joining us for Main Street Capital Corporation's Third Quarter 2019 Earnings Conference Call. Main Street issued a press release yesterday afternoon that details the company's third quarter financial and operating results. This document is available on the Investor Relations section of the company's website at mainstcapital.com. A replay of today's call will be available beginning an hour after the completion of the call and will remain available until November 15. Information on how to access the replay was included in yesterday's release. We also advise that you -- we also advise you that this conference call is being broadcast live through the Internet and can be accessed on the company's home page. Please note that information reported on this call speaks only as of today, November 8, 2019, and therefore, you are advised that time-sensitive information may no longer be accurate at the time of replay listening or transcript reading.

謝謝接線員，大家早安。感謝您參加 Main Street Capital Corporation 2019 年第三季財報電話會議。Main Street 昨天下午發布了一份新聞稿，詳細介紹了該公司第三季的財務和營運業績。本文件可在公司網站 mainstcapital.com 的投資者關係部分取得。今天的電話會議的重播將在電話會議結束一小時後開始提供，並將持續到 11 月 15 日。有關如何存取重播的資訊已包含在昨天的發布中。我們也建議您，我們也建議您，本次電話會議正在透過網路進行現場直播，並且可以在公司主頁上進行存取。請注意，本次電話會議報告的資訊僅截至今天（2019 年 11 月 8 日），因此，請注意，時間敏感的資訊在重播或閱讀文字記錄時可能不再準確。

Today's call will contain forward-looking statements. Many of these forward-looking statements can be identified by the use of words such as anticipates, believes, expects, intends, will, should, may or similar expressions. These statements are based on management's estimates, assumptions and projections as of the date of this call, and there are no guarantees of future performance. Actual results may differ materially from the results expressed or implied in these statements 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, which can be found on the company's website or at sec.gov. Main Street assumes no obligation to update any of these statements unless required by law.

今天的電話會議將包含前瞻性陳述。許多前瞻性陳述可以透過使用諸如預期、相信、期望、打算、將、應該、可能或類似表達等詞語來識別。這些陳述是基於管理層截至本次電話會議之日的估計、假設和預測，對未來績效不提供任何保證。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列出的因素，實際結果可能與這些聲明中明示或暗示的結果有重大差異。可在公司網站或sec.gov 上找到。除非法律要求，否則 Main Street 不承擔更新任何這些聲明的義務。

During today's call, management will discuss non-GAAP financial measures, including distributable net investment income. Please refer to yesterday's press release for a reconciliation of these measures to the most directly comparable GAAP financial measures. Certain information discussed on this call, including information related to portfolio companies, was derived from third-party sources and has not been independently verified.

在今天的電話會議上，管理階層將討論非公認會計準則財務指標，包括可分配淨投資收益。請參閱昨天的新聞稿，以了解這些指標與最直接可比較的公認會計準則財務指標的調節表。本次電話會議討論的某些信息，包括與投資組合公司相關的信息，均來自第三方來源，未經獨立核實。

And now, I will turn the call over to Main Street's CEO, Dwayne Hyzak. Dwayne?

現在，我將把電話轉給 Main Street 的執行長 Dwayne Hyzak。德韋恩？

Thanks, Zach, and thank you all for joining us today. Joining me for the call today with prepared comments are David Magdol, our President and Chief Investment Officer; and Brent Smith, our CFO. Also joining us for the Q&A portion of the call are Vince Foster, our Executive Chairman; and Nick Meserve, our Managing Director and Head of our Middle Market Investment Group.

謝謝扎克，也謝謝大家今天加入我們。今天和我一起參加電話會議的還有我們的總裁兼首席投資長 David Magdol；和我們的財務長布倫特史密斯。我們的執行主席文斯福斯特 (Vince Foster) 也參加了電話會議的問答部分。 Nick Meserve，我們的董事總經理兼中間市場投資集團負責人。

On today's call, I will start by providing a recap of our overall performance in the third quarter, commenting on the performance of our investment portfolio, discussing our recent dividend announcements and other recent developments, and I will conclude by commenting on our investment activities and pipeline.

在今天的電話會議上，我將首先回顧我們第三季度的整體業績，評論我們的投資組合的業績，討論我們最近的股息公告和其他最新動態，最後我將評論我們的投資活動和管道。

Following my comments, David and Brent will provide additional comments on our financial results, our current liquidity position and certain key portfolio stats, after which we will be happy to take your questions. We are pleased with our operating results for the third quarter, a quarter during which the performance, quality and diversity of our investment portfolio and the leverage of our efficient, low-cost operating structure facilitated favorable operating performance and financial results. During the quarter, we continued to focus our efforts on sourcing transactions that are consistent with our historical investment profile and on the aspects of our business, where we have more control and influence.

在我發表評論後，大衛和布倫特將對我們的財務表現、當前流動性狀況和某些關鍵投資組合統計數據提供更多評論，之後我們將很樂意回答您的問題。我們對第三季的經營業績感到滿意，在這個季度中，我們投資組合的業績、品質和多樣性以及高效、低成本營運結構的槓桿作用促進了良好的經營績效和財務表現。在本季度，我們繼續將工作重點放在尋找符合我們歷史投資狀況的交易以及我們擁有更多控制力和影響力的業務方面。

As a result of our performance, we again generated distributable net investment income, our DNII per share in excess of our regular monthly dividends, exceeding the monthly dividends paid during the quarter by approximately 7%. We believe that the advantages of our differentiated investment strategy, diversified investment portfolio and efficient operating structure, combined with our conservative capital structure and liquidity position, have us very well positioned for continued future success.

由於我們的業績，我們再次產生了可分配的淨投資收入，每股 DNII 超過了我們的每月定期股息，超過本季度支付的每月股息約 7%。我們相信，差異化的投資策略、多元化的投資組合和高效的營運結構的優勢，加上我們保守的資本結構和流動性狀況，使我們為未來的持續成功做好了充分的準備。

Looking specifically at the performance of our investment portfolio in the third quarter. Our lower middle market portfolio appreciated by $2.7 million on a net basis, with 27 of our investments appreciating and 17 depreciating. Our lower middle market companies collectively continued to exhibit very conservative credit profiles on a relative basis, which David will cover in his comments.

具體來看我們第三季投資組合的表現。我們的中低階市場投資組合淨值增加了 270 萬美元，其中 27 項投資升值，17 項投資貶值。我們的中低端市場公司總體上繼續表現出相對而言非常保守的信用狀況，大衛將在他的評論中對此進行闡述。

Our middle market and private loan portfolios collectively depreciated by $10.7 million on a net basis, primarily due to the impact of depreciation from certain investments with specific credit issues that we have been working through in our middle market portfolio.

我們的中間市場和私人貸款投資組合淨值總共貶值了 1,070 萬美元，這主要是由於我們在中間市場投資組合中一直在解決的具有特定信貸問題的某些投資的貶值影響。

Earlier this week, our board declared our first quarter 2020 regular monthly dividends of $0.205 per share payable in each of January, February and March and amount is unchanged from our monthly dividends for the fourth quarter and representing a 5.1% increase from the first quarter of 2019.

本週早些時候，我們的董事會宣布2020 年第一季定期每月股息為每股0.205 美元，將於1 月、2 月和3 月支付，金額與第四季度的每月股息相同，較2020年第一季增加5.1%。2019.

Consistent with our prior guidance, and our previously announced plan for transitioning our semiannual supplemental dividends into our monthly dividends over several years, we also recently declared a supplemental dividend payable in December of $0.24 per share, a decrease of $0.01 from our June supplemental dividend. We continue to expect that our dividend transition will take several years with the ultimate timing of this transition impacted by the performance of our investment portfolio, the overall economy and changes in the overall interest-rate environment, and we remain confident that by the end of the transition period, we will be successful in delivering on our long-term goal of growing our total annual dividends.

根據我們先前的指導，以及我們先前宣布的將半年度補充股息轉變為未來幾年每月股息的計劃，我們最近還宣布12 月份應付的補充股息為每股0.24 美元，比6 月份的補充股息減少了0.01 美元。我們仍然預計，我們的股息過渡將需要數年時間，而這一過渡的最終時間將受到我們投資組合表現、整體經濟和整體利率環境變化的影響，我們仍然有信心到年底在過渡期內，我們將成功達成增加年度股利總額的長期目標。

Now turning to our investment activities in the quarter and our current investment pipeline. We completed lower middle market investments of approximately $25 million in the quarter. And as of today, I would characterize our lower middle market investment pipeline as above average. Our third quarter activity and our current pipeline as a result of our maintenance of a disciplined and selective approach to new investment opportunities, and we remain confident in our future ability to continue to originate new investments consistent with our historical investment profile.

現在轉向我們本季的投資活動以及我們目前的投資管道。本季我們完成了約 2500 萬美元的中低階市場投資。截至今天，我將我們的中低端市場投資管道描述為高於平均水平。我們第三季的活動和目前的管道是我們對新投資機會保持嚴格和選擇性方法的結果，我們對未來繼續發起符合我們歷史投資狀況的新投資的能力充滿信心。

In our comments over the last 2 quarters, we noted that we are experiencing increased third-party interest in several of our existing lower middle market portfolio companies and this interest resulted in 2 attractive exits in the third quarter. We believe that these ongoing activities should result in additional attractive exits over the next 2 quarters. We continued our success in focusing our non lower middle market investment portfolio growth on our private loan portfolio, with this portfolio growing by approximately $32 million on a net basis in the quarter. In addition, our middle market portfolio grew by approximately $26 million. As of today, I would characterize our private loan investment pipeline as above average.

在過去兩個季度的評論中，我們注意到第三方對我們現有的幾家中低端市場投資組合公司的興趣不斷增加，這種興趣導致第三季度出現了兩次有吸引力的退出。我們相信，這些正在進行的活動應該會在未來兩個季度帶來更多有吸引力的退出。我們繼續成功地將非中低端市場投資組合成長重點放在私人貸款組合上，該投資組合本季淨成長約 3,200 萬美元。此外，我們的中間市場投資組合成長了約 2,600 萬美元。截至今天，我認為我們的私人貸款投資管道高於平均水平。

And in closing, our Officer and Director of Group has continued to be regular purchasers of our shares, investing approximately $500,000 during the quarter and owning Main Street shares valued at over $154 million at quarter end.

最後，我們的高階主管和集團董事繼續定期購買我們的股票，在本季度投資了約 50 萬美元，並在季度末持有價值超過 1.54 億美元的 Main Street 股票。

With that, I will turn the call over to David.

這樣，我就把電話轉給大衛。

Thanks, Dwayne, and good morning, everyone. We're pleased to report another quarter during which we grew our net total investment income and distributable net investment income, while continuing to generate distributable net investment income in excess of our monthly dividends. We believe that our results illustrate the significant benefits of our unique investment strategy in the lower middle market, which, when combined with our complementary first lien debt investment strategies and our asset management activities, provide the value proposition that positively differentiates Main Street among our BDC peers. This has been demonstrated through our consistent ability to generate premium total returns for our shareholders through the growth in our dividends per share, our increased net asset value per share and our stock-price appreciation.

謝謝，德韋恩，大家早安。我們很高興地報告另一個季度，我們的淨總投資收入和可分配淨投資收入有所增長，同時繼續產生超過每月股息的可分配淨投資收入。我們相信，我們的結果說明了我們在中低端市場的獨特投資策略的顯著優勢，該策略與我們互補的第一留置權債務投資策略和我們的資產管理活動相結合，提供了使Main Street在我們的BDC 中脫穎而出的價值主張同行。我們始終有能力透過每股股息的成長、每股資產淨值的增加和股價的升值，為股東創造優質的總回報，這證明了這一點。

The primary driver of our long-term success continues to be our focus on the underserved lower middle market. We see significant benefits from investing in both the debt and the equity securities in this segment of our business. Our equity investments closely align our interest with our portfolio company management teams and allow us to share in the equity upside as our portfolio companies perform, while our first lien debt investments provide an attractive yield profile and significant downside protection.

我們長期成功的主要驅動力仍然是我們對服務不足的中低端市場的關注。我們看到投資於我們這一業務領域的債務和股本證券會帶來巨大的好處。我們的股權投資與我們的投資組合公司管理團隊的利益緊密結合，使我們能夠在投資組合公司的表現中分享股票的上漲空間，而我們的第一筆留置權債務投資提供了有吸引力的收益率狀況和顯著的下行保護。

Each quarter, we try to highlight different aspects of our unique investment strategy. This quarter, we'd like to highlight several points related to the benefit of our lower middle market investment strategy, as illustrated by several recent exits of equity investments. During 2019, we fully exited 4 of our lower middle market equity investments. All of these exits resulted in realized gains in which -- which in aggregate totaled approximately $14 million. When you compare our realized gains on these exits to the fair-value-marked 2 quarters and 4 quarters prior to exit, the actual value achieved on the exit of these investments exceeded the fair value marks by approximately 5% 2 quarters prior to exit and by over 40% 4 quarters prior to exit.

每個季度，我們都會嘗試強調我們獨特投資策略的不同面向。本季度，我們想強調與中低端市場投資策略的優勢相關的幾點，最近的幾項股權投資退出就說明了這一點。2019 年，我們全面退出了 4 項中低階市場股權投資。所有這些退出都帶來了已實現的收益，總計約 1,400 萬美元。當您將這些退出的已實現收益與退出前2 個季度和4 個季度的公允價值標記進行比較時，這些投資退出時實現的實際價值超出了退出前2 個季度的公允價值標記約5%，且退出前 4 個季度成長超過 40%。

In the third quarter of 2019, we exited 2 of our lower middle market equity investments. Both exits resulted in realized gains, with these gains totaling almost $8 million. The exit from our investment in land ventures during this past quarter generated a realized gain of approximately $6 million and a cumulative 11% internal rate of return and a 2.2x money invested on our cumulative debt and equity investments. The full exit of our equity investment in conduit during this past quarter generated realized gains over the life of the investment of $2.6 million and a cumulative 22% internal rate of return and a 2.8x money invested on our cumulative debt and equity investments.

2019 年第三季度，我們退出了 2 項中低階市場股權投資。兩次退出都帶來了已實現的收益，這些收益總計近 800 萬美元。上個季度我們退出土地投資產生了約 600 萬美元的已實現收益，累計內部收益率為 11%，累計債務和股權投資投資額為 2.2 倍。上個季度我們對管道的股權投資完全退出，在投資期間實現了 260 萬美元的已實現收益，累計內部收益率為 22%，累計債務和股權投資的投資金額為 2.8 倍。

Despite both investments experiencing volatility in profitability and valuation over our 11-year investment period, we ultimately achieved very attractive return profiles. We believe these examples support our competitive advantage of being long-term investors, participating in both the debt and the equity in our lower middle market companies and the advantage of being able to hold investments for extended periods of time despite market volatility. We also believe the related comparison of these realized gains to our prior fair value estimates are helpful when evaluating the current fair value estimates for our overall portfolio.

儘管這兩項投資在我們 11 年的投資期間都經歷了獲利能力和估值的波動，但我們最終還是取得了非常有吸引力的回報。我們相信這些例子支持了我們作為長期投資者的競爭優勢，參與中低端市場公司的債務和股權，以及儘管市場波動仍能夠長期持有投資的優勢。我們也認為，在評估我們整體投資組合的當前公允價值估計時，將這些已實現收益與我們先前的公允價值估計進行相關比較是有幫助的。

Finally, as Dwayne mentioned earlier, we continue to get inbound interest in various lower middle market companies, and we currently have several other attractive potential portfolio company exit opportunities that we hope to complete in the next 2 quarters.

最後，正如 Dwayne 之前提到的，我們繼續對各種中低端市場公司產生興趣，目前我們還有其他幾個有吸引力的潛在投資組合公司退出機會，我們希望在未來兩個季度完成。

By size and scope, our lower middle market investments are a primary driver behind both our historical NAV per share growth and our significant pretax net unrealized appreciation at September 30, contributing approximately $212 million or $3.35 per share. Our lower middle market investments also support growth in our total dividends paid to our shareholders through the dividend income we receive and the periodic realized gains upon the exit from these equity investments. In addition, the unrealized appreciation and realized gains from these equity investments provide an offset against the inevitable credit losses that will be experienced when making investments in non investment-grade debt securities.

從規模和範圍來看，我們的中低端市場投資是我們歷史每股資產淨值增長和截至9 月30 日的稅前未實現淨增值的主要驅動力，貢獻約2.12 億美元或每股3.35 美元。我們的中低端市場投資也透過我們收到的股息收入以及退出這些股權投資時的定期實現收益來支持支付給股東的股息總額的成長。此外，這些股權投資的未實現升值和已實現收益可以抵消投資非投資等級債務證券時不可避免的信用損失。

Turning back to our most recent operating result, the contributions from our lower middle market portfolio continued to be well diversified with 40 of our 67 lower middle market companies with equity investments having unrealized appreciation at quarter end. 66% of our companies that are passed through entities for tax purposes, contributed to our dividend income in the last 12 months. And our total dividend income received from our lower middle market investments was approximately $33 million during this period of time, representing a 28% compounded annual growth rate since the year ended 2017. We believe the diversity of our lower middle market portfolio is critical when analyzing the benefits from this strategy, and we believe that this diversity provides visibility to the recurring nature of these benefits in the future.

回到我們最近的經營業績，我們的中低端市場投資組合的貢獻繼續多元化，我們的 67 家股權投資公司中有 40 家在季度末出現了未實現的升值。我們 66% 的公司透過實體進行稅務處理，在過去 12 個月為我們貢獻了股息收入。在此期間，我們從中低端市場投資中獲得的總股息收入約為 3,300 萬美元，自 2017 年底以來複合年增長率為 28%。我們認為，在分析該策略的收益時，中低端市場投資組合的多樣性至關重要，並且我們相信這種多樣性可以讓人們了解這些收益在未來的重複性質。

At September 30, we had investments in 182 portfolio companies spaning across more than 50 industries. Our largest portfolio company represented 2.6% of our total investment portfolio fair value at quarter end and 4.9% of our total investment income for the last 12 months. The majority of our portfolio investments represented less than 1% of our assets and our income.

截至 9 月 30 日，我們投資了 182 家投資組合公司，涵蓋 50 多個產業。我們最大的投資組合公司佔季末總投資組合公允價值的 2.6%，佔過去 12 個月總投資收入的 4.9%。我們的大部分投資組合僅占我們資產和收入的不到 1%。

Additional details on our investment portfolio at quarter end are included in the press release that we issued yesterday, but I'll note a few highlights. Our lower middle market portfolio included investments in 68 companies representing approximately $1.2 billion of fair value, which is over 20% above our cost basis.

我們昨天發布的新聞稿中包含了季度末投資組合的更多詳細信息，但我會指出一些要點。我們的中低階市場投資組合包括對 68 家公司的投資，公允價值約為 12 億美元，比我們的成本基礎高出 20% 以上。

(technical difficulty)

（技術難度）

At the lower middle market portfolio level, the portfolio's median net senior debt-to-EBITDA ratio was a conservative 3.1:1 or 3.2:1, including portfolio company debt, which is junior in priority to our position and the total EBITDA-to-senior-interest ratio was 2.9:1.

在中低階市場投資組合層面，投資組合的淨優先債務與EBITDA 比率中位數保守為3.1:1 或3.2:1，其中包括投資組合公司債務，該債務的優先順序低於我們的部位以及EBITDA 總額。優先利率為2.9：1。

In our private loan portfolio, we had investments in 62 companies, representing approximately $630 million of fair value. And in our middle market portfolio, we had investments in 52 companies, representing approximately $550 million of fair value. The total investment portfolio at fair value at quarter end was approximately 108% of the related cost basis, and we had 7 investments on nonaccrual status, which comprised approximately 1.6% of the total investment portfolio at fair value and 4.4% at cost.

在我們的私人貸款組合中，我們對 62 家公司進行了投資，公允價值約為 6.3 億美元。在我們的中間市場投資組合中，我們投資了 52 家公司，公允價值約為 5.5 億美元。季末以公允價值計算的總投資組合約為相關成本基礎的108%，我們有7項非應計狀態的投資，約佔以公允價值計算的總投資組合的1.6%，以成本計算的投資組合約佔4.4%。

With that, I'll turn the call over to Brent to cover our financial results, capital structure and liquidity position.

接下來，我將把電話轉給布倫特，介紹我們的財務表現、資本結構和流動性狀況。

Thanks, David. We are pleased to report that our total investment income increased over the same period in 2018 to a total of $60.1 million, primarily driven by an increase in dividend income and partially offset by a decrease in fee income. The change in total investment income includes a decrease of $1.9 million related to lower levels of accelerated income for certain debt investments when compared to the third quarter of last year.

謝謝，大衛。我們很高興地報告，我們的總投資收入較 2018 年同期增加至 6,010 萬美元，這主要是由股息收入的增加所推動的，部分被費用收入的減少所抵消。總投資收入的變化包括與去年第三季相比減少了 190 萬美元，原因是某些債務投資的加速收入水平較低。

Our operating expenses, excluding noncash, share-based compensation expense, increased by $0.4 million over the same period of the prior year to a total of $18.5 million, primarily related to an increase in interest expense and partially offset by a decrease in compensation expense. The ratio of our total operating expenses, excluding interest expense, as a percentage of our average total assets was 1.2% for the third quarter on an annualized basis and 1.3% for the trailing 12-month period. The combination of our unique investment strategy and leverage of our efficient operating structure resulted in distributable net investment income of $41.6 million or $0.66 per share, which exceeded our monthly dividends paid for the quarter by approximately 7%. The activities of our external investment manager, benefited our net investment income by approximately $2.6 million through the allocation of $1.7 million of operating expenses for services we provided to it and $1 million of dividend income. We recorded a net realized loss of $5.9 million, primarily relating to the realized losses from the restructure and exit of 2 middle market investments, partially offset by realized gains relating to the exit of 2 lower middle market investments.

我們的營運費用（不包括非現金、股權激勵費用）比去年同期增加了 40 萬美元，達到 1,850 萬美元，主要與利息費用的增加有關，但部分被薪酬費用的減少所抵消。以年化計算，第三季我們的總營運費用（不含利息費用）佔平均總資產的比例為 1.2%，過去 12 個月為 1.3%。我們獨特的投資策略和高效營運結構的結合帶來了 4,160 萬美元的可分配淨投資收益，即每股 0.66 美元，比我們本季支付的月度股息高出約 7%。我們的外部投資經理的活動透過為我們提供的服務分配 170 萬美元的營運費用和 100 萬美元的股息收入，為我們帶來了約 260 萬美元的淨投資收入。我們所錄得的已實現淨虧損為590 萬美元，主要與2 項中低端市場投資的重組和退出所實現的虧損有關，部分被與2 項中低端市場投資的退出相關的已實現收益所抵消。

And as Dwayne discussed, we recorded net unrealized depreciation on the investment portfolio of $7.7 million, primarily resulting from $12.2 million of net depreciation relating to our middle market portfolio, partially offset by $2.7 million of net appreciation on our lower middle market portfolio, $1.5 million of net appreciation on our private loan portfolio and $0.8 million of appreciation relating to our external investment manager.

正如Dwayne 所討論的，我們投資組合的未實現淨折舊為770 萬美元，主要是由於與我們的中端市場投資組合相關的1220 萬美元的淨折舊，部分被我們中低端市場投資組合的270萬美元的淨升值所抵消，即150 萬美元我們的私人貸款組合的淨增值和與我們的外部投資經理相關的 80 萬美元的增值。

Our operating results for the third quarter resulted in a net increase in net assets of $33.9 million or $0.54 per share.

我們第三季的經營業績導致淨資產淨增加 3,390 萬美元，即每股 0.54 美元。

Our overall capitalization and liquidity remains strong as our total liquidity was approximately $650 million at the end of the third quarter. And as we previously discussed, following our investment-grade debt issuance in April of this year, we will reborrow under our revolving credit facility to repay the 175 million investment-grade notes that mature in December.

我們的整體資本和流動性仍然強勁，第三季末我們的流動性總額約為 6.5 億美元。正如我們之前討論的，繼今年 4 月發行投資等級債券後，我們將根據循環信貸安排進行再藉款，以償還 12 月到期的 1.75 億張投資級票據。

Due to our elevated liquidity, we were again less active under our ATM equity issuance program during the third quarter, raising approximately $9.3 million in net proceeds, with an average sale price exceeding $42 per share. As we look forward to the fourth quarter of 2019 and taking into account the impact from the recent interest rate cuts, which we estimate will have a negative impact of approximately $0.02 per share during the fourth quarter based on our floating rate loan portfolio as of September 30. We expect that we will generate distributable net investment income of $0.63 to $0.65 per share. This estimate is $0.015 to $0.035 per share or approximately 2% to 6% above our previously announced monthly dividends for the fourth quarter of $0.615 per share.

由於流動性增加，第三季我們的 ATM 股票發行計畫再次變得不那麼活躍，籌集了約 930 萬美元的淨收益，平均售價超過每股 42 美元。我們展望 2019 年第四季度，並考慮到最近降息的影響，根據截至 9 月份的浮動利率貸款組合，我們估計第四季度將產生每股約 0.02 美元的負面影響30.我們預計每股可分配淨投資收益為 0.63 美元至 0.65 美元。這項預估為每股 0.015 至 0.035 美元，比我們先前宣布的第四季每股 0.615 美元的月度股息高出約 2% 至 6%。

With that, I will now turn the call back over to the operator so we can take any questions.

現在，我將把電話轉回給接線員，以便我們回答任何問題。

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

（操作員說明）我們的第一個問題來自羅伯特·多德（Robert Dodd）和雷蒙德·詹姆斯（Raymond James）的線路。

On the lower middle market portfolio, can you give us any color on kind of growth that you're seeing? I mean, obviously, you have a lot of portfolio companies, revenue, EBITDA, anything like that in terms of trends that you're seeing there? And if there are any weaker industry areas. And then sort of semi related to that, I think the tone changed when I think last quarter your lower middle market pipeline was about average. This quarter, it's above average. Any color on what the drivers were there? And if there's any industries that have become more attractive or more active?

在中低階市場投資組合中，您能為我們介紹一下您所看到的成長嗎？我的意思是，很明顯，你有很多投資組合公司、收入、EBITDA，以及你在那裡看到的趨勢方面的類似情況？以及是否存在薄弱的產業領域。然後與此相關的是，我認為當我認為上個季度中低端市場管道處於平均水平時，基調發生了變化。本季高於平均水平。那裡的司機有什麼顏色嗎？是否有任何行業變得更具吸引力或更活躍？

Sure. Robert, I'll give a couple of comments, and I'll let David add on. I'd say when you look at the existing lower middle market portfolio, it continues to perform at a favorable level. If you look at revenue and EBITDA performance with increases or decreases at the portfolio level, I'd say, it's consistent with what it's been for a long time. So it's a continued positive performance in the actual results. I'd say if you're seeing any increased uncertainty of pessimism, it's more in the outlook. I think if you talk to a subset of our companies, particularly those that are in more cyclical industries, they're probably more pessimistic about the outlook today than they would have been 3 or 6 months ago. We just haven't seen that come through in our actual results yet to a significant extent, and the portfolio continues to perform at a positive level. Do you want to add anything to that, David, or...?

當然。羅伯特，我會發表一些評論，然後讓大衛補充。我想說，當你看看現有的中低端市場投資組合時，它繼續表現在有利的水平。如果你看看投資組合層面的收入和 EBITDA 表現的增加或減少，我想說，這與長期以來的情況是一致的。因此，這是實際結果中持續的正面表現。我想說的是，如果你看到悲觀情緒的不確定性增加，那更多的是在前景方面。我認為，如果你與我們的一部分公司交談，特別是那些處於週期性較強行業的公司，他們對今天的前景可能比 3 或 6 個月前更加悲觀。我們只是還沒有在很大程度上看到我們的實際結果得到體現，而且投資組合繼續保持積極的水平。大衛，你想補充什麼嗎，還是…？

Just to your point about the pipeline, the -- it is a lumpy business. And last year, we closed 10 portfolio company, new investments. Because they are only 10, it's lumpy in how it falls in the quarter. So at any one time, we might see more or less activity. Right now, I'd say that the pipeline, like Dwayne characterized, it's above average, and we're optimistic about closing some deals in the near term.

正如您關於管道的觀點一樣，這是一個不穩定的業務。去年，我們關閉了 10 家投資組合公司的新投資。因為他們只有 10 歲，所以本季的業績下降情況很不穩定。因此，在任何時候，我們都可能會看到或多或少的活動。現在，我想說的是，正如 Dwayne 所描述的那樣，管道高於平均水平，我們對短期內完成一些交易持樂觀態度。

Okay. Got it. And then just one more on the HMS, that if I remember right from [quarters], I think that the dividend was a little lower this quarter than it has been, was that anything related to incentive fees at HMS or anything like that, that are flowing to you and maybe paying a slightly smaller dividend this quarter, it's marginal, so...

好的。知道了。然後還有一個關於 HMS 的問題，如果我沒記錯的話，我認為本季度的股息比以往要低一些，是與 HMS 的激勵費或類似的事情相關的任何事情，正在流向你，本季度可能支付的股息略少，這是邊際的，所以......

Yes. Robert. I would say that the vast majority of that variance is all incentive fees. We had a nice incentive fee that we recognized and recorded in Q2, and that decreased on a relative basis, quarter-over-quarter in Q3.

是的。羅伯特.我想說，絕大多數差異都是獎勵費用。我們在第二季認識並記錄了一筆不錯的激勵費用，並且在第三季較上季相對下降。

(Operator Instructions) Our next question comes from the line of Bryce Rowe with National Securities.

（操作員說明）我們的下一個問題來自國家證券公司的布萊斯·羅（Bryce Rowe）。

Great. Dwayne and David, I wanted to ask about dividends within the income statement. Obviously, it's taking a nice share of total revenue, and it's been pretty consistent so far throughout 2019. You've got, from what I can tell, one company that's accounted for maybe 1/4 or 20% to 1/4 of those dividends so far this year. So I wanted to understand kind of what visibility you might have into dividend payments coming from those lower middle market equity investments? And if you can kind of foresee when you might have a shift from one company taking a relatively large portion of that dividend income to another company kind of stepping in to provide that dividend income?

偉大的。德韋恩和大衛，我想問損益表中的股息。顯然，它在總收入中佔據了很大的份額，並且整個 2019 年到目前為止一直非常穩定。據我所知，今年到目前為止，一家公司的股息可能佔了這些股息的 1/4 或 20% 到 1/4。因此，我想了解您對中低端市場股權投資的股息支付有何了解？如果你能預見到什麼時候你可能會從一家獲得相對大部分股息收入的公司轉變為另一家介入提供股息收入的公司？

Yes. Bryce, what I would say in response to the question is, as these lower middle market companies mature and delever, as long as they're continuing to perform, they naturally have more cash flow that's available for dividend or distribution purposes. So we have -- we do have 1 company that has contributed to a significant amount of dividend income in the year-to-date period, but we also have a number of companies that are contributing to dividend income on a consistent basis. And that's the thing that we really take a lot of comfort in is that, there's a group of companies that have continued to delever and perform and are now becoming consistent, meaningful contributors to our dividend income on a recurring quarterly basis, and that's what gives us a lot of comfort when we look at the portfolio as a whole and the sources of that dividend income each quarter going forward.

是的。布萊斯，我要回答這個問題的是，隨著這些中低端市場公司的成熟和去槓桿化，只要它們繼續表現，它們自然就會有更多的現金流可用於股息或分配目的。因此，我們確實有一家公司在今年迄今貢獻了大量股利收入，但我們也有許多公司持續貢獻股利收入。令我們感到非常欣慰的是，有一群公司繼續去槓桿化並表現出色，現在正成為我們每季度股息收入的持續、有意義的貢獻者，這就是我們的股息收入的來源。當我們審視整個投資在組合以及未來每季股利收入的來源時，我們感到非常安慰。

Okay. That's helpful. Maybe a question on the nonaccrual flows. Obviously, you stated total number of nonaccrual investment's at 7. I was curious if there was change within those 7 quarter-to-quarter, if you had 1 come in and 1 or 2 go out?

好的。這很有幫助。也許是關於非應計流量的問題。顯然，您所說的非應計投資總數為 7。我很好奇這 7 個季度之間是否有變化，是否有 1 個進入，1 個或 2 個退出？

Yes. That's correct. The count stayed the same but we had 1 move out and 1 move in. So Joerns was on nonaccrual at the end of last quarter, but it went through a restructuring. So it was removed from the nonaccrual list and then American Addiction Centers was added to nonaccrual during the third quarter.

是的。這是正確的。人數不變，但我們有 1 人搬出，1 人搬入。因此，喬恩斯在上個季度末屬於非應計項目，但它經歷了重組。因此，它從非應計清單中刪除，然後美國成癮中心在第三季度被添加到非應計清單中。

Okay. And then maybe one more for you, Brent. Just you made note of the lower incentive compensation accrual here in the third quarter. That pushed compensation expense down a bit quarter-over-quarter. Is that a function of weaker volumes, weaker credit quality trends, what's driving that? And any kind of forward look on what they -- what that might look like in the fourth quarter, would be helpful?

好的。布倫特，也許還有一份給你。剛剛您注意到第三季應計激勵薪酬較低。這使得薪酬支出較上月下降了一些。這是交易量疲軟、信用品質趨勢疲軟的結果嗎？是什麼推動了這個趨勢？對第四季度的情況進行任何前瞻性的展望都會有所幫助嗎？

Yes. What I would say is that there's a number of factors that contribute into the incentive fee declining. Part of it is impact of interest rates, part of it is specific names that have had performance issues, namely the nonaccrual that Brent touched on. So those are contributing factors. I think when we look forward, it's always hard to predict how much incentive-fee income you will have. I think when you look forward -- I'm sorry, the comp -- I'm sorry, all right, go ahead, I'm sorry.

是的。我想說的是，有很多因素導致獎勵費下降。部分原因是利率的影響，部分原因是存在績效問題的特定名稱，即布倫特提到的非應計利息。所以這些都是促成因素。我認為，當我們展望未來時，總是很難預測您將獲得多少獎勵費收入。我想當你展望未來時——我很抱歉，比賽——我很抱歉，好吧，繼續吧，我很抱歉。

No. That's okay. Yes.

不。沒關係。是的。

I misunderstood the question.

我誤解了這個問題。

Okay, Bryce, on the -- sorry, incentive compensation accrual. Basically, we accrue that every quarter and we look at the overall financial results. Obviously, this year, we haven't quite met our ROE target and other factors to do some middle market credit specific issues as well as lower originations in the lower middle market. So we adjust our incentive accrual each quarter based on year-to-date performance. So looking forward to the fourth quarter, ultimately it would depend how the fourth quarter shakes out and how the full year shakes out. Generally speaking, I would expect our compensation level, it might be a little bit higher than the third quarter, but it should not be materially higher.

好的，布萊斯，關於－－抱歉，應計獎勵薪酬。基本上，我們每季都會累積這些數據，然後我們會查看整體財務表現。顯然，今年我們還沒有完全達到我們的淨資產收益率目標和其他因素來處理一些中端市場信貸特定問題以及中低端市場的較低起源。因此，我們每季都會根據年初至今的業績調整我們的激勵措施。所以展望第四季度，最終還是要看第四季和全年的情況如何。總的來說，我預計我們的薪資水平可能會比第三季高一點，但不會大幅提高。

This concludes today's question-and-answer session. I'd like to turn the call back to management for closing remarks.

今天的問答環節到此結束。我想將電話轉回給管理階層，讓其結束語。

We just want to thank everyone for joining us today, and we look forward to talking to everyone again in late February.

我們只是想感謝大家今天加入我們，我們期待在二月下旬再次與大家交談。

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.

女士們、先生們，今天的電話會議到此結束。感謝您的參與。此時您可以斷開線路，度過美好的一天。