Silver Spike Investment Corp (SSIC) 2023 Q2 法說會逐字稿

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

早上好，感謝您的支持。歡迎參加 Silver Spike Investment Corp. 2023 年第二季度收益電話會議。 （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 go ahead.

現在我想將會議交給今天的發言人、首席財務官 Umesh Mahajan。請繼續。

Thank you, Catherine. Good morning, everyone. 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，凱瑟琳。大家，早安。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 the Silver Spike -- Silver Spike's earnings conference call and live webcast for the second quarter of 2023. Silver Spike's financial results for the quarter ended June 30, 2023, were released yesterday and can be accessed from our website at ssic.silverspikecap.com. A replay of the call will also be available on Silver Spike's website.

歡迎參加 Silver Spike——Silver Spike 的 2023 年第二季度收益電話會議和網絡直播。Silver Spike 截至 2023 年 6 月 30 日的季度財務業績已於昨天發布，可通過我們的網站 ssic.silverspikecap 訪問。 com . Silver Spike 的網站上還將提供此次電話會議的重播。

Before I begin, I would 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 under -- forward-looking statements under federal securities laws.

在開始之前，我想提醒大家，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，可能會被視為聯邦證券法下的前瞻性陳述。

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.

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。

We encourage you to refer to our most recent SEC filings for information on some of these risk factors. Silver Spike assumes no obligation or responsibility to update any forward-looking statements. Please note that the information reported on this call speaks only as of today, August 11, 2023. Therefore, you're advised that time-sensitive information may no longer be accurate at the time of any replay or transcript.

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 不承擔更新任何前瞻性陳述的義務或責任。請注意，本次電話會議中報告的信息僅截至今天（2023 年 8 月 11 日）。因此，我們建議您，時間敏感的信息在重播或轉錄時可能不再準確。

That said, good morning again, and thank you all for joining early in the morning today. We released our earnings yesterday, and there's also an earnings slide deck attached to the 8-K that was filed with the results. Those that have joined us on this earnings webcast should see it live. I'll refer to the slides by numbers just for your reference.

話雖如此，再次早上好，感謝大家今天早上加入。我們昨天發布了收益，8-K 中還附有收益幻燈片，其中包含結果。那些參加我們的財報網絡廣播的人應該會看到它的現場直播。我將按數字引用幻燈片，僅供您參考。

Turning to page 3 of the presentation, financial highlights for the second-quarter 2023, gross investment income of $2.9 million, up from $2.5 million in the first quarter of 2023; expenses of approximately $1 million; net investment income of $1.9 million, up from $1.4 million last quarter; net investment income per share of $0.31 versus $0.22 last quarter; net assets of $90 million; and net asset value per share is at $14.49.

翻到演示文稿的第 3 頁，2023 年第二季度的財務摘要，總投資收入為 290 萬美元，高於 2023 年第一季度的 250 萬美元；費用約為100萬美元；淨投資收入為 190 萬美元，高於上季度的 140 萬美元；每股淨投資收益為 0.31 美元，上季度為 0.22 美元；淨資產9000萬美元；每股資產淨值為 14.49 美元。

The increase in the gross investment income reflects the steady ramp up in our investment portfolio. We made one new investment during this quarter. The gross investment income reflects the interest, we all know that investment, as well as the increase in the base rate for all of our floating rate loans. We'll discuss the portfolio in more detail and in subsequent slides.

總投資收益的增長反映了我們投資組合的穩步增長。我們在本季度進行了一項新投資。總投資收入反映了利息，我們都知道投資，以及我們所有浮動利率貸款的基準利率的增加。我們將在後續幻燈片中更詳細地討論該產品組合。

Also, we are pleased to announce that our Board has approved a cash dividend of $0.63 per share, consisting of a regular quarterly dividend of $0.23 per share and a special dividend of $0.40. These dividends will be payable on September 29 to stockholders of record on September 15. The company also expects to pay another special dividend during the last quarter of this year.

此外，我們很高興地宣布，董事會已批准每股 0.63 美元的現金股息，其中包括每股 0.23 美元的定期季度股息和 0.40 美元的特別股息。這些股息將於 9 月 29 日支付給 9 月 15 日登記在冊的股東。該公司還預計在今年最後一個季度支付另一筆特別股息。

We'll talk more about the dividend announcement in subsequent slides. But to expand more on the Silver Spike story and the market opportunity, I'll turn it over to Scott Gordon, our CEO. Scott?

我們將在後續幻燈片中詳細討論股息公告。但為了詳細介紹 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)。斯科特？

Thank you, Umesh. Good morning, everyone. Turning to Slide 4, please, just briefly in terms of an overview of Silver Spike Capital. Silver Spike Investment Corp., the BDC is externally managed by Silver Spike Capital. Silver Spike Capital is an SEC-registered investment advisor that works with its clients to originate, underwrite, and deploy first-lien senior-secured fixed and floating rate debt to the cannabis industry's most established operators.

謝謝你，烏梅什。大家，早安。請轉到幻燈片 4，簡單介紹一下 Silver Spike Capital。 Silver Spike Investment Corp.（BDC）由 Silver Spike Capital 進行外部管理。 Silver Spike Capital 是一家在 SEC 註冊的投資顧問，與客戶合作，向大麻行業最成熟的運營商發起、承銷和部署第一留置權高級擔保固定和浮動利率債務。

The investment team is seasoned with decades of experience across various market cycles and complex legal regulatory frameworks in credit special situations, equities, distressed, and emerging market debt. We have raised over $600 million in public and private capital since inception. And we are the first and only publicly traded cannabis-focused business development corp.

投資團隊在不同市場週期和信貸特殊情況、股票、不良債務和新興市場債務等複雜的法律監管框架中擁有數十年的豐富經驗。自成立以來，我們已籌集了超過 6 億美元的公共和私人資本。我們是第一家也是唯一一家專注於大麻的公開交易的業務發展公司。

Just jumping on to the market opportunity slide on page 7, just an update here in terms of what we're seeing in broad market. The secular growth story in cannabis continues intact, albeit at a much more subdued pace than in previous years.

跳到第 7 頁的市場機會幻燈片，這裡只是我們在廣闊市場中看到的情況的更新。大麻的長期增長故事仍然完好無損，儘管增速比前幾年要低得多。

New states continue to come onstream. Generally speaking, though, the rollout has been slower than had hoped for. The state and local regulatory frameworks get through growing pains of early adoption and commercialization.

新的州繼續投入使用。但總的來說，推出速度比預期要慢。州和地方監管框架經歷了早期採用和商業化的成長陣痛。

Progress at the federal level remains stalled. Expectations of the passage of the SAFE Act continue to get rolled back. We don't really have a strong view in terms of what the timetable will look like for any meaningful reform at the federal level and are not generally optimistic that we'll see much progress this year.

聯邦層面的進展仍然停滯不前。對《安全法案》通過的期望繼續回落。對於聯邦層面任何有意義的改革的時間表，我們並沒有真正明確的看法，而且對於今年會取得多大進展，我們普遍並不樂觀。

Capital market conditions within the sector continue to be very tight. Equity market activity for public companies with respect to IPOs, secondaries, and follow-ons is virtually nonexistent. Debt capital is also scarce but more available and has become the funding source of choice for most companies in the space.

該行業內的資本市場狀況仍然非常緊張。上市公司在首次公開募股、二級市場和後續發行方面的股票市場活動幾乎不存在。債務資本也很稀缺，但更容易獲得，並已成為該領域大多數公司的首選資金來源。

The net result of that is a deepening of the trend toward very favorable conditions for lenders such as ourselves to command attractive terms, structure, and pricing, which drives compelling risk-adjusted returns for us.

其最終結果是，對於像我們這樣的貸款人來說，獲得非常有利的條件的趨勢正在加深，以獲取有吸引力的條款、結構和定價，這為我們帶來了令人信服的風險調整回報。

Jumping forward to Slide 9, just briefly on sourcing and origination, and then I'll pass it back to Umesh. We continue to have a significant pipeline of potential debt investments. We've reviewed over $7.8 billion and transactions across 368 different deals. Our active pipeline today is just shy of $600 million, representing about 25 different transactions.

跳到幻燈片 9，簡單介紹一下來源和起源，然後我會將其傳回給 Umesh。我們繼續擁有大量潛在債務投資。我們審查了超過 78 億美元的交易以及 368 筆不同的交易。目前我們的活躍渠道接近 6 億美元，代表大約 25 項不同的交易。

With that, I'll pass it back to Umesh to talk more specifics about the current activity within the portfolio. Umesh?

這樣，我會將其傳回給 Umesh，以討論有關投資組合中當前活動的更多細節。烏梅什？

Thank you, Scott. So yes, we definitely feel very good about the opportunity set in front of us. But moving to Slide 10, a little bit more about our portfolio. This slide tries to show the risk diversification that is embedded within our existing portfolio companies. The bar chart on the left shows the number of states that each of our portfolio companies operate in.

謝謝你，斯科特。所以，是的，我們確實對擺在我們面前的機會感到非常滿意。現在轉到幻燈片 10，更多地了解我們的產品組合。這張幻燈片試圖展示我們現有投資組合公司中嵌入的風險多元化。左側的條形圖顯示了我們每個投資組合公司運營所在的州的數量。

So for the cannabis industry, this is important since each state has its own set of regulations and has its own unique competitive dynamics. Each company is thus diversified when it's operating across multiple states. And at an overall portfolio level, we are even more diversified with our portfolio companies operating across various state jurisdictions.

因此，對於大麻行業來說，這一點很重要，因為每個州都有自己的一套法規，並且有自己獨特的競爭動態。因此，每家公司在多個州運營時都是多元化的。在整體投資組合層面，我們的投資組合公司在各個州司法管轄區運營，因此更加多元化。

The pie chart on company strategy in the middle shows that we have a healthy mix of companies across --those that have brands as their primary focus were those that are focused on setting up business infrastructure across multiple states as their primary strategy.

中間的公司戰略餅圖顯示，我們擁有健康的公司組合——那些以品牌為主要關注點的公司，以及那些專注於在多個州建立業務基礎設施作為主要戰略的公司。

At the same time, if you see the pie chart on the right, we like the fact that most of our portfolio companies do have a vertically integrated operation structure that somewhat protects them from any supply chain issues if they occur in their state. So we feel good overall about the diversification embedded within our portfolio.

同時，如果您看到右側的餅圖，我們喜歡這樣一個事實：我們的大多數投資組合公司確實擁有垂直一體化的運營結構，這在一定程度上保護了它們免受在其所在州發生的任何供應鏈問題的影響。因此，我們對投資組合中的多元化總體感覺良好。

Turning to Slide 11, it shows a snapshot of our portfolio as of June 30. Companies A and B are [Shine] and PharmaCann, which were the investments we made last summer. Company C shows Curaleaf's 8% secured bonds due 2026. This investment was made at a significant discount to its par value.

轉向幻燈片 11，它顯示了截至 6 月 30 日我們的投資組合的快照。公司 A 和 B 是 [Shine] 和 PharmaCann，這是我們去年夏天進行的投資。 C 公司展示了 Curaleaf 於 2026 年到期的 8% 擔保債券。這項投資的價格與其面值相比有很大折扣。

Our bottom three investments have a floating rate loan structure. And so with Prime currently at 8.5%, these investments offer a pretty attractive return. Company D is one of our large positions in Verano's first-lien term loan, a transaction that was done in fourth quarter of last year. Company E [is present in] MariMed, which was an investment done earlier this year.

我們排名靠後的三項投資採用浮動利率貸款結構。因此，鑑於 Prime 目前的利率為 8.5%，這些投資提供了相當有吸引力的回報。 D 公司是我們在 Verano 第一留置權定期貸款中的大頭寸之一，該交易於去年第四季度完成。 E 公司[存在] MariMed，這是今年早些時候完成的一項投資。

And in the second quarter, we made an investment in DreamFields Brands, Inc., shown as Company F. We talked about this investment briefly in our last earnings call. The company's brand, Jeeter, is one of the most recognized cannabis brands, especially in the pre-roll category and is experiencing strong growth across all its markets.

在第二季度，我們對 DreamFields Brands, Inc. 進行了投資，顯示為 Company F。我們在上次財報電話會議中簡要討論了這項投資。該公司的品牌 Jeeter 是最受認可的大麻品牌之一，特別是在預卷類別中，並且在其所有市場上都經歷了強勁的增長。

So overall, if you look at the top of the page, we have about $58 million invested with an average yield -- with a weighted average used to maturity of a little over 18%.

總的來說，如果你看一下頁面頂部，我們的投資額約為 5800 萬美元，平均收益率為到期加權平均收益率略高於 18%。

And a few additional points that we would like to highlight about this portfolio that an investor may want to consider when comparing Silver Spike Investment Corp. to other listed BDCs out there, first, all of our positions are first-lien loans or secured bonds, as you can see on this page.

關於此投資組合，我們想強調幾點，投資者在將 Silver Spike Investment Corp. 與其他上市 BDC 進行比較時可能需要考慮，首先，我們的所有頭寸都是第一留置權貸款或擔保債券，正如您在此頁面上看到的。

Second, none of our loans or bonds are in non-accrual status. Third 86% of our portfolio is in floating rate loans. And lastly, our gross portfolio yield of over 18% compares favorably to the broader listed BDC universe and their portfolios.

其次，我們的貸款或債券均不處於非應計狀態。第三，我們投資組合的 86% 是浮動利率貸款。最後，我們超過 18% 的投資組合總收益率與更廣泛的上市 BDC 領域及其投資組合相比毫不遜色。

So we believe our portfolio is attractive, and we also strongly believe that our portfolio companies are very well positioned in the industry for the longer term. And we remain extremely busy working on a number of very interesting opportunities. Our pipeline remains robust, and we hope to have more updates as we continue to deploy our capital and build our portfolio.

因此，我們相信我們的投資組合具有吸引力，而且我們也堅信，從長遠來看，我們的投資組合公司在行業中處於非常有利的地位。我們仍然非常忙於開發一些非常有趣的機會。我們的管道仍然強勁，我們希望在繼續部署資本和建立投資組合的過程中獲得更多更新。

Moving to Slide 12, again, on the dividend announcement a little bit more. Our Board has approved a cash dividend of $0.63, $0.23 of regular quarterly dividend, and a special dividend of $0.40 per share.

再次轉到幻燈片 12，詳細介紹一下股息公告。我們的董事會已批准每股 0.63 美元的現金股息、0.23 美元的定期季度股息以及每股 0.40 美元的特別股息。

As shown in the table, for the regular dividend as well as the special dividend, the record date is September 15, and the payment date is September 25. Further, we also expect that the Board will approve another similar-sized roughly special dividend to be paid during the last quarter of this year.

如表所示，對於定期股息和特別股息，登記日為9月15日，支付日為9月25日。此外，我們還預計董事會將批准另一筆規模大致相同的特別股息，以於今年最後一個季度支付。

With that, I'll pass it back to the operator. Catherine?

這樣，我會將其傳回給操作員。凱瑟琳？

(Operator Instructions) Michael Lavery, Piper Sandler.

（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？

Yes, I just was wondering if you could unpack your thinking on the special dividend in addition to the regular dividend and what drove that structure. And any other thoughts behind that there?

是的，我只是想知道您是否可以解釋一下您對除定期股息之外的特別股息的看法，以及是什麼推動了這種結構。這背後還有其他想法嗎？

Absolutely. So as you are aware, we are BDC, and we are required to distribute over 90% of our net investment income to shareholders in the form of dividends. We started our operations middle of last year, and we have been ramping up our portfolio. And our tax year ends in March of every year.

絕對地。所以大家知道，我們是BDC，我們需要將淨投資收益的90%以上以股息的形式分配給股東。我們於去年年中開始運營，並一直在擴大我們的投資組合。我們的納稅年度於每年三月結束。

So all the income that -- the net investment income that you have on through March is something -- is an amount that we have to take into account for making distributions this year.

因此，所有收入——截至三月份的淨投資收入——都是我們今年進行分配時必須考慮的金額。

So effectively, a special dividend that we have announced -- that the Board has announced here today is for a catch up in some form for the dividends that we should abate based on the net investment income that was earned until the March quarter end. And the regular dividend is effectively the dividend that we expect to pay on a regular basis based on a net investment income trend that we see going forward.

因此，我們宣布的特別股息——董事會今天在這裡宣布的，是為了以某種形式追趕我們應該根據截至三月份季度末的淨投資收入而減少的股息。定期股息實際上是我們期望根據我們未來看到的淨投資收入趨勢定期支付的股息。

Okay. That's helpful.

好的。這很有幫助。

Yes. And so to clarify, there are again in there two special dividends that we foresee. We have split them into two just so that we can finalize the exact levels of special dividend that we need to pay out based on the tax calculations.

是的。因此，需要澄清的是，我們預計還有兩項特別股息。我們將它們分成兩部分，以便我們可以根據稅收計算最終確定我們需要支付的特別股息的確切水平。

And so the first special dividend is $0.40. The second one would be somewhat similar, but the number is not finalized yet and approved yet. But that could be paid later in the year before the calendar year gets over.

因此，第一筆特別股息為 0.40 美元。第二個有點類似，但數量尚未最終確定和批准。但這可以在今年晚些時候在日曆年結束之前支付。

Okay, great. And just -- as I look ahead, can you give a sense of what other investments might be in the pipeline, and how do you expect some -- how much visibility you have on timing or what might be next?

好的，太好了。只是 - 當我展望未來時，您能否介紹一下可能正在進行的其他投資，以及您對其中一些投資有何期望 - 您對時間安排或下一步可能會發生什麼有多少了解？

Yes. So I think our pipeline is really, really robust, and we do have -- we're extremely busy looking at a number of opportunities. As you can appreciate, there's a lot going on in this industry across much most states, and we have been very deliberate and focused and disciplined on going through each one of the opportunities very carefully and doing a deep dive.

是的。所以我認為我們的渠道真的非常強大，而且我們確實有——我們非常忙於尋找許多機會。正如您所理解的，大多數州的這個行業都在發生很多事情，我們一直非常謹慎、專注和自律，非常仔細地對待每一個機會並進行深入研究。

And I would not say that we have deliberately slowed down our deployment but a natural corollary of having to do a much deeper dive and deeper analysis and diligence on each of these opportunities has worked -- has led to a slightly different pace of deployment than what was expected earlier.

我不會說我們故意放慢了部署速度，但自然的必然結果是，必須對每一個機會進行更深入的研究、更深入的分析和勤奮工作，這導致了部署速度與之前略有不同。早些時候預計。

But I would say that in terms of what we see in our pipeline, it's a very healthy mix of really well-performing companies that are looking to raise capital opportunistically to expand into new states as they see the opportunity to go into new states and potentially either through organic growth or through M&A, but also a lot of the smaller companies who have smaller operators who have shown that they have the ability to be resilient.

但我想說的是，就我們在管道中看到的情況而言，這是一個非常健康的組合，由業績良好的公司組成，這些公司希望機會主義地籌集資金以擴展到新的州，因為他們看到了進入新州的機會，並且有可能無論是通過有機增長還是通過併購，而且許多擁有較小運營商的小公司也表明了他們有能力保持彈性。

There are a number of companies that have reached out to us who we do not really think are credit worthy, and it's -- but we are very happy with the pipeline that we see right now. Scott, do you have anything else to add?

有許多公司向我們伸出了援手，我們認為這些公司並不具有信用價值，但我們對目前看到的管道非常滿意。斯科特，你還有什麼要補充的嗎？

I would just add to that, Michael, that -- and I've said this before in previous calls. And I think the same is true today that I think it behooves us to be extremely selective and patient and disciplined in terms of our deployment here.

邁克爾，我想補充一點——我之前在之前的電話會議中已經說過這一點。我認為今天也是如此，我認為我們在部署這裡時應該非常有選擇性、耐心和紀律。

And as Umesh alluded to, I think the market continues to come our way in terms of pricing and structure and terms. And we're in a position fortunately where we can really sort of pick and choose among the best and the most compelling opportunities in the space.

正如烏梅什提到的，我認為市場在定價、結構和條款方面繼續朝著我們的方向發展。幸運的是，我們確實可以在該領域最好、最引人注目的機會中進行挑選。

So we like to say that we're -- we have a patient sense of urgency to deploy the capital. I think, as you can see in the presentation, and as Umesh suggested that the pipeline does remain robust. It's really on us, and we're just being very, very careful in what has been an extremely challenging and market operating environment for our borrowers to make sure that we're positioning ourselves carefully in the opportunities that really sort of rise to the top.

所以我們想說，我們對部署資金有耐心的緊迫感。我認為，正如您在演示中看到的那樣，正如 Umesh 所建議的那樣，管道確實保持穩健。這確實是我們的責任，我們只是在對借款人來說極具挑戰性的市場運營環境中非常非常小心，以確保我們在真正躋身頂峰的機會中謹慎定位自己。

So we feel good about it, we think. But the flipside of the industry challenges is really our opportunity. And so we feel very good in terms of where we're positioned and having dry powder to deploy.

所以我們認為，我們對此感覺良好。但行業挑戰的另一面確實是我們的機遇。因此，我們對自己所處的位置和部署乾粉的感覺非常好。

Okay, great. Thanks so much.

好的，太好了。非常感謝。

You're welcome.

不客氣。

Thank you. And I'm showing no further questions. I'd like to turn the call back to management for any closing remarks as well.

謝謝。我沒有再提出任何問題。我也想將電話轉回給管理層，讓他們發表結束語。

Okay. Well, thank you, Catherine. Thank you, everyone, for taking the time to join us on this call this morning. We look forward to updating you further on our next call. In the meantime, if you have any questions on our earnings or on our dividends, please do not hesitate to reach out to our Investor Relations team. Thank you so much for joining today.

好的。好吧，謝謝你，凱瑟琳。謝謝大家今天早上抽出時間參加我們的電話會議。我們期待在下次通話中向您提供進一步的最新消息。同時，如果您對我們的收益或股息有任何疑問，請隨時聯繫我們的投資者關係團隊。非常感謝您今天的加入。

This concludes today's conference call. Thank you for participating. You may now disconnect.

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。