Main Street Capital (MAIN) 10 May 242024 Q1 Earnings call transcript

Greetings, and welcome to the Main Street Capital First Quarter Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Zach Vaughan. Thank you, Zach, you may begin.

good and operator, you, morning, everyone. Thank for First Quarter you joining us Corporation's Capital Street Main XXXX for Thank Earnings Call. Conference

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

release afternoon on A This the XX. will and that completion press Relations company's a be quarter financial until results. at available the replay remain of issued operating first call the will of document available Street Main the mainstcapital.com. yesterday today's company's May website section the beginning call details of after and an available is Investor hour

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

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for financial measures reconciliation Please directly to comparable non-GAAP most yesterday's a refer of release these press the GAAP to measures.

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

call, everyone, activities, current management noteworthy going and activities morning, also our doing joining recent for our quarter. updates. the your for We're regarding call, usual forward, in providing hope pipeline that we morning's on and expectations updates Thanks, our Zach. declarations, and Good recent On on performance everyone participation dividends thank us. this dividend We well. appreciate and today's my updates will you several our our is provide asset investment other investment I

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

results, quarter per by share on first our new and DNII an share of annualized NAV and a for NII with which pleased our to shareholders. dividends share record equity the per for are return were quarter, the significantly exceeded paid per XX.X% highlighted We that

positive impressive addition, our return trailing XX-month our increased for performance the equity in period to XX.X%. on the quarter In an

Our quarter of the the in to significant representing the by our quarter total XX% paid same share shareholders coverage. per XX% after to increasing to this paid dividend our the the shareholders shareholders dividends first monthly DNII paid in by by as first year. X%, the and our dividends total is last And a exceeded period compared dividends to level of

strength investment and continued strategies, management the the underlying overall positive differentiated of quality these unique the of portfolio sustainable and We results the that platform, contributions our demonstrate business and benefits companies. strength our believe our of asset of diversified continued and our

our market to superior favorable will results these maintain also to allow for ended and in which very remain quarter continued momentum are and together pleased operating remain structure us from in into the with asset we strategies generated loan market performance loan portfolios our and We our management deliver shareholders investment middle the that the the of future. quarters diversified to confident We of both be benefits business we attractive as middle helpful the our believe by cost-efficient investment last will future. that lower growth our and private private few work and continue encouraged pipelines our in strategies, lower we positive both the strategies with

our and our adequate investment our for in prospects our long-term offering, both of continue our with a debt our relationships loan Additionally, liquidity, window support benefits which for in positive of continued more to the favorable with outlook to quarter, later. an strategies. second discuss private current leverage growth Directors and resulted flexibility our strong and market the results to maintain I'll the middle Board most we January combined fund investment-grade These of conservative profile announcements, our dividend lower recommendations recent with detail in for

middle to portfolio of and The excess increases dividends continued favorable of lower equity paid, fair high-performing investment will discuss about our and total in companies the of majority the share retention of lower above excited follow-on middle fair the per in investments we our market our made increased lower market our we the due NAV value another the of NII performance Our in significant are investments net detail. quarter Jesse value several in market more our the primarily net portfolio, appreciation which in middle quarter companies. in portfolio portfolio of in resulted impact

middle completing million investments of strategic in Street these Main debt debt we of in quarter, the supported were investments by a total companies. X incremental portfolio $XX funded by portfolio During follow-on market lower which each of companies acquisitions, for

We highly appreciation expect portfolio by in drive companies interest in follow-on in additional investments. to the investments that debt help these these quarters, provided income addition attractive will fair future value these

We've portfolio also and market seen few over companies and realizations interest favorable we lower of companies. increased which our quarters strength middle could buyers portfolio lead quality from the the believe to potential several of that in our next highlights

are in repayments of our the middle and market This first investment other activity. in increase activity resulting market $XX included $XX middle a with pleased quarter. net investments million investments in million, lower after We activity of investment total lower

increase the slightly in a million. loan as activities and investment of private in quarter, moderated to new net our million repayment $XX the investments of Our fourth experienced compared quarter level resulting the repayment of investments activity in $XXX private in loan significant included activity

As cost of approximately investment activity, a a result investment our by total portfolio X% our favorable grew on basis.

portfolio Given liquidity investment the the over capital position, well quarters. growth continue few of positioned our our structure to and conservative strong very we remain next

contribution funds The for consecutive incentive to We've quarter, business our management also fees, asset income advised external experience the produce our to our a and manager positive in significant in investment continued management results to business. for investment our performance the we management base first in our together through recurring net favorable with fee sixth quarter income. asset continued resulting significant

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as of attractive execute we plans providing funds investment We optimistic funds we about and future the the we and the strategic external our returns strategies other manage are are about the we remain our performance initiatives, and excited about structure that remain the business from actively strategy to unique benefit this within fund. to are managed We Street the of asset for and management our our Main internally our our growing optimistic stakeholders. investors working contributions for each to increase

additional strategy, base and additional recurring this near-term As assets value related fee the these part growth management work as the investors in fee and our create for on we of under we Main future. both opportunities continue in incentive the the funds and Street of to management to focus growth

our supplemental share primary management this strategies our over representing to monthly Board supplemental to the XXth for X and with sixth our results our declared our outlook for regular monthly to favorable increase June, in of share, increase dividends dividends our combined payable our the first business, Based quarter, upon of each last dividend our $X.XXX and XXXX quarter third the earlier in $X.XX per week, per of a asset for quarters. quarterly consecutive an our dividend investment

and payable representing result September performance paid excess an quarter are dividends are supplemental a the increase dividend in supplement XX% total XX-month will first regular of XXXX. of period during trailing we yield August our share a quarter June additional strong result as of to from in total current paid the to monthly our third quarter a monthly July, and $X.XX third X%. our shareholders The of for over shareholders represent per of regular each in dividends and our dividends The in X.X% and the providing

significant our increases paid in and DNII or dividends the the per per quarter paid our to first monthly share still $X.XX for X%. our share multiple exceeded dividend dividend After by March, total supplemental

structure the further able of excess We investment against retaining with the significant associated shareholders share. NAV to conservatively our the risks the growth a value still our are of economic to support portion per to to portfolio while earnings pleased be to current uncertainty general and enhance our capital additional and deliver our

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

to our Now pipeline. current turning investment

of with experience remainder lower above in uncertainty, economic market lower investment of I our middle and market periods our management unique of current are we and the middle we companies the represent strong confident to that flexible more in believe solution attractive our As environment, solutions and to expectations broad middle that differentiated long-term pipeline the lower we prior XXXX. our average. permanent as even provide teams today, investment owners our characterize an holding for periods and would our Consistent financing activity and market in over

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

and Dwayne, everyone. good morning, Thanks,

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

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highlight we our Each to key of differentiated aspects try strategy. investment quarter,

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investment long-term of new us we our market businesses. First, lower an held side, to believe permanent permanent for structure be privately the on a ideal capital partner middle allows that to owners

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our to quarter year, market Additionally, EBITDA more their companies middle market than half which year the compared of increases of our middle demonstrates the experienced of we underlying lower strength quarter portfolio. of trailing first fourth last in lower the this believe when in XX-month

portfolio with from XX, a our markets. diversified March to investment continue maintain to XXX end companies as of the and in turning overall portfolio we investments across industries results Now highly composition spanning numerous

end. value represented income companies, largest at Our our of fair total manager the only than of portfolio of X% portfolio investments majority quarter The excluding assets. less our XX-month asset our of represented and trailing our and for our investment investment X.X% income total portfolio period our external X.X%

of lower portfolio also first invested in a million portfolio by private approximately and resulted of capital return which increase after investments capabilities market $XXX in Driven Our after of total net in and $XX loan in million. total market the credit on our $XX loan activity relationships activity made $XX debt investments, private which equity team, investment our of we of investment net private a portfolio in repayments included aggregate in our lower in our aggregate investments middle quarter million. the increase middle million resulted

representing $XX of our companies, is we our market investments middle investment quarter, investments fair And net value. market $XXX of representing lower million. related in in cost the quarter, our fair of market cost during in of had companies quarter we had middle billion above in portfolio a our end fair continued at At companies, value, had total The representing XX% included XX portfolio, in of We million fair value. decrease $X.X in XXX% $X.X our private first portfolio at value XX portfolio, basis. basis. investments the which was the portfolio loan middle the billion Finally, end XX of

investment continues goals. long-term a and on Street's In perform level deliver summary, to our high at Main portfolio

issued quarter on in details at position. results, our structure financial are cover press to that the to will that, portfolio Jesse call our over Additional capital yesterday. I end liquidity we turn included investment and With release the

To first operating are you, very comments, pleased the Dwayne's results echo we with Thank David's quarter. our David. and for

we or million we X.X% levels Dwayne first and $XXX.X of in continued income and increasing and momentum Positive quarter demonstrates $XX.X on, over by XXXX resulted XXXX. or quarter quarter quarter strong first X.X% first was the strength fourth from the believe, of which David for the total by $X.X investment investment Our management income, million XXXX as during touched differentiated investment our and in million, of experienced of the asset strategies. the continued

The income certain and nature, of ] first million include quarters, of higher aggregate, In the our $X.X these considered to and average accelerated items quarter investments. included fourth from debt were first the higher in [ and million XXXX. Interest million over related million was prepayment, and than equity than by repricing dividends the increase increased from the decreased net investment or X from million less other nonrecurring which the levels elevated income ago prior million quarter consistent increased $X.X prior the totaled primarily activity $X.X The investments and our increases $X.X and rates lower the fourth quarter. $X.X by of driven a quarter $X.X year year benchmark index activity. than

ago, decrease primarily Dividend The decrease from income $X.X offset quarter a the X.X% and by driven fourth income, investment increased million decreased compared when less or consistent a driven by dividends. year primarily in OID partially net by to by activity. nonrecurring was accelerated $X.X million decrease a or

deemed The our in decreased Dividends of characterize asset strength $X.X consistent and as and $X.X million underlying management recurring the in majority increase $X of continued result in our or a increase portfolio included from by of business. is recurring quarter we a nature. dividends, the million the from nonrecurring X.X% benefits or less the companies fourth dividends million

fee considered fees $X.X from by increased income higher a million increase from of quarter. a $X.X activity. in increased and ago and an from Prepayment were million and nonrecurring and from year ago $X.X and primarily refinancing fourth from portfolio investments the fees fourth received million million year related driven quarter. debt other $X.X from prepayment These income Fee to the increases by investment

interest for our expenses, operating total million increases as be industry. our year annualized increased on expense, Manager. the a of to partially X.X% lowest quarter by ratio the the by to an total and driven assets allocated an expense increase Investment The from and average largely in expenses of expenses, continues in Our interest percentage in excluding offset External by operating a expenses our $X.X among was basis compensation-related ago,

a million million contributed Manager $X.X from of to during net and $X.X quarter, increase External our income million first quarter. a Investment decrease the year from $X.X an ago fourth of the investment Our

$X.X by ended quarter, the performance $X.X fees over of a a of the assets result Manager assets management. million under total The The million earned the during the Manager in of ago positive under quarter incentive increasing $X.X with billion. management year as

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

appreciation of our net of The performance value market was a portfolio portfolio fair value certain external driven investment positive an our middle the fees manager lower valuation by the manager, fair and The companies. appreciation of use traded publicly by increase a on the our was benchmarks for of of the valuation an generated purposes. Management as performance combination continued result in driven of Asset multiples Business the by strong in of increase we continued the one in which peers,

combined net the other by on net driven market net a of value of quarter portfolio $XX.X and loan offset impact underperforming underperformance, in private company We losses The investments. spreads. loan our portfolio market long-standing recognized related middle to partially specific in fair million impact our decreases the by in which was private realized of portfolio the depreciation were

the value of first ended unrealized We at of a status X.X% at approximately net investment and to portfolio in was into on unrealized the result, comprising fair the was depreciation quarter account of cost. investments previously decrease realized related nonaccrual after a depreciation value reversals of recognized approximately majority taking the investments taken with the periods net the total fair as X% prior quarter The impact and million. $X.X losses of accounting in these these

and the by end NAV a or year at the to record $X.XX a over increased by asset $X.XX when the fourth value, Net compared first X.X% or quarter. of $XX.XX share NAV, ago, share per to per of quarter

conservative by X.X and SBIC of total ratio as asset to our coverage debentures, X.X regulatory our leverage long-term Our than ranges regulatory to divided and intentionally we're net was X.Xx X.Xx calculated target and debt excluding more X.Xx was debt-to-equity asset value our X.XXx.

$XXX million of to outstanding million unsecured this with the utilized under year, And repay credit repaid January borrowings on $XXX this notes of We XXXX year, we a coupon rate of the facilities. in our we maturing on May maturity X proceeds XXXX of availability March investment due X.XX%. May under strong giving under credit our this notes thus $XXX year, cash maintain continue our including at borrowings million. the capital we of in and to effect over through to liquidity, far activity After facilities. our credit issued facilities

to that are liquidity while strengths future have us believe leverage, have continued execute continue us significant proven to well conservative to and continue We positioned historically to access investment our allowing for and our the capital to strong strategy. us that benefit

currently liquidity, of year. to the in increase investment proportion activity of course net would during XXXX to level debt leverage current this of a our expect expect the we through we and fund greater as With new financing such,

results. operating our to back Coming

on and the As a was exceeded quarter the equity or the the investment $X.XX $X.XX basis. return the X $X.XX strong result or of the last first per and $X.XX for the quarter quarter certain the and above of per X.X% share record a fourth $X.XX DNII was income than combined share last [ for the per performance below The for ] quarters of above our was annualized year by impact same on $X.XX nonrecurring quarter DNII considered quarter, of DNII per consistent lower the nature per quarter, X.X% of quarter. the for our share less a an for ago. year share share on XX.X% average fourth basis

dividend $X.XX share, the during of prior period of paid share, quarter dividends paid including per the total over an year. dividends increase first in per XX% the Total a were $X.XX supplemental in the same

a and As rest our our approved XXXX. year, given strength operating for the results the supplemental dividend payable mentioned, the the outlook in per of of $X.XX of Board share June Dwayne

share, were to representing approved dividends per monthly increase total recurring XX% total third $X.XX of quarter $X.XXX quarter. the the increase second a of of share With an Board total The in paid supplemental last the a also over this $X.XXX dividends per our quarter per the or dividend, for second for share dividends year. declared

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

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

Instructions] [Operator

Our Bryce Securities. Rowe B. Riley first from question comes with

target will range? your try leverage run below the I target Jesse to you debt where the conservatively using fund to do comments you of maybe expect Or regulatory help in could and around start where back you that that Dwayne, now is, us is Maybe on you more range? wanted made to kind to to here get growth into 'XX. about think still target relative that

give expectations remind comments long-term I'll are Bryce. for new you let Jesse few a Sure, everyone target what I'll and our then there, leverage.

of saying we really the week our we just that That May or maturity targets repaid the just XXXX, here anticipation we've So I'd start well off for in so. was that a over X, while. last had been below

we intentionally IG advance issuance be So would very being because in and able have you've unsecured an standpoint. we say to were we markets been more conservative heard what us accomplish to sure weren't that, the from uncertain, before, as

heard would otherwise as ROE XX kind or of to long-term a So we're you've that to different view our We ability we going approach. always underwriting. in over more more the strategy. conservative what this than overall leverage conservatism executed say investment have we be past, more had permanent to It's a space. and fundamental. a us is months best-in-class, It's in standpoint. It's good last ratio in built so from generate cushion, the But on intentionally capital structure best-in-industry

So we financial that the excessive engineering or return look at get our and on focusing to strategies produce equity there. use really on fundamental not leverage to investment we have

think anything don't conservative would always we'll the in we be change and So there. more space,

targets more said, or moving what being over next Jesse But to to have comments position message a everybody growth Jesse months XX investment targets we let been continue XX was the position we for a because long-term maybe while, current long-term indicate in what is in as remind trying our those of will be are. portfolio. towards his we execute our I'll That conservative to that the

Dwayne. to leverage X.Xx. on targets And Thanks, our said are the as Sure. I call, X.Xx

our our that, the end way you moved exclude As we Bryce, to probably exemption X.Xx. a had closer quarter, reminder, And the that, the SBIC as of debentures due we we saw, define there. to at to

So the some last made those, comment we're expecting closer more the we're And those. same we to to conservative closer quarter. to made to We movement being still continue to those targets. in and

All did that the right. down. debenture was It outstanding, looks existing maturity? Were SBA like -- that just Maybe Or same an went prepay you is topic. just on all some?

maturities. Yes, Bryce, in those existing to are just activities relation

full X from time started us before It's again. in that's a to through we we'll of the capacity process. the with debentures we process that of We $XXX just tranches get access So requesting we a replenish the SBA. matter and had hopefully have process. just to paid while new process the for off, but the It to million that be in takes that SBA,

All if And others one then right. don't queue maybe questions. in back and ask other more Okay. I'll ask jump

that the nonrecurring for amendment think that? seen your is especially us side. of of curious prepayment more that borrowers? income, for help Is activity, of refinance terms fee here spreads if the we've that and type kind the recurring less getting or driving what's recently, opportunity that tighter activity? opportunities prepayment of type or about Just activity kind Is So in on it

Bryce. the items combination would look long that, When of a be Sure, you metric that provide of term, you we at each it that referenced.

Specifically income X that it a -- allowed the benefits receive additional or us first occurred in standpoint. had some but quarter, was fee not repayments upon or repayment benefits and that to to accelerate prepayment they accelerate, from protections or

based and it's a values upon happen little to that quarter repayment Obviously, there's number So in broad I'd say you the first investment that in going quarter normal the But there. it the each abnormal. just that to or be across was portfolio. going see activities -- prepayment number peaks

lower private the Dwayne, in were middle those loan portfolio, market? And Okay. or

ones X portfolio. loan private referencing I'm in were both The bigger that the

James. next from with Robert comes Our Raymond question Dodd

the bit did yield quarter, like yield first 'XX, down little On perspective. last management, it quarter the which portfolio as think, on income highlight, I company was portfolio from not you companies, from looks from X.X% the a it same but right, a a asset this year, down dividend the equity,

of are majority that that are to I said margin, about things the little reserve at are distribute. Or fine. companies becoming random than just of portfolio? they that deciding theme the an Jesse one portfolio something rather doing it vast couple those a cash Is in now a is Where think So happens? emerging the

companies, of more Thanks broad our for to quarterly just income, quarters. to it's been say companies in contributing continues we just group the pointed attribute prior our to be question, a Robert. broad random are that been group like or I'd -- a of just just fluctuation. The it's like dividend to people,

haven't materially. the concentration we So seen increase

haven't contributing on quarterly the that companies composition to dividend a basis materially. are change that We of income seen the

time last do look really quarters, from of But the to changed have, fundamental versus over out. try to what's if to couple contributing or call quarters. company of been say that performance do the significantly. I income the the at best time, nonrecurring you dividend X it's wouldn't last to the there is we that X always We today which stuff, our

have income. to fluctuations just quarter-to-quarter You that dividend drive

it. Got

this talking not just us plans I'm next give and about thematically if years, not Can -- you quarter, maybe. indication manager, of the over of any asset the kind couple On but initiatives mean, you as about I developed funds loan if MSC obviously, in plan undertaking, have are X you on like there well. or that private handle other you'd have to there how

Main couple more any on really color will, if high is business you Just that, return The for risk-adjusted on going think the capital, next what outlook over to you years? go? of within

Robert. Sure,

extremely investment something similar a attractive. contributor has So relation to our It the to BDCs. in unique very It's that's very for be to been other be asset return just what and income. to recurring we net management equity you to to large our said view Street on Main us there, business

that we highly attractive So and think value we do. a it just find lot put on, of our we it's like stakeholders of most something

probably focused deliberate it, it through the it heard One last private to growth those to and the will say be is be private the as loan -- that, activities grow the can be double growth that you've couple quarters, ways. to been loans more result, a us look we've have So when had. and very, in Obviously, of you moderate. will trying we continue and we're not and at planning on grow that very Those of through this of there. we couple a

solution shareholders fund at that's we really Street that fund. look we MSC to take the for if term, both and initiatives the allow for Longer through the us strategic that both and to really, continue opportunity, activities find to shareholders, can biggest to we us of entity grow on additional but that works good think that we different front that, growth also to deliver for deliver of benefits can a their of Main or returns income

I today but comments our point future, I that provided don't have in to you the you, prior that, I outcome we're we'll expect, think parties. would work really anything and hopeful continue at share we I that some with in that given comments, have the for just just good a on our can

with Our Mark next Truist from question comes Hughes Securities.

-- from Yes. you're buyers. more interest about Dwayne, you talked the seeing several

all little average that deal What last pipelines could your in quarter. -- that? that that's bit seeing. to a Uptick compared broader? average What's you categorized driving on think activity more? expand above you clearly also a as You you're Do the

I noticeable on those the order. and you a uptick questions loan both side, activity would in seen taking have Thanks the middle X the look Sure, When lower both Mark. for the we say at market side private questions. sides. reverse on

As numbers, in the and we activity in really script good you had in both saw the investment our heard quarter. strategies you in

cases, attribute it's my not if from be in done or if you sure positive. took I'm that comments, more the something of just market pipeline kind to or continues you both both as situations specifically. becoming And that we've to active overall the

I probably two. of the combination think it's a

equity, end probably definitely for months private more of saying market become the private that last more debt heard or I that has the investors, BDCs think, broadly, the seen you of active. other couple on front We've the funnel. other

or on to think funnel actionable more experienced and we've the both lower more opportunity we market get I the the items seen in middle success recently, success strategies moving execute And and opportunities, in on. here that and resulting having private loan through

doing the significant, of those a job and just improved, or has opportunities. good market huge not capturing we're So

get a from it's of has in exit for to On then first where a from unsolicited the get well desire some activity question investment have activity to exit our where and an kind mean about inbound go new couple our just outcome business standpoint, and of we lot have others parties there. seen ebb both a of to things there's but we'll see in least prompted at things company of increase, to does increased activity, from because have that liquidity that of potential to good an we and company It terms your time, one activity seek our like uptick always lot realizations third activity, that in us partners to an the flow. portfolio time that in on not a order

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kind you that seeing the attractive prompt Any observation more realizations? valuations? Are about perhaps would valuations of more

gotten I there's I mean don't heated big competitive. a or know change little there. a more if I'd has say the market

have tick probably they healthy wouldn't months different. anything but today, materially that kind say, valuations than has David But overall, of It's wants a think not or uptick. if a would XX been he but that's it's there's market, ago. anything is add, we a So see XX that let market. I I'll anything he a significant higher are say to productive

know don't add I if you'd Dave, anything? So

some that material not Only about if there did sellers interest of concerns when thing at financing. transactions, size was the a and come more for change there you has is rates reluctance our Yes. in I'd to past. up ticked to the market been look longer kind recent suddenly for term add We see

So we in some saw degradation valuation multiples.

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Instructions]. [Operator

with from next Our comes question Erik Zwick Group. Hovde

loan the private start on second First, to funds. wanted just

And think in size it kind And range if If when that the to a in update a maybe also, that million. you do set provide activity? or of targeting could or on quarter? factors indicated then you've activity the previously $XXX precise you ultimately, curious narrowed more Is just kind $XXX I target? first market of between an there you've then do And or you're final consider and what million in just determining timing closing? change

first slight to of but LPs. quarter, or Thanks in existing investors equity fund commitments active We in I some kind the the Erik. Sure, the increase When you increasing continue their had about new current moderate have activity dialogue for increase have from joining about at said look investors the there, either huge question. we a didn't commitments. with

on that to So or to the add we over hope year next to continue so.

about to million you $X second Just just LP commitments fund. give of $XX or number, in a over at we're probably that

business million provided, at is increase million will investors nice first have look to with be still million, successful realistic. $XXX long some today, we success it, significant we're in we to unlikely would term. but $XXX the management it's it million you in, put Unless say you I it institutional to expecting range think which When more when closer fund. would to are larger probably on coming the the you that, we we asset of And to a $XXX we if indicated, than get top be our be was $XXX increasing as somewhere leverage

fund be and So work to continue about we to excited those the fundraising activities. continue on

a set of typically that out terms last. for when period fundraising go line that's date how that asked the Like fundraising we other period you or process, the contractual. you about, and will fund start we In time long any

So we're it it, for we when no different. we And set set months. XX

that for my of top last off continue duration. believe, will process XX-month September in started, fundraising of I the So We year, head. the

XXXX least of last at directionally. So through it will March

if -- right, that's that's pretty that's is. think not to exactly time what I period close

for That's one helpful. me. And second very

maybe able within diversity still, Just I well industry are performing -- of better trajectory the diversity given you sectors guess. current or as pipelines, uncertainty worse, industries Are I the in there's your some or degree as economic existing over which the do of portfolios away have feel industries have how at activities all? And sectors through -- kind at shying there point glimpse or to see all that you you from of weakened kind you're and is any your the economy this underperforming? of are a of think,

focused companies to would today Sure, the from even in say the the a was at over change us and invested demographic likely the Erik. consumers say last have say a I from or a from on at there's broad to months. portfolio that If broadly, customer kind standpoint. overperformance look BXB you the industries based if an pretty XX if is of of businesses that look the base are And higher-end I look or heard what overperforming underperforming. standpoint not or I'd from are at companies more industrial than it you we're overperformance, you've we are that XX

are have risk the that be away off end of been to more the the We continue lower focused consumer. consumer, from companies shy or and particularly on

just et is we've what definitely not of consumer quarters, is much and couple trading calls or in BDC how they're think down lower you I this of the it the broadly firm heard over interestingly seen economy being across cetera last that. terms you're the end that buying, I probably he cost-conscious, U.S. buying, from but or investment think more of the hearing they're she

underperformance. consumer that as had companies, a I good companies exposure, meaningful they of that we depreciation of did and performance across significant businesses lower end kind we portfolio. result, quarter, say kind the And consumer have those of broad, the and really exposure. We both unrealized couple on have significant had In recognized would were a broadly

the of seen the So an last concerned recently. about wouldn't we've you've for last anything been else, more I to here hit a months couple X but or that's headwind the been But X -- impact years, start really that so. really that, risk you're on things than other area has to here I think

from is question Rowe Riley Securities. B. next Bryce with Our

within Told more portfolios. for just the you you yield maybe dynamics Dwayne, X I'll a couple be me. the of talk Can back. some about

the laid like X private the over in in the the lower release, press in out months last assuming You bit it compression looks reflective loan, gone spreads a of middle was of or have market there that just so? where is

color on Meserve Sure, here the loan question. then leads I've side. lower give additional Bryce. Thanks group. for some give with the market and follow-up joining us again. middle some I'll on private Thanks side for let got Nick him I'll credit the our color who private

rate the change. market, middle On impact. see side, to our leverage the market wouldn't companies, at middle grid our going uncommon yields I standpoint, grid that interest And perform, very down, investments get lower a When for they are If be really, interest It's haven't a ones performing and as you we've particularly result it's disciplined, really not benefit. existing down seen continue portfolio of to new a seen grow, place. and really that more we in any delever look there that our them disciplined an rates it say pricing good We're change. on lower move well. is ability rate have environment, from to and they'll the

rates on them -- it's approach. great be as balanced the portfolio, longer term our got in that, if We we market which we've to you really have opposed the a companies those going take and we lower obviously, rather we'd in some middle reduction portfolio companies some So keep see think to exit.

So we a as thing. necessarily bad view don't that

my is less think, there. rate additional more on opinion, some and seeing I give pressure more On private from color side, credit do -- do and structure you're I'll kind pressure Nick of some let loan, there. in on probably the private you've heard I The think others, this the side, leverage, but

probably to last we're back widening kind I'd Bryce, after spread of say spreads 'XX year. of the Yes, 'XX,

XX And X are fully far to as between more of competitive last or it's the points put months there XX focused we're less little on basis deal more people money has terms. and to X so over on in, work. say trying incremental a more out leverage and market debt so sort and to I'd gotten the spread

heard one with I for other and we've what or that's Maybe Jesse. from Okay. think Yes, another BDCs. consistent throughout the pretty

good, even with estimate supplementals. at sitting is do guys You a you this of where have Jesse, point? outearned the maybe an the have spillover dividend clearly

Bryce. Yes,

up can was to from million think $XX you? spillover back I around $XX and that get you memory, to million. I for pull

Okay.

quarter then there? Okay. cost just and ebbs on one like Any It out nonaccruals Is flows and basis. for last it nonaccruals the And in of that normal color were a of looked for me. bucket? down

that when nonaccruals, one comes nothing Yes. nonaccrual, is a on. a small the which we significant. new one on a There's, at then Bryce, addition nonaccrual, on was company go nonaccrual. had on company look We you down basis. saw addition, that stat that off loss had we percentage when you the had why realized it to Obviously, And

just Going XX -- for under Jesse, Jesse's, your we're under sorry, just I'm question back of million $XX to spillers.

end spillover bucket at income the quarter. So share of of a right from standpoint out the

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

of for to quarter second Street, you and this results. in look your want talking just August our to after morning, Main everyone, we to joining you again again, thank us We say forward continued early for long-term you thank support and

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

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