Silver Spike Investment Corp (SSIC) 2023 Q1 法說會逐字稿

Good day and thank you for standing by. Welcome to Silver Spike Investment Corporation's first-quarter 2023 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded.

美好的一天，感謝您的支持。歡迎參加 Silver Spike Investment Corporation 2023 年第一季度收益電話會議。 （操作員指示）請注意，今天的會議正在錄製中。

I would now like to hand the conference over to your speaker today, Umesh Mahajan, Chief Financial Officer. Please begin, sir.

現在我想將會議交給今天的發言人、首席財務官 Umesh Mahajan。請開始吧，先生。

Thank you, Norma. Good morning. This is Umesh Mahajan, CFO of Silver Spike Investment Corp. With me here today is Scott Gordon, CEO of Silver Spike Investment Corp.

謝謝你，諾瑪。早上好。我是 Silver Spike Investment Corp 的首席財務官 Umesh Mahajan。今天和我在一起的是 Silver Spike Investment Corp 的首席執行官 Scott Gordon。

Welcome to Silver Spike's earnings conference call and live webcast for the first quarter of 2023. Silver Spike's financial results for the quarter ended March 31, 2023, were released yesterday and can be accessed from our website at ssic.silverspikecap.com. A replay of this call will also be available on our website.

歡迎參加 Silver Spike 2023 年第一季度的收益電話會議和網絡直播。Silver Spike 截至 2023 年 3 月 31 日的季度財務業績已於昨天發布，可通過我們的網站 ssic.silverspikecap.com 訪問。我們的網站上也將提供本次電話會議的重播。

Before we begin, I'd like to remind everyone that certain statements that are not based on historical facts made during this call, including any statements related to financial guidance, may be deemed forward-looking statements under the federal securities laws. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. We encourage you to refer to our most recent SEC filings for information on some of these risk factors.

在我們開始之前，我想提醒大家，根據聯邦證券法，本次電話會議期間做出的某些並非基於歷史事實的陳述，包括任何與財務指導相關的陳述，可能被視為前瞻性陳述。由於這些前瞻性陳述涉及已知和未知的風險和不確定性，因此存在一些重要因素可能導致實際結果與這些前瞻性陳述明示或暗示的結果存在重大差異。我們鼓勵您參考我們最近向 SEC 提交的文件，了解有關其中一些風險因素的信息。

Silver Spike assumes no obligation or responsibility to update any forward-looking statements. Please note that information reported on this call speaks only as of today, May 12, 2023. Therefore, you are advised that time-sensitive information may no longer be accurate at the time of any replay or transcript reading.

Silver Spike 不承擔更新任何前瞻性陳述的義務或責任。請注意，本次電話會議報告的信息僅截至今天（2023 年 5 月 12 日）。因此，請注意，時間敏感的信息在重播或閱讀文字記錄時可能不再準確。

So with that said, good morning again and thank you all for joining. We released our earnings results yesterday and there's a management presentation deck attached to the earnings release as well. Those who have joined us on this earnings webcast should be able to access this presentation live, else, you'll find a link to the deck and the 8-K also that was filed yesterday -- or this morning. We may refer to the slides by numbers just for your reference as we go through the presentation.

話雖如此，再次早上好，感謝大家的加入。我們昨天發布了收益結果，收益發布後還附有管理層演示文稿。那些參加我們的財報網絡廣播的人應該能夠現場觀看此演示文稿，否則，您會找到昨天或今天早上提交的演示文稿和 8-K 的鏈接。我們可能會按編號引用幻燈片，僅供您在演示時參考。

So turning to page 3 of the presentation, financial highlights for the first-quarter 2023. As you can see the first column, we had a gross investment income of $2.5 million. Expenses of approximately $1.1 million, gives us net investment income of $1.4 million. Net investment income per share of $0.22 for this quarter. Net assets at the end of the period of $88.8 million versus $86.5 million at the end of last quarter. And the net asset value per share at the end of the period was $14.29 versus $13.91 at the end of last quarter.

因此，請翻到演示文稿的第 3 頁，2023 年第一季度的財務亮點。正如您在第一列中看到的，我們的總投資收入為 250 萬美元。大約 110 萬美元的費用為我們帶來了 140 萬美元的淨投資收入。本季度每股淨投資收益為 0.22 美元。期末淨資產為 8880 萬美元，上季度末淨資產為 8650 萬美元。期末每股資產淨值為 14.29 美元，上季度末為 13.91 美元。

The increase in gross investment income reflects the ramp-up in our portfolio. We made one new investment during this quarter, and the gross investment income reflects the interest we have on that investment for this quarter. We'll discuss the portfolio and the pipeline in more detail in subsequent slides. But before I do that, to expand a little bit more on the Silver Spike story and the market opportunity, I'll turn it over to Scott Gordon, our CEO.

總投資收入的增長反映了我們投資組合的增加。我們在本季度進行了一項新投資，總投資收入反映了我們本季度對該投資的興趣。我們將在後續幻燈片中更詳細地討論產品組合和管道。但在此之前，為了進一步擴展 Silver Spike 的故事和市場機會，我將把它交給我們的首席執行官斯科特·戈登 (Scott Gordon)。

Thank you, Umesh. Good morning, everyone. So just to remind folks, we are a BDC, focused on lending to the cannabis sector, predominantly in the US market. We believe that lending to cannabis companies is a compelling investment opportunity with attractive yields and limited competition.

謝謝你，烏梅什。大家，早安。所以提醒大家，我們是一家 BDC，專注於向大麻行業（主要是美國市場）提供貸款。我們認為，向大麻公司提供貸款是一個極具吸引力的投資機會，具有有吸引力的收益率和有限的競爭。

We also feel that lending to cannabis requires intense focus and specialization given the myriad of regulatory, legal, and operating complexities that exist in the space. At Silver Spike, we have a team of experienced professionals with extensive backgrounds in both credit and cannabis to execute on our mandate. We continue to benefit from an excellent vintage of lending to the cannabis sector currently. Previous vintages of cannabis loans did not afford the same opportunity that we are seeing today with respect to pricing, terms, and overall structure.

我們還認為，鑑於該領域存在無數的監管、法律和運營複雜性，向大麻提供貸款需要高度關注和專業化。在 Silver Spike，我們擁有一支經驗豐富的專業團隊，在信貸和大麻方面擁有豐富的背景來執行我們的任務。我們繼續受益於目前向大麻行業提供的良好貸款。以前的大麻貸款在定價、條款和整體結構方面並沒有提供我們今天看到的同樣的機會。

We remain focused on finding the very best operators in the industry in every jurisdiction and provide them with growth capital. We structure our investments appropriately and carefully and do not take or rely on any equity sweeteners to obtain our returns. Our loans are typically made to borrowers with very low leverage. And lastly, our objective is to create a diversified portfolio of investments, offering high-quality risk and an attractive yield to our shareholders.

我們仍然致力於在每個司法管轄區尋找業內最優秀的運營商，並為他們提供增長資本。我們適當、謹慎地構建我們的投資結構，不採取或依賴任何股權甜味劑來獲得回報。我們的貸款通常提供給槓桿率非常低的借款人。最後，我們的目標是創建多元化的投資組合，為股東提供高質量的風險和有吸引力的收益。

With that, I will pass it back to Umesh. Thank you.

這樣，我會將其傳回給 Umesh。謝謝。

Thank you, Scott. So turning to page 8, which talks about sourcing and origination. On the origination front, we do have at Silver Spike an extensive network of contacts within the industry which has been built over the years through our partners' operating experience in the industry. And as a result, we've been able to originate and lead deals that are much larger than what we would otherwise be able to do based on the size of our BDC. And we are very pleased with the pipeline of opportunities in front of us.

謝謝你，斯科特。所以請翻到第 8 頁，其中討論了採購和起源。在發起方面，Silver Spike 確實在行業內擁有廣泛的聯繫網絡，這些網絡是多年來通過我們合作夥伴在行業中的運營經驗建立起來的。因此，我們能夠發起和領導的交易規模遠遠大於我們根據 BDC 的規模所能完成的交易。我們對擺在我們面前的一系列機會感到非常滿意。

To date, with -- until March 31, we have seen over $7.3 billion of transactions. And as of March 31, we were actively looking at a pipeline of over $670 million of transactions. We were there. We were engaged with these potential borrowers, so we feel good about the opportunity set.

迄今為止，截至 3 月 31 日，我們的交易額已超過 73 億美元。截至 3 月 31 日，我們正在積極尋找超過 6.7 億美元的交易渠道。我們到過那裡。我們與這些潛在藉款人進行了接觸，因此我們對這個機會感到滿意。

Moving to the next page, SSIC portfolio summary. It shows our portfolio summary as of May 5. On this list, you can see companies A and B are Shryne and PharmaCann, which are investments we made earlier during 2022. Company C shows AYR's 12.5% secured bonds, and company D shows Curaleaf's 8% secured bonds. These were investments made at a significant discount to their par values. Our last three investments on this page are floating rate loans, and with prime currently at 8.25%, these investments offer an attractive return at this point. Company E is up for large investments in Verano's first-lien-term loan, a transaction that was completed in October last year.

轉到下一頁，SSIC 投資組合摘要。它顯示了我們截至 5 月 5 日的投資組合摘要。在此列表中，您可以看到公司 A 和 B 是 Shryne 和 PharmaCann，這是我們在 2022 年早些時候進行的投資。C 公司顯示了 AYR 的 12.5% 擔保債券，D 公司顯示了 Curaleaf 的 8 % 擔保債券。這些投資的面值大幅折扣。我們本頁上的最後三項投資是浮動利率貸款，目前優質利率為 8.25%，這些投資目前提供了有吸引力的回報。 E 公司準備對 Verano 的第一留置權定期貸款進行大量投資，該交易已於去年 10 月完成。

In the first quarter of this year, we made an investment in MariMed, shown as company F. We talked about this investment in our last earnings call. It's a three-year first-lien secured term loan with prime plus 5.75% cash and 1.4% PIK. Subsequent to the end of the quarter, so in last week, first week of May of this year, we made an additional investment in DreamFields Brands, shown as company G. The company's brand Jeeter is one of the most recognized cannabis brands, especially in the pre-roll cannabis product category. We believe this loan also offers an excellent and attractive yield on our investment.

今年第一季度，我們對 MariMed 進行了投資，如 F 公司所示。我們在上次財報電話會議上談到了這項投資。這是一項為期三年的第一留置權擔保定期貸款，包含優質貸款加上 5.75% 的現金和 1.4% 的 PIK。在本季度末之後，因此在上週，即今年五月的第一周，我們對 DreamFields Brands 進行了追加投資，如 G 公司所示。該公司的品牌 Jeeter 是最受認可的大麻品牌之一，尤其是在預卷大麻產品類別。我們相信這筆貸款還為我們的投資提供了優異且有吸引力的收益。

So overall, if you look at the top of the page, we have almost $60 million invested. But then, weighted average yield to maturity of almost 17.7%. This is all, as Scott mentioned, it's all fixed income based. It does not include -- we do not take any equity sweeteners on our transactions, neither does it include any upside that can potentially come to prepayments; purely fixed income return.

總的來說，如果你看一下頁面頂部，我們的投資額接近 6000 萬美元。但那時，加權平均到期收益率幾乎為17.7%。正如斯科特提到的，這就是全部，都是基於固定收入的。它不包括——我們在交易中不採取任何股權甜味劑，也不包括預付款可能帶來的任何好處；純固定收益回報。

And we believe that our portfolio has companies that are very well positioned in the industry for the longer term and at the same time, offer a really attractive yield on our investment. And we have been very busy working on a number of very interesting opportunities. We are excited about the pipeline that we're currently working on, and we hope to have more updates as we continue to deploy our capital and build a high-quality portfolio.

我們相信，我們的投資組合中的公司在行業中長期處於有利地位，同時為我們的投資提供了非常有吸引力的收益。我們一直非常忙於尋找一些非常有趣的機會。我們對目前正在開發的管道感到興奮，並希望在繼續部署資本和構建高質量投資組合的過程中獲得更多更新。

I also wanted to briefly address the important topic of dividends. As we have mentioned in our previous calls, our goal is to announce a regular recurring dividend when we are nearly fully invested. Now that we are approaching 70% deployment, evaluating a dividend policy has become a key priority for management and the Board.

我還想簡單談談股息這一重要話題。正如我們在之前的電話會議中提到的，我們的目標是在我們幾乎完全投資時宣布定期經常性股息。現在我們已接近 70% 的部署，評估股息政策已成為管理層和董事會的首要任務。

Also, I would highlight that we are required to distribute at least 90% of the income on during the tax year, which ended on March 31, 2023 for us. So we now have the audited results for that period, and we are finalizing the necessary calculations for the associated amount of dividends. Our Board will be evaluating our dividend policy and we should have an update for you on our next call.

另外，我要強調的是，我們需要在截至 2023 年 3 月 31 日的納稅年度內分配至少 90% 的收入。因此，我們現在有了該期間的審計結果，並且我們正在最終確定相關股息金額的必要計算。我們的董事會將評估我們的股息政策，我們應該在下次電話會議上為您提供最新信息。

With that, I'll pass it on to the operator. Norma?

這樣，我會將其傳遞給接線員。諾瑪？

Thank you. (Operator Instructions) Michael Lavery, Piper Sandler.

謝謝。 （操作員說明）Michael Lavery、Piper Sandler。

Thank you. Good morning.

謝謝。早上好。

Good morning, Michael. How are you?

早上好，邁克爾。你好嗎？

Good, yeah. Just was wondering if you could give us maybe a little bit of the state of the industry -- you're in a unique position to really see all across it -- and just maybe how it's evolving, and then what the key implications are from that for your business?

很好，是的。只是想知道您是否可以向我們介紹一下這個行業的現狀——您處於一個獨特的位置，可以真正了解整個行業——也許它是如何發展的，然後是主要的影響是什麼適合您的業務嗎？

I'm sorry, Michael, can you repeat the question? It wasn't coming clear on our end.

對不起，邁克爾，你能重複一下這個問題嗎？我們這邊還不清楚。

Sorry, yeah. Just given how many operators you are in contact with, you seem like you have a unique perspective on the industry overall. Just was wondering if you could give a sense of how you see the market evolving and what that means for you. Obviously, you're talking -- you're pointing to some stronger pricing and that's one of the aspects of it, but just curious, at a high level, what you're seeing across the industry and then some of what that means for your business.

抱歉，是的。考慮到您接觸過的運營商數量，您似乎對整個行業有著獨特的視角。只是想知道您是否可以介紹一下您如何看待市場的演變以及這對您意味著什麼。顯然，你在談論——你指的是一些更強勁的定價，這是它的一個方面，但只是好奇，在高水平上，你在整個行業中看到了什麼，然後這對你意味著什麼你的事。

Okay. Let me start, and I'll turn to Scott. In terms of the market, we all know that the market did take a significant turn in the second half of '22. Not just from the point of view of what we saw as valuations for the company, but also at the industry level. And this was reflected in the wholesale pricing that we saw across the markets. But if we split that further and dig into those pricing trends, you'll notice that a lot of the pricing decline happened in cycles.

好的。讓我開始吧，我將轉向斯科特。就市場而言，我們都知道22年下半年市場確實發生了重大轉變。不僅從我們對公司估值的角度來看，而且從行業層面來看。這反映在我們在市場上看到的批發定價中。但如果我們進一步細分並深入研究這些定價趨勢，您會發現很多定價下降都是周期性發生的。

So the extremely competitive markets, the likes of California, Oregon, Nevada, they saw a large wholesale decline earlier in this phase. And we have now reached a point where some of those markets have arguably hit a bottom and have started coming back up, so California did see a bounce back. In the limited license markets, like maybe Illinois, Massachusetts, Connecticut, they are still going through that decline phase of wholesale prices going down.

因此，競爭極其激烈的市場，如加利福尼亞州、俄勒岡州、內華達州，在這一階段的早期出現了批發量的大幅下降。我們現在已經達到了這樣一個地步：其中一些市場可以說已經觸底並開始回升，因此加州確實出現了反彈。在有限許可市場，比如伊利諾伊州、馬薩諸塞州、康涅狄格州，他們仍在經歷批發價格下降的下降階段。

So what that does is it makes the operators think about what -- how they should position themselves. So the earlier era of 2021 and early 2022, where they were all just chasing revenue for the sake of revenues, are now thinking looking inward and trying to figure out what are the cost reduction strategies, what are the most effective competitive strategies. And as a result, we are in a better position to have a clearer understanding of which companies are positioned well, which companies are not positioned well.

因此，它的作用是讓運營商思考他們應該如何定位自己。所以2021年初和2022年初，他們只是為了收入而追逐收入，現在他們正在思考向內看，試圖找出什麼是降低成本的策略，什麼是最有效的競爭策略。因此，我們能夠更清楚地了解哪些公司定位良好，哪些公司定位不佳。

And as we see this dynamic play out, yes, some of the good operators are taking the measures to cut their costs, slow down their CapEx deployment, and we view that as a positive. We like the fact that they are taking a step back. It may mean that some of the capital raises that these companies were planning get pushed out by a quarter, but at the end of all of it, it's actually good for the industry, it's good for us.

正如我們看到的這種動態發展，是的，一些優秀的運營商正在採取措施削減成本，減緩資本支出部署，我們認為這是積極的。我們喜歡他們後退一步的事實。這可能意味著這些公司計劃的一些融資被推遲了四分之一，但最終，這實際上對行業有利，對我們有利。

And so, we do have an optimistic view in terms of where this is going to end up by the end of this year or next year. This process of correction in many ways was much needed, and we think that we are right at the -- we are all, if not at the bottom, we are pretty close to the bottom in terms of correction, and we should start things improving over the next couple of quarters.

因此，我們確實對今年年底或明年的結果持樂觀態度。這個在很多方面的修正過程都是非常需要的，我們認為我們現在處於正確的位置——即使不是處於底部，我們在修正方面也已經非常接近底部了，我們應該開始改進事情在接下來的幾個季度裡。

Scott, do you want to add?

斯科特，你想補充一下嗎？

Yeah, I think, Umesh, you covered those. There's still, I think, a fair amount of consolidation that has yet to occur in the industry. So while I think Umesh was reflecting more of the end market trends, I think you'll continue to see a fair amount of consolidation as well as just a number of operators who are dropping off and shuttering.

是的，我想，烏梅什，你涵蓋了這些。我認為，該行業仍有相當多的整合尚未發生。因此，雖然我認為 Umesh 反映了更多的終端市場趨勢，但我認為您將繼續看到大量的整合以及一些運營商的退出和關閉。

And I would just add to the industry comments, in terms of what we see on the capital market side. As you know, Michael, it still remains very much in the doldrums. Just in terms of the general sentiment out there towards the sector and the capital availability, I would characterize still as extremely constrained, both as it relates to public equity, private equity, as well as the availability of credit capital.

我只想補充一下我們在資本市場方面看到的行業評論。正如你所知，邁克爾，它仍然處於低迷狀態。就對該行業和資本可用性的總體情緒而言，我認為仍然受到極大限制，因為它與公共股權、私募股權以及信貸資本的可用性有關。

I mean, that works in our favor, obviously, as it affords us the ability to really be selective and pick and choose and dictate terms in a way that we might not be able to in a more competitive environment. And the beat goes on there. We haven't really seen any meaningful change in trend in terms of capital formation [of loan into the] sector.

我的意思是，這顯然對我們有利，因為它使我們能夠真正有選擇性地挑选和決定條款，而在競爭更加激烈的環境中我們可能無法做到這一點。節奏就在那裡繼續。在資本形成（貸款進入該行業）方面，我們確實沒有看到任何有意義的趨勢變化。

Okay. Thanks. That's great color. Thanks so much.

好的。謝謝。那顏色真棒。非常感謝。

Thank you. And at this time, I'd like to hand the conference back over to Umesh Mahajan for closing remarks.

謝謝。此時，我想將會議交回給烏梅什·馬哈詹 (Umesh Mahajan) 致閉幕詞。

Thank you, Norma. Thank you, everyone, for joining us on this call. We look forward to speaking with you again on our next call and give you an update on our business and our strategy going forward. Thank you very much.

謝謝你，諾瑪。謝謝大家參加我們的這次電話會議。我們期待在下次通話中再次與您交談，並向您提供有關我們業務和未來戰略的最新信息。非常感謝。

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

謝謝。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。祝大家度過美好的一天。