Main Street Capital (MAIN) 4 Aug 232023 Q2 Earnings call transcript

Greetings, and welcome to the Main Street Capital Corporation Second 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 at Dennard Lascar Investor Relations. sir. you, Thank

begin. You may

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

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

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

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

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

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

net Generally investment investment NII or Accepted During discuss today's non-cash U.S. call, of expenses. DNII. net will as impact management or or accordance income measures, including the determined with compensation in Accounting Principles, DNII distributable excluding GAAP, is non-GAAP financial income

presenting supplemental the useful net Main cash for Street's are financial analyzing that share and since to believes expenses result related per DNII upon and Management do and Street disclosures amount performance settlement. non-cash compensation appropriate not impact Main

divided non-GAAP on management financial value additional refer comparable Please yesterday's a this measures discussing press and directly Two ROE. quarterly is to reconciliation return operations or reported these will total are as the the defines from per ROE in be equity measures. share net call, as release that net is on indicators increase performance GAAP total most NAV, Main assets for asset of and liabilities resulting minus assets net assets. basis. total to Street key a or net on defined the average NAV by

information third-party that note companies, been certain call, this from portfolio on has was derived independently information verified. not related including sources Please to and discussed

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

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

going dividend also noteworthy provide quarter, I and updates. on performance declarations, the pipeline, my recent investment several our activities, updates providing regarding management in usual our expectations forward, will asset other our On call, our will our dividends current today's updates for

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

share DNII was in new performance share, fourth XX.X% NAV per return quarterly records NII consecutive pleased and the very highlighted per second a which for are includes of per quarter. the quarter, by on for share, We our and with equity

strong strength and asset loan our results underlying strategies, private investment contributions business. of investment Our positive our unique and business demonstrate strength from the of These strategies, management included our continued significant and and contributions of the sustainable from management market results of portfolio middle the our lower performance continued diversified asset benefits the our and platform, our differentiated overall quality and companies.

position are investment in loan structure, private this and pleased we lower outlook us pipeline, a continued provides that conservative We maintain favorable pipeline together in for our market the an investment with also strategies quarter. attractive and continue attractive to investment our both middle liquidity third capital

our and Our still to meaningful DNII and more conservatively portion growing our later. NAV performance dividends XX% for deliver Board to results and the shareholders resulted shareholders us share. per which paid These detail retaining of our income outlook in in favorable the allowed XX%. for our recent I'll dividend by quarter third dividends of recommendations discuss announcements, to while most by our Directors to strong paid a significant our monthly our total the positive shareholders, the value in to our exceeded second This quarter

the several Our dividends retention due the quarter, equity in impact in increases the our of factors, share quarter. paid our to in of of in NAV share the our fair total our increased value above excess including issuances investment the portfolio quarter accretive per NII the per and impact

appreciation, from in portfolio another which resulted companies fair of their investments dividend continued strong equity Our portfolio. our this lower value favorable in net income market performance, and middle quarter overall contributions

by had expect forward next remain lower market follow our XX see excited these the additional last few acquisitions portfolio realize benefits we about from quarters, over we middle funded to companies in portfolio those expect we portfolio to companies months, to future. we the fair on As value companies, in made the and we certain in appreciation the debt of they look investments completed largely the

increase an next could also middle realizations few to lower in that in potential We’ve favorable market over portfolio exit activities our lead seen the quarters.

net portfolio included and debt total activity middle middle investment resulted lower exit companies. repayments we investments million. $X two investments investments quarter, increased We portfolio second in received on These in by companies. the $XXX,XXX,XXX, of were the market which lower offset new of of are full This basis investments, with our in decrease our a investment lower our cost the several and in X of activity pleased market investments market in middle investments

were pleased with investment We the of quarter, which also our private million. investments loan total activities included in $XXX

the realized quarter, private of during We decrease also million. a on loan basis a and our investment investments cost net of resulting repayments received increased private a loan the in loss $XX in

to we business. experience external positive We’ve to continue in returns second funds also manage net fee The quarter, management investment quarter. management performance incentive This resulted our in investment our the asset and asset continue management significant to for from our performance a received through significantly the income our in result, produce for income business asset third favorable a as business. attractive higher contribution consecutive manager, we

that are of our these external funds optimistic execute returns to manage, future investment the and about of investors plans each about the other the excited we remain the providing we for funds our and fund. performance We and attractive we strategies initiatives, as we strategic are

to managed the growing strategy contributions about business from unique our stakeholders. optimistic benefit our Main internally within our management remain and in Street structure asset for increase also this We

the on happy fund have quarter. that closing meaningful planning on forward this fund made private details As to to third part we've our additional next strategy, to are We we're end first progress the growth update before conference for our of sharing next and and loan new our of updates the look we on fund, call.

week, of in our quarter, consecutive asset with share, supplemental $X.XXX each for dividend. our primary Board outlook our supplemental our favorable per combined the earlier and a quarterly September, Based and representing largest this for dividend payable our business, in declared second results our investment strategies, upon of eight management

representing declared supplemental dividend our per by the the share, our the resulted exceeded quarter increase September increased a our quarter, quarter of a $X.XXX which dividends payable paid to in of for or second the performance October, regular each Our $X.XXX which monthly an The November, per quarter also is regular in X.X% increase DNII from XX%. Board strong in XXXX. dividends in result of fourth XXXX, of share, monthly for fourth during December,

the will per total supplemental $X.XXX monthly paid XXXX the XX% and yield XX% to dividends September to current regular increasing our over and increase additional paying are shareholders. result significantly of XXXX June of during dividend, period XX-month an a supplemental dividend our representing paid The in our shareholders the excess trailing share, dividends supplemental in we

or exceeded XX%. Our total DNII share for the by per $X.XX second share per paid dividends quarter our

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

We anticipate DNII dividend of significantly declare to regular third maintain quarters, favorable Board fourth the extent performance continue the future supplemental an we exceeds dividends positive that we future expectations the recommend NAV. proposing in to paid a the currently Based and monthly in expect dividends stable our upon quarter for our payable continued to XXXX. to supplemental additional quarter, currently in

current our investment to pipeline. turning Now

the of our lower solutions prior to in be I be As current despite to us. companies middle our uncertainty, and in market long-term broad in flexible unique attractive more broad lower market and should uncertainty, our with continue provide lower the we differentiated very we holding pipeline can economic active investment the management characterize Consistent periods and permanent as middle an current result today, our even their believe market opportunities financing teams, to middle for would of economic solution attractive to and and investment environment in expect owners average. we periods strategy. experience should

new maintain these the will helpful last expect positive are We work as about our current and pipeline be several we to excited opportunities, quarters. we momentum investment our from

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

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

everyone. good and Dwayne, morning, Thanks,

operating strong As Street’s Dwayne we believe our results of our Main remarks, platform, unique quarter continue differentiated second financial the model. highlighted demonstrate strength his approach, investment to and our in

quarter report financial for second which We’re our performance our companies operating overall attractive to that the of continued be to results. pleased positive, portfolio contributed most to

portion middle primary be and As largest in to specifically underserved companies. we've our past, lower the our lower equity the has both success discussed driver the of investing debt portfolio the focus long-term in our and of and on market investment the our middle market in continues been and strategy

our of market area we primary of to our strategy of we differentiated focus expect this to in the the highlight key be try Our remains aspects Each continue unchanged, and middle view in investment on quarter attractiveness lower investing future. and approach. to

For of and our private in of is a represents be today's strategy call, some would last part to businesses. thought and significantly equity on investment useful spend the it senior our is investments years sponsor strategy, grown primary second portfolio driver which time we several the investment of secured our management has principally private over the asset business. This loan debt largest

Our firms private equity investment private capital loan are directly our strategic intermediaries. investments professionals by internal with market originated in through their primarily relationships

investments private Our attractive lien terms. with profiles typically favorable debt loan and yield first are investments

As are first of bear average have XX% XX.X%. which secured interest private investments and our at interest of of weighted loans, quarter floating yield end, attractive debt rates, an XX% loan lien

our middle to strategic ambitious loan growing dedicate in double six seemed syndicated percentage our of our portfolio, size a portfolio, our loan Over which a portfolio. growing are to since greater of than set market significant private We at portfolio, which private a of private resources market typically the while was reminder, almost we our middle ago, portfolio decision as larger loan goal towards years investments the loan our portfolio market time companies. the deemphasizing our middle announced asset

XX%. to market growing During to year, the this loan our middle a portfolio private fair by our through total period in maintain the lower XXXX and of our of value total at we of of of middle end at emphasis deliberate fair second year total portfolio also XX% fair portfolio our assets quarter approximately From repositioning, from our and our value. have are setting to we lower this increased market value goal XX% XXX% portfolio on

only we time, of total by middle portfolio value of XX% period total our fair X%. market portfolio same the at from the our to XX% value reduced Over of fair

we We started is middle value, of our lower fair today when also which target market represents by XXX%, and value fair at middle this total increased our above portfolio market the total the assets cornerstone our XX% portfolio initiative. lower of

Our return purposeful attractive market environment intentional more and future investments growing an direct private belief the primarily would exist adjusted private risk in that strategic loan than our driven shift and profile to loan portfolio in lending was grow a that our attractive investments. provided middle by

weighted important than private is portfolio our the Today, than more higher but yield meaningfully in in even middle market our loan average higher portfolio, yields.

underwriting better credit in are loan and after to returns, We terms of favorable investment market middle significantly our our process the and confident available and that contractual private in provide us losses, the investments will returns conditions investments net more strategy.

management of capabilities time, allows relationships private we on flow, from and our our attractive benefited Main grow Through our credit also for to fee-based Based investment third-party team, growth returns Main clients, the leverage from ability professional’s the received private Street utilize manager investment loan private investment of has to same effectively platform Street strength time strategy investment our the providing our to platform loan external opportunities strategy our benefit our those asset income from while and at private and highly our portfolio to business. and the clients. of loan our overall attractive deal our the

overall different loan, as portfolio from than with turning industries and highly June lower spanning XX, of XX more investment our Now, our middle our in the among maintain we companies continue composition portfolios. private across to middle investments results diversified market market, XXX to portfolios

last our X% XX at our our of income portfolio our portfolio less our of investment X% the of represented and largest than assets. investment quarter-end, Majority company Our for income and investments fair X.X% months. represented total total value portfolio of

in continued and of one be middle benchmark coverage increases on rate calculated forma the majority interest and their as to the the and middle July a our rates market we companies have to debt Despite interest today confident and in above vast loan lower debt rates, times, interest market, of basis portfolio in ratios covered service future. private pro their ability well current X, continue for obligations service

market predominantly index and as and lower middle addition, fixed portfolio not In companies by increasing a are impacted therefore market investments, rates. our reminder, rate debt are

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

private I capital completed debt after a the of capabilities private Driven also decrease previously investments, return in total our credit million realized discussed, net that by private and equity invested $XX we relationships investments portfolio our $XXX team losses, resulted of loan loan which in and of aggregate million. of in repayments

a we market quarter, continue of the middle deemphasize decrease during to our we strategy. as portfolio in Finally, had $XX million this net

billion portfolio billion is XX% quarter, XX At cost the our of value. $XXX portfolio, market in portfolio, included which investments had had companies, basis. of over end $X.X representing in over representing we first lower investments above We $X.X XX fair investments million our loan middle representing market the middle fair our value value. our fair of companies, in companies private XX of in In

value portfolio was at The of related XXX% total quarter-end the fair cost basis. investment at

results on and Additional portfolio our and long-term Street's at investment yesterday. continues press level release in deliver Main are a details at the included perform that In quarter-end high to summary, on we investment our portfolio issued goals.

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

Thank you, David.

and results David pleased the our quarter. for we Dwayne very mentioned, As with second are operating

and million the XXXX X.X% and a the our included of $XX.X million quarter first total each quarter second Our of million in over XX% the performance in total over same period increased or $XXX.X income from XXXX, strong investment components. or to $X.X income by

the $XX.X prior half or remainder by increase of first over We the increased increase by driven continued the XX% index ago income our investments. X.X% increases year $X.X Interest from with million, the of that approximately in primarily the drove and about quarter. rates quarter a and XX% from debt the benchmark the from or in the prior year growth million estimate

or from a for $X.X companies, a market income external over investment manager. second strong record and Dividend and income the demonstrates represents middle by the consecutive million dividend XX% ago, year quarter. continued first quarterly This performance of our portfolio or million $X.X increased lower X.X% the and

ago million million Fee and a by activity. income increased investments new driven and on over year $X.X $X from first the quarter, closing follow fees on repayment

or quarter. The the $X.X million these dividends less second are four considered other quarter activity In lower elevated quarters consistent. and first investment income accelerated of prepayment the $X.X were million than aggregate, and the included average above prior that

over by expenses million and offset related driven operating allocated compensation an increased expenses, interest increase in $XX.X by by Our manager. expense year largely investment external to a expenses ago, increases partially in

by new an Interest investment the expense in growth the our higher $X.X rates, from increased benchmark fund average debt of borrowings and to in with and over interest index at the our increase driven primarily activity million prior year, support by of combined outstanding portfolio. rates, increases investment addition obligations

assets compensation, increased Cash year investment million driven incentive ago, higher from increases ago, by as result over a a to and compensation of expenses levels compensation in support accruals, expenses including operating $X.X increased by and deferred headcount primarily compensation a management. year and performance, increased $X.X under by Non-cash increases activity expenses. of our in compensation share-based million positive

percentage excluding in continues the of quarter, amongst and expenses, ratio expense XX-month assets of as average The our period the X.X% both operating was lowest and a be our industry. total to interest our total for trailing the

$X.X million to manager year Our income an over million from $X.X of quarter, the the our and $X.X increase net investment quarter. investment first during contributed ago, external a million

the million the of positive million $X.X from year and a result performance fees quarter, with as $X.X under an and a assets over $X.X the the incentive of management, the earned quarter, during of of $X.X ago assets under billion. million manager first in total ended management quarter The increase

value including on in Dwayne was quarter by companies. fair $XX.X unrealized net our the positive million. we We of market the net net $XX.X realized which our of During appreciation, recorded performance recorded value driven mentioned, lower the million appreciation fair appreciation net investment portfolio, as portfolio continued losses and of middle portfolio

positive in $X.X underperforming net historically due market certain from private appreciation fair portfolio prices, contribution portfolio certain by underperformance fair value quoted in performance of from market appreciation our million with changes of companies, net and offset loan middle our recorded and value We a of in million improved $X.X market to companies. spreads, portfolio, depreciation

We appreciation also revenues of fair our million in in of external net partially offset investment peer in realized losses recognized investment. recognized the exit losses quarter. of manager, underperforming and of $X.X decline investments the exits value by driven a by gains a recognized private of million the multiples. We investment $XX.X realized the by the long-standing restructuring The middle or result offset market several partially lower of were realized on primarily increased loan

approximately were fair impact such these than specifically this prior. million the quarter a prior greater completed the realized realized of investments a investments end XXXX. net in the majority realized losses value of were of quarter fair which of we first recognized quarter, When at for the the value the at was approximately of to second at looking the second to year XX% vast loss $X.X XX% was XXXX recognized and for or unrealized related The unrealized depreciation in depreciation the the

on meaningful $X.XX end investments by portfolio of approximately year status fair the the and X.X% X.X% X.X% and and share per costs status fair the increased ago a a approximately approximately quarter. investments the when record or $XX.XX X.X% approximately XXXX. which first XX, of ended over at by nonaccrual or investment first X.X% the as $X.XX to X.X% of total quarter at comprising to June compared of NAV at end represented comprising on first with total from quarter value of portfolio a non-accrual the XX the reduction at investment costs, We value nine the

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

and our Our was calculated to our and value as equity X.XX conservative our regulatory respectively. excluding intentionally coverage SBIC more quarter regulatory slightly net X.X asset debentures was are and leverage by target to ratio total times, end range debt X.X to divided X.X of times than asset X.XX debt X.XX at

million. our quarter During million equity be We a $XX and at we a including market $XXX with to throughout maintain and continuing opportunities net conservative ended the raising quarter, us continue program the provides to to believe investment profile. facilities ample issuances. the credit under availability XXXX, this continue to in that leverage while pursue opportunistic We be liquidity from attractive of cash strong active with liquidity our

and as July, from million facility In on expanded it the conditions of facility, lender came corporate our existing expanded the commitments. confidence. strong commitment was appreciate existing under believe to vote commitments an same which we million by The in and the we $XX $XXX the greatly terms a

first and Return six on June on respectively. the XX.X% basis, an ended annualized months XX.X% XX equity quarter for and were

period, XX-month trailing the For XX.X%. was ROE

ago. combined income to All $X.XX quarter are less per a and share over year of our believe to consistent considered DNII results an we investment over per The for was per $X.XX period year the above represents $X.XX DNII over of the share, share a long-term nature or the first average ago. and per was share quarters last the $X.XX above strong quarter or record impact four compared of certain non-recurring same XX% same increase the the which the $X.XX at in X.X% or above quarter industry. targets these

exceeded a and year The per last impact compensation to the $X.XX was dividends our same together DNII our XX% expense per include to $X.XXX paid by second share per which share shareholders the deferred XX%. per the dividends ago. share with quarters of NII, in average or $X.XX items by above regular total four in quarter the quarter monthly total share or the these

for an per largest outlook year to fourth in the our quarter payable monthly quarterly representing of Dwayne this increase dividends share, quarter a board total the approved for mentioned, our and given total XX% As the our over paid monthly dividend consecutive increase the share supplemental increase the results third quarter in are share the and second in Xth supplemental quarter and operating $X.XXX prior supplemental dividends $X.XXX and dividends a XXXX, and XXXX, of a of XXXX, our per for strength September increase of XXXX X.X% the XXXX total for the $X.XXX of second dividends the per year. The declared dividend. the paid third over

Looking forward, the given to portfolio we continued expected driven the by performance income per quarter the activities with XXXX this quarter. during level per strength and of to portfolio, share of our of strong of the DNII investment dividend exceed underlying share third $X level the expect in $X.XX opportunity with

to operator. call With will that, over turn back the I now the

can we So questions. any take

Thank you.

[Operator now question-and-answer Instructions]. will We conduct session. a

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

Thanks the here a mean, level record start I quarter. lot. you Good morning. next for the highlighted Wanted on supplemental all to in supplemental maybe the Dwayne. the

to coming Just how over about formulaically in to kind to how thinking you've it level. few that And future paid kind relative curious quarters. up quarters, you're of last out size the of what thinking about

Sure. would look at you say the is Bryce, think thanks we've What some before. given guidance of I good and I that when question. for it, morning this

a excess purposes. just significant amount the know, you conservatism for the when the supplemental as Obviously, NAV supplemental the above We you and monthly. or for based excess still numbers, of determining the the are retaining for look our we're upon funding DNII at

per performance about, visibility guaranteeing of really is we feel not being, do think have supplemental, continue we you we meaningful because it'll the good confidence we second $X.XXX to confidence something continue from have it well -- contribution that So that that forward standpoint. to good that share quarter a a to going the really a is terms where good be a supplemental to dividend But shareholders quarter. to forward, really, being meaningful our be going it’s as going a we'll relative pay know, set and number conservative I in as

That’s Okay. a maybe gears of, And kind here great. little then changing bit.

of company Just exit around, help or exit market driving other the it's be markets heard comment and in some smaller activity, potential just of you activity we've not of the is you driven. the activity. think of Maybe that from don't exit BDCs. your specific. kind fact maybe can some It's I type exits and pace the that play about seen going what's and maybe of of some know necessarily comment if the kind us to

Sure, very, Bryce. with we've We may got that high lower portfolio a probably we agree an that investments to We wanted in equity others companies outlier highlight bit it middle little be an the believe do what because or saying. it's anomaly very versus quality you of specifically a market.

other had teams the is look it. at take businesses interest So us well part of gotten companies management the party equity of it have the these of to parties has caused several performing a we interest and and companies gotten owners, have some from third those and third those

-- on things. on we're uncertain the just so overall side So, both of obviously very and the environment a capital it's side market economy

of but to more activity of seen So, highlight last than are why transactions had seeing we can't really in our and prepared which wanted predict forward comments. couple we the move we will in quarters, close, those we whether it any is

in Great. And non-performers. up intentional they of Was did, of the as that just activity standing again me, to, clean timing then happen when kind or of trying of some with last one longer you of the that for bit matter describe of going things of a more some would kind to cleanup underperformers.

more former, Yeah. I it's would say Bryce. the

were transactions, where are significant most transactions or Some not when of of underperforming lead you we investors. these Several look at the investments. the even the legacy those

the determining restructure or for along an we're happens. extent, some to how So, in a and of when exit ride terms

were look There our but did of were over say we there items, when couple but of transactions of most involvement, it. you things the at, that are not have out influence, control where couple more we where I'd -- largely that those control had

its had his sale not some was depreciation transaction through way to it restructuring or losses. just or highlighted I final could think in wait for quarters, work taken Jesse years. prior process some process, but it other realized prior was in just recognize most those But we whether of the we a a in before to So, to transaction comments, really

on some to these the underperforming were that we you've companies got So quarter. longstanding in resolution finally

queue. Well, Great. Appreciate back this in the morning. jump I'll time Okay.

Thanks, Bryce.

The Dodd Robert Raymond next proceed. with from James. Please comes question

quarter. have looking is on color the give average. the Can it's pipeline share small add-on make any it may that is mix which pipeline, Hi, for of greater like what is kind companies lower market versus ticking average up characterize normal and middle it of capital. guys. or you pipeline, These Congrats like. kind on platforms? of that Is acquisitions, of new add looking you which kind to as you the on Dwayne, be on average much than the how just on us a acquisitions

couple been to investments, To follow-on we in with for I point your line to and XXXX. I both excited of Sure, the terms one, years trend you about companies question of would on were in investment say potential think the both has about Robert. when are size and the last or a dollar versus we of strong back pipeline, the that morning. volume really pipeline, and good what the amounts number look the we this talked want the would be. new at numbers of and Thanks are for them going we pipeline XXXX think because of

some extent, intentional it's on side. to And our

significant or us equity gives deploy been better when value pipeline our in companies, we one XX good heard our are fair by months. follow-on acquisitions industries is the time, we at have the then last additional the risk really of think capital, consistent that our value opportunities with you to last for opportunity portfolio a of seeing existing It well significantly some the investment a and of really the companies, an which an in things us which investment represented a opportunity companies. they're past, an value because that have for made because investor performing you've seen in from future, as of say appreciation standpoint, it’s investment reward companies XX one having we has the over we for in We period opportunities know same couple been companies those management those we look we've and when quarters for that teams those so amount in

we in to of as good the as high our companies. commentary on So, types well to from David of it terms wants the pipeline. a it's And pipeline that mix investments Obviously, add if your anything of new to is a point, quality in terms think follow-ons. perspective good

in add time. over our opportunities certainly with platforms of platform we're add-ons a mix today the thing only activity and that The Yeah. But also is add-ons here the nice in increased some the future. I'd we have pleased make the of

The and taken nice has in today's portion our consistent particularly and a strategy. fit with So, steam some really have do market we conditions mix minority transactions us that of equity, well. those

financing non-contingent that And got we've in I'd appreciative say one that last opportunity shop of on stop knowing type we thing are of a environment. the the is provide, intermediaries this really just

it's a a, So, like to really, way lead. good feel a we

it. now. [affection] right of being be target Got you the the your in conservative any on or was economy, that think it intentionally capital would about color mean, would worried seem that. intentionally I on X.XX neither conservative you're you're case. running think And strong, reserve mean, and be either things the the because I pipeline to Jesse (ph) but I those it's why but your at leverage, appreciate versus the color I said can us right then on give I now.

are you conservative intentionally So why now? right

he do even to Sure, strong conservative that structure for market you to to comments Robert. to and always -- it. capital next just of a not we've positions. be some We the quarter, and has then loan though add give if would the always guidance we valued additional liquidity we're gave both expect pipelines the do expect lower are in average. points next What I We quarters. but couple initial middle make private active, say some and is on can I'll Jesse

So, that for standpoint. opportunity we're preparing an from investment

do XXXX. that we also of have We in a acknowledge May maturity

sure as many and possible in making we much that that flexibility So, with as XXXX. as we're to intentionally have maturity options deal

you had to I'll be add if other So, factors. let key those some would want the on? Jesse comments

you Dwayne, strategy as a having you sheet you prior just my I core core, said I the think know, mean in flexibility just has and strong for having as been us balance these very I mean, comments particularly covered times. a

you. it. Thank Got

Thank Robert. you,

proceed. from comes question next The Truist. with Please Mark Hughes

Thank you. morning. Good

Mark. morning, Good

of grow business, deal opens to In expect of kind size say to how management the that you the the private the if the flow kind you asset how accelerate, to me deal on earlier fund, you're cadence be up. closing Could compares going of market it -- this Do you funds. pretty expect loan fund refresh to cadence shortly.

Mark. points. of a Sure, couple reference give I'll you

Just as expectations fund. help guide for the reminder, and for the our second it'll

that fund partner we million raised million that you put limited $XXX capital. it. you some equity $XXX just of loan over leverage private we on take first the When So a have,

maximum commentary. as You capacity. release get we very is in earnings to very, in from performing That a gave just our over investment well our fund $XXX million and

standpoint two, the you from moving size our a is of $XXX there's uncertainty of When the be size the environment equity lot increase today's at goal at a goal be fund look being and LP lot is to an than we Obviously, of parts. it have least with equity that capital. the larger million same to

ability level. of then that the get we by drive, $XXX and achieve And catalyst million big significantly impacted upside So, I we participation above will really will other $XXX goal. opportunity new in and institutional to somewhat much increase larger that think the our investor our we're able will interest markets, how that to level that to be can fund be overall equity than going the confident million the be to but be feel

like that or your details if me answers know to question, there. But some if me Mark, let additional give you'd

about If Is little an bit it you think this event? tell we be the me could a progressing. should annual How you future, to how about would great it? that see

Sure.

we from color expect some goals, fund, have similar to we give would to the fund. performance the first first our think achieve to because if maybe I So a ramp as standpoint

So, the February, we're fully today. fundraising in of in invested and fund, effectively March we fund that one the first closed XXXX,

if you there private be based we're frame, We have a again conditions XX market then that team's successful, on we a our months. be to you in new if type credit think would cadence and in could fund ability time of XX and our level expect to if at I of to successful a obviously, that. do ability high But confidence every So, of opportunities. to be a sourcing investment movement, new look having

impacted end that'll that's be, on extended. could the a are raising raise fund, really well as with fund. in get time bit more know period range, wide be we of as little but the that by If in successful similar front that pretty the you're standpoint. large marketplace I first a capital how we If timeline a from a larger it's to size the it's would of second

big maybe that loan very lot with in your to then, talk differentiate BDC And give that compete Can you're context, private a deal just the strategy successful. peers their question. of corporate the parent, about you and flow. talk you able about, picture A the companies structure, related how be how them good

room additional comments. team our in few Sure. I'll credit leads the some who with investment private comments and Nick strategy private who's let credit us and give I'll give our Meserve, a

I of large we when perspective. our are platforms, really the different from parts in would say marketplace the us But you compare to

regular from So, strategy might, are or loan We at our do time? but not when we investment they see some loan competitors the activity. we're private looking of those private time to players

standpoint, some in transactions other that players the our a executing well. really the of view a They because in a fit strategy. perspective from really relative really, So, fit that really some big size guys we and our our view, of types to disadvantage loan the as it of from well marketplace. private as Frankly, positive we're us they don't platform we wouldn't

So from interested standpoint, investment guys big even when landscape the larger be to they're a were at going much you are. interested, a if it look competitive than in we

may he in, transactions let not to pay be to attention Nick we're they it's their color some standpoint. the But add. wants any priority from I'll but a participating additional to give competitive So, going

The be we also source thing transactions. I’d add would to that how our

of market. relationships. banking from kind theirs advisors from are they direct find and sponsors end wealth We’re the intermediaries then, either hire finding to in run or not of or of two mainly through of sponsor activities, direct the financing, to with five most preferred bringing being the that It's main channels or them the those and our smaller intermediaries of six

them to work weekly with transactions. on kind a of new And you basis source

sourcing that certain that necessarily because have different on avenue an fits type focused certain matter we of size got that's we're a whether that platform, that and you've bigger doesn't us. so transactions And transaction really really

it. Appreciate you. Thank

Mark. Thanks,

question with UBS. comes Abraham next Please The proceed. from Vilas

for Hi everybody. question. Thanks the

bit time around Is to that market private on about you any certain Just as more target put now. that a is XX% Can a a lower middle think over dig you amount that to timeframe a in there little the want I XX% well? level of kind portfolio. grow that. on And XX portfolio to, see to of loan

Sure. I'll take a question. stab at answering the

market it be above You lower of goal have investment cover portfolio the middle XX%. if long-term But is we to completely. can our don't portion tell me our

moving realistically period long think it of a time good is to a over XX goal. I XX or

portfolios, look move continue well growth portfolio market you as absolute loan portfolio as just portion middle when market and private both time, market lower the to and at middle private our Over total will percentage been will dollar. shrink a of as an that the loan. of And of middle have and we to the

middle what less there'll what something there, for. will time increases So, market want looking in see middle a both or percentages the and portfolio. and into gives is market let know it loan that you'll you're overall portions today pick you perfect But if X private the the out lower the be -- in world, me of will period you be it future, to than be years but XX whatever or

Okay.

been So, now tactical. And is the of more where thinking into message then long that kind guys loan private are you terms of how about that? you're in right term, still like have you leaning

it's When management you our management and the for business, it. the not sheet our us private exclusively the loan, loan, look of business. the at if but management is of for at not if the exclusively, whole, it's private business majority our is asset business private growth, important today, balance growth vast a both strategy asset for investment asset So, look our you loan as very to

when more a whole, to and our part as when our investment Street at balance to of you you're Main see But portfolio loan will a lower would and be loan. the you to is private you So, look look activities. private continue platform Main middle sheet big specifically, and investment at going continue than Street's strategy market

would The do that to to expect say balance our or we going existing expect going that our we portfolio decrease private in going I investment increase of and both piece decline is of forward, shrink. loan forward not the private portion the But on continue forward. market balance the will middle portfolio portion market our Main portions middle loan the both sheet to Street lower sheet of

year versus company portfolio great? a a are And are Okay. let's Any things than there industries bit decelerating talk others. color you a would be you That's trends, growth helpful. bit where little maybe EBITDA your now there can more And about, little that ago. say seeing certain

very on some we is of good. performance I'll continue he comments additional comments, but wants of add broadly companies David if to portfolio or to I'd say our across the some can view ask then the give kind

company And dividend appreciation, would it see industries specific. with the at look I changes in or also think than view, industry income. individual in appreciation, more our past, heard specific what can say is probably consistent you which it's you see us can value you When I in that you fair in is say companies, the it our is

and dividend and appreciation see to some in some value contributions come their are fair companies that We doing you through exceptional income. their job an and that teams have in management

So, by specific industry or I say wouldn't anything other seeing vertical. specific we're any

little showing of a do I have bit may think slowdown. industries we some that be

would broader you the from what it's see think economy. I

on little well. a I performing think type portfolio large, a whole consumer very as bit very, but risk we're off approach is and taking more a by the of certain industries,

contributions income a to want market as that. us environment, performing positive situations, comfort know, are companies. performed appreciation gives both well as are of the any to us well certain add I performing view performing which in gives high David, in and future those there's about And value if they've and you anything towards from that fair lot But companies don't ever dividend a

you covered I it. think

Okay. And squeeze I just more one could in.

can combination Just on and lower drivers a of you that Any DNII give as dividend income the here. bit a would of color -- little a there? QX, some for you. step of of smaller down Should the be just think we slightly great. portfolio Thank

look I of do Sure. let, non-recurring. we at some numbers, with quarter, portion or some DNII you try when back but I'll to each that's it, think Jesse, we come highlight NII as

reason. items that it's So, elevated some are for

that Some dividend of is income.

Some we of accelerated have it that could of which quarter. a two, combination those had be, repayments. income from And we

in the actual projections Street, items clients those not Main is, impact of there. just elevated asset would our that impact I they elevated have in would same other only you to thing those the QX is And highlight be between but some say, what QX, don't management change investments. items one biggest So, and

get to standpoint. see asset on also give the let, through as us the business benefit management an same, receive or clients, Street a it from you from that. few items, come So, income Main asset income at you accelerated numbers But, or I'll maybe add same to those as elevator see directly the benefit management accelerated generate Jesse to

a items, what we and this as income, from Yes. come consistent. less then, or again. consider Dwayne. those No. accelerated that That's And, items Thank elevated dividend that, certain we elevator reminder, prepayment you call right, fees

where the those think second the predict, as we in quarter, outperformance, quarter the can drove guidance a drive lot comments, of are in beginning the the and I my in I at. to at of hard the outperformance terms and of initial So, to indicated ended

into or the those of $X.XX the included, share, And, items, we that drove results quarter. that the had not, for quarter, quarter here today. for we second guidance set For much or the as third all, million have our about second we per at that $X.X

Great. That's it for me. Thank you very much.

Thank you.

Zwick comes Group. Our proceed. from with Hovde next Eric Please question

We just BDC negotiations so more expanded increased from Most morning. than recently have time and who here involved this Good that recent answered, kind in history. another bit little of one final their my facility Thanks. been credit kind for me. the any discussions questions a one or heard of intense were of morning,

with or there fairly under small were So, that your of given accordion was accompanied was already expansion, I'm increase it? fact the in that kind it any it curious allowed relatively negotiations that straightforward July the was a feature it

detailed really We it our lot is we support a the comments, received his didn't appreciate the further in really facilities, addition in most think of just pretty of getting we relationships. trouble was the we said a we is or I straightforward. I’d in Yes, recent negotiations those Jesse the period there, value which -- of reason kind say banks all credit why that and further have

think bank the the with come is as from across through get saw think at the our I I the ease the able $XX feedback we happy which we add whole, group to very of relationship a capacity. expanded them, based very upon the board. And we that happy million with with performance, were

add happy anything. you to jump there. wants I'm to in Jesse, again, let So

guys] you, [Thank (ph).

I my for the question. Thanks appreciate color. taking

it. Appreciate Eric. Thanks,

like I session. would closing concludes back the to for question-and-answer floor our management over This turn to comments.

forward this morning. early again you we for to speaking joining November. Thank to everyone again us And you look in

include This today's and Ladies participation. you does teleconference. your for gentlemen, thank

and disconnect day. wonderful may time, have at this a You your lines