Main Street Capital (MAIN) 24 Feb 232022 Q4 Earnings call transcript

Greetings, and welcome to the Main Street Capital Corporation Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

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

begin. You may

operator, joining and quarter Thank you, morning, earnings good for Main for us fourth call. you Street conference Thank everyone. Capital XXXX Corporation's

Credit Executive comments Joining the with Jesse call Group. portion Managing Also Morris, Investment and Meserve, Chief are participating Officer; Officer and David Director Financial is of Operating Dwayne Investment me Nick Officer; Magdol, prepared the and of Hyzak, Chief today Chief for and President Q&A Private Chief Head Officer. the

Main completion X. of until and and afternoon available yesterday's call fourth This remain of Street section release details that available on included mainstcapital.com. replay will Information the replay call yesterday is at available Relations issued today's beginning a the A and full March press of the company's to website be in the on document operating was will quarter access the Investor how financial company's release. the year results. an after hour

We also page. through accessed home conference company's being advise on the can is this Internet and the you be that broadcast live call

reported accurate information of replay that that and listening information only transcript advised call longer you this February time XX, note Please XXXX, as of therefore, no may reading. time-sensitive at are speaks the be today, on or any

guarantees similar date of no there or Today's as of such may as projections Many forward-looking call, can expects, of of management's These of use will, future estimates, statements. this and by based call on should, the words and contain be anticipates, will these statements the performance. forward-looking are identified assumptions statements intends, are believes, expressions.

expressed a not by of the materially and factors, risks, result statements in but factors differ the these these or obligation law. company's with required implied may in Street or be any statements results Securities including, forth to update of from the uncertainties on sec.gov. other which the can to, at set limited Commission, results no Actual as and website found unless filings Exchange Main company's the assumes

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

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

appreciate Thank Good you, everyone, that your on Zach. joining and morning's We you everyone this We us thank well. morning, doing for call. hope today. participation is

payable provide few in I'll also regarding provide the our I'll our providing supplemental for XXXX, performance on quarter going also investment the several noteworthy in performance our full while my updates declarations On updates. usual other our expectations dividend activities, and recent our activities the year. regular today's forward, dividends recent updates our March monthly management quarter, a for of second call, updates and asset investment on of another our current dividends and for pipeline

our provide comments, investment portfolio, be expectations we results, after and which take for comments financial structure our my Jesse and investment first strategy, and questions. XXXX, capital will leverage, to David Following your of the quarter additional happy regarding will

performance a fourth pleased for significant closed Street our We're XXXX. results, indicators, for record several across which momentum year with Main very positive key quarter with

and set which third matched for consecutive per the in records we our records share, include Distributable quarter or DNII, or exceeding Investment Investment record. and quarterly representing significantly Net share new NII results Our per share or Income our in Income, the Net NII quarter per sixth achieved

diversified of companies. investment overall our differentiated the our and portfolio demonstrates sustainable This our continued consistent platform, strong of underlying and benefits performance and the of strategies quality strength the

investment loan our future. both our the us the these also that asset from in business, positive confidence results about included management results recurring of We're and strong positive the private middle nature and contributions strategies pleased market providing lower

strong performance, equity generated over per $X income of DNII annualized for result return a our share an As quarterly of the our net XX%. time, first on exceeded per and we share

pleased with year, strong the liquidity results results, We're position us capital leverage these for value markets share with entered and year per and New per which also share share. we NII included record-breaking record and profile. net also full activities, meaningful asset some and a a the per allowed strong end the the to Year DNII conservative After a record at

middle allow encouraged of strategies us with very our shareholders the operating remain private that deliver investment management will to cost-efficient market results and confident structure continued these remain We the loan by strategies, to business of our continue future. asset over for lower long-term and superior and diversified together benefits our performance favorable our the

discuss These in positive our to more of most recommendation results later. for first resulted and the will I Board detail recent our which for favorable quarter our in dividend announcements, outlook Directors our

impact in per equity due the our of the the components the in value in portfolio increased investment asset the net share quarter, issuances and Our value positive of our fair to several increases impact of quarter.

And portfolio middle continued the follow-on in and the investments our in overall, which are performance market strong companies another portfolio quarter companies we in excited value equity of quarter. market about in middle this fair during resulted investments made Our their the we appreciation new lower portfolio. meaningful lower

these these that investments in companies will quarters. future expect portfolio drive additional fair follow-on appreciation in We value

fair market-based our portfolio, meaningful of from and portfolio our and the investment in a in appreciation benefited adviser, private value value of owned loan registered through combination wholly broader also drivers. We company-specific

fourth activities investment favorable have quarter. to continue in the also We

lower in market strong middle lower the $XXX capped This net lower increase in year, after $XXX investments, resulted million. a a $XXX market Our million. year quarter off million in repayments of for resulting in of increase with activity $XXX another of investments million total market of the net of middle investments middle

$XX repayments resulted private in a million. aggregate quarter of after in of the Our private loan our activities in which new $XX net investments investment decrease loan investments included million,

million net we in of a new of portfolio resulting investments, $XXX in For the completed private our increase loan $XXX million. year,

will which a environment, next in to very positioned the well Jesse are favorable capital our the which portfolio after Given we very markets despite comments, activities, address growth position, liquidity capital challenging continue quarters. few achieved investment of over market his recent we our our

also credit MSC fourth to Loan experience and continued a our Private produce non-traded positive We've favorable through BDC we results asset Fund, our The performance continued in funds including in business. a I, to quarter. MS investment Fund private fund, advised manager, the management external Income

our we the we We remain as and our returns other execute and higher the management strategic about for This performance these plans providing funds, of initiatives, positive on are performance excited we management and to income optimistic attractive fee investors business. the future funds the of as we dividends our a fund. asset incentive for business. about strategies investment from each in asset resulted result, our And received significant significantly are

about and to additional We are the business for stakeholders we this forward plans unique next managed the create to strategy internally also and increase actively contributions as structure value within are growing from execute to XXXX for we our few our optimistic for details Street Main in years. this to our working additional work sharing look asset and business management our benefit our

Board combined and supplemental business structure, our and earlier representing of results a our efficient payable for outlook quarterly consecutive the Based share our $X.XXX dividend. favorable quarter, operating our of the supplemental our upon benefits week, this declared in per in fourth segment largest of our March, dividend with each sixth

increased from share $X.XXX dividends per Our or DNII June, share dividends second XX% quarter is a payable quarter, of second in the XXXX XXXX. monthly greater paid supplemental was dividend Board also X.X% $X.XX the at of of for in the April, increase The our fourth and strong than May our March a the quarter for resulted declared which during that each of regular quarter. result in representing per performance monthly

dividend March our share total supplemental regular representing supplemental dividends Including in dividends in paid of XX-month period paid per excess dividends, shareholders to dividends. will the XXXX our for paid supplemental exceeded the trailing per share. quarter share, these of total during per monthly DNII additional XX% The fourth $X.XX $X.XX our by our an result

our able per in our XXXX maintaining structure our value against the also pleased to capital risks significant maybe further while are We the to significant earnings from realized excess and support portfolio of investment be to enhance that to portion and additional NAV a uncertainties deliver our the shareholders, to of share. economic current growth

supplemental extent As significantly DNII our upon dividend quarter, a expectations future asset positive we monthly currently stable in to the for dividends future additional we've quarters, favorable we exceeds previously first recommend performance an expect dividends and mentioned, we June anticipate our regular Based value. continued payable paid Board to supplemental in in proposing maintain net that XXXX. the currently to declare

to investment our current turning Now pipeline.

pipeline the our after and quarter, below characterize lower fourth I market for today would of investment average. our as As activity robust middle

While is middle remain the new investment generate below significant market ability XXXX. lower we to pipeline near-term confident in highly in opportunities average, currently our

characterize private our with today, our to loan private the significant for And private of pipeline team average. performance our We have I'd investment credit also continue and they very of be provided our portfolio and pleased business. growth as the asset as loan management

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

period extended how history We and our a highly and our look good future. diversified this an to of provides our benefits Dwayne, unique highlight at over and and our to shareholders at and Thanks, supports morning, unique our enabled strategy to believe strategy execute time. intent also the history us opportunity has back returns attractive Year-end discuss back our to everyone. good in of to the continue investment deliver looking differentiated

X.X share Since total $XX.XX our by $XX share. increased our have per our we XXX%, cumulative dividends IPO over times per monthly IPO have in per of and or shareholders XXXX, to of dividends we share price our declared

IPO BDC money dividends reinvestment since period higher the was of is IPO to over assuming Our compares very the and This time our times significantly favorably calculated for of our invested to and when X.X our stock total our all invested. S&P same of yesterday's X.X times price shareholders return to money XXX since close compared using peers. as received

that discussed, previously middle of continue underserved success making in the primary on our and believe equity investments will the long-term focus lower drivers be market. we've both we have and to our As debt

shareholders interest Asset team activities which our through compensation for cost and which to financial private tied results clearly benefits stock sheet of benefit strong shareholders. our between provides team's management achieve superior the to Growing ability industry-leading for incentive our structure, is the our our our balance for our our and which and business, credit shareholders clients of our ownership Management a meaningful alignment and plan, of for

through companies provides middle the ownership Most points attractive also debt our investments, lien first our our our creating management equity leverage and on partnership flexible lower notably teams market of yields uniquely, portfolio with while true strategy and a structures.

approach partners. our investments the significant company our This significant investments, through our lien downside still made first debt upside protection portfolio alignment management potential alongside team and while provides of equity providing benefits with

Our able we will find view track continue opportunities of historical to lower in long-term that attractive of confidence be important market, us underserved that new in record our our coupled gives continues this market with investing business cornerstone investment in middle future. the to this be to the

$XXX in invested of market lower million Street capital companies. middle $XXX existing market market middle with strategy. new lower remaining and Main million fees this XXXX, five in follow-on $XXX investments in million platform represented is middle companies lower our the deployed In

very performing in quarters, aspect history. Consistent us. some made middle lower tree's our XXXX for strategies prior our in our represents Consistent middle of companies, strongest these were prior in which in portfolio guidance investments quarters, investments with add-on market with exciting follow-on makes Main market highest this lower of year growth our support investment to of companies in activity our comments the the

investments typically including transactions. capital support management less diversification or follow-on recapitalization teams geographic proven to product investments risk investment new Our objectives, that to follow-on companies. are expansion used compared support acquisitions, investment when opportunities, and multiple intrinsically providing plus to portfolio These

meaningful achieve from in in middle benefit participating as the value companies, strive businesses our we lower market significant Since proven we equity are managers equity they alongside creation. these to owners

lower in distributions the perform flow. market our with from companies stated we've over to flow management cash the market time lower from cash operations. deleverage this past, This portfolio with benefit free team allows portfolio from generated also partners As received us, our middle to middle naturally along

results in portfolio, Given income the a contributor continue market to to lower we middle and our primary expect our strength of be dividend to quality XXXX.

value with losses market our Additionally, BDC middle achieve benefit unique underlying appreciation at equity serving will lower investments this allowed the floor in naturally our market in portfolio companies among attractive offset This activities. our investing coupled along with middle $XX us activities. incur with in appreciation to deleveraging, our realized peers gains results in is operating fair million to value realized we

Our that to upside unrealized simply value equity BDCs do potential have. asset appreciation other also Street's Main provides net not

The year. to XXXX our are last important I'd the contributions delivered like regarding that accomplishments during cover credit private our the area impressive team

team dedicate to reminder, credit middle larger the our investments continued private significant to a typically Our on resources includes deemphasizing private loan of our which, as in growing while portfolio, business, strategy towards execute our syndicated loans. segment market

return purposeful and Our portfolio provide exists, direct attractive private last belief the strategic that our Street. and shift is five risk-adjusted loan our that by an grow loan for profile and to attractive primarily over intentional driven lending years Main growing private an environment investments

market by which purposely middle loan private portfolio During invested by XXXX, XX%. XX% helped private Main increase and Street our our our in loan portfolio decreased million $XXX strategy,

year-end, represent and value. declined XX% As our investments grown a represent value has the portfolio to investments result, portfolio total to points basis loan total fair middle X% by at market XXX our at fair of of our at private

As Dwayne continue growing to also loan business. key private our strategic intention earlier, our asset support discussed management our capabilities

current to portfolio. turning Now our

in of portfolio XX than As spanning industries. companies more across XXX had we XX, investments different December

value represented X.X% represented our of company portfolio X.X% less of portfolio our largest our income of investment income Our the at than for and our investment and fair assets. our of investments total portfolio majority The X% year-end. total year

which portfolio repayments investments quarter debt in on in of after $XXX our $XXX resulted lower of invested in investment and investments in Our fourth return aggregate market activity a total market million, of capital equity middle the net middle included increase our million. portfolio lower

million. private million repayments which after During portfolio investments, in of debt capital in resulted loan private equity of the and decrease investments quarter, in aggregate our net made $XX a $XX we invested also loan return of

quarter, in Finally, a middle net had we during market portfolio decrease the million. $XX our of

had middle XX XX over which lower value, fair private our market $X.X We portfolio loan portfolio, our above of is cost in in billion investments $X.X value. included investments our year-end, of fair in At billion over representing XX% companies basis. representing companies

market at at cost representing fair at In portfolio XX million in Total portfolio, investments we our XXX% companies the value basis. related $XXX value. year-end had fair of middle was investment

the yesterday. Additional press details on that our we included issued investment release are portfolio at in year-end

structure cover With to call turn the financial and that, our position. I liquidity over will to Jesse results, capital

number David's you, year net we basis. all the income a income, and share comments, net pleased results capped To quarterly are David. fourth our records quarter, Thank Street Dwayne's operating and investment distributable asset per with the on with echo net for achieving for of which value, included Main records and a investment

same $XXX.X or fourth Our another by to represented total investment the record, quarter income consecutive million XXXX $XX.X the quarterly total increasing XX.X% over of a period for in million.

including total investment increases strength The dividend meaningful of XX.X%, which continued or by surpassed management momentum strategies. XXXX income and and million the demonstrates recent quarter and record most for fee quarterly in fourth income, quarter our of our the asset third $XX.X flat interest, investment in

our $XX.X portfolio Interest the income third with a quarter. the the the million remainder benefit We by increases $XX.X continued continued in index estimate driven debt in million year rates, ago drove little benchmark growth the increased quarter, over by primarily third a and the over from investments. half increase of from over

items prior comparable per fourth the In $X dividends in prepayment, to XXXX. or and quarters and favorable earned the certain average less was or fourth other activities addition, million quarter the combined considered impact amounts of consistent are share four was repricing income elevated such accelerated including the by of of in that $X.XX the income quarter, approximately

expenses $X.X External Our in $X.X million related the the Manager. by and XXXX, largely compensation, in increase expense, the a of and $X.X million decline general increased to driven quarter $X.X by by million compensation and interest of quarter of in offset share-based $X operating in partially for expenses of million fourth an million cash administrative over increases expenses $X.X expenses in Investment million allocated

a our total lowest of our X.X% amongst total interest of excluding for and be ratio assets The continues in average the as operating year the expense, to percentage expenses, our was industry.

our period manager $X.X increase to to due same from $X contributed investment million income external a prior Our an of million primarily earned. increase fourth for quarter, of net year $X.X million investment fees the the incentive the in

loan net the During the value value our unrealized lower value appreciation and of realized middle These million quarter, million $X.X on by portfolio including manager. our fair a we losses our portfolio. were our $XX.X portfolio, investment recorded of offset of million, appreciation, in investment market net million partially million fair $XX.X net including and appreciation net external $XX.X $X.X market in middle private fair of portfolio depreciation in net

third when increased year $X.XX Net record $XX.XX XX share fair ago, per ended by X.X% by comprising portfolio investment year per cost. asset the investments compared status, $X.XX approximately total approximately or quarter a end. of fourth over at the with on NAV value value X.X% the and NAV X.X% and We of or at share quarter at to a non-accrual to

not non-accrual large for While quarter XXXX. we expectations very at non-accrual of next March did stats NAV resolve which the these will in XXXX, a the our impact to long-standing and first quarter, XX, material

strong that for have We liquidity continue significant and us our to or believe future. that to positioned continued well capital the leverage, conservative access strengths

we additional belief capital debt structure, third Given of we liquidity importance conference of of our quarter conservative financing. on a continue explore call, sources our as the indicated and to

$XXX million, a $XXX we million raised net quarter, the capital the issuances facility XXXX execution notes placement $XX repayment of program. new notes, a fourth a the active million with our maturity and front, on equity from unsecured at private of During our the credit $XXX including due execution the of under on million the were of commitments SPV at-the-market

these cash liquidity, result ended credit under actions, a availability As and our we facilities of year strong of with million. the including $XXX

million Taken the credit $XX together additional of with maintain to healthy this and while periods. to by million an attractive placement commitments liquidity provided issuance be and uncertain private profile to opportunities XXXX necessary notes our additional additional and these by XXXX, $XXX capital in expansion million, the in with continuing under leverage opportunistic facility believe $XX including in investment corporate continue provides January activities we unsecured a liquidity conservative of us pursue the

leverage debentures, divided conservative excluding X.XX, Our its intentionally end by debt, value XXX%, regulatory ranges are our calculated asset ratio target slightly XXX% the our of the asset below to coverage net and our of total from X.Xx XXX%, SBIC regulatory and which improvements was X.X are third quarter and respectively. debt-to-equity of both was to

back to our results. operating Coming

was Our fourth share our $X.XX on a per by quarter the dividends monthly third eclipsed an record per $X.XX per per for or approximately $X.XX of the the year. for fourth for return year. prior share XXXX was quarter NII on quarter XX%. quarter for per last XX.X% annualized and share paid equity regular same in $X.XX share shareholders increase over or by exceeding The total the our XX.X% per record the XX.X%, by quarter in period share basis the the C&I an or XX.X% the share to

total Total paid increase of dividends during in $X.XX per an over XXXX dividends, share were paid XXXX. dividends share, in per XX.X% supplemental $X.XXX including

per total total for over our $X.XX and dividends given approximately quarter fourth a of dividend the payable approved XXXX, representing of annualized the March total supplemental of yield the mentioned, Dwayne for and the are per XXXX quarter the XXXX. declared and of a an Board share this dividend, supplemental in of first increase our supplemental X.X%. monthly XX.X% $X.XXX results strength paid outlook share, in dividends As With operating XXXX

quarter. we look strong $X.XX the DNII the portfolio, XXXX during least As first portfolio by strength given income line we quarter of of expected level share at per with the driven forward, and expect and in dividend per for the potential of investment upside activities with top and the our underlying another share earnings quarter

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

time, first Instructions] question. will question-and-answer proceed James. Robert Please with from we conducting comes be this [Operator session. with At your a Our question Dodd Raymond

Congratulations on Good quarter. morning. good really another Hi.

Thanks Robert.

still manager in On the was dividend hard quarter, it the this out from was strong can, know I really income, I-XX, predict. it's portfolio if a dividend to out if not just quarter But the mean, to XXXX still dividend I take I really strong. but I just from asset companies. crazy,

us income much even about, give concentration give comes you the from that any on in from? income given comes us companies maybe, of you've for of portion the what you held color … us you've portfolio of Can Can how past or the how that much color any updates portfolio that, some

Yeah.

you or give from? any breakdown is us the …five of of companies concentration years for age the types, or more can coming portfolio of kind

Robert. give for Sure, the Thanks those to details. you question. happy We're

As dividend said, the you are the to and on see this when you'll contributions broad-based. be XX-K, the see pretty income you able side

another you XX it would before of take XX% Income take income. Fund, lower middle the market remaining got side the If to dividend on MSC companies, you out

think So nice a diversity, of it's contributions from broad base companies. we a

XX, contributors. of Once there's that that companies are you get meaningful a very other large past number

good how are market companies about us say our lower we feel So comments, performing. middle you the in as heard

the You but in you fourth the the here raised it here also quarter, portfolio to point, see that income broad-based the you in that recognized we both you the see quarter. saw to in the the from with appreciation raised dividend question we

-- average. currently, Got But average? the you it. it then, it's why you below below mean, the market lower I also gave is lot more. other Thank you it. is, middle give me you Got I pipeline, mean, that. and can what for a question said,

of need average, get owners, the to to is with to average kind in we the right? for do outlook economic function business on think a certainty you or above because, sellers or it back environment economy the more Do obviously, it

on side right? what So a color on pipeline different on, get It's in not it economy. business? views the takes sponsors deal, that market have the on the they of may rebound we the to Any middle got

Sure, Robert.

So highly each is that statement provide we always judgmental. quarter

So you've heard…

Yeah.

for the I'd time. a both long quarter fourth time active, very get periods. third very were below us today, largely very, average … robust because, say, quarter and it's

comments, is today, average a As I it not my while below said concern. in it's

ability I consistently lower our market feel confident, long very to think platform we generate of over middle the about opportunities very good the term.

we as for a slower, at time, here little Just sit bit it's but in a concern this point not big us. it's

I expect bit and back add a David continue sellers' standpoint active. That's need line we've I'll reset the a from he there. be execution ourselves grow them structure continue with prepared need into the market to where from go to think, why little capital expectations just we to in comments let be And to standpoint. and we be any an active area. see being has in to that additional to we

Robert. Hey

in our So, when the closing characterize taking period how been we think it, a and is see the The the QX have of QX say, we I'd how towards and place lower by outlook on time. middle we medium growing. pipeline lumpy. has term, mostly about 'XX impacted we always comment is the beyond, visibility But that near-term really better market

medium-term to that's We're type and to got there. to a transact, will We're still kind making set. too we've out the -- of So, active be very I surface it out about confident the our year very that opportunities. of it the well with still opportunity pipeline and family-owned not unattractive being need play or overall relative market dealing businesses, assumptions able being concerned taking to wouldn't many relative

congratulations Got it. and the on Thank quarter. you, again,

Thank you, appreciate Robert. it. We

comes from Bryce Our with proceed your Please next Rowe Riley. question B. question. with

morning Good much. guys. so Thanks,

morning, Good Bryce.

Nice to marks just dive I is and also and a I unrealized about release NAV see, net question but XX fair quarter? talk XX highlight from the impact in that activity, outsized depreciation. middle there you portfolio contribution similar ATM, you to type see can breadth, perspective of in into value press of the obviously, market here kind quarter. guess, portfolio gain from lower the wanted companies around the an up company net then appreciation that's here in -- of the Can Let's you mark a some, kind to -- dividend saw having or Robert's

Sure, income side, on of your on Robert's schedule that the our Bryce. I I dividend would to look that here, the when question we the or question there's there's to contributed And companies unrealized would also that during of a the looking appreciation. on And at on to significantly. number And seven appreciation here, just quarter. middle market outperform you you significantly it see lower depreciation prior see say continue say, the companies side. kind unrealized it at six

primary also I I'll that What the to by lot tell the you, you and are income. contributors would say names, I numbers a but of companies also won't dividend give same those

These contributions. continued us seeing the economy are excellent and managers, been with come the them, So not excel. quality they've And excellent despite to just the we navigate through new just and challenges, heard you've got able but say labor, that side income fair dividend past, the continue appreciation inflation, supply teams, the to cetera. as in et chain, companies, value some you're on companies that on navigate the challenges see the in we in

Okay.

be income the And that meaningfully wouldn't Obviously, maybe the in level? then up helpful. in kind quarter. That's here activities that fee on asset the Okay. kind uptick incentive the fourth recurring? looked the income dividend of management anything sustainable ticked dividend, quarter. a it nice there the and that of Is in in considered like into BDC Is the pretty

Yes. the Income MSC It one also Bryce, I was there directly. Funds. say benefited Street quarter in transaction would that Main benefited both

MSC incentive will be have transaction seen But would that transaction, some even we not recurring. So Fund. that income Income without fee at

it where one business, I in be to to some one sit have So to contribution today, what directly may happens transaction quarter future, just bit are it that the we that from in predict incentive would management referenced. it's asset primarily expect fee out. difficult down I attributable our quarter, the a say, very, very as would little from was we here even fourth

Okay.

maybe And then me. last Okay. one for

meaningful takes where today. -- You guess Obviously, have puts kind portfolio, of you can of you the the And did realized about a are quarter. versus but and XX all activity. not talk you today highlight I last nonaccruals XX nonaccruals piece highlight some loss quarter-on-quarter?

Just that? some generated curious nonaccruals those if of

any say let memory, here. quarter, Jesse that detail on But I'd the that had additional we on net I'll from has he Yes. during add. add

lot you a of said. So not movement, as

it's think first portfolio for middle a going to supporting what side, on I of market perform equity when names in to do the look we in they whole if do private or thing is to terms have the have well. some company. as they're We that the underperform, And underperformed. private relation the continues do sponsor the loan

And to the private we have the continue where strategy the I'll either very, thing the in either that he But or I'd the But had big needed activity. seen good and supportive, in can performance part sponsors give specifics let nonaccrual were on. caused restructure realized investment situations, that a that very firms segment. is our Jesse a of a add loss private not supportive, we've equity was a couple be the which any such we but do to additional say obviously private equity most loan

heard that I was probably one came quarter expect one of And my we in commentary, think this off another you to it that come on, have I year. movement. this think first the we in the have is -- but

it. Got

Okay.

it. leave I’ll it think Appreciate I there.

Bryce Thanks a lot,

Thank you.

Kenneth your proceed from Markets. with comes with Capital next Lee RBC question. Our question Please

for Hi, good taking my questions. Thanks morning.

Management the on one Just Asset business.

you could I prepared little but actively the that's working a bit in briefly, I about just the could of business. on? comment in or remarks you're still mentioned the for wonder on early seeing if investor either about a I terms And there? just demand of if realize little also could wonder you fundraising working upon what more You sort what you're days, talk maybe growing activity Thanks. product

Thanks Sure. the for question, Ken.

early haven't the last is grow our our is say I'd it because messaging desire longer, we launched year or While business. with asset the for to anything. consistent management

vehicle our natural to private Private step be be would would it I. think I Loan private or fund another a next that Fund similar there MS

comments, my we could performed for quarter. you well. you has see can That also really us, news see think the during in I the it the and in it incentive earned good fund fees

the that think So performance. very I investors pleased or the about are there excited LPs or

outcome, are there launch interest to those we existing once significant and LPs success how somewhat of the we side. be at bringing successful are So there vehicle, in, specifically eventual LPs the institutional will much the that new from we another we how be have outcome amount on confident a will

we'll our have next the new I'd how I near in in a new big terms term from vehicle be, we've will existing that's the vehicle that vehicle first of large got think confidence question and that, would So private vehicle. a strong the of level high LPs reception least say that that but in at have

Very may. you. Got if I And follow-on, helpful there. just one

you're liquidity with wondering the over or as liquidity near comfortable on position a if term position position, the see in there? Just the the liquidity do you further it is, Thanks. boost

Thanks, Ken.

of want the one is in can period long we always defensive, heard where but value think over time that be that us be be of on only we can not you a offense. big we position things I to liquidity. We say probably a

bad. we a support So to always companies, to or good be in times market in lower position whether that's middle want our

We also has which that offense. when when on make is that no want can one market be most to attractive, the is capital else sure we

do step here seen great big recession each economy, the in the the that of through it or more was COVID. backs whether recently during You've us

were low that on market the the to specifically we some on you position? structure significant had not very the questions. conservative those Several And the to and we wouldn't our COVID, we at been other middle capital right if of earlier, in side of look in able Have of made performing response do and companies, some liquidity have middle best that. touched investments

we're on always significant So liquidity. focused maintaining

we over do see wants you're comments I think a job our last in so what any I our capital being the structure. But But always to three he liquidity or of can add. enhancing position, really we've I'll and done us just great additional to months Jesse, add on. on let a two focus touched conservative going

it. think I you covered

Okay.

Got Great. there. you. helpful Very again. Thanks

Ken. you, Thank

Our your Hughes Please next with Mark is Truist question. question proceed Securities. with from

Yeah. Thanks. Good morning.

Mark. morning, Good

kind a This the environment. pipeline of private deal is loan slow is Why average?

optimistic about seem You pretty that.

on driving thoughts what's your in interested that? Just

you seen personal Sure. I there's last in overall, opinion. do think, overall have a months, From of purely my the the my standpoint, couple for slowdown market.

the today's to exists because that's think the capital have in firms private that significantly equity been, given of reset needing expectations, I cost their higher marketplace.

I think to some extent, that's happening.

So I an see think to that you'll improve. do standpoint activity that the part of from marketplace starting

that give having last including of of already team and what largely credit to want what here private good allowed we business us built and over high-quality think a I'll because we our be to talked We private the recently, doing job, great to be continue we've seen a firms I years, about, couple with active. with. during relationships And we some did think having structure that credit really more equity liquidity COVID, to just are but that capital us we some

flow. So see to we deal continue good

think do the from the we marketplace, transacting likely in is prudent because higher it survived very private at that equity transaction firm to But approach firm everybody this think broader I economy. with market. how like excited pay cost side. our just else, being better, that the is a we, fact least quality in private in a capital they're we on when of standpoint, of what's despite that going investment equity moving that debt forward going on capital, is about the the And is

position. to point. continue as wants selective it touched be think ability investing good be And reasons. But capital we have sense to Nick those structure comments active that on and obviously, it's if see I'll our we a liquidity add to conservative where be the earlier, our and for additional to So on any you makes given environment

overall the nailed got theme. Dwayne think, I

specifically, is I think the are industry. one other across the repayments down,

lower respin need And lower. money so with is our that to repayments,

total transactions spent net will a our was where so the in year. And might basis target we be the for but be total dollar down, on amount

kind do middle slower a a the market, me there? And run the Thank on we to the from then is of lower Yes. kind back, into credit for refresh that. economy, perspective, you of just if step dynamics that going to perform

Sure.

I'd of our rate add So wants floating. middle a debt and say lower is key I'll fixed look can. the portfolio to couple David we points One is then But as most market of provide he opposed on, if comments, at. to

So rate see That's one rising big being in we positives they're that environment. impacted part not by of the the of strategy. our

dealing because management are strong well-capitalized, got supply a team The structure cetera, but capital obviously they et investor labor, there, with their are not very is they at they've they in worried are for Street expense rates about inflation, interest seeing, of majority have market Main structure, capital not that and least as the improved. chain, not are the in seeing their portfolio changes

big positive we positive to forward. think continue it think we that's a be and big be So will going -- a today,

that vendors, are day-to-day is customers, valued individuals are market to strategy businesses, the always we've investment people lower management that of we employees’. owners reason business company with that is run directly with they're our that really The middle primary are favored of the are The the that that aligned with kind day. these our living day strategy majority the typically teams

over years, not large. just market like our the times they're of businesses recession, on time is. real-time with just long-term So challenges stress, last clearly, making XX period in when our everybody our the opinion, outperform again, and a experience that seen them changes great will pick, you it's we've else dealing are want These are opinion, they But execute they whether to just COVID, whatever in because is basis.

pivot when impact an to it make a the in So on what's going almost they immediately. to has address marketplace, decision strategic

situations. the So to that they're doing something the do, the and business positive, that they're thing we've because a viewed doing but that's it of always as majority owner one because also it's they're right big most in

two add highlight, additional color. those any I'll I'd things let biggest but the So are David

but Dwayne part, points. just think, period we're most, backing that lengthy of the been a time existing business managers for of additional in and couple look to seen have is the they very that proactively covered very most One a I down for their at the nimble know up They're operating and in can and cut. proactively. ahead small expenses, looking They're do. where what businesses past, as they cycles looking have

a in we'd type front portfolio so equity is And They transaction, that end their this also coverage the have overall see private total at point. better. on normal very seasoned just leverage of is the leverage,

So extended of if period for companies look have, have them the in the naturally at portfolio of time been you deleveraged. have we many an XX and

individual industry be for well-situated tougher we really happen they're segment. their a climate economic So if to there in

you. Appreciate that. Thank

Thanks, Mark.

Abraham from your Please comes with question question. next Our with UBS. Vilas proceed

for the Thanks question. everyone. Hi,

of some of bit a structure commentary. capital finer Just point the on

$X.XX in -- believe. to So dropped leverage regulatory leverage down I

here below timing up? you about are running at issuance that do the to or the So guys how is go bottom And message comfortable are could the equity that here? when that that you just the with thinking how do you And also, range? you're couple on able

Thanks is of economic Yeah, us environment, backdrop say that overall this more Obviously, for range. very for call. little very side I'd above today. we're joining question, or we're the being a current say thanks comfortable the the the the kind conservative much with. that on below just dealing I'd bit and the we're morning given on intentional

move lower our private will other secondarily, In of terms all pace be see strategy can the then opportunities in market middle comfortable, results. the and will by when direction, it strategy. primarily our in we're and But it our loan of it you quarterly driven

deliver just We're we comfortable an Main from that's in Street. running we that at other a can standpoint, returns, investing public And higher of not compared without companies best-in-class of an leverage. to part levels from a huge or gets shareholder industry the it that but investor benefit think

positive we good return, very, favorable and risk-adjusted think or getting a very basis. getting very you're You're on it a

it. Got

the on maybe just then And dividend. Okay.

point? about dividend? And thinking how take to get Just what some bump you would are base versus a in the at the base guys the supplemental up it

Sure.

so be our terms trying we've I And making on in planning that consistent we're of I'd policy. the last So not setting fairly year to been there. or changes think for say

when X% two So we quarters, goals, kind years, not three dividend. recurring monthly to to kind Historically, growing of three minus. a goals, or our say it's consistent, been long-term plus of is five and to deliver long-term

And X%. would closer continue we've environment, I near recently, that to above in case. think term, to most that, to the this expect I be been we think

monthly. much net we are On to be quarter directly in how that's able investment the distributable in income, attributable DNII, or going supplemental, to the to a generate relation to

for prepared upon very but March were touched the is on fourth a comments, we by the wide quarter's I dividend in the think results monthly based I may our dividend have exceeded margin. So as

I little think a and that in half bit my we off $X.XX the half head, of supplemental. that, less the it about paid was than of top out of

the taken last we've So of in couple that's approach the quarters.

I take think we'll continue that approach. to conservative

additional about and that say we're more though a it's at out we would performing paying we there a in good not prudent the a risk of case take just really earnings out some even it and that paying prudent support is number there's super We high is dividend, that. of to would in be in today super, not economy, think of back. step there's level, the your not things factors And risk XXX% and portfolio economy though, that XXX% reason to the feel the it's reserve think your because doing be would dividends of would

paying fairly approach how we're supplemental a conservative dividend. in taking that us see you why that's So

it. one last Got one. maybe And quick sense. Makes

sector? mentioned six of contributed cross companies specific or seven those was to this that appreciation or the Were materially kind quarter. in You any sector that

sector, say you mean by strategy? investment you industry When mean or you

industry. yeah, Yeah. Yeah,

industry specific that they're Yeah, an sector. say I to or would not individual

if to look at are across our it, the say they industries. lower of the And middle at I continues in market top a I'd look you be contributors different portfolio you diverse. there, that think very range wide very, when

you. Thank it. Got

Thank you.

your [Operator with Instructions] proceed Please with Our Group. Zwick comes question next Hovde Eric from question.

and comments excess from to regard you what some outlook. credit you. Good and I'm economy risk quality the the still data this number morning. a curious, morning have the There of Thank And you been and have. that with track in

about any signs along or of at early is concerns those to any this that which credit lines anything either in getting covenant quality, deterioration seeing list or the or you amendment heightened maybe requests growing close companies internal watch point? Are are

huge I I would you at a when seen wouldn't say there, changes look we've that that Erik, change. say Yeah.

driven broad-based, not company-specific look that company level we to when more think portfolio be specific very the at and I underperformance at it by I something economy. broader think continues or is a

jump not portfolio. And but of a David, guys we're you seeing across or issue systematic Nick, the kind here, in Jesse, thematic

I guys perform companies have but on companies better, not some say relative in opinion a environment, that you any add underperformance changed or underperform, months. performance, different the it. But has the if you some like on dramatically different here recent over would Just most a view

some if different you look The only are which at is a intentionally thing diverse that diversification, industry lot of of add and countercyclical. segments, I'd our very across we're purposefully

Obviously, we'll So feel we do be. But if as we in can pretty major feel the that we well like, we're as well sit. overall positioned have change economy, with you positioned, where comfortable we're a right impact. now,

the appreciate I Thanks. there. commentary

it's that strategy just down mentioned attractive market goal that portfolio bring you about portfolio? at you occasionally me, still opportunities or for zero, Is to within to the portion the to portfolio, fair total now. to regard the X% value invest with to do think I the more see middle of the of deemphasize one Just

Erik. we're not been trying. to Sure, trying We've emphasize,

years. number a been have for strategy of deemphasizing We middle the market

ago, publicly be strategy. to going the working that to that So five, said we we six years loan private deemphasize to were pivot and

couple last you'll And And our I of successful that. it's that. us in don't a go think I and We to success think to to highly expect been continue the contributor been doing zero. we've significant it do to see over years,

it want But see active maintain to minimize that capability that activities I to those makes continue because you'll there. be think continue us going do where there We time-to-time to sense comes from could up stuff forward. to be

Got my it. Thanks today. questions taking for

Thank appreciate it. We Eric. you,

comments. our Hyzak, to Dwayne turn We end have the back would reached I now over floor session. of closing to question-and-answer the like for

early to really forward And you, Maria. joining talking in us and support your to May. this Main Thank you our look we Thank We morning everybody for in of Street. to call. for again interest you appreciate again

This your Thank conference. concludes for participation. today's you

disconnect your You may lines. now