MSC Income Fund Inc (MSIF) 2025 Q2 法說會逐字稿

Greetings and welcome to the MSC Income Fund's second-quarter earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Zach Vaughan. Thank you, Mr. Vaughan, you may begin.

大家好，歡迎參加 MSC Income Fund 第二季財報電話會議。（操作員指示）提醒一下，本次會議正在錄音。現在我很高興介紹您的主持人 Zach Vaughan。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 MSC Income Fund's second-quarter earnings conference call. Joining me today with prepared comments are Dwayne Hyzak, Chief Executive Officer; David Magdol, President and Chief Investment Officer; Nick Meserve, Managing Director and Head of the Private Credit Investment Group; Cory Gilbert, Chief Financial Officer. MSC Income Fund issued a press release yesterday afternoon that details the Fund's second quarter financial and operating results. This document is available on the Investor Relations section of the Fund's website at mscincomefund.com.

謝謝接線員，大家早安。感謝您參加 MSC Income Fund 第二季財報電話會議。今天與我一起發表準備好的評論的有執行長 Dwayne Hyzak、總裁兼首席投資長 David Magdol、董事總經理兼私人信貸投資集團負責人 Nick Meserve 和財務長 Cory Gilbert。MSC Income Fund 昨天下午發布了一份新聞稿，詳細介紹了該基金第二季度的財務和營運表現。文件可在基金網站 mscincomefund.com 的投資者關係部分查閱。

A replay of today's call will be available beginning an hour after the completion of the call and will remain available until August 21. Information on how to access the replay was included in yesterday's earnings release. We also advise you that this conference call is being broadcast live through the Internet and can be accessed on the Fund's homepage. Please note that information reported on this call speaks only as of today, August 14, 2025, and therefore, you are advised that any time-sensitive information may no longer be accurate at the time of any replay listening.

今天的電話會議重播將在電話會議結束後一小時開始提供，並將持續提供至 8 月 21 日。有關如何存取重播的資訊已包含在昨天的收益報告中。我們也建議您，本次電話會議將透過網路進行現場直播，您可以在基金主頁上觀看。請注意，本次通話中報告的資訊僅截至今天（2025 年 8 月 14 日），因此，請注意，任何時間敏感資訊在重播收聽時可能不再準確。

Today's call may 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.

今天的電話會議可能包含前瞻性陳述。許多前瞻性陳述可以透過預期、相信、期望、打算、將、應該、可能或類似表達來識別。這些聲明是基於管理層截至本次電話會議之日的估計、假設和預測，並不能保證未來的表現。

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 Fund's filings with the Securities and Exchange Commission, which can be found on the Fund's website or at sec.gov. MSC Income Fund assumes no obligation to update any of these statements unless required by law. During today's call, management will discuss net asset value or NAV and return on equity or ROE.

由於風險、不確定性和其他因素，包括但不限於基金向美國證券交易委員會提交的文件中所述的因素，實際結果可能與這些聲明中明示或暗示的結果有重大差異，這些因素可在基金網站或sec.gov上查閱。除非法律要求，MSC Income Fund 不承擔更新任何這些聲明的義務。在今天的電話會議中，管理層將討論淨資產價值或 NAV 和股本回報率或 ROE。

NAV is defined as total assets minus total liabilities and is also reported on a per share basis. MSC Income Fund defines ROE as the net increase in net assets resulting from operations divided by the average quarterly NAV. As previously announced, the Fund effectuated a 2-for-1 reverse stock split on December 16, 2024. All per share amounts, share data and related information discussed on today's call reflect the effect of the reverse stock split. Please note that certain information discussed on this call, including information related to portfolio companies, was derived from third-party sources and has not been independently verified.

NAV 定義為總資產減去總負債，也是以每股報告。MSC Income Fund 將 ROE 定義為營運產生的淨資產淨增加額除以平均季度 NAV。如先前所宣布的，該基金於 2024 年 12 月 16 日實施了 2 比 1 的反向股票分割。今天電話會議上討論的所有每股金額、股票數據和相關資訊都反映了反向股票分割的影響。請注意，本次電話會議討論的某些資訊（包括與投資組合公司相關的資訊）來自第三方來源，尚未經過獨立核實。

And now I'll turn the call over to MSC Income Fund's CEO, Dwayne Hyzak.

現在我將把電話轉給 MSC Income Fund 的執行長 Dwayne Hyzak。

Thanks, Zach. Good morning, everyone, and thank you for joining us for the MSC Income Fund second quarter conference call. We appreciate your participation on this morning's call and we hope that everyone is doing well. On today's call, Nick, David, Cory and I will provide you with the Fund's key quarterly updates, after which we'll be happy to take your questions. We are pleased with the Fund's performance in the second quarter, which resulted in a return on equity of 9% and favorable net investment income per share.

謝謝，扎克。大家早安，感謝大家參加 MSC 收入基金第二季電話會議。我們感謝您參加今天早上的電話會議，並希望每個人都一切順利。在今天的電話會議上，尼克、大衛、科里和我將向您提供基金的主要季度更新，之後我們很樂意回答您的問題。我們對該基金第二季的表現感到滿意，其股本回報率為 9%，每股淨投資收益良好。

We believe that the second quarter results provide visibility to the opportunity for continued favorable performance in the future, with the potential for increased net investment income and shareholder dividends as we work to expand the Fund's investment portfolio over the next several quarters. We remain confident that the Fund's increased current liquidity and path to additional debt capacity obtained through the Fund's successful listing and related equity offering earlier this year, together with the change in the Fund's investment strategy to be solely focused on its private loan strategy for investments in new portfolio companies, will strengthen the Fund's ability to deliver attractive recurring total dividends and favorable total returns to the Fund's shareholders in the future.

我們相信，第二季的業績為未來繼續保持良好表現提供了機會，隨著我們努力在未來幾季擴大基金的投資組合，淨投資收益和股東紅利有可能增加。我們仍然相信，透過今年稍早基金成功上市和相關股票發行，基金當前的流動性得到增強，並獲得了額外的債務能力，加上基金的投資策略轉變為僅專注於投資新投資組合公司的私人貸款策略，將增強基金在未來為基金股東提供有吸引力的經常性總股息和有利的總回報的能力。

The Fund generated NII per share of $0.35 in the quarter after excise tax and NII related income taxes of $0.02 per share, or $0.37 on a pretax NII basis, which Cory will discuss in more detail. This favorable performance gave us the confidence to recommend that our Fund's Board of Directors declare a regular quarterly dividend of $0.35 per share and a supplemental quarterly dividend of $0.01 per share, which I'll discuss in more detail later. The Fund finished the quarter with an NAV per share of $15.33, which Cory will also discuss in more detail.

該基金在本季扣除消費稅和每股 0.02 美元的 NII 相關所得稅後，每股 NII 產生 0.35 美元，或稅前 NII 產生 0.37 美元，Cory 將對此進行更詳細的討論。這一良好表現使我們有信心建議基金董事會宣布每股 0.35 美元的定期季度股息和每股 0.01 美元的補充季度股息，稍後我將詳細討論。該基金本季的每股資產淨值為 15.33 美元，Cory 也將對此進行更詳細的討論。

While we are pleased with the Fund's recent results, we continue to believe that the Fund has the opportunity to increase its ROE in the future through several post-listing changes and activities, including the favorable changes to the Fund's fee structure which among other changes provides for additional future contractual reductions in the Fund's annual base management fee percentage as the Fund's lower middle market investments decrease as a percentage of the Fund's total investment portfolio. The listing also provided the Fund the opportunity to expand its utilization of debt capital, and we believe gives the Fund the opportunity to achieve a lower cost of capital in the future.

雖然我們對基金近期的業績感到滿意，但我們仍然相信，基金有機會透過上市後的幾項變革和活動在未來提高其淨資產收益率，包括對基金費用結構的有利變化，除其他變化外，隨著基金中低端市場投資在基金總投資組合中所佔比例的下降，基金年度基本管理費百分比未來將進一步合約性費用降低。此次上市也為該基金提供了擴大債務資本利用的機會，我們相信這將為該基金未來實現更低的資本成本提供機會。

Although, we continue to be encouraged by the favorable overall performance of most of the Fund's portfolio companies, as noted on our call last quarter and as Nick will discuss in more detail, we have experienced underperformance in certain of our private loan portfolio companies, and this is having a negative impact on the contributions from the Fund's private loan portfolio. We continue to actively monitor these investments and are working with the portfolio companies to achieve the best possible outcome for each investment.

儘管我們繼續對基金大多數投資組合公司良好的整體表現感到鼓舞，但正如我們在上個季度的電話會議上所指出的以及 Nick 將更詳細地討論的那樣，我們的某些私人貸款投資組合公司表現不佳，這對基金私人貸款投資組合的貢獻產生了負面影響。我們將繼續積極監控這些投資，並與投資組合公司合作，以實現每項投資的最佳結果。

Now turning to investment activity. The Fund's private loan investment activity in the quarter was slower than the expected normal quarterly activity, primarily due to lower overall levels of private equity, industry, investment activity, resulting in a net decrease in private loan investments of $30 million, which Nick will cover in more detail. Despite the slower-than-expected private loan activity in the quarter, we remain confident in our ability to grow this portfolio in the future with the Fund's additional liquidity and capital availability. The Fund increased its lower middle market investment portfolio in the quarter by $16 million as a result of several investments in existing portfolio companies.

現在轉向投資活動。本季基金的私人貸款投資活動低於預期的正常季度活動，主要原因是私募股權、行業、投資活動的整體水平較低，導致私人貸款投資淨減少 3000 萬美元，Nick 將對此進行更詳細的介紹。儘管本季私人貸款活動低於預期，但我們仍然有信心，憑藉基金的額外流動性和資本可用性，我們有能力在未來擴大這項投資組合。由於對現有投資組合公司進行了幾項投資，該基金在本季將其中低端市場投資組合增加了 1,600 萬美元。

The Fund remains highly focused on deploying the liquidity achieved through the recent equity offering and the corresponding increase in available debt capacity into new private loan investments, maximizing the benefits from the Fund's legacy lower middle market investment portfolio and recycling existing capital into private loan investments as investments are exited or repaid. In addition to the Fund's focus on deploying its current liquidity, at the end of January 2026, the Fund will achieve expanded regulatory leverage capacity, effectively doubling the Fund's current regulatory leverage limit and providing the Fund the opportunity to deploy additional capital into new private loan investments, further grow its investment portfolio and achieve the benefits of a reduced base management fee percentage.

該基金仍然高度注重將透過最近的股票發行和相應增加的可用債務能力獲得的流動性部署到新的私人貸款投資中，最大限度地發揮基金遺留的中低端市場投資組合的收益，並在投資退出或償還時將現有資本回收到私人貸款投資中。除了基金專注於部署其現有流動性之外，到2026年1月底，基金將實現擴大監管槓桿能力，有效地將基金當前的監管槓桿限額翻一番，並為基金提供機會將額外資本部署到新的私人貸款投資中，進一步擴大其投資組合併獲得降低基本管理費百分比的好處。

Based upon the Fund's results for the quarter, we are pleased that we are in a position to recommend that the Fund's Board of Directors declare a regular quarterly dividend of $0.35 per share and a supplemental quarterly dividend of $0.01 per share, both of which are payable on October 31 to shareholders of record as of September 30. Going forward, the Fund expects to continue to maintain a dividend policy that provides for its total quarterly dividends, which are expected to include a regular quarterly dividend and a supplemental quarterly dividend, to be set at an amount in line with the Fund's pretax NII.

根據基金本季的業績，我們很高興能夠建議基金董事會宣布每股 0.35 美元的常規季度股息和每股 0.01 美元的補充季度股息，這兩項股息均將於 10 月 31 日支付給截至 9 月 30 日登記在冊的股東。展望未來，該基金預計將繼續維持一項股息政策，即其季度股息總額（預計將包括定期季度股息和補充季度股息）將與基金的稅前 NII 保持一致。

As such, we expect to recommend that our Board continue to declare future supplemental quarterly dividends to the extent the Fund's pretax NII exceeds its regular quarterly dividends paid in future quarters. Based upon the most recently declared regular and supplemental quarterly dividends and the current stock price, the Fund is currently providing its shareholders a dividend yield of approximately 10%. As the Fund executes its transition to a private loan-only investment strategy and investment portfolio and optimizes its use of leverage, our goal is for the Fund to increase the total dividends paid to shareholders in the future.

因此，我們預計建議董事會繼續宣布未來的補充季度股息，只要基金的稅前 NII 超過其未來季度支付的常規季度股息。根據最近宣布的定期和補充季度股息以及當前股價，該基金目前為其股東提供約 10% 的股息收益率。隨著基金向僅私人貸款的投資策略和投資組合過渡並優化其槓桿率的使用，我們的目標是讓基金在未來增加向股東支付的總股息。

As we look forward to the Fund's near-term investment activities, given the continued slower overall private equity industry investment activities, I would characterize the private loan investment pipeline at slightly below average. Despite this lower market environment, we continue to have a positive view of the current investment opportunities and we remain confident in our ability to generate attractive new private loan investment opportunities in the future and grow the Fund's investment portfolio over the next several quarters.

展望基金的近期投資活動，鑑於整體私募股權產業投資活動持續放緩，我認為私人貸款投資管道略低於平均水準。儘管市場環境較低，我們仍然對當前的投資機會持積極態度，並且我們仍然相信我們有能力在未來創造有吸引力的新的私人貸款投資機會，並在未來幾季擴大基金的投資組合。

My last comment is a reminder on the continued support the Fund has received from Main Street Capital Corporation. Since Main Street's wholly-owned subsidiary was appointed the sole adviser to the Fund in October 2020, Main Street has purchased over $21 million of equity in the Fund, over $4 million of which was purchased as part of the Fund's public equity offering in January.

我的最後一則評論是提醒大家該基金將繼續獲得 Main Street Capital Corporation 的支持。自 2020 年 10 月 Main Street 的全資子公司被任命為該基金的唯一顧問以來，Main Street 已購買了該基金超過 2,100 萬美元的股權，其中超過 400 萬美元是作為該基金 1 月份公開發行股票的一部分購買的。

In conjunction with the offering, Main Street also entered into an open market share purchase plan to purchase up to $20 million of the Fund's shares for a 12-month period beginning in March 2025 at times if and when the Fund's shares are trading at predetermined levels below the Fund's NAV per share, with the terms of such plan being identical to the Fund's open market share repurchase plan to purchase up to $65 million of the Fund shares, and with any open market share purchases being split by the Fund and Main Street on a pro rata basis. We believe Main Street's significant equity ownership in the Fund and its participation in the post-listing share purchase plan demonstrates Main Street's commitment to the future success of the Fund and reinforces Main Street's confidence in the strength and quality of the Fund's investment portfolio and investment strategy.

配合此次發行，Main Street 還簽訂了一項公開市場股份購買計劃，從 2025 年 3 月開始的 12 個月內，當基金股份的交易價格低於基金每股資產淨值 (NAV) 的預定水平時，Main Street 將購買價值高達 2000 萬美元的股份基金，該計劃的條款與市場購買基金Main Street 依比例分割。我們相信，Main Street 在該基金中的大量股權及其參與上市後股票購買計劃表明了 Main Street 對該基金未來成功的承諾，並增強了 Main Street 對該基金投資組合和投資策略的實力和質量的信心。

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

說完這些，我會把電話轉給尼克。

Thanks, Dwayne, and good morning. As Dwayne highlighted in his remarks, we are pleased with the performance of the Fund's private loan investment portfolio in the second quarter. The overall operating performance for most of the Fund's private loan portfolio companies continue to be positive, which contributed to the Fund's favorable second quarter financial results.

謝謝，德韋恩，早安。正如德韋恩在演講中所強調的那樣，我們對基金第二季私人貸款投資組合的表現感到滿意。基金大部分私募貸款投資組合公司整體經營績效持續向好，為基金第二季財務表現的良好發展做出了貢獻。

The Fund has continued to see softness in certain private loan portfolio companies, particularly those with consumer exposure, and we are working on maximizing recoveries on those specific investments over the next few years. We have been and continue to work with the private equity owners and management teams of the Fund's private loan portfolio companies to understand their current tariff exposures and mitigation plans.

該基金持續看到某些私人貸款投資組合公司（尤其是那些涉及消費者業務的公司）表現疲軟，我們正致力於在未來幾年內最大限度地回收這些特定投資。我們一直並將繼續與基金私人貸款投資組合公司的私募股權所有者和管理團隊合作，以了解他們當前的關稅風險和緩解計劃。

Based upon those discussions and activities to date and the overall diversity of the private loan portfolio, we are comfortable with the Fund's estimated tariff exposure. The largest portion of the Fund's investments continues to be in its private loan strategy, which as a reminder is now the Fund's sole focus with respect to new portfolio company investments. At quarter-end, 93% of private loan portfolio was comprised of secured debt investments, over 99% of which were first lien and 97% of which were floating rate loans.

根據迄今為止的討論和活動以及私人貸款組合的整體多樣性，我們對該基金估計的關稅風險感到滿意。該基金的最大投資部分仍在其私人貸款策略中，提醒一下，這現在是該基金在新的投資組合公司投資方面的唯一關注點。截至季末，93% 的私人貸款組合由擔保債務投資組成，其中超過 99% 為第一留置權貸款，97% 為浮動利率貸款。

The portfolio had an attractive weighted average yield of 11.5%, which was down 50 basis points from the end of 2024, primarily as a result of decreases in the SOFR rates for these floating-rate debt investments. During the second quarter, the Fund invested $44 million in the private loan portfolio, which after aggregate investment activity resulted in a net decrease of $30 million.

該投資組合的加權平均收益率為 11.5%，頗具吸引力，較 2024 年底下降了 50 個基點，主要原因是這些浮動利率債務投資的 SOFR 利率下降。第二季度，該基金向私人貸款組合投資了 4,400 萬美元，經過整體投資活動後，淨減少了 3,000 萬美元。

The Fund ended the second quarter with investments in 82 private loan portfolio companies, totaling $742 million at fair value and representing 60% of the Fund's total investment portfolio at fair value. As Dwayne mentioned, our private loan pipeline is below average at the moment. As we all know, M&A activity overall, and especially within the private equity industry, has been lower than historical averages and the market's general expectations. While we expect activity to pick up in the second half of the year, we have also expected this activity to have been busier in the first half of the year.

截至第二季末，該基金已投資於 82 家私人貸款組合公司，以公允價值計算，投資總額達 7.42 億美元，佔該基金總投資組合的 60%。正如德韋恩所提到的，我們目前的私人貸款管道低於平均水平。眾所周知，整體併購活動，尤其是私募股權產業的併購活動，低於歷史平均值和市場普遍預期。雖然我們預計下半年活動將會回升，但我們也預計上半年活動會更加繁忙。

Another reason for the Fund's lower investment activity has been market pricing on new deals. A portion of the market we focus on, the lower end of the middle market, has come in some over the last two quarters of 2025, and as a result, we missed out on a few opportunities. The good news is we are not seeing other terms become more aggressive on transactions, and we are encouraged that we have closed a few deals since quarter-end and are starting to see the pipeline build.

該基金投資活動減少的另一個原因是新交易的市場定價。我們關注的市場部分，即中端市場的低端，在 2025 年的最後兩個季度已經出現了一些成長，因此，我們錯過了一些機會。好消息是，我們沒有看到其他條款對交易變得更加激進，我們很高興看到自季度末以來我們已經完成了幾筆交易，並且開始看到管道建設。

With that, I'll turn the call over to David.

說完這些，我會把電話轉給大衛。

Thanks, Nick, and good morning, everyone. In addition to the private loan portfolio that Nick just covered, the Fund also maintains a portfolio of legacy lower middle market investments. As a reminder, these are combined debt and equity investments in smaller, privately-held companies whereby the Fund partnered directly with the company's existing business owners and management team through co-investments with Main Street Capital Corporation, utilizing the customized one-stop shop debt and equity financing solutions provided by Main Street's lower middle market investment strategy.

謝謝，尼克，大家早安。除了尼克剛剛提到的私人貸款組合之外，該基金還持有一系列傳統的中低階市場投資組合。提醒一下，這些是對規模較小的私人控股公司的債務和股權組合投資，其中該基金透過與 Main Street Capital Corporation 共同投資，直接與公司現有的企業主和管理團隊合作，利用 Main Street 的中低端市場投資策略提供的定制一站式債務和股權融資解決方案。

After the listing of the Fund's shares on the New York Stock Exchange at the end of January, the Fund will not make any investments in new lower middle market portfolio companies, but will continue to participate in follow-on investments in existing lower middle market portfolio companies. We are pleased to report that the overall operating performance for most of the Fund's lower middle market portfolio companies continues to be positive, which contributed to the attractive second quarter financial results. These contributions included both strong dividend income and continued fair value appreciation. Despite the continued heightened level of concern and uncertainty in the overall economy, we remain confident in the ability of the Fund's lower middle market portfolio companies to continue to navigate the current climate.

基金股票於1月底在紐約證券交易所上市後，基金將不再對新的中低階市場投資組合公司進行任何投資，但將繼續參與對現有中低階市場投資組合公司的後續投資。我們很高興地報告，該基金的大多數中低階市場投資組合公司的整體經營業績持續保持良好，這有助於實現第二季的良好財務表現。這些貢獻包括強勁的股息收入和持續的公允價值升值。儘管整體經濟的擔憂和不確定性持續加劇，但我們仍然相信該基金的中低端市場投資組合公司有能力繼續應對當前的環境。

During the second quarter, the Fund had follow-on investment activity related to its existing lower middle market investments, which resulted in a net increase in the lower middle market portfolio of $15.9 million. At quarter-end, the lower middle market portfolio had investments in 57 portfolio companies totaling $458 million at fair value and representing 37% of the Fund's total investment portfolio. The lower middle market portfolio at fair value was comprised of 54% debt investments and 46% equity investments. These debt investments had an attractive weighted average yield of 13%, consistent with the prior year, and over 99% were first lien loans. The Fund had equity ownership positions in all of its lower middle market portfolio companies, representing a 9% average ownership position.

第二季度，該基金對現有的中低階市場投資進行了後續投資活動，導致中低階市場投資組合淨增加 1,590 萬美元。截至季末，中低端市場投資組合對 57 家投資組合公司進行了投資，以公允價值計算，投資總額達 4.58 億美元，佔該基金總投資組合的 37%。以公平價值計算的中低端市場投資組合由 54% 的債務投資和 46% 的股權投資組成。這些債務投資的加權平均收益率為 13%，與去年持平，其中 99% 以上為第一留置權貸款。該基金在所有中低端市場投資組合公司中均擁有股權，平均持股比例為 9%。

We expect these investments will continue to provide significant benefits in the future, including the opportunity for continued dividend income, fair value appreciation and eventually, meaningful realized gains upon the future exit of these lower middle market portfolio companies. Turning to the Fund's total investment portfolio as of June 30, the Fund continued to maintain a highly diversified portfolio with investments in 147 portfolio companies spanning across numerous industries and end markets. The Fund's largest portfolio companies represented less than 4% of the total investment portfolio fair value at quarter-end and less than 3.5% of total investment income for the trailing 12 months ended June 30, with most portfolio investments representing less than 1% of the Fund's income and assets.

我們預計這些投資將在未來繼續帶來顯著的收益，包括持續的股息收入、公允價值升值的機會，以及最終在這些中低端市場投資組合公司未來退出時實現的有意義的收益。回顧截至 6 月 30 日的基金總投資組合，該基金繼續保持高度多元化的投資組合，投資於 147 家投資組合公司，涵蓋眾多行業和終端市場。該基金最大的投資組合公司在季度末佔投資組合總公允價值的不到 4%，在截至 6 月 30 日的過去 12 個月中佔總投資收入的不到 3.5%，大多數投資組合投資佔基金收入和資產的不到 1%。

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

說完這些，我會把電話轉給科里。

Thank you, David, and thank you to everyone who has joined us today. The Fund's total investment income for the second quarter was $35.6 million, an increase of $1.7 million or 5% from the second quarter of 2024, and 7.3% higher compared to the first quarter.

謝謝你，大衛，也謝謝今天加入我們的每個人。該基金第二季的總投資收益為 3,560 萬美元，比 2024 年第二季增加 170 萬美元或 5%，比第一季增加 7.3%。

Second quarter included income considered less consistent or non-reoccurring in nature of $0.9 million. As we previously discussed, these non-reoccurring items vary quarter-to-quarter and can include dividend income from equity investments and interest and fee income from accelerated prepayment, repricing and other activity related to debt investments. For the second quarter, these items were $0.1 million lower than the average of the prior four quarters, $0.7 million lower than the second quarter of 2024 and consistent with the first quarter.

第二季的收入被認為不太穩定或非經常性，為 90 萬美元。正如我們之前所討論的，這些非經常性項目每季都會有所不同，包括來自股權投資的股息收入以及來自加速預付款、重新定價和其他與債務投資相關的活動的利息和費用收入。對於第二季度，這些項目比前四個季度的平均值低 0.1 百萬美元，比 2024 年第二季度低 0.7 百萬美元，與第一季持平。

Dividend income for the second quarter increased by $0.9 million from a year ago and decreased by $0.2 million from the first quarter. The increase in dividend income from prior year was primarily due to an increase in dividends from lower middle market and private loan equity investments. The decrease in dividend income from the first quarter was due to a decrease in dividends from lower middle market equity investments. As we've previously discussed, dividend income will fluctuate quarter-to-quarter based on the underlying performance, cash flows and capital allocation activities of the Fund's portfolio companies. Interest income increased by $0.5 million from the second quarter of 2024 and by $1.9 million from the first quarter.

第二季股利收入較去年同期增加 90 萬美元，較第一季減少 20 萬美元。股息收入較前一年增加主要是由於中低端市場和私募貸款股權投資的股息增加。第一季股息收入的減少是由於中低端市場股權投資的股息減少。正如我們之前所討論的，股息收入將根據基金投資組合公司的基本績效、現金流量和資本配置活動而逐季度波動。利息收入比 2024 年第二季增加了 50 萬美元，比第一季增加了 190 萬美元。

The increase from prior year was primarily due to higher average levels of income producing investment portfolio debt investments, partially offset by an increase in investments on nonaccrual status and a decrease in the interest rates on floating-rate debt investments primarily resulting from decreases in benchmark index rates. The increase in interest income from the first quarter was primarily due to higher average levels of income producing investment portfolio debt investments, primarily driven by investments made late in the first quarter.

與前一年相比的成長主要是由於產生收益的投資組合債務投資的平均水平較高，但部分被非應計狀態投資的增加和主要由於基準指數利率下降而導致的浮動利率債務投資利率的下降所抵消。第一季利息收入的增加主要是由於第一季末的投資推動了投資組合債務投資的平均收入水準提高。

Fee income for the second quarter increased by $0.3 million from a year ago and increased by $0.7 million from the first quarter. The increase in fee income from both the prior year and the first quarter was primarily due to changes in investment activities. The Fund's expenses for the second quarter decreased by $1.2 million from the prior year and increased by $1.9 million from the first quarter of 2025.

第二季的費用收入比去年同期增加了 30 萬美元，比第一季增加了 70 萬美元。費用收入較上年同期和第一季的增加主要是由於投資活動的變化。該基金第二季的支出比前一年減少 120 萬美元，比 2025 年第一季增加 190 萬美元。

The decrease from prior year was primarily driven by a $0.9 million decrease in interest expense and a $0.3 million decrease in base management fees. The decrease in interest expense from a year ago was largely driven by decreases in weighted average interest rates on the Fund's credit facilities due to decreases in benchmark index rates and reductions to contractual spreads, partially offset by an increase in weighted average outstanding borrowings used to fund a portion of the growth of the investment portfolio. The $1.9 million increase in expenses from the first quarter was primarily driven by a $1.4 million increase in incentive fees and a $0.4 million increase in interest expense.

與前一年相比的下降主要是由於利息支出減少 90 萬美元和基本管理費減少 30 萬美元。利息支出較上年同期減少，主要是由於基準指數利率下降和合約利差縮小導致基金信貸額度的加權平均利率下降，但用於資助投資組合部分增長的加權平均未償還借款增加，部分抵消了這一減少。與第一季相比，費用增加了 190 萬美元，主要是因為獎勵費增加了 140 萬美元，利息費用增加了 40 萬美元。

The increase in incentive fees was primarily due to a lower incentive fee in the pre-listing first quarter period under the pre-listing incentive fee structure. The $0.4 million increase in interest expense from the first quarter was largely driven by an increase in weighted average outstanding borrowings used to fund a portion of the growth of the investment portfolio, partially offset by decreases in weighted average interest rates on the Fund's credit facilities due to reductions to contractual spreads.

激勵費用的增加主要是由於上市前第一季激勵費用結構下的激勵費用較低。利息支出較第一季增加 40 萬美元，主要是由於用於資助投資組合部分增長的加權平均未償還借款增加，但因合約利差減少導致基金信貸額度加權平均利率下降，部分抵消了這一增加。

The Fund's expense ratio, calculated as the Fund's total operating expenses net of any waivers and excluding interest expense as a percentage of the Fund's average total assets was 3% on an annualized basis for the second quarter, compared to 3.4% for the prior year and 2.6% for the first quarter. Excluding incentive fees, the Fund's expense ratio was 1.9% on an annualized basis for the second quarter, a decrease from 2.2% in the prior year and consistent with the first quarter.

該基金的費用率（計算方法為基金總營運費用減去任何豁免不包括利息費用佔基金平均總資產的百分比）第二季為 3%，按年率計算，去年同期為 3.4%，第一季為 2.6%。不包括激勵費用，該基金第二季的費用率為按年率計算為 1.9%，低於去年同期的 2.2%，與第一季持平。

These variances were primarily due to changes to the base management fee and incentive fees under the amended advisory agreement after the listing on January 29, 2025. The Fund's NII before taxes in the second quarter was $17.3 million or $0.37 per share, increasing from $14.4 million or $0.36 per share from the prior year. The Fund's NII in the second quarter was $16.3 million or $0.35 per share, increasing from $13.4 million or $0.33 per share from the prior year.

這些差異主要是由於 2025 年 1 月 29 日上市後修訂後的諮詢協議下的基本管理費和激勵費變化所致。該基金第二季的稅前淨資產收益率為 1,730 萬美元或每股 0.37 美元，高於去年同期的 1,440 萬美元或每股 0.36 美元。該基金第二季的 NII 為 1,630 萬美元或每股 0.35 美元，高於去年同期的 1,340 萬美元或每股 0.33 美元。

During the quarter, the Fund recorded a net increase in the fair value of its investments of $0.9 million, representing the combined impact of $4.8 million of net realized gains, partially offset by $3.9 million of net unrealized depreciation. The net fair value increase was attributable to an increase of $2.9 million in the lower middle market portfolio, partially offset by decreases of $1.5 million in the private loan portfolio and $1 million in the middle market portfolio.

在本季度，該基金的投資公允價值淨增加 90 萬美元，代表 480 萬美元的淨實現收益的綜合影響，部分被 390 萬美元的淨未實現折舊所抵消。淨公允價值增加歸因於中低端市場投資組合增加 290 萬美元，但私人貸款投資組合減少 150 萬美元和中端市場投資組合減少 100 萬美元，部分抵消了這一增加。

Overall, the Fund's operating results for the second quarter resulted in a net increase in net assets of $16.3 million and an NAV per share of $15.33, a $0.02 decrease from the first quarter. As of quarter-end, the Fund had nonaccrual investments comprising 2.6% of the total investment portfolio at fair value and 6.3% at cost. As of quarter-end, the Fund's regulatory asset coverage ratio was 2.34 and its net debt to NAV ratio was 0.71. This remains below the Fund's targeted leverage levels. As Dwayne mentioned, the Fund's focus remains on achieving a fully invested portfolio within its current leverage limits through January 2026, at which point the Fund will benefit from expanded regulatory leverage capacity as previously approved by the Fund's Board in January 2025.

整體而言，該基金第二季的營運結果導致淨資產淨增加1,630萬美元，每股淨值為15.33美元，較第一季減少0.02美元。截至季末，該基金的非應計投資佔總投資組合的 2.6%（以公允價值計算）及 6.3%（以成本計算）。截至本季末，該基金的監理資產覆蓋率為2.34，淨負債與淨值之比為0.71，仍低於該基金的目標槓桿水準。正如 Dwayne 所提到的，該基金的重點仍然是到 2026 年 1 月實現在當前槓桿限制範圍內完全投資的投資組合，屆時該基金將受益於基金董事會於 2025 年 1 月批准的擴大監管槓桿能力。

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

說完這些，我現在將把電話轉回給接線員，以便我們回答任何問題。

(Operator Instructions)

（操作員指示）

Robert Dodd, Raymond James.

羅伯特多德、雷蒙德詹姆斯。

First question, on kind of the shrinking private loan book in the quarter. Obviously, lower M&A activity, et cetera, but Nick talked about missing out because of lower pricing. So with the optimism kind of that you seem to have into the second half, do you expect to hold the line on what you view as appropriate pricing? Or do you think you're going to move lower on those deployment spreads given where the market is on pricing terms at the moment?

第一個問題是關於本季私人貸款規模縮減的情況。顯然，併購活動減少等等，但尼克談到由於定價較低而錯失良機。那麼，您對下半年似乎抱持樂觀態度，您是否預計會維持您認為合適的定價？或者，考慮到目前市場的定價情況，您是否認為您會降低這些部署價差？

Sure, Robert. Thanks for the question. I'll give a quick answer and then I'll let Nick add on if he has any additional color he thinks is appropriate to add. I'd say most of our view of the better second half is more driven by an expectation that there is more activity. That would be one component.

當然，羅伯特。謝謝你的提問。我會快速回答，然後讓尼克補充他認為適合添加的其他顏色。我想說，我們對下半年會更好的看法主要是因為預期會有更多活動。那將是一個組成部分。

I think as we sit here today, we've already seen some of the activity increasing here recently. So that also drives optimism. And then I think we've talked about this before, but as we have a larger existing portfolio on the private credit, private loan side, those companies are doing well. There's more of those that have had an opportunity to grow through acquisitions. Those acquisitions need financing.

我想，當我們今天坐在這裡時，我們已經看到最近這裡的一些活動增加。這也激發了人們的樂觀情緒。然後我想我們之前已經討論過這個問題，但由於我們在私人信貸、私人貸款方面擁有更大的現有投資組合，這些公司表現良好。其中更多的公司有機會透過收購來實現成長。這些收購需要融資。

We love providing follow-on or additional financing to those types of companies. So we've also seen some increase on that side and we expect to see continued activity there in the second half. So I'd say that's the primary driver of the optimism. When you look at rates, I think, from my perspective, for a high-quality deal, would we go inside by 25 basis points of what we would have done in the first half? We probably would. But I think we're going to continue to try and maintain as much consistency on pricing as possible.

我們樂意為這些類型的公司提供後續或額外融資。因此，我們也看到了這方面的一些成長，我們預計下半年將繼續看到這項活動。所以我認為這是樂觀情緒的主要驅動力。當你考慮利率時，我認為，從我的角度來看，為了達成高品質的交易，我們會在上半年的基礎上再加息 25 個基點嗎？我們可能會。但我認為我們將繼續努力盡可能保持定價的一致性。

But Nick, you add on any additional color.

但是尼克，你添加了任何額外的顏色。

Yes, I'd echo that. I think one thing in the first half of the year, and really it's always the case, but pricing is a little bit more of an art than a science. I think there's a few deals, we've talked about it in the past, we're not trying to do 75 or 80 deals per year, we're shooting for 15 to 25 per year. And if we miss on a couple of pricing, we're off by 25 basis points and they go somewhere else, we probably have more of that in the first half of the year than we have historically. And so, I think we rightsized that a little bit and maybe we do dip down for better deals on 25 basis points in the second half of the year, that's kind of where we think we'll hit our numbers for the total year.

是的，我同意。我認為上半年的情況確實如此，但定價更多的是一門藝術，而不是一門科學。我認為有幾筆交易，我們過去曾討論過這個問題，我們並不是想每年做 75 或 80 筆交易，而是每年 15 到 25 筆。如果我們錯過了幾個定價，我們就會偏離 25 個基點，然後他們會轉到其他地方，那麼今年上半年我們遇到的這種情況可能會比歷史上更多。因此，我認為我們稍微調整了一下規模，也許我們會在下半年以 25 個基點的價格降低以獲得更好的交易，這就是我們認為我們將達到全年數字的地方。

Does that make sense, Robert?

這樣有道理嗎，羅伯特？

Yes, it does. I mean just to that point, I mean before the kind of the indications where you might get by kind of year-end, before January, you might get leverage into the 90s before the leverage limit changes, I mean how do you feel about that given where you are now and what the expectations or maybe hopes are for more activity? I mean do you think you're going to get -- and it's a very hard question, I realize that, but just trying to sense of where do you think is realistic by kind of year-end in terms of portfolio size leverage, whichever way you want to look at it?

是的。我的意思是，就這一點而言，我的意思是在年底前，也就是 1 月份之前，您可能會在槓桿限制發生變化之前將槓桿率提高到 90 多倍，我的意思是，考慮到您現在的狀況以及對更多活動的期望或希望，您對此有何感想？我的意思是，您認為您會得到什麼——我知道這是一個很難的問題，但只是想了解一下，就投資組合規模槓桿而言，您認為到年底達到什麼程度才是現實的，無論您從哪個角度來看？

Sure, Robert. I'd say that our view of our ability to get there today versus where it would have been six or nine months ago, obviously, is a little less confident just purely because of the activity that we've had in the first two quarters of the year. But I think when you look at our expectations, I think we still feel optimistic about our ability to grow the portfolio significantly and head in that direction. I don't know if we'd get all the way to that level by year-end or even by January, but it's largely going to be dictated or determined by the overall market activity in the industry. But I think we still feel very confident about where we are.

當然，羅伯特。我想說的是，與六個月或九個月前相比，我們對今天實現這一目標的能力的看法顯然不那麼有信心，這純粹是因為我們在今年前兩個季度的活動。但我認為，當你看到我們的期望時，我認為我們仍然對我們大幅擴大投資組合併朝著這個方向前進的能力感到樂觀。我不知道我們是否能在年底甚至明年一月達到這一水平，但這很大程度上取決於或決定於該行業的整體市場活動。但我認為我們仍然對自己的現狀充滿信心。

And I think we've got multiple drivers, just the overall investment activity, the existing portfolio growing through acquisitions and add-on financing for us, they can still get us to a level that's very, very good for us.

我認為我們有多個驅動因素，僅整體投資活動、透過收購和附加融資實現的現有投資組合成長，它們仍然可以讓我們達到對我們非常有利的水平。

And then, a couple more. On, I think, Nick, you said in the prepared remarks, but obviously it's for anybody, comfortable with the level of tariff exposure in the portfolio right now. I mean, can you give us any more color?

然後，又來幾個。尼克，我想，你在準備好的演講中說過，但顯然這對任何人來說都是合適的，可以適應目前投資組合中的關稅風險水平。我的意思是，你能給我們更多細節嗎？

I mean, has that been shifting in terms of like how much exposure there is? Well, I mean, the tariffs keep shifting as well. But can you give us any more color on like what gives you the comfort? Is it adaptions on the portfolio company side or is it how tariffs are shaking out? What's kind of the give and take in that?

我的意思是，就曝光程度而言，情況有改變嗎？嗯，我的意思是，關稅也在不斷變化。但您能否向我們進一步說明是什麼讓您感到安慰呢？這是投資組合公司方面的調整，還是關稅如何改變？這其中的付出和收穫是怎麼樣的呢？

Yes, like you said, it is moving around and shifting week by week. I think where I'd say where we feel comfortable is it's a combination of where the management teams have led. We don't have a lot of portfolio companies that have exposure to one country or have no options to outsource elsewhere. And so, we think most companies have some flexibility to move around. It might take a little bit of time to get there.

是的，就像你說的，它每週都在移動和變化。我認為讓我們感到安心的是管理團隊所採取的措施的組合。我們投資組合中沒有很多只在某個國家開展業務或沒有選擇在其他地方進行外包的公司。因此，我們認為大多數公司都有一定的彈性。到達那裡可能需要一點時間。

And then also what they can do to work around different tariffs, have some exemptions, et cetera. I think as we look at the portfolio in whole and as it moves around week by week, we do track that and see what we're exposed to. But right now, I think we feel overall comfortable it's not going to be a massive impact to the portfolio.

然後他們還可以採取哪些措施來解決不同的關稅問題、獲得一些豁免等等。我認為，當我們從整體上看投資組合，並觀察它每週的變化時，我們確實會追蹤它，並了解我們所面臨的情況。但現在，我認為我們總體上感到放心，這不會對投資組合產生巨大影響。

Got it. Got it. And then one final one, kind of housekeeping. Of the $912,000 in federal and state income other taxes, et cetera, not the excise tax, the $900,000, how much of that was tax on dividend income at the blockers, I mean, ballpark? I'm not asking for -- is the majority of that number the tax on your dividend income where it's held in blockers, or any comment there?

知道了。知道了。最後再說一點家事。在聯邦和州收入的 912,000 美元中，其他稅款等（不包括消費稅，即 900,000 美元）有多少是針對股息收入徵收的稅，我的意思是，大概是多少？我並不是問——這個數字中的大部分是不是代表了對股息收入徵收的稅款，還是有什麼評論？

Yes. Sure, Robert. I'd say that when you look at the amount of tax that's up in the NII-related section, I would say that the vast majority of that, outside of excise tax, the vast majority of that is going to be taxed on the dividend income from flow-through companies that are held by the blockers. So that's the driver. Obviously, you've got to split it between current and deferred in terms of what's payable versus something that will be paid at some point in the future. But the vast majority of it would be related to dividend income from the flow-through entities.

是的。當然，羅伯特。我想說的是，當你查看 NII 相關部分的稅額時，我會說其中的絕大部分（除了消費稅之外）將對阻斷者持有的流通公司的股息收入徵稅。這就是驅動因素。顯然，您必須將其分為當前付款和遞延付款，即應付款項和將來某個時間點付款。但其中絕大部分與流通實體的股利收入有關。

Brian Mckenna, Citizens.

布萊恩·麥肯納，公民。

So maybe just another question here on origination activity. Appreciate the detail on where the pipeline stands today and then also just kind of what you're seeing in the market more broadly. But in terms of activity in the second quarter, I'm assuming April was pretty slow. I mean, it was an air pocket broadly just given Liberation Day. But how did fundings trend in May and June?

所以也許這只是關於發起活動的另一個問題。請詳細了解目前管道的狀況，以及您在市場上看到的更廣泛的情況。但就第二季的活動而言，我認為四月的活動相當緩慢。我的意思是，解放日那天，這裡基本上就是一個氣穴。但五月和六月的融資趨勢如何？

And then, any more detail you can share just on quarter-to-date activity or even how July fundings compare to May or June?

然後，您能否分享更多有關本季度迄今為止的活動的詳細信息，或者七月份的融資情況與五月份或六月相比如何？

Brian, you're spot on there. April, obviously, post tariff announcements, was a very slow month and everything kind of got delayed. I'd say the timing of the quarter, most of that would have closed in June. And then, for what we did close that quarter, and also repayments came in much heavier in June than they would have in April. On year-to-date or, I guess, quarter-to-date, I'd say we've closed a few add-ons to the existing portfolio, and then one new platform.

布萊恩，你說得完全正確。顯然，關稅公告發布後的四月是一個非常緩慢的月份，一切都被推遲了。我想說的是，就本季的時間而言，大部分交易將在 6 月結束。然後，就我們那個季度的收尾而言，6 月的還款額比 4 月要大得多。從年初至今，或者我猜，從本季度至今，我想說我們已經關閉了現有投資組合中的幾個附加組件，然後是一個新平台。

But overall, I'd say we feel good about what we've closed to date. That's partially what's pulled the below-average pipeline as we did close some of the pipeline that we had existing, and building that back up today. The other one I'd say is, just last one, is I think we're -- when we say below average, I think it's barely below average, if you will. I think Dwayne said slightly below average. But it's kind of going back and forth on -- it's building, so it's close to being average. I think right now we're below average.

但總的來說，我想說我們對迄今為止所完成的工作感到滿意。這在一定程度上導致了管道低於平均水平，因為我們確實關閉了一些現有的管道，並在今天重新建立了它們。我想說的另一點是，也就是最後一點，我認為我們——當我們說低於平均水平時，我認為它只是略低於平均水平，如果你願意的話。我認為德韋恩說的是略低於平均。但它有點像是來回反覆——它正在建設中，所以它接近平均水平。我認為現在我們低於平均水平。

And Brian, just to give a little more kind of color or granularity, when you look at our activity to date in the third quarter, the net activity on the private loan side is just over $50 million of net investment activity.

布萊恩，為了提供更多的細節，當你查看我們第三季迄今為止的活動時，私人貸款方面的淨活動剛剛超過 5000 萬美元的淨投資活動。

Yes. Okay. That's helpful. And then just in terms of credit quality, we talked about this a little bit the last couple of quarters, if I look at the Q2 dynamics, nonaccruals, that cost increased a little bit to 6.3% from 6.1%. So can you just talk about some of the puts and takes here in the quarter?

是的。好的。這很有幫助。然後就信貸品質而言，我們在過去幾季中討論過這個問題，如果我看一下第二季的動態，非應計成本從 6.1% 略微增加到 6.3%。那麼，您能否談談本季的一些情況？

And then where are we in the process of working through some of these nonaccruals? And then, I mean, is there any expectation on the time line when some of these could get resolved or even nonaccruals can start to move lower again?

那麼，我們在處理這些不提列事項的過程中處於什麼階段呢？然後，我的意思是，在時間上是否有任何預期，什麼時候這些問題可以解決，或者甚至不提列費用可以再次開始降低？

Sure, Brian. I'll give a quick answer and then Nick can add on again if he has some additional thoughts. I'd say in the quarter, it was plus 1 minus 1. You had 1 investment that was on nonaccrual status come off. You had a new 1 that came on.

當然，布萊恩。我會快速回答，然後如果尼克還有其他想法，他可以再補充。我想說的是，本季的業績是+1減1。您有 1 項處於非應計狀態的投資被取消。您有一個新的 1 出現。

I think as we look at the nonaccruals, I do think that we're making progress on a couple of those nonaccruals. We would be -- we're hopeful that at least one, if not more than one of those, could move off nonaccrual status back on to accrual. Obviously, as you probably expect, if something gets restructured, it won't go back 100% accrual, but will move to some of the investment being on accrual going forward.

我認為，當我們審視不提項目時，我確實認為我們在其中一些不提項目上取得了進展。我們希望至少有一個（如果不是多個）能夠從非應計狀態轉回應計狀態。顯然，正如您可能預料的那樣，如果某些東西被重組，它不會恢復 100% 的應計，但會轉向未來應計的部分投資。

So I think we feel good about where we are. Obviously, those transactions are always difficult because there's a lot of gives and takes between us as a lender and the private equity sponsor and the portfolio company in terms of that negotiation. But I think we feel good about several of those activities, and we think several of the nonaccruals will be resolved either in Q3 or Q4. But Nick, you can add on as well.

所以我認為我們對目前的狀況感到滿意。顯然，這些交易總是很困難，因為在談判方面，我們作為貸款人、私募股權發起人和投資組合公司之間有很多的讓步和妥協。但我認為我們對其中幾項活動感到滿意，我們認為幾項未計提事項將在第三季或第四季得到解決。但是尼克，你也可以補充。

Yes. I'd say we expect a couple of those to be done by the end of 3Q, and then one or two more to get done by fourth quarter. And so, I think from the consumer-focused names, I think we've transitioned most of those and restructured the names that we're seeing weakness in. And so, we expect that to get back to normal -- I'd say normal flow, if you will, going into '26.

是的。我想說，我們預計其中幾個將在第三季末完成，然後還有一兩個將在第四季完成。因此，我認為從以消費者為中心的品牌來看，我們已經轉變了大部分品牌，並重組了我們認為有弱點的品牌。因此，我們預計情況將恢復正常——如果你願意的話，我會說進入 26 年，情況將恢復正常。

Arren Cyganovich, Truist Securities.

Truist Securities 的 Arren Cyganovich。

Maybe you could talk a little bit about your ability to exit some of the equity positions in the lower middle market and rotate those into the private loan. And maybe just remind us how much control you have in those situations and whether or not -- or maybe just giving us a time frame of expectation of when those might occur?

也許您可以稍微談談您退出中低端市場部分股權頭寸並將其轉入私人貸款的能力。也許只是提醒我們您在這些情況下有多少控制權以及是否 - 或者只是給我們一個預期這些情況何時可能發生的時間框架？

Sure. Happy to do that. Thank you for the question and thanks for joining us this morning. I would say that similar to the comment we gave last week on the Main Street side, we had a couple of exits in the lower middle market portfolio for the Main Street platform over the last nine months. Unfortunately, for MSC Income Fund, those were investments that they had not been invested in.

當然。很高興這樣做。感謝您的提問，也感謝您今天早上加入我們。我想說的是，與我們上週在 Main Street 方面發表的評論類似，在過去的九個月裡，我們在 Main Street 平台的中低端市場投資組合中進行了幾次退出。不幸的是，對於 MSC Income Fund 來說，這些都是他們尚未投資的投資。

Despite those exits, the guidance we gave last week was that we're continuing to see kind of elevated or some activity from an exit standpoint. In the case of those names that we referenced last week, MSC Income Fund is invested. If you recall, most of the investments historically on the lower middle market side would have been an 80%-20%, 80% Main Street, 20% MSC Income Fund, split. So you have to take that split into consideration. But I think we feel good about those investments.

儘管存在這些退出，但我們上週給出的指導是，從退出的角度來看，我們將繼續看到某種程度的提升或某種活動。就我們上週提到的那些名稱而言，MSC Income Fund 進行了投資。如果你還記得的話，歷史上中低端市場的大部分投資都是 80%-20% 的比例，即 80% 為主街基金，20% 為 MSC 收入基金。所以你必須考慮到這種分裂。但我認為我們對這些投資感到滿意。

And if we were to exit, I think we would feel really good about where the realized event would compare to our historical or our current fair value. In terms of control, our approach on the lower middle market is always about partnership. So even if we had equity ownership control, we're not going to exit something without the support of our partners at the management team. So I would say in each of those situations where we're looking at a potential exit, is kind of a joint decision fully supported both by us and the management team. And I think it's supported because, if we decide to seek an exit, we expect to have a really good outcome.

如果我們退出，我認為我們會對實現的事件與我們的歷史或當前公允價值的比較感到非常滿意。在控制方面，我們對中低端市場的態度始終是合作。因此，即使我們擁有股權控制權，如果沒有管理團隊合作夥伴的支持，我們也不會退出。因此我想說，在我們考慮退出的每一種情況下，這都是我們和管理團隊全力支持的共同決定。我認為它之所以受到支持，是因為如果我們決定尋求退出，我們期望得到一個非常好的結果。

Okay. Yes, that makes sense. And then in terms of the leverage getting higher over time, can you just remind me where your target range is there and what that represents to the extent that you still have some of the LMM in the portfolio? I'm assuming you carry a lower leverage on that than you would on the private loan side.

好的。是的，這很有道理。然後，就槓桿率隨時間推移而升高而言，您能否提醒我您的目標範圍在哪裡，以及這代表您的投資組合中仍然有一些 LMM 的程度？我假設你在這方面的槓桿率比私人貸款方面的槓桿率低。

Yes. I think when you look at our leverage, we look at it on a combined basis. Obviously, as we shift to the private loan portfolio and have lower middle market decrease, that naturally will make you more comfortable in having a higher leverage. But as we've said in the past, the transition from lower middle market to private loan is going to take a long time. We take a long term to permanent holding period on the lower middle market investment, so it won't be a quick switch or transition.

是的。我認為，當你審視我們的槓桿時，我們會從綜合的角度來看它。顯然，隨著我們轉向私人貸款組合併降低中端市場下降幅度，這自然會讓您更願意接受更高的槓桿率。但正如我們過去所說的那樣，從中低端市場到私人貸款的轉變將需要很長時間。我們對中低端市場投資採取長期甚至永久的持有期，因此這不會是一個快速的轉變或過渡。

But despite that, we do expect to take leverage up over the next couple of quarters. I'll let Cory kind of give a reminder on our current leverage targets and then how those leverage targets would move once we have the expanded BDC regulatory leverage.

但儘管如此，我們確實預計未來幾季槓桿率將會上升。我會讓 Cory 提醒我們目前的槓桿目標，然後一旦我們擴大了 BDC 監管槓桿，這些槓桿目標將如何改變。

Yes. Thanks, Dwayne. Our leverage targets are -- we are below it currently as of 6:30. And where we try to lever the portfolio is anywhere between 0.75x and -- between 0.85x and 0.95x. And as we mentioned on the call and in previous calls as well, is that the -- our Board of Directors back -- after we did the listing in January of 2025, have approved the expanded leverage, which will go into place in January of 2026, in which we will lever the portfolio anywhere between 1.15x and 1.25x.

是的。謝謝，德韋恩。我們的槓桿目標是－截至 6:30，我們目前低於該目標。我們嘗試將投資組合的槓桿率設定在 0.75 倍到 0.85 倍到 0.95 倍之間。正如我們在本次電話會議以及先前的電話會議中提到的那樣，我們的董事會在我們於 2025 年 1 月上市後批准了擴大槓桿率，該措施將於 2026 年 1 月生效，屆時我們將把投資組合的槓桿率設定在 1.15 倍到 1.25 倍之間。

(Operator Instructions) Paul Johnson, KBW.

（操作員指示）Paul Johnson，KBW。

On just the weaker consumer trends that you're sort of noticing, what is, I guess, your assessment of kind of the total underlying consumer exposure within the portfolio?

就您注意到的較弱的消費趨勢而言，您對投資組合中整體潛在消費者風險敞口的評估是什麼？

Sure, Paul. Thanks for joining us. Thanks for the question. I'd say when you look at our view of the consumer weakness, just as a reminder, I'd say that's not something that's new. I think we've been talking about it, at least on the Main Street side when we're having quarterly conference calls prior to MSC Income Fund going public, probably talking about it for probably two years.

當然，保羅。感謝您的加入。謝謝你的提問。我想說，當你看到我們對消費者疲軟的看法時，提醒一下，這並不是什麼新鮮事。我認為我們一直在談論這個問題，至少在主街方面，當我們在 MSC Income Fund 上市之前召開季度電話會議時，可能已經談論了兩年。

We had kind of seen it coming, had expected that there'd be some pain. And I'd say over that time period, you've seen a number of companies that have been able to deal with it fine, but you've seen some companies, as evidenced by the fair value depreciation and the nonaccruals, seen some companies that have had more stress on their performance, which has resulted in the stress on the nonaccrual side.

我們已經預見了它的到來，並預料到會有一些痛苦。我想說，在那段時間內，你會看到很多公司能夠很好地處理這個問題，但你也會看到一些公司，正如公允價值貶值和不計提項目所證明的那樣，一些公司在業績上承受著更大的壓力，這導致了不提列方面的壓力。

I think Nick may have said this earlier, I'll let him kind of clarify if my memory is wrong, but I think as we look at it, we feel pretty good about the exposure today. I think we've taken most of the pain both in terms of nonaccrual, fair value depreciation, whether that's unrealized or if it's gone through a restructuring and it's already been realized, I think we feel pretty good about the downside that we've taken. Now we're just trying to maximize the recovery on those names.

我想尼克可能早些時候就說過這個，如果我的記憶是錯誤的，我會讓他澄清一下，但我認為當我們看它時，我們對今天的曝光感覺很好。我認為我們已經承受了大部分的痛苦，無論是非應計、公允價值折舊方面的痛苦，無論是未實現的還是經過重組並且已經實現的，我認為我們對所承受的不利影響感覺相當良好。現在我們只是試圖最大限度地恢復這些名字。

But I think that's the way that I would categorize it. I don't think we have a disproportionate exposure. It just has been a disproportionate amount of our underperforming companies for the last couple of years.

但我認為這就是我對其進行分類的方式。我認為我們並沒有受到過度的影響。過去幾年來，我們表現不佳的公司數量一直不成比例。

Yes. Not a whole lot to add there. I would say one thing, is none of them are really consumer product businesses. They're just -- the end user eventually becomes the consumer. And so we're using a pretty wide swath on how we say consumer.

是的。沒什麼好補充的。我想說的是，它們都不是真正的消費品企業。他們只是——最終用戶最終成為消費者。因此，我們對消費者的表達範圍非常廣泛。

But really the driver of that is really consumer's pocket book, whether that's a service or a product that eventually works its way down to the consumer side of it. But like Dwayne said, I think we feel good that we've worked through most of those issues from a market perspective and a fair value perspective, and now we're going through the back end of it of how do we drive that recovery on the restructuring.

但真正推動這一趨勢的還是消費者的錢包，無論是服務還是產品，最終都會流向消費者。但就像德韋恩所說的那樣，我認為我們很高興我們已經從市場角度和公允價值角度解決了大部分問題，現在我們正在研究如何透過重組推動復甦的後端問題。

Got it. I appreciate that. And last one for me. Is there -- I'm wondering if there's any sort of relationship just between kind of the broader level of M&A activity, particularly in the lower middle market, and the dividend income that you generate from the portfolio. I mean is there some sort of relationship that plays out over time where, as M&A activity stalls out or just remains sluggish, does that drive higher-than-average dividend income from those companies over time as they're looking to potentially monetize some of their value out of that or -- does that exist in your opinion?

知道了。我很感激。對我來說這是最後一個。我想知道，更廣泛的併購活動（特別是在中低端市場）與您從投資組合中產生的股息收入之間是否存在某種關係。我的意思是，隨著時間的推移，是否存在某種關係，當併購活動停滯或保持低迷時，這是否會導致這些公司的股息收入高於平均水平，因為他們希望從中將部分價值貨幣化，或者 - 您認為這種情況是否存在？

Yes. Paul, the way I would respond to that is our dividend income across the lower middle market portfolio, because that's where it's heavily concentrated, it's going to come from companies that have been in the portfolio for a while, that have performed well and have delivered. And as a result, they have the same or greater amounts of free cash flow compared to what we underwrote, but they just don't have the same leverage. So there's less interest expense, there's more free cash flow. If they don't have a use for it, i.e., an acquisition or a significant CapEx, then that cash likely will be paid out in the form of dividend.

是的。保羅，我對此的回應是，我們的股息收入來自中低端市場投資組合，因為那裡的股息收入高度集中，它將來自那些已經在投資組合中存在一段時間、表現良好且已兌現承諾的公司。因此，與我們承保的相比，他們擁有相同或更多的自由現金流，但他們沒有相同的槓桿率。因此利息支出減少，自由現金流增加。如果他們沒有用處，例如收購或重大資本支出，那麼這筆現金很可能會以股息的形式支付。

So that's really the key driver for our dividend income contributions. When we have high-performing companies and those companies exit, clearly, we would lose that dividend income. But I wouldn't say it's a direct correlation with the M&A market. I think today, obviously, we've said the M&A market, from a private equity standpoint, and I would say probably in general just given the uncertainty in the environment or the economy for the last couple of quarters, has been less than kind of average, or at least historical average. But we've got a bunch of great companies and those companies continue to perform.

所以這確實是我們股利收入貢獻的關鍵驅動力。當我們擁有高績效公司並且這些公司退出時，顯然我們會失去股息收入。但我不會說這跟併購市場有直接關係。我認為今天，顯然，我們已經從私募股權的角度討論了併購市場，我想說，考慮到過去幾個季度環境或經濟的不確定性，總體而言，併購市場低於平均水平，或者至少低於歷史平均水平。但我們擁有一群優秀的公司，而這些公司繼續表現出色。

They get on the radar of every private equity group that's out there. And if they want to kind of acquire those companies and we and our partners decide that it makes sense to pursue that exit, we're going to end up in a really good situation. So we'll lose dividend income on those, but I wouldn't say that there's a direct correlation between the two, if I understand your question.

他們受到了所有私募股權集團的關注。如果他們想要收購這些公司，而我們和我們的合作夥伴認為退出是合理的，那麼我們最終將處於一個非常有利的境地。因此，我們將損失股息收入，但如果我理解您的問題的話，我不會說兩者之間存在直接關聯。

Brian Mckenna, Citizens.

布萊恩·麥肯納，公民。

Okay. Great. So just on the dividend, looking out over the next 12 to 18 months, there's a few variables within that just in terms of base rates and credit quality from here, but you're in a position to grow the portfolio. So I mean in the event earnings are flat to up over the next 12 to 18 months, you'll have some more capacity on the dividend. So I mean, how are you going to pay that?

好的。偉大的。因此，僅就股息而言，展望未來 12 至 18 個月，從現在開始，在基準利率和信貸品質方面存在一些變量，但您可以增加投資組合。所以我的意思是，如果未來 12 到 18 個月的收益持平或上升，你將有更多的股息能力。那我的意思是，你打算如何支付呢？

I mean would you look to increase the regular or would you pay that kind of step-up in earnings if that exists through the supplemental?

我的意思是，您是否會考慮增加常規收入，或者如果透過補充收入存在的話，您是否會支付這種增加的收入？

Yes, Brian, you may not like this answer, but I think it will be determined based upon the quality of the income. The more of that income that we think is recurring and will be there for several quarters in the future, the more likely you'll be to increase the monthly. The more that it's onetime or less visible that it's recurring, I think you're more inclined to either increase the supplemental or just retain some of that for retained earnings or portfolio growth purposes. But I do think we feel comfortable with where we are in terms of having several levers that could allow us to potentially grow NII and grow the dividend going forward. I think you guys know it.

是的，布萊恩，你可能不喜歡這個答案，但我認為這將根據收入的品質來決定。我們認為經常性收入越多，並且在未來幾季持續存在的收入越多，您增加每月收入的可能性就越大。我認為，一次性支出越多，或重複性支出越不明顯，您就越傾向於增加補充支出，或僅保留其中一部分用於留存收益或投資組合成長目的。但我確實認為，我們對目前的狀況感到滿意，因為我們擁有多種槓桿，可以讓我們在未來潛在地增加 NII 和增加股息。我想你們都知道。

But part of it is utilizing the significant leverage capacity that we have today, but more importantly, what we'll have beginning in -- at the end of January. But also as we continue to execute and grow the private loan portfolio and have some migration from lower middle market to a private credit, we'll eventually get the lower middle market to fall below 20% of fair value. And when we do that, just the simple contractual change that takes the base management fee down from 1.5% to 1.25% basically represents about $0.02 a share per quarter. So we think we've got a number of drivers that can be a positive catalysts there, and our goal is to execute to our strategy and deliver that benefit to the shareholder over the next couple of quarters. Whether that's 2 quarters, 4 quarters or 6 quarters, we feel confident in our ability to deliver that over the future time periods.

但其中一部分是利用我們今天擁有的巨大槓桿能力，但更重要的是，我們將在 1 月底開始擁有這些能力。但隨著我們繼續執行和擴大私人貸款組合，並從中低端市場轉向私人信貸，我們最終將使中低端市場跌至公允價值的 20% 以下。當我們這樣做時，只需進行簡單的合約變更，將基本管理費從 1.5% 降至 1.25%，基本上相當於每季每股 0.02 美元。因此，我們認為我們有許多可以成為積極催化劑的驅動因素，我們的目標是執行我們的策略並在接下來的幾個季度內為股東帶來利益。無論是 2 個季度、4 個季度還是 6 個季度，我們都對自己在未來一段時間內實現這一目標的能力充滿信心。

Thank you. At this time, I would like to turn the floor back over to management for closing comments.

謝謝。現在，我想將發言權交還給管理階層，請他們發表最後評論。

Thank you, operator, and thank you again to everyone for joining us today. We appreciate the support of MSC Income Fund. And we look forward to talking to you again in November after our third quarter earnings release.

謝謝接線員，再次感謝大家今天的參與。我們感謝 MSC Income Fund 的支持。我們期待在 11 月發布第三季財報後再次與您交談。

Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time. And enjoy the rest of your day.

女士們、先生們，今天的活動到此結束。現在您可以斷開線路或退出網路直播。祝您今天餘下的時光愉快。