Saratoga Investment Corp (SAR) 2024 Q1 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Saratoga Investment Corp.'s 2024 Fiscal First Quarter Financial Results Conference Call. Please note that today's call is being recorded.

早上好，女士們，先生們。謝謝你的支持。歡迎參加薩拉託加投資公司 2024 財年第一季度財務業績電話會議。請注意，今天的通話正在錄音。

(Operator Instructions)

（操作員說明）

At this time, I would like to turn the call over to Saratoga Investment Corp.'s Chief Financial and Chief Compliance Officer, Mr. Henri Steenkamp. Sir, please go ahead.

現在，我想將電話轉給薩拉託加投資公司的首席財務官兼首席合規官 Henri Steenkamp 先生。先生，請繼續。

Thank you. I would like to welcome everyone to Saratoga Investment Corp.'s 2024 Fiscal First Quarter Earnings Conference Call. Today's conference call includes forward-looking statements and projections. We ask you to refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these forward-looking statements and projections. We do not undertake to update our forward-looking statements unless required to do so by law.

謝謝。我歡迎大家參加薩拉託加投資公司 2024 年第一季度財報電話會議。今天的電話會議包括前瞻性陳述和預測。我們要求您參考我們最近向美國證券交易委員會提交的文件，了解可能導致實際結果與這些前瞻性陳述和預測存在重大差異的重要因素。除非法律要求，否則我們不承諾更新我們的前瞻性陳述。

Today, we will be referencing a presentation during our call. You can find our fiscal first quarter 2024 shareholder presentation in the Events and Presentations section of our Investor Relations website. A link to our IR page is in the earnings press release distributed last night. A replay of this conference call will also be available. Please refer to our earnings press release for details.

今天，我們將在電話會議中引用一份演示文稿。您可以在我們投資者關係網站的活動和演示部分找到我們 2024 年第一財季的股東演示文稿。我們的投資者關係頁面的鏈接位於昨晚發布的收益新聞稿中。還將提供本次電話會議的重播。詳情請參閱我們的收益新聞稿。

I would now like to turn the call over to our Chairman and Chief Executive Officer, Christian Oberbeck, who will be making a few introductory remarks.

我現在想將電話轉給我們的董事長兼首席執行官克里斯蒂安·奧伯貝克 (Christian Oberbeck)，他將做一些介紹性發言。

Thank you, Henri, and welcome, everyone. Saratoga's 10% and 104% increases in adjusted net investment income per share as compared to last quarter and last year's first quarter respectively, outpaced our recent and significant dividend increases and reflects growth in AUM and margin improvement from rising rates on our largely floating rate assets in contrast to the largely fixed rates, paid on our financing liabilities.

謝謝亨利，歡迎大家。與上一季度和去年第一季度相比，薩拉託加的調整後每股淨投資收益分別增長了 10% 和 104%，超過了我們最近的顯著股息增長，反映了資產管理規模的增長和我們主要浮動利率資產利率上升帶來的利潤率改善與我們的融資負債支付的基本上固定的利率相反。

Higher and rising interest rates and a general contraction of available credit are producing higher margins on our portfolio, and importantly, an abundant flow of attractive investment opportunities from high-quality sponsors at increasingly improving pricing, terms and absolute rates. We believe Saratoga continues to be well positioned for potential future economic opportunities and challenges. Saratoga's credit structure with largely interest-only covenant-free, long-duration debt incorporating maturities primarily 2 to 10 years out, positions us well, particularly well for a rising and potentially higher-for-longer interest rate environment, coupled with market volatility.

不斷上升的利率以及可用信貸的普遍收縮正在為我們的投資組合帶來更高的利潤，更重要的是，高質量的讚助商以日益改善的定價、條款和絕對利率帶來了大量有吸引力的投資機會。我們相信薩拉託加將繼續處於有利地位，以應對未來潛在的經濟機遇和挑戰。薩拉託加的信貸結構主要為只付息、無契約、長期債務，到期日主要為 2 至 10 年，這使我們處於有利地位，特別是在不斷上升且可能長期較高的利率環境以及市場波動的情況下。

Most importantly, at the foundation of our performance is the high-quality nature and resilience of our approximately $1.1 billion portfolio, marked down just 0.9% overall. Our core BDC portfolio, excluding our CLO and JV, is up 1.3% versus cost, reflecting the strength of our underwriting in our solid, growing portfolio companies and sponsors in well-selected industry segments. This quarter's unrealized depreciation of $16.3 million reflects the interest rate market and economic volatility in the current environment across our diverse assets, including both our core and broadly syndicated loan portfolios with approximately 2/3 of the markdown in this BSL or broadly syndicated loan space.

最重要的是，我們業績的基礎是我們約 11 億美元投資組合的高質量和彈性，整體僅下降了 0.9%。我們的核心 BDC 投資組合（不包括我們的 CLO 和合資企業）相對於成本上漲了 1.3%，反映了我們在精選行業領域中穩固、不斷增長的投資組合公司和讚助商的承保實力。本季度未實現折舊 1,630 萬美元反映了當前環境下我們多元化資產的利率市場和經濟波動，包括我們的核心和廣泛銀團貸款組合，其中 BSL 或廣泛銀團貸款空間的降價約為 2/3。

As an example of the volatility in our markets, the unrealized reported losses in the BSL portfolio would be nearly 1/3 recovered if that portfolio were marked as of today. Our portfolio strength -- it's further manifested in our many key performance indicators this past quarter, including: first, following sequential quarterly adjusted NII per share increases of 33% in Q3 and 27% in Q4. Adjusted NII increased another 10% in Q1, almost doubling from $0.58 to $1.08 per share over the last 3 quarters.

作為我們市場波動的一個例子，如果截至今天對 BSL 投資組合進行標記，則該投資組合中未實現的報告損失將收回近 1/3。我們的投資組合優勢——在上個季度的許多關鍵績效指標中得到了進一步體現，包括：首先，經過季度調整後的每股 NII 在第三季度和第四季度分別增長了 33% 和 27%。調整後的 NII 在第一季度又增長了 10%，在過去 3 個季度中幾乎翻了一番，從每股 0.58 美元增至 1.08 美元。

Second, current assets under management grew to approximately $1.1 billion. Third, dividend increases to $0.70 per share, up 32% from $0.53 per share in Q1 last year, up 1.4% from $0.69 per share last quarter and over earned by 54% as compared to this quarter's $1.08 per share adjusted NII. And fourth, $77.5 million in long-term fixed rate callable capital recently raised in volatile markets to support record growth while maintaining our BBB+ investment-grade rating.

其次，管理的流動資產增至約 11 億美元。第三，股息增至每股 0.70 美元，較去年第一季度的每股 0.53 美元增長 32%，較上季度每股 0.69 美元增長 1.4%，與本季度調整後每股 1.08 美元的 NII 相比，超額盈利 54%。第四，最近在動蕩的市場中籌集了 7750 萬美元的長期固定利率可贖回資本，以支持創紀錄的增長，同時維持我們的 BBB+ 投資級評級。

While being increasingly discerning in terms of new commitments in the current environment, this quarter demonstrates our robust pipeline. We originated 7 new portfolio company investments in this fiscal quarter and 20 follow-on investments in existing portfolio companies we know well with strong business models and balance sheets. Originations this quarter totaled $140 million, with $11 million of repayments and amortization. Our credit quality for this quarter remained high at 96.5% of credits rated in our highest category with still only 1 credit on nonaccrual.

儘管在當前環境下對新承諾的洞察力越來越強，但本季度展示了我們強大的渠道。我們在本財季發起了 7 項新的投資組合公司投資，並對我們熟悉的擁有強大業務模式和資產負債表的現有投資組合公司進行了 20 項後續投資。本季度的發起總額為 1.4 億美元，其中還款和攤銷為 1,100 萬美元。本季度我們的信貸質量仍然很高，達到最高類別信貸的 96.5%，其中只有 1 個非應計信貸。

With 85% of our investments at quarter-end in first-lien debt and generally supported by strong enterprise values and balance sheets in industries that have historically performed well in stress situations. We believe our portfolio and leverage is well structured for future economic conditions and uncertainty.

截至季度末，我們 85% 的投資是第一留置權債務，並且通常受到歷史上在壓力情況下表現良好的行業的強大企業價值和資產負債表的支持。我們相信，我們的投資組合和槓桿結構對於未來的經濟狀況和不確定性而言是良好的。

Saratoga's annualized first quarter dividend of $0.70 per share and adjusted net investment income of $1.08 per share imply a 10.2% dividend yield and a 15.7% earnings yield based on its recent stock price of $27.43 per share on July 7, 2023. The overearning of the dividend by $0.38 this quarter or $1.52 annualized per share increases NAV, supports the increased dividend level and growth and provides a cushion against adverse events.

薩拉託加第一季度年化股息為每股 0.70 美元，調整後淨投資收益為每股 1.08 美元，根據其 2023 年 7 月 7 日每股 27.43 美元的最新股價計算，股息收益率為 10.2%，盈利收益率為 15.7%。本季度股息增加 0.38 美元，或每股年化 1.52 美元，增加資產淨值，支持股息水平和增長的提高，並為不利事件提供緩衝。

To summarize the past quarter on Slide 2. First, we continued to strengthen our financial foundation this quarter as indicated by our strong Q1 portfolio performance and credit quality, both this quarter and life to date since Saratoga took over the management of the BDC. Second, our assets under management increased to approximately $1.1 billion this quarter, a record level. Third, in volatile economic conditions such as we are currently experiencing, balance sheet strength, liquidity and NAV preservation remain paramount for us. Our capital structure at year-end was strong. $337.5 million of mark-to-market equity supporting $571 million of long-term covenant-free non-SBIC debt, $202 million of long-term covenant-free SBIC debentures and $35 million of long-term revolving borrowings. Our total committed undrawn lending and discretionary funding facilities outstanding to existing portfolio companies are $143 million with $84 million committed and $59 million discretionary.

總結幻燈片 2 上的過去季度。首先，我們本季度繼續加強我們的財務基礎，這體現在我們強勁的第一季度投資組合表現和信貸質量，無論是本季度還是薩拉託加接管 BDC 管理以來迄今為止的情況。其次，本季度我們管理的資產增加至約 11 億美元，創歷史新高。第三，在我們目前所經歷的動蕩的經濟條件下，資產負債表實力、流動性和資產淨值保護對我們來說仍然至關重要。年底我們的資本結構強勁。 3.375 億美元按市值計價的股本支持 5.71 億美元的長期無契約非 SBIC 債務、2.02 億美元的長期無契約 SBIC 債券和 3500 萬美元的長期循環借款。我們向現有投資組合公司提供的未提取貸款和可自由支配融資總額為 1.43 億美元，其中承諾金額為 8,400 萬美元，可自由支配金額為 5,900 萬美元。

Our debt maturity schedule ranges primarily from 2 to 10 years out, providing a solid credit structure at a fixed cost and with favorable terms, positioning us well for both a rising rate environment or should overall economic challenges arise. And at quarter-end, we had $231 million of investment capacity available to support our portfolio companies with $148 million available through our newly approved SBIC III fund, $30 million from our expanded revolving facility and $53 million in cash.

我們的債務到期期限主要為 2 至 10 年，以固定成本和優惠條件提供堅實的信貸結構，使我們能夠應對利率上升的環境或出現整體經濟挑戰。截至季度末，我們擁有 2.31 億美元的投資能力來支持我們的投資組合公司，其中 1.48 億美元可通過我們新批准的 SBIC III 基金獲得，3000 萬美元來自我們擴大的循環貸款，5300 萬美元為現金。

Finally, based on our overall performance and liquidity, the Board of Directors most recently declared quarterly dividend of $0.70 per share, which was paid on June 29, 2023, was our largest quarterly dividend effort.

最後，根據我們的整體業績和流動性，董事會最近宣布派發每股 0.70 美元的季度股息，並於 2023 年 6 月 29 日支付，這是我們最大的季度股息努力。

Saratoga Investment's first quarter demonstrated strong performance in our key performance indicators as compared to the quarters ended May 31, 2022, and February 28, 2023. Our adjusted NII is $12.8 million this quarter, up 101% from last year and up 11% from last quarter. Our adjusted NII per share was $1.08 this quarter, up 104% from $0.53 last year and up 10% from $0.98 last quarter. Latest 12 months return on equity is 7.2%, up from 6.9% last year and unchanged from 7.2% last quarter and beating the industry average of 1.5%. And our NAV per share is $28.48, down 0.7% from $28.69 last year and down 2.4% from $29.18 last quarter and substantially ahead of the latest 12 months industry average of a negative 7.3%. Henri will provide more detail later.

與截至 2022 年 5 月 31 日和 2023 年 2 月 28 日的季度相比，薩拉託加投資第一季度的關鍵績效指標表現強勁。本季度調整後的 NII 為 1,280 萬美元，比去年增長 101%，比去年增長 11%四分之一。本季度調整後每股 NII 為 1.08 美元，比去年的 0.53 美元增長 104%，比上季度的 0.98 美元增長 10%。最近 12 個月的股本回報率為 7.2%，高於去年的 6.9%，與上季度的 7.2% 持平，高於 1.5% 的行業平均水平。我們的每股資產淨值為 28.48 美元，比去年的 28.69 美元下降 0.7%，比上季度的 29.18 美元下降 2.4%，大大高於最近 12 個月的行業平均水平（7.3%）。亨利稍後將提供更多細節。

As you can see on Slide 3, our assets under management have steadily and consistently risen since we took over the BDC almost 13 years ago, and the quality of our credits remains high, with only 1 credit on nonaccrual, the same as last quarter. Our management team is working diligently to continue this positive trend as we deploy our available capital into our growing pipeline while at the same time being appropriately cautious in this volatile and evolving credit environment.

正如您在幻燈片 3 中看到的，自近 13 年前我們接管 BDC 以來，我們管理的資產一直在穩步增長，而且我們的信貸質量仍然很高，只有 1 個非應計信貸，與上季度相同。我們的管理團隊正在努力工作，以延續這一積極趨勢，將可用資本部署到不斷增長的渠道中，同時在這個不穩定和不斷變化的信貸環境中保持適當的謹慎。

With that, I would like to now turn the call back over to Henri to review our financial results as well as the composition and performance of our portfolio.

現在，我想將電話轉回亨利，以審查我們的財務業績以及我們投資組合的構成和業績。

Thank you, Chris. Slide 4 highlights our key performance metrics for the fiscal first quarter ended May 31, 2023, most of which Chris already highlighted. Of note, across the 3 quarters shown on the slide, weighted average common shares outstanding were relatively unchanged. So per share numbers are comparable.

謝謝你，克里斯。幻燈片 4 重點介紹了我們截至 2023 年 5 月 31 日的第一財季的關鍵績效指標，克里斯已經重點介紹了其中大部分指標。值得注意的是，在幻燈片所示的三個季度中，加權平均已發行普通股相對沒有變化。因此每股數字具有可比性。

Adjusted NII increased significantly this quarter, up 85.4% from last year and up 7.2% from last quarter primarily from: first, the impact of higher interest rates, both base rates and spreads with a weighted average current coupon on non-CLO BDC investments increasing from 8.5% to 12.7% year-over-year and from 12.1% last quarter. Second, average non-CLO BDC assets increasing by 22.2% year-over-year and by 5.7% since last quarter.

本季度調整後NII大幅增長，較去年增長85.4%，較上季度增長7.2%，主要源於：一是利率上升的影響，包括基本利率和利差，非CLO BDC投資的加權平均當期息票增加同比增長 8.5% 至 12.7%，上季度增長 12.1%。其次，平均非 CLO BDC 資產同比增長 22.2%，自上季度以來增長 5.7%。

And third, other income this quarter, including both the structuring and advisory fees generated from the higher level of Q1 originations as well as a $1.8 million dividend received from the Saratoga joint venture. This was partially offset by increased base and incentive management fees generated from higher AUM and earnings and increased interest expense resulting from the various new Notes and SBA debentures issued during the past quarter and year.

第三，本季度的其他收入，包括第一季度較高水平的發起產生的結構和諮詢費用，以及從薩拉託加合資企業收到的 180 萬美元股息。這部分被資產管理規模和收益增加所產生的基礎管理費和激勵管理費的增加以及過去季度和年度發行的各種新票據和 SBA 債券帶來的利息支出的增加所部分抵消。

Adjusted NII yield was 15.0%. This yield is up from 13.6% last quarter and 7.3% last year. Total expenses this quarter, excluding interest and debt financing expenses, base management and incentive fees and income and excise taxes increased from $2.0 million to $2.3 million as compared to last year's Q1 and remained unchanged from Q4. This represented 0.8% of average total assets on an annualized basis down from 0.9% at Q1 last year and unchanged from last quarter.

調整後NII收益率為15.0%。這一收益率高於上季度的 13.6% 和去年的 7.3%。本季度的總費用（不包括利息和債務融資費用、基礎管理和激勵費用以及所得稅和消費稅）與去年第一季度相比從 200 萬美元增加到 230 萬美元，與第四季度相比保持不變。按年化計算，這占平均總資產的 0.8%，低於去年第一季度的 0.9%，與上季度持平。

Also, we have again added the KPI slides 27 through 30 in the appendix at the end of the presentation that shows our income statement and balance sheet metrics for the past 9 quarters and the upward trends we have maintained, including a 52% increase in net interest margin over the past year.

此外，我們在演示文稿末尾的附錄中再次添加了 KPI 幻燈片 27 至 30，顯示了我們過去 9 個季度的損益表和資產負債表指標以及我們保持的上升趨勢，包括淨利潤增長 52%過去一年的息差。

Moving on to Slide 5. NAV was $337.5 million as of this quarter end, a $9.5 million decrease from last quarter and a $7.7 million decrease from the same quarter last year. This quarter, the main drivers were $60 million of net investment income, offset by $16.3 million of net realized and unrealized losses and $8.2 million of dividends declared. In addition, during Q1, $1.1 million of stock dividend distributions were made through the company's DRIP plan, offset by $2.2 million of shares repurchased at an average price of $24.36. This chart also includes our historical NAV per share, which highlights how this important metric has increased 16 of the past 21 quarters. Over the long term, our net asset value has steadily increased since 2011, and this growth has been accretive, as demonstrated by the consistent increase in NAV per share. We continue to benefit from our history of consistent realized and unrealized gains.

轉到幻燈片 5。截至本季度末，資產淨值為 3.375 億美元，比上季度減少 950 萬美元，比去年同期減少 770 萬美元。本季度的主要驅動力是 6000 萬美元的淨投資收入，被 1630 萬美元的已實現和未實現淨虧損以及 820 萬美元的股息所抵消。此外，第一季度，通過公司的 DRIP 計劃分配了 110 萬美元的股票股息，被以平均價格 24.36 美元回購的 220 萬美元股票所抵消。該圖表還包括我們的歷史每股資產淨值，突出顯示了這一重要指標在過去 21 個季度中 16 個季度的增長情況。從長期來看，我們的資產淨值自2011年以來一直在穩步增長，而且這種增長一直在增值，每股資產淨值的持續增長就證明了這一點。我們繼續受益於我們一貫的已實現和未實現收益的歷史。

On Slide 6, you will see a simple reconciliation of the major changes in adjusted NII and NAV per share on a sequential quarterly basis. Starting at the top, the primary driver of the $0.10 increase in adjusted NII is the $0.15 increase in non-CLO net interest income. While on the lower half of the slide, NAV per share decreased by $0.70 primarily due to the $0.69 dividend recognized in the quarter with GAAP NII and unrealized depreciation basically offsetting each other.

在幻燈片 6 上，您將看到按連續季度調整後的 NII 和每股 NAV 的主要變化的簡單調節。從頂部開始，調整後 NII 增加 0.10 美元的主要驅動力是非 CLO 淨利息收入增加 0.15 美元。而在下滑的下半部分，每股資產淨值下降了 0.70 美元，主要是由於本季度確認的 0.69 美元股息以及 GAAP NII 和未實現折舊基本上相互抵消。

Slide 9 outlines the dry powder available to us as of quarter end, which totaled $231.2 million. This was spread between our available cash, undrawn SBA debentures and undrawn secured credit facility. This quarter end level of available liquidity allows us to grow our assets by an additional 21% without the need for external financing, with $53 million of pro forma quarter-end cash available and that's fully accretive to NII when deployed, and $148 million of available SBA debentures with its low-cost pricing also very accretive.

幻燈片 9 概述了截至季度末我們可用的干粉，總額為 2.312 億美元。這分佈在我們的可用現金、未提取的 SBA 債券和未提取的擔保信貸額度之間。本季度末的可用流動性水平使我們能夠在無需外部融資的情況下將資產額外增長 21%，預計季度末可用現金為 5,300 萬美元，部署後可完全增加 NII，還有 1.48 億美元的可用流動性SBA 債券以其低成本定價也非常具有增值性。

We remain pleased with our available liquidity and leverage position, including our access to diverse sources of both public and private liquidity and especially taking into account the overall conservative nature of our balance sheet. The fact that almost all our debt is long term in nature with almost no non-SBIC debt maturing within the next 2 years. And importantly, that almost all our debt is fixed rate in this rising rate environment.

我們對我們的可用流動性和槓桿狀況仍然感到滿意，包括我們獲得公共和私人流動性的多種來源，特別是考慮到我們資產負債表的整體保守性質。事實上，我們幾乎所有債務都是長期債務，幾乎沒有非 SBIC 債務會在未來 2 年內到期。重要的是，在這種利率上升的環境下，我們幾乎所有的債務都是固定利率的。

Also, our debt is structured in such a way that we have no BDC covenants that can be stressed and with available call options in the next 2 years on the debt with higher coupons, important during such volatile times.

此外，我們的債務結構使得我們沒有可以強調的 BDC 契約，並且在未來 2 年內可以對票面較高的債務提供看漲期權，這在如此動蕩的時期很重要。

Now I would like to move on to Slides 8 through 12 and review the composition and yield of our investment portfolio. Slide 8 highlights that we now have $1.1 billion of AUM at fair value, and this is invested in 56 portfolio companies, up by 7 from last quarter, 1 CLO fund and 1 joint venture. Our first lien percentage is 85% of total investments, of which 29% is in first lien last-out positions.

現在我想轉到幻燈片 8 到 12，回顧一下我們投資組合的構成和收益率。第 8 張幻燈片強調，我們現在按公允價值計算的 AUM 為 11 億美元，投資於 56 家投資組合公司（較上季度增加 7 家）、1 支 CLO 基金和 1 家合資企業。我們的第一留置權比例佔總投資的 85%，其中 29% 位於第一留置權後出位置。

On Slide 9, you can see how the yield on our core BDC assets, excluding our CLO, has changed over time, especially this past year. This quarter, our core BDC yield is up another 60 basis points to 12.7%. And the full impact of the rising rate environment through today is still not yet fully reflected in our earnings, as you will see on the next slide. The CLO yield decreased further to 6.5% from 7.4% last quarter, reflecting current market performance. The CLO is performing and current.

在幻燈片 9 上，您可以看到我們核心 BDC 資產（不包括 CLO）的收益率如何隨著時間的推移而變化，尤其是在過去的一年。本季度，我們的核心 BDC 收益率又上漲 60 個基點，達到 12.7%。截至今天，利率上升環境的全面影響尚未完全反映在我們的收益中，正如您將在下一張幻燈片中看到的那樣。 CLO 收益率從上季度的 7.4% 進一步下降至 6.5%，反映了當前的市場表現。 CLO 正在執行且處於當前狀態。

Slide 10 shows how at the end of Q1, the average 3-month SOFR yield in our portfolio was 498 basis points versus at quarter end when 3 months SOFR closed at 529 basis points and versus today at approximately 528 basis points. Despite the small decrease recently, with 99% of our interest-earning assets using variable rates, earnings will continue to benefit from these higher rate levels in Q2 and Q3, while all but $35 million of our borrowings is fixed rate and will not be impacted by these increases in base rates. There is uncertainty about the future of rates, but we stand to continue to gain as rates rise. That said, there will be a lag in the effect this dynamic has on our earnings due to timing of rate resets and invoicing terms.

幻燈片 10 顯示，在第一季度末，我們投資組合中的 3 個月 SOFR 平均收益率為 498 個基點，而季末時 3 個月 SOFR 收於 529 個基點，而今天約為 528 個基點。儘管最近略有下降，但由於我們 99% 的生息資產採用浮動利率，收益將繼續受益於第二季度和第三季度較高的利率水平，而除 3500 萬美元外，我們的所有借款均為固定利率，不會受到影響通過這些基本利率的增加。利率的未來存在不確定性，但隨著利率上升，我們將繼續受益。也就是說，由於利率重置的時間和發票條款，這種動態對我們收益的影響將會存在滯後。

Slide 11 shows how our investments are diversified through the U.S.

幻燈片 11 顯示了我們如何通過美國實現投資多元化

And on Slide 12, you can see the industry breadth and diversity that our portfolio represents spread over 42 distinct industries in addition to our investments in the CLO and JV, which are included as structured finance securities. Of our total investment portfolio, 8.9% consists of equity interest, which remain an important part of our overall investment strategy. For the past 11 fiscal years, we had a combined $81.6 million of net realized gains from the sale of equity interest or sale or early redemption of other investments. This consistent realized gain performance highlights our portfolio credit quality, has helped grow our NAV and is reflected in our healthy long-term ROE.

在幻燈片 12 上，您可以看到我們的投資組合所代表的行業廣度和多樣性，除了我們對 CLO 和 JV 的投資（包含在結構性融資證券中）之外，還涵蓋了 42 個不同的行業。在我們的總投資組合中，8.9%是股權，這仍然是我們整體投資策略的重要組成部分。在過去 11 個財年中，我們通過出售股權或出售或提前贖回其他投資獲得了總計 8160 萬美元的已實現淨收益。這種穩定的已實現收益表現突顯了我們的投資組合信用質量，有助於提高我們的資產淨值，並反映在我們健康的長期淨資產收益率中。

That concludes my financial and portfolio review. I will now turn the call over to Michael Grisius, our Chief Investment Officer, for an overview of the investment market.

我的財務和投資組合審查到此結束。我現在將把電話轉給我們的首席投資官 Michael Grisius，以了解投資市場的概況。

Thank you, Henri. I'll take a few minutes to describe our perspective on the current state of the market and then comment on our current portfolio performance and investment strategy. Not too much has changed since our recent update in May. For the most part, lenders are staying cautious, though competition for premium quality credits persist.

謝謝你，亨利。我將花幾分鐘來描述我們對當前市場狀況的看法，然後評論我們當前的投資組合表現和投資策略。自我們最近五月份的更新以來，沒有太大變化。儘管優質信貸的競爭持續存在，但在大多數情況下，貸款機構仍保持謹慎態度。

Liquidity continues to remain abundant after the large-scale fundraisings of last year, but lenders and especially banks remain more risk-sensitive, backing off historically volatile sectors and taking a harder stance on the use of capital. Lenders are requiring greater equity capitalizations regardless of the enterprise multiple and in some cases, have reduced their pace of deployment as well as their hold positions. All these factors are positive for us as we have been seeing more attractive opportunities come our way and have a very actionable deal pipeline.

經過去年的大規模融資後，流動性繼續保持充裕，但貸款機構，特別是銀行仍然對風險更加敏感，退出歷史上波動較大的行業，並對資本使用採取更強硬的立場。無論企業倍數如何，貸款人都需要更大的股權資本，並且在某些情況下，貸款人已經減少了部署速度以及持有頭寸。所有這些因素對我們來說都是積極的，因為我們看到了更多有吸引力的機會，並且擁有非常可行的交易渠道。

Leverage levels appear to have come down at the margin, but remain full for strong credits. Absolute yields continued to grow with SOFR increasing another approximately 30 basis points during our first fiscal quarter and have remained there. The spread widening we have been experiencing in recent quarters appears to have stabilized and for highly desirable credits, we have seen some lenders offer tighter spreads to win mandates.

槓桿水平似乎有所下降，但由於信貸強勁，槓桿水平仍然充足。絕對收益率繼續增長，SOFR 在我們的第一個財政季度又增加了約 30 個基點，並一直保持在這一水平。最近幾個季度我們經歷的利差擴大似乎已經穩定下來，對於非常理想的信貸，我們看到一些貸方提供更窄的利差以贏得授權。

Lenders in our market remain wary of thinly capitalized deals and for the most part, are staying disciplined in terms of minimum aggregate base levels of equity and requiring reasonable covenants, particularly given the concerns around potential economic recession. The Saratoga management team has successfully managed through a number of credit cycles and that experience has made us particularly aware of the importance of first being disciplined when making investment decisions and second, being proactive in managing our portfolio.

我們市場上的貸款人仍然對資本薄弱的交易保持警惕，並且在大多數情況下，在最低總股本水平方面保持紀律，並要求合理的契約，特別是考慮到對潛在經濟衰退的擔憂。薩拉託加管理團隊成功地度過了多個信貸週期，這些經驗使我們特別意識到首先在做出投資決策時遵守紀律，其次是積極主動地管理我們的投資組合的重要性。

We're keeping a very watchful eye on how continued inflationary pressures and labor costs, supply chain issues, rising rates, and slowing growth could affect both prospective and existing portfolio companies. A natural focus currently is on supporting our existing portfolio companies through follow-ons.

我們正在密切關注持續的通脹壓力和勞動力成本、供應鏈問題、利率上升和增長放緩可能對未來和現有投資組合公司產生的影響。目前的一個自然焦點是通過後續行動支持我們現有的投資組合公司。

Our underwriting bar remains high as usual, yet we continue to find opportunities to deploy capital. First half of calendar year 2023 was a very strong deployment environment for us. Follow-on investments in existing borrowers with strong business models and balance sheets continued to be a healthy avenue of capital deployment as demonstrated with 39 follow-ons so far this calendar 2023, including delayed draws. In addition, we have invested in 9 new platform investments this past calendar year and in another 8 new investment platform so far this year.

我們的承保門檻仍然像往常一樣高，但我們繼續尋找部署資本的機會。 2023 年上半年對我們來說是一個非常強大的部署環境。對具有強大業務模式和資產負債表的現有借款人的後續投資仍然是資本配置的健康途徑，2023 年迄今為止的 39 項後續投資（包括延遲提款）就證明了這一點。此外，我們去年投資了 9 個新平台，今年迄今又投資了 8 個新平台。

Portfolio management continues to be critically important, and we remain actively engaged with our portfolio companies and in close contact with our management teams, especially in this volatile environment. All of our loans in our portfolio are paying according to their payment terms, except for our Knowland investment that remains on nonaccrual as we have moved to PIK interest for a period of time. Knowland is our only nonaccrual investment across our portfolio.

投資組合管理仍然至關重要，我們仍然積極與投資組合公司合作，並與我們的管理團隊保持密切聯繫，尤其是在這個動蕩的環境中。我們投資組合中的所有貸款均根據其付款條件進行支付，但我們的 Knowland 投資除外，該投資仍為非應計利息，因為我們已在一段時間內轉向 PIK 利息。 Knowland 是我們投資組合中唯一的非應計投資。

After recognizing the unrealized depreciation on our overall portfolio this quarter, Saratoga's overall assets are now slightly less than 1% below cost basis with our core non-CLO portfolio 1.3% above cost. We believe our strong performance reflects certain attributes of our portfolio that bolster its overall durability. 85% of our portfolio is in first lien debt and generally supported by strong enterprise values in industries that have historically performed well in stressed situations. We have no direct energy or commodities exposure. In addition, the majority of our portfolio is comprised of businesses that produce a high degree of recurring revenue and have historically demonstrated strong revenue retention.

在認識到本季度我們整體投資組合的未實現折舊後，薩拉託加的整體資產目前比成本基礎略低於 1%，而我們的核心非 CLO 投資組合比成本高出 1.3%。我們相信，我們的強勁表現反映了我們投資組合的某些屬性，這些屬性增強了其整體耐用性。我們的投資組合中 85% 屬於第一留置權債務，並且通常受到歷史上在壓力情況下表現良好的行業的強大企業價值的支持。我們沒有直接的能源或商品風險。此外，我們的大部分投資組合由產生大量經常性收入且歷來表現出強勁收入保留的業務組成。

Our approach has always been to stay focused on the quality of our underwriting. And as you can see on Slide 14, this approach has resulted in our portfolio performance being at the top of the BDC space with respect to net realized gains as a percentage of portfolio at cost. We are only -- we are 1 of only 14 BDCs that have had a positive number over the past 3 years, currently fifth overall.

我們的方法始終是專注於承保質量。正如您在幻燈片 14 中看到的那樣，就淨實現收益佔投資組合成本的百分比而言，這種方法使我們的投資組合績效處於 BDC 領域的頂部。我們是過去 3 年中實現正值的 14 個 BDC 之一，目前總體排名第五。

Our internal credit quality rating reflects the impact of current market volatility and shows 96.5% of our portfolio at our highest credit rating as of quarter-end. Part of our investment strategy is to selectively co-invest in the equity of our portfolio companies when we're given that opportunity and when we believe the equity upside potential. This equity co-investment strategy is not only serve as yield protection for our overall portfolio, but also meaningfully augmented our overall portfolio returns as demonstrated on this slide and the previous one, and we intend to continue this strategy.

我們的內部信用質量評級反映了當前市場波動的影響，並顯示我們 96.5% 的投資組合處於截至季度末的最高信用評級。我們投資策略的一部分是，當我們有機會並且相信股票上漲潛力時，有選擇地共同投資我們投資組合公司的股票。這種股權共同投資策略不僅可以作為我們整體投資組合的收益保護，而且還有意義地增加了我們的整體投資組合回報，如這張幻燈片和上一張幻燈片所示，我們打算繼續這一策略。

Now looking at leverage on Slide 15, you can see that industry debt multiples have come down this year from their historically high levels. Total leverage for our overall portfolio is 4.9x, excluding Knowland and Pepper Palace, while the industry is now around 5x leverage. In addition, this slide illustrates the strength of our deal flow and our consistent ability to generate new investments over the long term, despite ever-changing and increasingly competitive market dynamics.

現在看看幻燈片 15 上的槓桿率，您可以看到今年行業債務倍數已從歷史高位回落。我們整體投資組合的總槓桿率為 4.9 倍（不包括 Knowland 和 Pepper Palace），而行業槓桿率目前約為 5 倍。此外，這張幻燈片還展示了我們交易流的實力以及我們在長期內持續產生新投資的能力，儘管市場動態不斷變化且競爭日益激烈。

During the second calendar quarter, we added another 4 new portfolio companies and made 20 follow-on investments. Despite the success we're having investing in highly attractive businesses and growing our portfolio and the increased deal flow we are seeing, it is important to emphasize that, as always, we're not aiming to grow simply for growth's sake. In the face of this uncertain macro environment, we're keenly focused on investing in durable businesses with limited exposure to inflationary and cyclical pressures. Our capital deployment bar is always high and is conditioned upon healthy confidence that each incremental investment will be accretive to our shareholders.

在第二季度，我們又增加了 4 家新的投資組合公司，並進行了 20 項後續投資。儘管我們在投資極具吸引力的業務、擴大投資組合以及交易量增加方面取得了成功，但必須強調的是，一如既往，我們的目標並不是僅僅為了增長而增長。面對這種不確定的宏觀環境，我們專注於投資於通脹和周期性壓力有限的耐用企業。我們的資本配置標準始終很高，並以每一項增量投資都將為我們的股東帶來增值的健康信心為條件。

Slide 16 provides more data on our deal flow previously discussed, demonstrating how our team's skill set, experience and relationships continue to mature, and our significant focus on business development has led to multiple new strategic relationships that have become sources of new deals. What is especially pleasing to us is 7 of the 13 new portfolio companies over the past 12 months are from newly formed relationships, reflecting notable progress as we expand our business development efforts.

幻燈片 16 提供了有關我們之前討論的交易流程的更多數據，展示了我們團隊的技能、經驗和關係如何不斷成熟，以及我們對業務發展的高度重視導致了多種新的戰略關係，這些關係已成為新交易的來源。尤其令我們高興的是，在過去 12 個月的 13 家新投資組合公司中，有 7 家來自新建立的合作關係，這反映出我們在擴大業務發展努力方面取得了顯著進展。

The significant progress we've made in building broader and deeper relationships in the marketplace is noteworthy because it strengthens the dependability of our deal flow and reinforces our ability to remain highly selective as we rigorously screen opportunities to execute on the best investments.

我們在市場上建立更廣泛、更深入的關係方面取得的重大進展值得注意，因為它增強了我們交易流的可靠性，並增強了我們在嚴格篩選執行最佳投資的機會時保持高度選擇性的能力。

As you can see on Slide 17, our overall portfolio credit quality remains solid. The gross unleveraged IRR on realized investments made by the Saratoga Investment management team is 15.6% on $908 million of realizations. On the chart on the right, you can see the total gross unlevered IRR on our $1.1 billion of combined weighted SBIC and BDC unrealized investments is 11%. As of this quarter, we continue to have 2 yellow rated investments, still only being Knowland Group and Pepper Palace investments.

正如您在幻燈片 17 中看到的，我們的整體投資組合信用質量仍然穩定。薩拉託加投資管理團隊已實現投資的總非槓桿 IRR 為 15.6%，已實現 9.08 億美元。在右側圖表中，您可以看到我們 11 億美元的 SBIC 和 BDC 未實現加權投資組合的總無槓桿 IRR 為 11%。截至本季度，我們仍有 2 項黃色評級投資，仍然只有 Knowland Group 和 Pepper Palace 投資。

Knowland has been yellow for a while now since COVID being more dependent on in-person business interaction and has been on nonaccrual status since last year. There was no significant change to the market in Q1. The current unrealized depreciation reflects the current performance of the company but does not change our view of the fundamental long-term prospects for the business.

由於新冠疫情更加依賴面對面的業務互動，Knowland 已經有一段時間處於黃色狀態，並且自去年以來一直處於非應計狀態。第一季度市場沒有發生重大變化。當前未實現的折舊反映了公司當前的業績，但並沒有改變我們對業務基本長期前景的看法。

The other yellow investment is Pepper Palace. In this quarter, there was an additional $1.1 million unrealized write-down to the mark, leaving the total depreciation of approximately $11 million since investment on our first lien term loan and equity investments. And this markdown reflects the current performance of the company but they continue to pay interest. We are working closely with the company and the sponsor as they work to improve performance.

另一項黃色投資是 Pepper Palace。本季度，還有 110 萬美元的未實現減記，自投資第一筆留置權定期貸款和股權投資以來，總折舊約為 1100 萬美元。這種降價反映了公司當前的業績，但他們繼續支付利息。我們正在與公司和讚助商密切合作，努力提高績效。

This quarter's $16.3 million net unrealized depreciation can be divided into 3 primary buckets. First, $11 million of unrealized depreciation on the company's CLO and JV equity investments, reflecting both the volatility in the broadly syndicated loan markets as of quarter-end as well as the reduction in value of certain defaulted assets in the CLO portfolio.

本季度 1,630 萬美元的未實現淨折舊可分為 3 個主要部分。首先，該公司的 CLO 和合資企業股權投資存在 1100 萬美元的未實現折舊，反映了截至季度末廣泛銀團貸款市場的波動以及 CLO 投資組合中某些違約資產價值的下降。

Second, $3.3 million of unrealized depreciation on the company's Netreo equity investment reflecting increased company leverage, reducing the investments total net unrealized appreciation to $5 million. And third, approximately $2 million of net unrealized depreciation across the remainder of the portfolio, most of which reflects current market spreads. Our overall investment approach has yielded exceptional realized returns and recovery of our invested capital.

其次，公司 Netreo 股權投資未實現折舊 330 萬美元，反映出公司槓桿率增加，從而將投資總未實現淨增值減少至 500 萬美元。第三，投資組合其餘部分約有 200 萬美元的未實現淨折舊，其中大部分反映了當前的市場利差。我們的整體投資方法產生了卓越的已實現回報和投資資本回收。

And moving on to Slide 18. You can see our first and second SBIC licenses are fully funded and employed with $3.5 million and $6.5 million of cash available for distributions to the BDC in SBIC I and SBIC II, respectively. We are currently ramping up our new SBIC III license with $19 million of cash and $148 million of lower cost undrawn debentures available, allowing us to continue to support U.S. small businesses.

轉到幻燈片 18。您可以看到我們的第一個和第二個 SBIC 許可證已得到充分資助和使用，分別有 350 萬美元和 650 萬美元現金可用於在 SBIC I 和 SBIC II 中分配給 BDC。目前，我們正在通過 1900 萬美元的現金和 1.48 億美元的低成本未支用債券來擴大新的 SBIC III 許可證，使我們能夠繼續支持美國小企業。

This concludes my review of the market, and I'd like to turn the call back over to our CEO. Chris?

我對市場的回顧到此結束，我想將電話轉回給我們的首席執行官。克里斯？

Thank you, Mike. As outlined on Slide 19, our latest dividend of $0.70 per share for the quarter ended May 31, 2023, was paid on June 29, 2023. This is the largest quarterly dividend in our history and reflects a 59% and 32% increase over the past 2 years and latest 12 months, respectively. The Board of Directors will continue to evaluate the dividend level at least a quarterly basis, considering both the company and general economic factors, including the near-term impact of rising base rates and increased spreads on our earnings.

謝謝你，邁克。如幻燈片 19 所示，我們於 2023 年 6 月 29 日支付了截至 2023 年 5 月 31 日的季度的最新股息每股 0.70 美元。這是我們歷史上最大的季度股息，比上一季度分別增加了 59% 和 32%。分別是過去 2 年和最近 12 個月。董事會將繼續至少每季度評估一次股息水平，同時考慮公司和總體經濟因素，包括基本利率上升和利差擴大對我們收益的近期影響。

Recognizing the divergence of opinions on the future direction of interest rate levels and overall economic performance, Saratoga's Q1 overearning of its dividend by 53% or $1.08 versus $0.70 per share this quarter, provides substantial cushion should economic conditions deteriorate or base rates decline.

認識到對利率水平和整體經濟表現的未來方向存在意見分歧，薩拉託加第一季度的股息超額增長 53%，即 1.08 美元，而本季度每股 0.70 美元，這為經濟狀況惡化或基本利率下降提供了巨大的緩衝。

Moving on to Slide 20. Our total return for the last 12 months, which includes both capital appreciation and dividends, has generated total returns of 30%, outperforming the BDC index of 18% for that same period.

繼續看幻燈片 20。過去 12 個月的總回報率（包括資本增值和股息）產生了 30% 的總回報率，優於同期 BDC 指數 18% 的回報率。

Our longer-term performance is outlined on our next slide, 21. Our 3- and 5-year returns place us in the top quartile of all BDCs for both time horizons. Over the past 3 years, our 113% return exceeded the average index return of 61%. While over the past 5 years, our 67% return more than double the index' average of 30%. Since Saratoga took over the management of the BDC in 2010, our total return has been 695% versus the industry's 197%.

我們的長期業績在下一張幻燈片 21 中概述。我們的 3 年和 5 年回報率使我們在這兩個時間範圍內都處於所有 BDC 的前四分之一。過去3年，我們113%的回報率超過了61%的平均指數回報率。而在過去 5 年中，我們 67% 的回報率是指數平均 30% 的兩倍多。自 Saratoga 於 2010 年接管 BDC 的管理以來，我們的總回報率為 695%，而行業的總回報率為 197%。

On Slide 22, you can further see our performance placed in the context of the broader industry and specific to certain key performance metrics. We continue to focus on our long-term metrics such as return on equity, NAV per share, NII yield and dividend growth, which reflects the growing value our shareholders are receiving. While NAV per share decreased 2.4% this quarter, we were only down 0.7% year-over-year, while the BDC industry is down 7.3%. We continue to be one of the few BDCs who have grown NAV over the long term, and we have done it accretively by also growing NAV per share, 16 of the last 21 quarters. And our latest 12 months return on equity of 7.2% significantly beat the industry's 1.5% average.

在幻燈片 22 上，您可以進一步看到我們在更廣泛的行業背景下的績效以及特定於某些關鍵績效指標的績效。我們繼續關注股本回報率、每股資產淨值、NII 收益率和股息增長等長期指標，這反映了我們股東所獲得的不斷增長的價值。雖然本季度每股資產淨值下降了 2.4%，但同比僅下降了 0.7%，而 BDC 行業則下降了 7.3%。我們仍然是少數幾個長期實現資產淨值增長的 BDC 之一，而且我們通過每股資產淨值的增長（過去 21 個季度中有 16 個季度）實現了這一增長。我們最近 12 個月的股本回報率為 7.2%，大大超過了行業 1.5% 的平均水平。

Moving on to Slide 23. All of our initiatives discussed on this call are designed to make Saratoga Investment a leading BDC that is attractive to the capital markets community. We believe that our differentiated performance characteristics outlined on this slide will help drive the size and quality of our investor base, including adding more institutions. These differentiating characteristics, most of which have been previously discussed include the maintaining of one of the highest levels of management ownership in the industry at 14%, ensuring we are aligned with our shareholders.

轉到幻燈片 23。我們在本次電話會議上討論的所有舉措都是為了使 Saratoga Investment 成為對資本市場界有吸引力的領先 BDC。我們相信，這張幻燈片中概述的差異化業績特徵將有助於提高我們投資者基礎的規模和質量，包括增加更多機構。這些差異化特徵（其中大部分已在之前討論過）包括將管理層持股比例維持在行業最高水平之一，即 14%，以確保我們與股東保持一致。

Looking ahead on Slide 24, we remain confident that our reputation, experienced management team, historically strong underwriting standards and time and market tested investment strategy will serve us well in navigating through the challenges and uncovering opportunities in the current and future environment. And that our balance sheet, capital structure and liquidity will benefit Saratoga's shareholders in the near and long term.

展望幻燈片 24，我們仍然相信，我們的聲譽、經驗豐富的管理團隊、歷來強大的承保標準以及經過時間和市場考驗的投資策略將幫助我們在當前和未來的環境中應對挑戰並發現機遇。我們的資產負債表、資本結構和流動性將使薩拉託加的股東在短期和長期受益。

In closing, I would again like to thank all of our shareholders for their ongoing support. I would like to now open the call for questions.

最後，我要再次感謝所有股東的持續支持。我現在想開始提問。

(Operator Instructions)

（操作員說明）

And our first question will come from the line of Mickey Schleien from Landenburg.

我們的第一個問題來自蘭登堡的米奇·施萊恩 (Mickey Schleien)。

A couple of questions today. The $1.8 million of dividend income from the senior loan fund implies over a 40% ROE on your equity investment in that fund at cost, which is obviously really high. I'd like to understand what drove that dividend? And what is your target ROE on that investment? .

今天有幾個問題。高級貸款基金的 180 萬美元股息收入意味著您對該基金的股權投資按成本計算的 ROE 超過 40%，這顯然非常高。我想了解是什麼推動了股息？您對該投資的目標股本回報率是多少？ 。

Henri, if you would like to...

亨利，如果你願意……

Yes, Mickey, yes, you're right. So that was -- let me start with what drove the dividend. Obviously, as you know, our joint venture owns a CLO investment. And so therefore, the returns were driven by the equity distributions that we received by the CLO into the joint venture, and then the joint venture dividended out some of the return to its partners, of which is us and one other partner in a joint venture structure. The accounting is that's dividend income. And so that was our first dividend that we've received on that investment. I'm trying to think how best to think of this as a future return. It's obviously a really strong return, but we definitely do think of the joint venture return as more similar to our CLO in general, which is high teen digits or higher.

是的，米奇，是的，你說得對。所以那就是——讓我從推動股息的因素開始。顯然，如您所知，我們的合資企業擁有 CLO 投資。因此，回報是由我們從 CLO 收到的合資企業的股權分配驅動的，然後合資企業將部分回報分紅給其合作夥伴，其中包括我們和合資企業的另一位合作夥伴結構。會計上就是股息收入。這是我們從這項投資中收到的第一筆股息。我正在嘗試思考如何最好地將其視為未來的回報。這顯然是一個非常強勁的回報，但我們確實認為合資企業的回報與我們一般的 CLO 更相似，後者是高十位數或更高。

Okay. So Henri, was there some sort of a catch-up in the quarter given that it was the first distribution?

好的。那麼，亨利，考慮到這是第一次分配，本季度是否有某種追趕？

That dividend represented a 3-month period. So no real specific catch-up. But you'll always see that the first waterfall distribution is quite a fulsome distribution.

該股息代表了 3 個月的時間。所以沒有真正具體的追趕。但你總會看到第一個瀑布分佈是一個相當豐富的分佈。

Right. Okay. My follow-up question is, I see that the portfolio's leverage has increased by almost a full turn over the last year to almost 5x as Mike described. And so I'd like to ask how your portfolio companies are doing in terms of their revenues and EBITDA? And is it declines in EBITDA that's driving that increase? Or is it the market terms that's driving the increase or a little bit of both?

正確的。好的。我的後續問題是，我發現投資組合的槓桿率比去年增加了幾乎一整倍，達到邁克所描述的近 5 倍。所以我想問一下您的投資組合公司的收入和 EBITDA 表現如何？是 EBITDA 的下降推動了這一增長嗎？或者是市場條件推動了價格上漲，還是兩者兼而有之？

This is Mike. So it's a good question. It is not underperformance that's driving the increase in leverage. It's really reflecting some of the newer portfolio companies that we feel really good about that have a bit higher leverage profile. And then in terms of the overall portfolio performance, the vast majority of our portfolio is performing very well, and we're watching it very carefully. But at this juncture, the vast majority of our portfolio is up quarter-over-quarter and up at the same quarter over last year.

這是邁克。所以這是一個好問題。推動槓桿率上升的並不是表現不佳。這確實反映了一些我們感覺非常好的新投資組合公司，它們的槓桿率較高。然後就整體投資組合表現而言，我們的絕大多數投資組合表現都非常好，我們正在非常仔細地觀察。但目前，我們的投資組合中的絕大多數都比上一季度有所增長，並且比去年同期有所增長。

And Mike, just to follow up. Is the more recent investment activity into perhaps larger companies than you've historically done, which may include higher leverage multiples?

邁克，跟進一下。最近對規模更大的公司的投資活動是否比您以往的投資活動更大，其中可能包括更高的槓桿倍數？

Well, it's less about size, and I think it's more about durability of the portfolio companies. So -- and we always say this, right? When we're looking at the lower end of the middle market, we're seeking companies that have kind of large company characteristics, i.e., lots of durability, really strong management teams, et cetera. So for instance, if you do a support -- and I'll just use an example of a business that's in the franchising space. It's a franchisor, not a franchisee.

嗯，這與規模無關，我認為更多的是與投資組合公司的耐用性有關。所以——我們總是這麼說，對嗎？當我們著眼於中低端市場時，我們正在尋找具有大公司特徵的公司，即具有很強的耐用性、非常強大的管理團隊等等。例如，如果您提供支持，我將僅使用特許經營領域的企業示例。它是特許人，而不是特許人。

It may not be a terribly big business. It's not a worldwide name, but it can be a business that has hundreds of locations, very successful, real durable cash flow stream, et cetera, that would be a business that would typically command a more fulsome leverage, just reflective of the much lower risk profile and the lower volatility that is associated with that business. So in business models like that, which we seek out having a lot of those characteristics. We're okay with a bit higher leverage profile, and most of the increase in leverage is reflective of some of that activity.

這可能不是一項非常大的生意。它不是一個全球性的名字，但它可以是一家擁有數百個分支機構、非常成功、真正持久的現金流等的企業，這將是一家通常擁有更充分槓桿的企業，只是反映了低得多的槓桿率。風險狀況以及與該業務相關的較低波動性。因此，在這樣的商業模式中，我們尋求具有很多這些特徵。我們可以接受更高一點的槓桿率，而且槓桿率的增加大部分反映了其中的一些活動。

And that includes your focus on software deals, right, where leverage tends to be higher than average? Or am I mistaken?

這包括您對軟件交易的關注，對吧，槓桿率往往高於平均水平？還是我錯了？

It would include that for the ones that are underwritten on an EBITDA basis for the same reasons. But it would also include some of the other business models that we invest in as well.

出於同樣的原因，這將包括那些以 EBITDA 為基礎承保的公司。但它也包括我們投資的一些其他商業模式。

Okay. I understand.

好的。我明白。

And our next question will come from the line of Bryce Rowe from B. Riley.

我們的下一個問題將來自 B. Riley 的 Bryce Rowe。

Wanted to start, Chris, with just the dividend. And obviously, the huge amount of coverage you have of the dividend here this quarter. How should we think about the dividend construct going forward, I think we probably -- all of us have thought about this or asked this on previous calls. But clearly, there could be some room to move the dividend higher. Are you expecting possibly to consider a base supplemental construct? Just curious how you and the Board are thinking about it at this point.

克里斯，我只想從股息開始。顯然，本季度的股息覆蓋面很大。我想我們應該如何考慮未來的股息結構，我們所有人都考慮過這個問題，或者在之前的電話會議上問過這個問題。但顯然，股息可能還有一定的上升空間。您是否希望考慮一個基本的補充結構？只是好奇您和董事會目前如何考慮這件事。

Well, as you can imagine, this is something we think about and discuss quite a bit. I think a lot of -- a lot of the -- predicting the future of business is very difficult, especially these days. And if you look at -- we kind of look at all these forward interest rate curves that are coming out. And I think if you look at the forward interest rate curve 6 months ago, they were predicting interest rate cuts this summer, this July.

嗯，正如你可以想像的，這是我們思考和討論很多的事情。我認為很多——很多——預測商業的未來是非常困難的，尤其是現在。如果你看一下——我們會看一下所有這些即將出現的遠期利率曲線。我認為，如果你看一下 6 個月前的遠期利率曲線，他們就預測今年夏天、今年 7 月會降息。

And then you look at more recently, there's higher for longer and interest rates coming in 2024. Since it transmit of volatility, I think we've had probably the most predicted recession by really accomplished intelligent, really successful investors have been predicting an imminent recession for 9 months now or something, and that has not yet occurred. And now this debate is a soft landing, hard landing still going on.

然後你看一下最近的情況，2024 年的長期利率和利率都會更高。由於它傳遞了波動性，我認為我們可能已經經歷了最有成就的聰明、成功的投資者預測的經濟衰退已經有 9 個月了，但那還沒有發生。而現在這場爭論到底是軟著陸還是硬著陸還在繼續。

So there's so much uncertainty out there, and that's not really our business to try and figure that one out. That's pretty complicated to figure out. And so what we're trying to do is we're trying to establish a sustainable dividend level if kind of somewhat of the worst case occurs coming out there in the future. If the economy comes off and then if interest rates comes down, we want to be in a position where we can sustain this dividend kind of through that case. Then obviously, if things continue much better, we're building up a lot of incremental dividend obligation, right, that we would ultimately look to pay out to our shareholders.

因此，存在如此多的不確定性，而嘗試解決這個問題並不是我們真正的職責。這很難弄清楚。因此，我們正在努力做的是，如果將來出現最壞的情況，我們將努力建立可持續的股息水平。如果經濟衰退，然後利率下降，我們希望能夠在這種情況下維持這種股息。顯然，如果情況繼續好轉，我們正在建立大量增量股息義務，對吧，我們最終會向股東支付這些義務。

I think as we mentioned on our last call, the way the BDC requirements for payouts occur generally, it's sort of like November, right, for us. So you have November of '23, you have a certain tax obligation November '24, the certain tax obligation. And so we don't have a requirement by November of 2023 to do anything different than what we've kind of been doing. November 2024 is different. That's when a lot of our supplemental earnings -- incremental earnings would be due. And so we have quite a bit of time. And as I've just said, if you look at over the last 6 months, how outlooks have changed. I think, over the next 6 months, probably outlooks may change just as much, may not change a lot. We don't know.

我認為正如我們在上次電話會議中提到的，BDC 付款要求的一般發生方式，對我們來說有點像 11 月，對吧。因此，您在 23 年 11 月有一定的納稅義務，在 24 年 11 月有一定的納稅義務。因此，我們沒有要求在 2023 年 11 月之前做任何與我們一直在做的事情不同的事情。 2024 年 11 月有所不同。那時我們的大量補充收入——增量收入將到期。所以我們有相當多的時間。正如我剛才所說，如果你看看過去 6 個月，你會發現前景發生了怎樣的變化。我認為，在接下來的 6 個月裡，前景可能會發生同樣大的變化，但可能不會發生太大變化。我們不知道。

But I think we're in a very comfortable position in terms of where our dividend is and being able to sustain it over the long run. And the incremental earnings that we have are going right into our equity base and allowing us to do more business. I think as Mike had elaborated in his piece, we had to have a tremendous pipeline, and we're actually turning down very interesting deals because our bar has been raised even higher. And so the terms, conditions, quality of what we're seeing is very strong. And so I think the shareholders should feel comfortable that those incremental earnings are being put to very good use in this current environment.

但我認為，就我們的股息狀況以及長期維持股息而言，我們處於非常有利的位置。我們所獲得的增量收益將直接進入我們的股本基礎，使我們能夠開展更多業務。我認為正如邁克在他的文章中闡述的那樣，我們必須有一個巨大的管道，而且我們實際上拒絕了非常有趣的交易，因為我們的標準已經提高得更高。因此，我們所看到的條款、條件和質量都非常強大。因此，我認為股東應該感到放心，因為這些增量收益在當前環境下得到了很好的利用。

That's helpful, Chris. Maybe one more for me. It looks like on the facing page of the queue that shares outstanding are up a little bit quarter-to-date with the quarter ending August, I assume that you've been a little bit active on the ATM. And I guess the question is, are you all at the adviser level helping to subsidize some of the costs of the ATM?

這很有幫助，克里斯。也許再給我一份。在隊列的首頁上，截至八月份的季度，流通股在本季度迄今略有上升，我假設您在 ATM 機上有點活躍。我想問題是，你們都是顧問級別的人，是否正在幫助補貼 ATM 機的部分費用？

Well, I think that's a very astute observation, Bryce, and yes, that is the case. We have sought to raise some more equity and we had sought some small raises in the past. And yes, the adviser has been involved in assuring that the BDC receives NAV for any shares sold. .

嗯，我認為這是一個非常敏銳的觀察，布萊斯，是的，情況就是如此。我們曾尋求籌集更多股本，並且過去曾尋求過一些小額融資。是的，顧問一直參與確保 BDC 收到所售股票的資產淨值。 。

Excellent. And with that in mind, Chris, I think we've talked about this in past calls as well. But is there a -- I understand kind of the nature of your debt outstanding and the higher quality nature of it. Is there a kind of a certain kind of target debt-to-equity ratio that you would optimize or that you would ultimately like to be at with the ability to possibly raise equity in the future?

出色的。克里斯，考慮到這一點，我想我們在過去的電話會議中也討論過這個問題。但是，我了解您的未償債務的性質及其更高質量的性質嗎？您是否會優化某種特定的目標債務股本比率，或者您最終希望達到這種目標，並有能力在未來籌集股本？

Well, again, last call, we had a very extensive conversation on that. I think our comments from that are still what we think about it. I think we've got a balancing act that we're working on here, which is we've got a tremendous pipeline of very high-quality investments. We've got a very solid liability structure that is really structured to handle a lot of adversity and right now is paying off super well given the rising rates. And so I think on the downside of leverage, I think we're very, very well positioned in that we don't have any covenants. We don't have any hard maturities that are coming anytime soon that aren't pretty manageable. And so we're very well structured on the downside.

好吧，最後一次通話，我們對此進行了非常廣泛的對話。我認為我們的評​​論仍然是我們的想法。我認為我們正在努力實現平衡，即我們擁有大量高質量的投資。我們擁有非常堅實的負債結構，該結構確實可以應對許多逆境，並且鑑於利率不斷上升，目前的回報非常好。因此，我認為，在槓桿的不利方面，我認為我們處於非常非常有利的位置，因為我們沒有任何契約。我們沒有任何即將到來的難以管理的硬到期日。因此，我們在應對不利方面的結構非常好。

And I know in terms of leverage, everybody, especially these days are very concerned about the downside. I think the flip side is the positive, right? I mean leverage is good, and there's a whole good aspect of leverage. And I think as you can see, our earnings performance kind of was way, way ahead of projections by many people looking at us and part of that is because of our leverage. And so we have a very strong, at the heart of it, super strong portfolio. And that portfolio with the rising rates and then the increase and better terms in our newer deals is driving -- I mean, our earnings are twice what they were a year ago.

我知道就槓桿而言，每個人，尤其是現在，都非常擔心其下行趨勢。我認為反面就是積極的一面，對嗎？我的意思是槓桿是好的，而且槓桿有一個很好的方面。我認為正如你所看到的，我們的盈利表現遠遠超出了許多人對我們的預測，部分原因是我們的槓桿作用。因此，我們擁有非常強大的核心產品組合。利率上升的投資組合以及新交易的增加和更好的條款正在推動——我的意思是，我們的收益是一年前的兩倍。

Our stock price is in twice what it was -- what our earnings are. And so -- and our earnings yield is over 15%. So dividend yield, 10-plus percent earnings yield, 15-plus percent. So from -- looking at our portfolio, I mean, we're performing extraordinarily well. So going to your question of what is our leverage levels, we just have to balance the fact that we've got some statutory requirements. We've got some -- which is most important to us, credit quality issues, like how do these assets fit within our credit quality perspective?

我們的股價是我們盈利的兩倍。因此，我們的收益率超過 15%。所以股息收益率、盈利收益率超過 10%、超過 15%。因此，從我們的投資組合來看，我的意思是，我們的表現非常好。因此，對於我們的槓桿水平是多少的問題，我們只需平衡我們有一些法定要求的事實。我們有一些對我們來說最重要的信用質量問題，比如這些資產如何符合我們的信用質量觀點？

And as Mike said, we've got a very high bar, and we're putting on some tremendously strong credits in this environment. So I can't give a precise answer, but it's kind of opportunity driven and risk assessment driven and statutory [requirements] and all that at once and try to do the best job we can to continue are pretty substantial and remarkable earnings performance.

正如邁克所說，我們有一個非常高的標準，並且我們在這種環境下獲得了一些非常強大的信譽。因此，我無法給出準確的答案，但這是一種機會驅動、風險評估驅動和法定[要求]，所有這些同時並努力做到最好，我們可以繼續獲得相當可觀且出色的盈利表現。

Yes. I appreciate that. It's great to see the progression in earnings and certainly impressive quarter that you had this quarter and even the last couple. So I appreciate the comments.

是的。我很感激。很高興看到收入的進步，以及本季度甚至上幾個季度的令人印象深刻的季度。所以我很欣賞這些評論。

Our next question will come from the line of Casey Alexander from Compass Point Research.

我們的下一個問題將來自 Compass Point Research 的 Casey Alexander。

I've got a couple here. First of all, I think Henri mentioned in the prepared remarks, that 29% of the first lien portfolio encompassed last-out position. So I'm not sure that I've heard that before. Could -- and I think maybe this is for Mike. If you could explain what makes -- what characteristics are you looking for that you would accept the position that's a last-out position kind of who's in front of you? It's kind of unusual in that not a lot of term loans have partial repayments. So I'm sort of interested in the characteristics. And why not have the chart on Page 8, the portfolio composition recognize that some of those first lien loans are last-out positions?

我這裡有一對。首先，我認為亨利在準備好的發言中提到，第一個留置權投資組合的 29% 包含最後的頭寸。所以我不確定我以前是否聽說過這個。可以——我想這可能是給邁克的。如果你能解釋一下是什麼讓你——你在尋找什麼樣的特徵，讓你願意接受排在你前面的最後一個職位？這有點不尋常，因為沒有很多定期貸款可以部分償還。所以我對這些特徵有點感興趣。為什麼沒有第 8 頁的圖表，投資組合構成認識到其中一些第一留置權貸款是最後的頭寸？

Casey, let me address the way that we think about last-out positions vis-à-vis $1 unitranche positions. Certainly, the bar is higher for those positions, given that we're in a first lien position, which is kind of the premium spot to be in the balance sheet, albeit behind a first-out lender. So we're looking at when we make those investments at making sure that from a credit quality perspective, we feel that much more comfortable that, that position is one that is sensible and that we're well protected by the enterprise value of the business.

凱西，讓我談談我們對後出頭寸與 1 美元統一頭寸的看法。當然，考慮到我們處於第一留置權位置，這些位置的門檻更高，這是資產負債表中的優質位置，儘管落後於先出貸方。因此，當我們進行這些投資時，我們會確保從信用質量的角度來看，我們感到更加放心，這一立場是明智的，並且我們受到企業企業價值的良好保護。 。

We also structure those deals typically with partners that we scrutinize very carefully and have a great deal of comfort that their rational partners, and we typically structure those also or not typically always structure those with an agreement in terms of how the loan is administered, should there be any challenges or what have you. And there's lots of protections around how we structure the deal so that we're working in partnership with the first-out lender.

我們通常還與我們非常仔細審查的合作夥伴一起構建這些交易，並非常放心地認為，他們的理性合作夥伴，我們通常也或通常不總是與那些在如何管理貸款方面達成協議的合作夥伴，應該你有什麼挑戰或者什麼嗎？我們如何構建交易有很多保護措施，以便我們與先出貸方合作。

Generally, and there's a lot of nuances in terms of how first out last out deals are structured. But the way we structure them is such that we feel very comfortable that the terms are strong, especially relative to some other structures that we've seen in the marketplace. And as I said, we're scrutinizing the partners that we work with to make sure that we've got a lot of comfort that they're reasonable in terms of their credit underwriting and that we have a good partnership approach to investing.

一般來說，先出後出交易的結構存在很多細微差別。但我們構建它們的方式使我們感到非常放心，因為這些條款很強大，特別是相對於我們在市場上看到的其他一些結構而言。正如我所說，我們正在仔細審查與我們合作的合作夥伴，以確保他們在信貸承保方面的合理性以及我們擁有良好的投資合作方式，從而讓我們感到非常放心。

Casey, I would just add, although we don't show it in the chart, I have been always providing that breakout for years now always in my remarks, just to give that color as well. So it's not a new disclosure there.

凱西，我想補充一點，雖然我們沒有在圖表中顯示它，但多年來我一直在我的評論中提供這種突破，只是為了賦予這種顏色。所以這並不是一個新的披露。

And the other thing I'd add, Casey, as well, is that those structures allow us to do some deals that if we try to be in those credits as a pure unitranche provider, we wouldn't be able to be competitive. So the credit profile -- the quality of the credit profile is such that the pricing were it to be a unitranche pricing would be below where we could make it accretive for our shareholders. So these are generally deals that are high-quality deals. The characteristics of them are very strong.

凱西，我還要補充的另一件事是，這些結構允許我們進行一些交易，如果我們試圖作為純粹的統一供應商獲得這些信用，我們將無法具有競爭力。因此，信用狀況——信用狀況的質量使得定價如果成為單一定價，將低於我們可以為其股東增值的水平。因此，這些交易通常都是高質量的交易。他們的特點是非常強的。

And so to be competitive, the overall pricing on a facility like that is quite -- is tighter. Doing a first-out, last-out gives us an opportunity to create a combined pricing structure that works for the borrower but gives our shareholders a chance to get premium yields because we're leveraging that first out partners pricing as well. And so we think it's a terrific way for us to augment our portfolio in a way that's balanced and still in a first lien position, but with premium quality credits.

因此，為了具有競爭力，此類設施的整體定價相當嚴格。採用先出後出的方式讓我們有機會創建一個適合借款人的組合定價結構，但也讓我們的股東有機會獲得溢價收益，因為我們也利用了先出合作夥伴的定價。因此，我們認為這是一種極好的方式，可以以平衡的方式擴大我們的投資組合，並且仍處於第一留置權位置，但具有優質信用。

If I could add as well to that, Casey, that just to kind of give a sort of a strategic overview. I think as both Mike and Henri said, there's sort of several categories here. One is how do we -- as Mike just described, how do we get into really high-quality credit, which may be different pricing. The other is how we stay in. We've had a number of deals where we would have lost the deal because the companies have credit quality, scale, size, enable them to get into a better credit facility pricing-wise than ours was.

凱西，如果我也可以補充一下，那隻是為了提供一種戰略概述。我認為正如邁克和亨利所說，這裡有幾個類別。一是我們如何——正如邁克剛才所描述的那樣，我們如何獲得真正高質量的信貸，這可能是不同的定價。另一個是我們如何留在其中。我們已經完成了許多交易，但我們本來會失去交易，因為這些公司的信用質量、規模、規模使他們能夠獲得比我們更好的定價明智的信貸安排。

But by bringing in a partner whom we select, we're able to bring in a senior level lender, which allows the combined package to be much more competitive, maybe not as competitive as it could be if they completely went to the market, but allows us to preserve the relationship and the credit positioning. And then the third is to provide strategic liquidity. We have a number of unit tranches we're in, and we've looked to bring in, again, known partners on known documentation that is our documentation largely that allow us to basically liberate some of the capital in these credits and redeploy.

但是，通過引入我們選擇的合作夥伴，我們能夠引入高級貸款人，這使得合併後的一攬子計劃更具競爭力，也許不像他們完全進入市場時那麼有競爭力，但是使我們能夠保持關係和信用定位。第三是提供戰略流動性。我們有許多單位，我們希望再次引入已知文檔上的已知合作夥伴，這些文檔在很大程度上使我們能夠基本上釋放這些信用中的一些資本並重新部署。

And I think if you look at the most recent quarter, we had 7 new relationships and having the capital to do new relationships is very important strategically because they pay us enormous dividends down the road because we had 7 new relationships, but we had 20 follow-on investments. And so all of our new relationships lead to all these follow-ons. And so it's a combination of capital enhancement for us and staying in much more substantial credits than before. And then -- and Mike and Henri, I think it's fair to say. I mean, all these people were doing (inaudible) with our relationships we've had for many, many years.

我認為，如果你看看最近一個季度，我們建立了 7 個新關係，擁有建立新關係的資本在戰略上非常重要，因為它們會為我們帶來巨大的紅利，因為我們建立了 7 個新關係，但我們有 20 個關注者- 投資。因此，我們所有的新關係都會帶來所有這些後續關係。因此，這對我們來說是資本增強和保持比以前更多的信貸的結合。然後——還有邁克和亨利，我認為可以公平地說。我的意思是，所有這些人都在（聽不清）我們已經建立了很多年的關係。

That's right. We've got long-standing relationships with our first-out partners. Casey, the one thing I would do to -- just to reemphasize what Chris mentioned, a perfect example would be the HemaTerra loan that we have in our portfolio. That's a deal that's sort of a great example of how we've attacked the market. So that -- going to get the dollars -- I don't have the exact dollars, but I'm going to say that the original investment there was for the initial platform was less than $10 million between our debt and equity investment. And we did a unitranche, $1 unitranche and a healthy equity co-investment. That company has performed very well. It's owned by a sponsor relationship that we've had for a long time, and it's a really strong sponsor relationship.

這是正確的。我們與先發合作夥伴建立了長期的合作關係。凱西，我要做的一件事 - 只是再次強調克里斯提到的，一個完美的例子就是我們投資組合中的 HemaTerra 貸款。這筆交易是我們進攻市場的一個很好的例子。因此，要獲得美元，我沒有確切的美元，但我想說，初始平台的原始投資在我們的債務和股權投資之間不到 1000 萬美元。我們進行了單一投資、1 美元單一投資和健康的股權共同投資。那家公司的業績非常好。它屬於我們長期以來的讚助商關係，而且是一種非常牢固的讚助商關係。

We supported it with follow-on capital for them to do some acquisitions. That investment grew to a pretty healthy size. I can't remember the exact number. And then most recently, they did a much larger acquisition that would have brought that facility as a unitranche to over $100 million, which is something that was too large for us to carry on our balance sheet. But given the performance of the business, the experience that we had in the deal for at least a couple of years directionally before we upsized it at that point.

我們用後續資金支持它，讓他們進行一些收購。這項投資增長到了相當健康的規模。我不記得確切的數字了。最近，他們進行了一項規模大得多的收購，使該設施作為一個整體超過 1 億美元，這對我們來說太大了，無法記入我們的資產負債表。但考慮到業務的表現，以及我們在當時擴大規模之前至少幾年的定向交易經驗。

We were very comfortable with the credit profile. And rather than see that portfolio company exit and not having our shareholders get the benefit of the continued earnings stream. In that case, we brought in a first-out partner, and we're able to upsize the facility, continue to support the portfolio company, and we also have equity in that investment, and that business continues to perform exceedingly well. So that's kind of a -- it's a microcosm of sort of how we look at certain deals or how we're approaching deals in the marketplace and an example of our first-out, last-out scenario.

我們對信用狀況非常滿意。而不是看到投資組合公司退出而不讓我們的股東從持續的收益流中受益。在這種情況下，我們引入了一個先行合作夥伴，我們能夠擴大設施規模，繼續支持投資組合公司，而且我們還擁有該投資的股權，並且該業務繼續表現出色。這是我們如何看待某些交易或我們如何在市場上處理交易的縮影，也是我們先出、後出場景的一個例子。

I'm pleased that I could ask a question that would prompt all 3 of you to participate in the answer. My second question is, can you give some more color on the defaulted assets in the CLO and how that may impact its structure, its requirements and potentially it's cash flow?

我很高興我能提出一個問題，促使你們三個都參與回答。我的第二個問題是，您能否對 CLO 中的違約資產提供更多說明，以及這可能如何影響其結構、要求以及潛在的現金流？

Well, maybe I'll start with that, Casey, on sort of on a high level. The CLO has round numbers plus and minus like a couple of hundred credits. And so there's a lot going on inside the CLO. And then the CLO also has a fairly complex roll up to value, if you will, with waterfalls and things like that. And so it's not necessarily the easiest thing to predict from a distance, how it behaves and how it operates. But inside of...

好吧，凱西，也許我會從較高的層面開始。 CLO 有正負整數，例如幾百個學分。 CLO 內部發生了很多事情。然後，如果你願意的話，CLO 也有一個相當複雜的價值匯總，包括瀑布和類似的東西。因此，從遠處預測它的行為和運作方式並不一定是最容易的事情。但裡面...

I guarantee you, it's impossible to predict for those of us sitting outside of the company.

我向你保證，對於我們這些坐在公司之外的人來說，這是不可能預測的。

Yes. Right. And so especially on a quarter-on-quarter basis, and there's like BB credits are highly desired right now. So those are trading extraordinarily well. Single B are less desirable because they're closer to CCC and the CCC credits are not trading very well at all because people don't want them. They have baskets that are kind of full. There is supply and demand issues out there where they have a lot of CLO formation in the beginning of the year and then less just recently, and then you combine that with not that much issuance because the larger buyouts are not happening at the same rate at 4.

是的。正確的。因此，尤其是按季度計算，現在非常需要 BB 積分。所以這些交易非常好。單 B 不太受歡迎，因為它們更接近 CCC，而 CCC 學分的交易根本不是很好，因為人們不想要它們。他們的籃子有點滿。存在供需問題，年初有大量 CLO 形成，最近則較少，然後您將其與發行量結合起來，因為較大的收購併沒有以相同的速度發生4.

And so you have all these different crosscurrents in the marketplace, which result in sort of different credits and different assets, different pricing, given what goes on. Like for example, a restructuring credit that might trade at 50, we mentioned in our conversation that the whole portfolio has recovered maybe 1/3 of where it was marked -- what it was marked down from May 31. But inside of that, anything trading at 50 probably didn't move, right, where something trading in the 90s might have moved up a lot more.

因此，市場上存在所有這些不同的交叉流，考慮到所發生的情況，這會導致不同的信用和不同的資產、不同的定價。例如，重組信貸的交易價格可能為 50，我們在談話中提到，整個投資組合可能已經恢復了其標記位置的 1/3（即自 5 月 31 日以來標記的價格）。但除此之外，任何東西都可以恢復。 50 年代的交易可能沒有變動，對吧，90 年代的交易可能會上漲更多。

And so you have all those dynamics underlying at all. But I think the -- it's hard to, again, take sort of individual pieces of the puzzle and then try and assemble the whole puzzle because there's like a 1,000 pieces to this puzzle. And so the way we look at it is, we've been in the CLO from the beginning. We have a second CLO, which has been added to it. And if you'd look -- and we -- and the CLO has been through a lot of different markets, right? And even before we owned it, it went through the 2008, 2009 crisis.

所以你擁有所有這些動態的基礎。但我認為——再次將拼圖中的各個部分然後嘗試組裝整個拼圖是很困難的，因為這個拼圖大約有 1,000 個拼圖。所以我們看待它的方式是，我們從一開始就在 CLO 中。我們有第二個 CLO，已添加到其中。如果你看看——我們——以及 CLO 已經經歷了很多不同的市場，對吧？甚至在我們擁有它之前，它就經歷了 2008 年、2009 年的危機。

And then we've been through all kinds of liquidity, different things, COVID, et cetera. But over the long run, our CLO reduced high teens returns based on our investments. And so we've kind of weathered a lot of ups and downs, a lot of different types of markets. And this one, I'm not going to say this is the same as we've seen before and I'm not going to say the whole marketplace has the exact same dynamics, but the structure has been a very successful long-term investment structure for us, and we don't think any differently. There are some adverse events and some are idiosyncratic.

然後我們經歷了各種流動性、不同的事情、新冠疫情等等。但從長遠來看，我們的 CLO 降低了基於我們投資的高額回報。因此，我們經歷了很多起起落落，經歷了很多不同類型的市場。對於這個，我不會說這與我們之前看到的相同，我不會說整個市場具有完全相同的動態，但該結構是一項非常成功的長期投資我們的結構對我們來說沒有什麼不同。有一些不良事件，有些是特殊的。

We've avoided a lot of traditionally cyclical elements in our CLO, like we don't have energy investments, for example, which have gone down a lot, gone up and then gone down. I mean, there's a lot going on there. But then as a general sort of overview of that, we feel that this is a good investment in the long run, although there are periods of time where you have some adverse developments, but the power and the earnings of it has produced fairly consistently high teens returns for us over the long run.

我們在 CLO 中避免了許多傳統的周期性因素，例如我們沒有能源投資，這些投資已經大幅下降，上升然後下降。我的意思是，那裡發生了很多事情。但作為一個總體概述，我們認為從長遠來看，這是一項很好的投資，儘管有時會出現一些不利的發展，但它的力量和收益已經產生了相當一致的高收益。從長遠來看，青少年會回歸我們。

All right. I appreciate it.

好的。我很感激。

Well, Casey, I hope you appreciate our presentation was shorter this time.

好吧，凱西，我希望您能理解我們這次的演示較短。

Our next question will come from the line of Erik Zwick from Hovde Group.

我們的下一個問題將來自 Hovde Group 的 Erik Zwick。

I wanted to start with the pipeline for my first question. I think last quarter, you mentioned you kind of described it as robust with many actionable opportunities. And this morning, you mentioned that it continues to grow. So I'm wondering if you could just provide a little color first in terms of any particular industries where you're seeing stronger demand or stronger activity? And then second, just if you could categorize how it shapes up in terms of new investment opportunities versus follow-ons?

我想從第一個問題的管道開始。我認為上個季度，您提到您將其描述為強大的，有許多可行的機會。今天早上，您提到它還在繼續增長。所以我想知道您是否可以先就您看到需求強勁或活動強勁的任何特定行業提供一些信息？其次，你能否根據新投資機會與後續投資機會對它的形成方式進行分類？

Yes, I'll try to address that. You're right. The pipeline that we have remains very robust, and that's mostly reflective of the business development efforts that we've taken on over the last several years. certainly, deal flow in the market is down relative to historical levels. It continues to be down, although we're seeing some pickup in that respect. So our actionable pipeline has more to do with kind of what we're doing in the marketplace and our reputation growing and our relationship is growing. But that's definitely yielding really good opportunities for us. We think it's a great time to be investing capital. There's a lot of caution in the marketplace. We think we've got certainly among the best teams in the BDC marketplace.

是的，我會盡力解決這個問題。你說得對。我們擁有的管道仍然非常強大，這主要反映了我們過去幾年所採取的業務開發努力。當然，市場的交易量相對於歷史水平有所下降。儘管我們看到這方面有所回升，但它仍在下降。因此，我們的可行渠道更多地與我們在市場上所做的事情、我們的聲譽不斷提高以及我們的關係不斷發展有關。但這無疑為我們帶來了非常好的機會。我們認為現在是投資資本的好時機。市場上有很多謹慎的態度。我們認為我們無疑擁有 BDC 市場中最好的團隊。

We like being in the lower end of the middle market for sure. We think we get an opportunity to underwrite our deals in a way that the larger market can't. We get better legal protections as well. We like the verticals that we're in. And I think as a result of that robust pipeline, we have an opportunity to be highly, highly selective. Now as it relates to sort of the industries that we're in, we're generalists. So we're really just looking for businesses that have really strong characteristics that get us comfortable that they're going to hold up under most reasonable circumstances that we can think of as we analyze the businesses, but we also have a few verticals that we tend to focus on.

我們當然喜歡處於中低端市場。我們認為我們有機會以更大的市場無法做到的方式承銷我們的交易。我們也得到更好的法律保護。我們喜歡我們所處的垂直領域。我認為，由於擁有強大的渠道，我們有機會進行高度、高度選擇性。現在，就我們所處的行業而言，我們是多面手。因此，我們實際上只是在尋找具有真正強大特徵的企業，這些特徵讓我們感到放心，它們將在我們分析企業時能想到的最合理的情況下保持穩定，但我們也有一些垂直行業傾向於專注於。

And that's by design because those verticals are ones where we think that businesses that differentiate themselves and really create a business model where they have an enduring value proposition that they offer for their customers, they can hold up really well and thrive. And as a result, we've sort of gravitated toward -- outside of our generalist approach, we've gravitated toward a few verticals, and we're seeing healthy deal flow there, in part because of our, as I said, business development outreach, but in part because those verticals are holding up well and there's still a fair amount of activity within those verticals, which would be certainly software-related businesses and SaaS businesses that are across a wide variety of industries.

這是設計使然，因為我們認為在這些垂直行業中，那些能夠脫穎而出並真正創建商業模式的企業，在該模式中為客戶提供持久的價值主張，他們可以保持良好的狀態並蓬勃發展。結果，我們有點傾向於——除了我們的通才方法之外，我們還傾向於一些垂直領域，我們在那裡看到了健康的交易流，部分原因是我們的業務，正如我所說的，開發外展，但部分原因是這些垂直行業保持良好，並且這些垂直行業內仍然有相當多的活動，其中肯定是跨​​多個行業的軟件相關業務和 SaaS 業務。

We certainly have expertise and a reputation that gives us healthy deal flow in that market. And then outside of that, we're also focused on healthcare and education. And so we're seeing healthy deal flow there. Now because a good portion of our portfolio is invested in those verticals where those businesses are continuing to grow, and they are -- have an appetite for more capital. And that's where you see a lot of that follow-on activity. But you've also seen that we've added additional portfolio companies as well, and that's just reflective of healthy new deal flow that we're seeing on new portfolios -- new portfolio companies.

我們當然擁有專業知識和聲譽，為我們在該市場提供了健康的交易流。除此之外，我們還專注於醫療保健和教育。因此，我們在那裡看到了健康的交易流動。現在，因為我們投資組合的很大一部分投資於那些業務持續增長的垂直行業，而且它們對更多資本有興趣。這就是您看到很多後續活動的地方。但您也看到，我們還增加了其他投資組合公司，這只是反映了我們在新投資組合（新投資組合公司）上看到的健康的新交易流。

That was all very helpful. And any color in terms of, I guess, kind of what's moving more near term through the portfolio -- I'm sorry, through the pipeline and potentially close in terms of kind of new opportunities versus follow-ons?

這一切都非常有幫助。我想，就短期內通過投資組合發生的任何顏色而言，我很抱歉，通過管道，並可能在新機會與後續機會方面接近？

It's a healthy mix. I think it's really hard to predict that. I think as you've seen, our portfolio -- our investments in new portfolios are really a reflection of how strong we think the business investment opportunities are. We have historically had some quarters where we actually have not done any new portfolio investments. And it's just because we haven't seen anything that's worthy of investing. And there are other times where we've had pretty significant investment activity. Right now, we're seeing a lot of opportunities, especially ones that we're delighted to see that fit our SBIC III, which has lots of room to expand.

這是一個健康的組合。我認為這真的很難預測。我認為正如您所看到的，我們的投資組合——我們對新投資組合的投資確實反映了我們認為商業投資機會的強度。從歷史上看，我們確實有過一些季度沒有進行任何新的投資組合投資。只是因為我們還沒有看到任何值得投資的東西。在其他時候，我們也進行過相當重大的投資活動。現在，我們看到了很多機會，特別是我們很高興看到適合我們 SBIC III 的機會，它有很大的擴展空間。

Yes, Erik, you will see historically, follow-on has always been a really, really important part of our origination story and our growth story. And I don't think we expect that to change. But definitely, our focus is SBIC III at the moment as we have a lot of capital to deploy there.

是的，埃里克，你會看到，從歷史上看，後續一直是我們的起源故事和成長故事中非常非常重要的一部分。我認為我們預計這種情況不會改變。但毫無疑問，我們目前的重點是 SBIC III，因為我們有大量資本可以在那裡部署。

Makes sense. And last one for me, really just kind of a maybe a recordkeeping one. Do you have the value of the spillover at the end of the quarter?

說得通。最後一個對我來說，實際上只是一種可能是記錄保存的。您有季度末的溢出價值嗎？

No, I don't. We disclosed it. It was around $20 million at the end of February, which we disclosed in the 10-K, but we don't generally disclose it on a quarter-end basis.

不，我不。我們披露了它。 2 月底約為 2000 萬美元，我們在 10-K 中披露了這一數字，但我們通常不會按季末披露。

Thank you. And I'm not showing any further questions in the queue. I'd like to turn the call back over to Christian Oberbeck for any closing remarks.

謝謝。我不會在隊列中顯示任何其他問題。我想將電話轉回給克里斯蒂安·奧伯貝克（Christian Oberbeck），讓其作結束語。

Well, thank you all. We very much appreciate the support of all our shareholders, and we look forward to speaking with you next quarter. Thank you very much.

嗯，謝謝大家。我們非常感謝所有股東的支持，我們期待下個季度與您交談。非常感謝。

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。大家，祝你有美好的一天。