FS KKR Capital (FSK) 9 May 242024 Q1 Earnings call transcript

Good morning, ladies and gentlemen. Welcome to FS KKR Capital Corp.

First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. At this time, Robert Paun, Head of Investor Relations, will proceed with the introduction. Mr. begin. may you Paun,

FSK, morning, XXXX to note Earnings Corp. call. information is being Today's to FSK KKR a Good The Corp.'s that release is KKR replay included an recorded, for available issued call First Capital as will that referred call in be Quarter Conference may the Fund and be you. conference or FS yesterday. XX Company the welcome Capital and FS The Thank Call. audio throughout of days. Replay press Please

of In these or update important outcomes not does by that unless so addition, Presentations. ended property strictly this economy for call that or with actual Events website on presentation and its to is presentation most SEC the the rebroadcast law. The forward-looking risks could filings Any form available materially a required financial from information website today's XX, company's factors portfolio March FSK to statements could financial is Please and is to the that with cause FSK on statements. and has to this of its call to FSK. that its risks affect and quarter results and in the posted containing and FSK link statements supplemental any of unauthorized prohibited. Today's recent differ are includes the We section undertake refer to uncertainties XXXX. performance ask the you FSK's for to under conference generally. subject forward-looking webcast call the note Relations do Investor respect

will call include non-GAAP certain In financial addition, measures. this

comparable with FSK's information SEC quarter considered for supplemental reconciliation that the financial GAAP. filed considered earnings first found can not related the in or XXXX. Non-GAAP measures, be be measures in a in to be GAAP prepared For with should as should and nature accordance the isolation substitute X, release was most May information on directly such in

In as obtain may reported not be FSK's SEC addition, same companies. measures To of these copies company's visit the measures latest named website. other please similarly the non-GAAP financial by filings,

Chief Gerson, Financial on will Pietrzak, Brian the the to Steven Speaking call Officer Lilly, Co-President; Co-President; Chief Wilson. I'll Michael Operating and Also Dan Ryan and Officer call turn Investment Executive joining us over and now Officers, Chief be O'Toole Chairman; Co-Chief Officer. are Drew call Michael. on and today's Forman,

the share Thank Call. you, totaling Earnings for Thank net morning, good Robert, and per investment XXXX share. consisting totaling year, $X.XX income per today to a net all everyone. First FSK for Conference us investment Quarter you of had start $X.XX income joining positive adjusted FSK's and

our progress as during made nonaccrual quarter, the volumes significant the year. We investments of experienced originated investment the investments. last $X.X approximately with increased team we During billion of origination placed fourth to X also of quarter on regard

Our billion net ended $XX.XX. quarter was liquidity. From the a available $X.X asset approximately of we as value of perspective, quarter first with the the of liquidity end

quarter XX.X% delivered of on operating $X.XX distribution distribution our our declared per base and of the results, has Based we $X.XX ROE second share. positive per distribution our annualized supplemental of Board of a share an Finally, a consisting $X.XX share, for per quarter. of

declared a mentioned Board we third earnings on $X.XX our XXXX per our As call, distribution quarter previously share. special totaling

share quarter month. share. paid second total per special distribution, Accounting later installment February second first the will this and will The be for installment the this be was share per $X.XX $X.XX paid distribution $X.XX per our

to volume private power we experience well remain during and of markets encouraged our value based FSK, which XX.X% Dan operating investors our of targets, that, we quality we a the to March on long-term our first able earnings yield an on increased equates distributions We're take receive the distribution XX% the strong annualized believe minimum the provide quarter. attractive market activity advantage recent opportunities. And a deal and quarter. an us believe forward-looking to of to approximately in the will result our team XXXX a on we're be positioned call credit the share by these total over to share paying and turn price. From shareholders. of enables tailwinds XXXX, $X.XX continue an the XX, achieving which As of of to level color I'll The the perspective, origination to continue per asset in the to net yield of with of and additional confident and

Thanks, Michael.

elevated year, observers that longer market expected. our it the rate interest higher past has and view environment been than some remain For the last inflation would will

remain view companies and asset-based has finance coupled should asset investment play attractive. believe and views out, rate to financial to assets proven portfolio on our hard continue floating with focused Our accurate we largely directly large will strategies structures, defensive and side investments

experience is the inflation in coupled will growth. with overall Looking albeit that term, stickier expectation near ahead, our economy continued, economic it slowing the

to picked during sponsors As the market solutions Michael meaningfully highlighted utilize transaction private business up to tailwinds earlier, there to in are material a increase in first compared and quarter finance expect few credit continue the private transactions. activity our prior we to XXXX. strong as quarters, Origination activity

a capital. equity from private private fund and the desire an dry equity of with level for powder, see to LPs demand return significant M&A higher pent-up combined Given perspective of

mentioned challenges portfolio few As of companies quarter backdrop created on fourth call, for year. of macro we the last our last a the during our

Our on done, we investments, be quickly. achieved has active to there's non-income progress recent while will team made. been we've names. work still our with to the and have pleased are results nonaccrual reducing And these pleased clearly as And Brian workout discuss, positive we're

activity. investment to Turning

add-on quarter, During we companies new and to XX% KKR Approximately the existing new investments. relationships. investments first billion financings $X.X long-term originated on our of were focused of portfolio

net to decrease billion equated Our new in $X.X our and of $XXX net when a investments portfolio million. factoring combined with joint sales to sales of venture, repayments,

second XX% senior other X% in X% X% approximately secured lien of loans, in investments. lien consisted in asset-based debt, XX% debt originations and New in subordinated in loans, first finance

continuing investments, of trade-off see still the is compression we're the mentioned regard we documentation in profiles. last As to spread The end pricing new to and our on market. middle strong upper credit very to tighter with the solid call,

with of We be pleased deals. the also the new to quality continue

receivables. During was investment approximately quarter, new approximately basis a contribution, the Global, coupon in provides facility. first with packaging security was KKR was investments our EBITDA who million points. One by $XXX million, equity trade through leverage of lending lender a the manufacturing, SPV of $XXX analytical example provided plus and upfront XXX manufacturer Pricing structured million of FSK Curia receivables our XX% as active new a points development, weighted the with of a average pharmaceutical pharmaceutical services. all Curia our sole the quarter committed fee. million ingredients, we deal $XXX XXX basis secured X% average weighted of SOFR direct sheet in contract X.Xx a $XX and a had facility U.S. off-balance

this first sale to consumer-related the in first quarter, we The its expect finance financing million. alternatives IRR company occurred for $XX investment our of In purchased committed KKR and IP approximately $XX other FSK's KKR is Aggregator IP received seller the And improvement a quarter. of on in Chord a from prime home the of million also that position. to in part to an was XXXX. million with transaction affiliates, XXXX Sachs highlight note approximately its connection FSK GreenSky received capital. during offering transaction. I realize partners seller to during with along $XX well-collateralized sale, share is music $XX an FSK Aggregator to also respective Chord gain from the value, divestiture return want on resulted asset of borrowers. that and and founded GreenSky, FSK of as repaid XX% expected million in businesses. a focuses IP Additionally, the our Goldman net note a point-of-sale be

we When continued pressure high due with the portfolio aggregate across our EBITDA to growth modest single-digit the to environment. we've inflationary at margin companies, see look continued trends

to average companies while trends $XXX as modestly we'd the we slowdown XXXX. of Over could in slow portfolio continued our weighted of EBITDA economic a lead XX, macro was companies, as potentially portfolio The million coming from quarters, expect to March growth revenue our growth. growth expect

Additionally, turn detail. the I'll EBITDA in of invested rate growth X% to we've across a with approximately over XXXX. And reported companies which companies to year-over-year that, portfolio in of call weighted discuss more average in our portfolio Brian since April our

Dan. Thanks,

This As of XX, line which XXXX. represented approximately value of first December with companies largest a XXX as our of portfolio of portfolio March portfolio, fair quarter, portfolio value the a end fair fair and had to of $XX.X in is the XX, quarters. compares XX% consisting prior XX XXX XXXX, value our the of of billion billion, companies. $XX.X portfolio companies our of investment At

investments XX% senior secured of to our senior first-lien continue We as XX. March secured debt as of portfolio focus consisted loans XX% on and approximately

In our venture joint portfolio. value the represented X.X% fair of of our addition,

as decrease basis points new by yield as compression average of on to on portfolio was As was approximately investments loans portfolio compared lien XX, XX% portfolio, driven joint XXXX. totaled entire our approximately consider investments a of first debt March secured of The as largely of our XX, XX. The our result, a senior looking totaled XX.X% occurring December to then weighted our through investors investments and venture, when XX the decrease XX.X% spread March of XX% in total of deals.

on As basis the assets cost is and perspective, basis December on market X.X% This with portfolio it a by a of on with the reminder, fair quarter, Credit. accretion of information the We average portfolio helpful nonaccrual a merger to end portfolio basis the value X.X% provide compares the X.X% believe based and of fair XXXX. calculation represented non-accruals will our FSKR. From the X.X% with of yield a to adjusted the to cost weighted also of of our on of KKR on a of be a associated value our exclude our portfolio XX, our as originated as basis. first

of been non-accruals portfolio, the were X.X% on the FS/KKR a of our fair basis the a and As total Advisor originated KKR by cost value and has relating quarter, basis. to first on Credit XX% X% of the end which

and placed During and million respectively. a with fair million, the value $XX first on of $XX quarter, small we investment nonaccrual cost X

and the X $XXX of one Additionally, Wittur million value cost we removed million. was nonaccrual investments the during of quarter. fair status combined from names $XXX removed nonaccrual the with and from

lien and fully on nonaccrual in KKR business. we've inflation in in The taking well of it quarter second as China. as prior our calls, earnings resulted restructuring headwinds lien on placed first being loan the slowdown the persistent XXXX equitized was of facing As construction loan discussed our a we control during second as

other a into debt reduced FSK's converted and FSK senior was the lien position. EUR million cost first the capital existing million company, fair of recapitalization resulted by other million in KKR company from operations. and This XX.X status. first debt operating removed significantly and new fund of The funds value loan $XX nonaccrual lien secured being the managed provided to company at of to $XXX.X was

resulted the million removed first its value and which new million $XX.X the of fair XX% of status. million loans of funds a company. $XXX.X equity and of being KKR nonaccruing Additionally, FSK million quarter, This restructuring of of second consensual new cost in restructuring from a company. taking and FSK million $XXX.X a lenders in the full first $XX.X nonaccrual equitization and resulted of KBS now of preferred lien loan, lien $XXX.X out control of out completed during second portion other own loan, the received managed

lien injection in cash million the position of first restructured from company the and America, was Sweeping a received during equity Corp first the our sponsor. $XX Lastly, quarter,

first-lien lien loan. a term and value million facility into nonaccrual million debt million million $XX.X of a in cost This being resulted of PIK second million restructured removed $XX loan, $X.X $XX.X was million lien The first-out a first paid $XX.X restructuring $XX.X lien tranche, first-out second a and term status. first cash first-lien fair out from second-out

to example benefits with of KKR these is platform. achieved Credit's companies an investment the progress of The regard portfolio we've

our quarter. in approach derisking fundamental nonaccruals credits to evident these of resolution this was Our

significantly prefer supporting our results. over additional financial Steven when the we'll I'll or companies the meaningful we've equity, full resources with improve we our of sponsors capabilities portfolio of While through call that, support companies By believe and go to our action necessary. receiving over capital with even recovery chances time. And to taking to quickly, their ourselves continue turn we a to investment

Brian. Thanks,

during last Our quarter to total of on to quarter-over-quarter. quarter totaled of income $X of by million, of decreased components and investment $XX $XXX fee positions were increase and income fourth the of income primarily the of repayments million, $XX million $XXX due million, primary as Dividend interest investment million nonaccrual million during year. our was The decrease an the income total follows: total higher-yielding $XX a investments quarter-over-quarter quarter-over-quarter. impact placed

and Our million dividend income $XX as dividends million various from during quarter income million is fee joint companies our total follows: from the totaling the summarized portfolio the $XX fee during of dividend $XX quarter other and approximately approximately totaling during venture, quarter. income recurring

a ending share per net per $XX.XX share, $X.XX in increased quarter-over-quarter, was a million, $X overall Our of $X our XQ interest of our $X decrease totaled Other and quarter-over-quarter detailed million, bridge was million million fees income is our million, million of totaled average follows: X.X% on quarter-over-quarter. The $X.XX net share per $X by of $XXX XX. decrease of a share cost decrease of asset of incentive decrease a quarter-over-quarter. as and fees March investment per in $X value an as million of investment by due expenses value was totaled expense the decreased a $XX portfolio. weighted XXXX Management of basis million, to increase asset our and $XX net totaled debt GAAP value

Our quarterly guidance activities a These value March per per per to share share per per XXXX our on in reduced distribution. share $XX.XX. From second second Detailed income forward-looking expect million. expected adjusted GAAP basis result XX, to $X.XX quarter XXXX net was quarter as value approximate share, to investment of GAAP we our our share expect is net and income $XXX we approximate per by $X.XX the guidance asset asset a investment perspective, $X.XX net interest special share. income net follows: is and $X.XX recurring our distribution approximate

We million. expect venture with our recurring $XX to joint approximate dividend income associated

to we to the approximate and income standpoint, quarter. From million an $XX expect during second management expect our We other million. dividend fee expense fees approximate $XX

We expect incentive fees million. to approximate $XX

expense we G&A interest million. our to approximate approximate and expenses $XXX million, expect $XX We to expect other

total during indicated per Michael per distributions $X.XX at share least As during his special of we our and distributions will share year quarterly distributions. expect $X.XX currently of remarks, $X.XX comprised of the per share

XXXX, XXX% equity were and net Our at to compared and XX, to and XXX% gross XXX% respectively, debt levels December XXXX. XX, XXX%, at March

XX% back with our comprised of As to available a was call of XX, committed for sheet balance our of call sheet approximately the our questions. of March drawn liquidity balance Michael turn $X.X and I'll billion remarks was few for and that, before debt. And the XX% unsecured closing we open

the Thanks, positive with Steven. we're closing, In start to pleased XXXX.

questions. like continue to we activity our share distributions earn a be picked basis. progress shareholders significant fully our we both long-term for continued continues and with in FSK and earnings on As of to per call to names, these on supplemental attractive origination award up, with ability strong made we've to operator, certain base and distributions. And portfolio that, we'd power The confidence open our the to

Our Jefferies. question with comes Instructions] first Hecht [Operator from John

then to you for look the and it either active should First And as on And for talked course I market competition a in and kind function of give kind deployment liquid wondering what well. drop? space? this an very different very markets or call there. active update but that the your needs stabilize perspective that of the then outlook Dan, we addition, know was in of to activity of levels fund sides loan picture. is maybe of, equity signals an in had it, us over is of deal repayment about quarter private start also, increasing a your of I'm because you've year both the repayments one

first. question second your with starting Maybe John.

said, incumbency value sold. activity. their well seen are that's that of extended because the that syndicated time, call you've probably after held be of sponsors I us very consistent positions so we'll speaks think do quarter. real lot the We open. by All for repayments market been it, level of some good because we of some that have market loan could and think companies a to is just expecting, have for think that sort a fact And they these overall period quarter I

happy think market. see the level pickup of we were start of to to in some I sort additional

You deployment in see can that our numbers.

going With think of market during there extensions are do on of technicals I that reopen. those extensions. And of that that that though, powder second lot repricing, for that loan M&A touched the more remain the valuation There to this 'XX a kind half push to call think is 'XX sidelines. loan we'll mismatch some well. so Some There LPs. definitely from confident, of a a it, bunch on dry do I We and we that are there came we as call out pressure -- the saw of fully is of narrowed. has of is most the pretty

should that make of year. QX of kind or think I So second for the productive half a

then bit helpful, what is And are you second of -- market And just aren't under market, mentioned question that quite where Okay. pressured? the spreads opportunity by second as going? where little the pressure Where spends -- those you in the a way. question think that's do And you are the because getting maybe finding dynamics.

Yes. odd everybody months. has there. question, have seeing out definitely basis think say, tightened, tightened a I'd fair X points I No, considering maybe it's XX been in Spreads the what very they've last

a with your the market John. a And activity, see question, level. bit the while that of money that's comments I capital, sense get think to raised that I been decent that change even technical of looking amount prior -- some of we're to normalized level we're where of made has pools some though does for is deployed. My in starting mind, there to out is of there my not it's

of it, now, going probably XXX market you moves. living to we'll think in the XXX all call I back to if is pre the probably where rate kind to get a So were, you're

was getting call of I'd the repricings, kind the with from that. the getting than of one extending XXX average. say, we're than more I an a market to protection. some for upfront conjunction we're more XXX And point, on we're to in -- is charging that probably with of think spread even X perspective. And not of market the benefit times I'd make, benefit the a extending X though, fee years actually

helpful. And some deals the some there's is the we talked the to mean, So of in point. that did quarter about which that, we offset I last just then call. your on

the the of stuff, of additional Some providing return trade we're some receivables to the portfolio, is to happy asset-based other stuff see. finance which

Our comes from Lee call Capital Markets. Kenneth with RBC next

the from opportunities one the the Just talk if more and any of landscape such little seeing finance there. impact on a about you just outlook about and new competitive kind current talk entrants you're asset-based bit you're that for Wondering opportunities the could perhaps space? whether seeing into

Sure. kind large direct bigger comment, market that feel your market, is space bit That a Thanks It is estimate it syndicated trillion. excited of there. It lending we is the sector bond of of a the little we're very -- about, high-yield than it to a is it for like market and kind white that the combined. a the goes question. pretty we market, $X there's of and makes loan market lot north

that's good think fact. a I So

of days in it's formation. of early kind capital think the I

there. ours given been challenges have scaled lot some a There's the pretty capital banks. have players there's there then of here or assets. money are Fincos, committing to to some and business. capital sort of they less There's that that that. tailwinds Obviously, we're certain managing void And that not to come selling certain regional good this been market able fill FSK banks sort of pools banks with thematics otherwise just to did maybe with do capital out there's So of been there been like than some needs

profile of capital, that lines really And not like good a risk value. we I market, lot So relative and think of think all tailwinds. of sort I up big some the the the up-down scale

So be think to continue there. we'll I active

action restructuring if I a if at what companies? a just involving And you. high wonder one more has FSK details level appreciate options those potential derisking, course portfolio Got for talk And choose may. of there. I helpful available? that the bit kind then X companies. follow-up, Really around around the are of the you little could how approach do portfolio a you Very around particular general the

do that. we'll it, were see, to call we Ken, Happy these progress to Sure. names. on pleased

perspective I and to dedicated that think Krueger human strong team. fortunate a runs we're Lauren workout a from team, capital very a a a staffing or have woman, It's team. restructuring

sits resources to prepared of got the while business, KBS I to But firm, bottoms-up be regular we'd team, mean, to to of obviously, addition I the We've the to will behind longer-term to the say from sort a the a on of one time the handful that kind companies the the That anyways, deal, that afraid time, work and it's situation, committee I'd need firm, other do entire they're the she's In consensual running of that for do think, us. But helpful. with kind and that so very so resources value. of We've in help we're of was, this KKR brought right? example will made. just difficult be won't investment option to maybe drive bear a and to We're active she approach including willing directly, situation. that. across prefer the Board. sponsor Brian that. is sponsors is think, to which I comments this an advisers obviously support control. not we From -- be take

best the We're available. are important just some But in that all pick resources it's I options to I we on So the think think to have mean, what are situation. for the current ways, the table. is going that

these to happy think I So nonaccruals see quarter-over-quarter. down we're

X.X% sort and still of portfolio is that do with of XX% remain happy KKR originated the piece we X%. nonaccruals think I were the and

there. important it's think I So to factor an understand out just

is that time this, in Ken, friend. thing not Brian, it's always one is situations to I'd Dan, add your like this,

is the situations our to road really the sort quickly think address important in I things deliberately circumstances. and not down of never we believe worse, kicking better So sometimes, get those can because in approach because the

So and just drive our support getting the continue to we do. they don't, want to -- eyes there close value to portfolio the and investors. a our be Clearly, often we to don't do want hope sponsor need and But best. their in they resolution. to we to to prefer support companies for for We preparing maximize when

from next Riley. Our comes Bryce with Rowe B. question

could coming this maturities and you've past debt you up in light But the refinance to least the I restructurings, talked the or you kind to speak the to maybe want might of address have especially those in about information surprised shifting and structure pleasantly the ditto of at the some some happen. around calls. of around opportunity certainly to how see the capital comments at pace open helpful in and Steven, are made super markets the resolutions, 'XX of which to Maybe 'XX, today? capital

thanks Bryce, the question. for

the July our think appear I our unsecured point, we maturity fall agree are your notes. million certainly issued open care last when from And with perspective, be took and of to of markets active. we $XXX

certainly that's So thing. good a

I course. think things normal the evaluate in we'll

quarter, has we'll a getting this us. been for issuer, time. like to I be clean very the continue a -- year quarter we've to having over frequent nice very And been a positive think start As certainly

us year-to-year the derisks the several regular really that of way just the the laddered last from way over years, think basis. on standpoint So things all consideration. in I I sort structure think -- terms issuer a capital being methodical of we'll it But take we've those into

obviously curious, that nonaccruals on resolutions Beach the larger the update it other Miami on the quarter. situations. some workout hard in That's one And kind that, of helpful. restructurings maybe just of maybe the an Can those first one and of quarter. assume and the But work that continues were of group kind maybe you care on then was fourth here resolutions, follow-up in pace of took to since I potential added the speak to of the

the Yes. one. to. very of busy a there, mean, Bryce, Brian remain team and I the was And happy point the obviously, I good made focus will resolutions. thought for that kind

more in make other non-income-producing coming progress talk a about continue quarters. either a think There's probably may bit complicated the of sort the industry, we I names little be to a that to on list of Beach, probably situation, nonaccrual more there the Miami complicated handful on probably nonaccrual we're XX% Bryce, of of or are or of closely. just think, M&A of or We're that of about for early watching Global That, 'XX sort the thinking larger And roughly exits I one preparing is markets you've, kind then that Jet. 'XX of is balance. kind maybe names there. the

I we've late. done been management very happy of with has what think

issue the base. the I markets equity portfolio. business have roughly a book think from side of perspective. they've overall done on They financing level capital one we'd asset recently a at of as million And rightsize I really that is nice that the credit That job. in $XXX-odd accessed is company its to north $X billion. received distributions continues don't there's believe

push nice for of Bryce. the those that So highlights job some other business management I think there the team has done to you, probably really sponsors But team sort are and forward. the working a with

Research Our Point with next question Casey & comes Trading. from Compass Alexander

feel to A year I'm couple you goes drag think, but questions, a new in new that. of compression, on and how seeing the as along? should higher we Dan. about that's curious One, the question, the I underwriting repays just, thinking general with average weighted be we a relation about And are yields spread yields environment,

Casey.

though, benefit spreads quarters. will of some as probably X that, the those think sort by of well. get will a could been there offset I transaction out kind that I I But maybe be rotated, rational it's is rotations to but go not point, think that mean, right? people's into the think think for sort books do this I smooth light fees. volume the amount I of bit, that, will just by little That but be and lower obviously assets. yield past lower-yielding will of earnings an extraordinary benchmark, driven FSK think, there's to an

go the So industry I look at that. back think can and of across you kind probably

bit that's room of of we we're think into the think a line. on leverage a then some I bit hard a to that beneficial got question what we're bottom bit little help. nonaccrual I pretty quite target So there, within balance. And be that we're a Bryce's working was, which range, still income back these -- our producing probably come little non-income-producing names rotating will or we should of And still to

to not side, ABLs real KKR ABL has, believe, Secondly, just on the withstanding effort attack I up the set a BDC.

a clearly of focus KKR. that's So

what of the be the origination where offset to weighted yields? do there also to some average BDC? private that percentage So direct take ABLs And to to origination you would portfolio willing relative credit? potentially drag way a on sit yields And in is

Casey, mentioned, wide to probably we're for a way points historically seeing ABLs to only. regular us. points receivables Yes. anywhere financial that lending just XXX north portfolios for as broad that XXX asset-based We've real I deal. views protection, on space. the point, focused kind thanks as a But Casey. of I We a $XX and XX finance and that, do basis of it direct point, market more downside of effort have space. billion of your the is but hard of We deals of people in like We've specifically, to effort do, total it basis just assets call we north kind No, of there. your AUM the dedicated nomenclature mean,

deals kind of asset-based kind talked you self should the We of to be joint for self-liquidate there, historically help to range benefit into will and there. I our that we've about some continue other new continue think, finance within obviously rotating inside I of the these -- of expect of have amortize. to deals the active to us But, venture FSK. think we're or

Casey, Brian. it's

constraint the The other is bucket, usually and also XX% ABS just non-EPC are the to we and stay JV. within non-EPC. we've investments have

a But our the Dan put So into that's JV to we non-EPC. can ABF constraint. a also as buying power increase of mentioned, basically bit on

question comes Wedel JPMorgan. Melissa next from Our of

some I elevated saw of it's repayment portfolio follow-up bit. really levels. a on activity come activity I the touch quarter, we about the in with sort in the -- wanted first first to investment to question, leverage Obviously, down think a

target Given the do expecting portfolio you level back I'm I leverage, portfolio comments about of growth of half of to of and it's EBITDA the revenue middle to sort side how right now, especially on side that year? company think the the in your of the curious well in sort on of about feel range decelerate context as the start

or sort Melissa, with of the Thanks, comfortable of of given range right? the right I pretty where kind target historically the think X.XXx sit midpoint that X.XXx. Yes. to of now, X probably with we of We've we're kind

So sort of maybe slightly that. below

much how we've. like liquidity available we think I

I think on we like the maturity ladder liability the we've side.

level I dry of range, think that powder. prepared to operate considering we've kind of within that we're

your view aggressively has the market removed think on the to mean, from taken kind that, landing think I maybe soft other sort perspective. overall equation hard the we're I almost concept in comment, of the and this too I of that is landing more

companies consumer will It side growth. the impact bit some kind is EBITDA we're for bit of side, be of little expecting here work though got half on year-on-year slowdown, of reduce empty. good a little maybe some the in these a leverage we're the and more think glass which a But of job at and broadly, that liquidity position. our sort to room names to I we

about that. feel good we So

incredibly 'XX I diversified. funding, -- is And And the you following decent on are But a own maturities. appreciate in security up laddered approached then of maturities guys your are some and issuances, have and upcoming always up 'XX. well there number done have there that. coming Okay.

given are you maturities? capacity the environment Given using appetite further -- sort for the are And you sort rate upcoming funding those of available about on spread diversification of the versus revolver? how what's thinking environment, the and the

No, worries. no Steven touched may And think on of I some this. have

to got, November think, do. if So do something I liquidity. please Obviously, the there's we maturity summer. Steven, funded that deal We've billion XX% essentially pre-funding our did unsecured. from sheet of $X.X upcoming got the today the of But in balance here, in is available add we've

to active kind markets with issuer some at do on add like want liability us when bit also -- be should you but there. CLOs diversified And a an fully think do to sure are or other otherwise we'll opportunistic think consistency, a open. it of basis in tools to I sort And anything make did there? level expect of very we're you I a Steven, also then that I from look perspective. But of

it covered you think, I well.

Our next question comes James. from Robert Dodd with Raymond

of some the But it's And mixed BDCs, that outlook hearing management of messages on companies But on how how software you right? from we're terms theme go expense. speak, of to years and generally, software the well, much of from demand front, margins, the been in concern are your been seeing because of running kind that so tools Obviously, sales forward for stems out lot up a versus On for where companies over are much tools overall margins of because of expanded, and last a lot do years? economic or cost-cutting a think? risk flashing companies, BDCs risk, of revenue the macro already several are many they that margin

question. our It's is larger Rob. We're recurring revenue right? exposure than structures. focused more that just sector we're a sort of of focused the software sort on EBITDA fair I software, of mean, sort biggest names

just blindly just I think be to probably the out kind is push through that. more will it there ability that challenging, do abated seen we've to and of price

one thoughts think think, I So your is with, in with line that are that point almost I there. and what

the in heavily line expect -- the by when probably company expense most When we their longer. is And that multiple rates the of talked out you we've kind sort challenge seen or where think to right? environment. wage inflation for higher is couple when for of with rate certain I situations the real as about a Because quarters most there. remain a driven wages, higher just now, remains point we've

So those little are our on. more things we do bit have eye a probably the of

I that piece. think revenue about of we're sort mindful So

sort see coming talking growth about quarters. in I partly the expecting we're EBITDA of to of think that's slower just kind why

is then half obviously that lots I piece front? for ask of on have think bid that you actually second LPs want And is between -- and people remained you it. Or factor this year, the sellers second you is of money to on of playing look the sufficiently, beginning obviously, their -- also buyers just opinion activity in activity been to -- in Got mean, half? Or right, expectation mean, a point activity is think your levels How outlined, I back. the levels to I are in the why still low? that do close? that's there -- And a year pickup in -- material pickup chicken has a going be the to close like the

No.

is the think I yes. answer short

had kind I has it will enough get do in play. you it, up. transaction meaningfully let's of, the or bunch I of levels to think call different factors closed a close think

-- of into lower things market it, summer, to deals a little the higher saw bit around out year, East most environment, forecasting sort bit October, hold. I think in more a the are they'd with a was happened activity, or there prices. But chatter the going better think we'll to cuts view on then I about coming that more in wanted think longer. that and consensus And we we call put rate of decent there's assets rate be X the hold sort sort get events that the in coming even than back a people for I the rates going little last to books have Middle Israel of,

all So on consensus hard around table. of, little conversation sort decent in terms a sort I might challenges in I the albeit pretty road there I the think, in be muted said, table, we're that. landing of the I think certain And cautious mind, that off it's off also of people's bit more that's think of there's while the challenges, or bumps this a -- as kind

coming on So all I a it, on and side together. you dry there's power. looking for the capital back said Robert, people And side, that are I other think is mean, LP lot then, the of

Zwick question next Erik is Group. of Our Hovde from

first could are if any I'm from of well industry mix with active pipeline. attractive terms there the as I regarding the add-on wanted how that to curious new are terms in either commentary investments in of more start more any provide today you're as perspective? that that versus particular a kind if your opportunities or looks finding question segments of of you

and it's say the probably line been in right? incumbency. add-on expect, with the you'd We've I'd probably overweighed almost what

will of but deals. large way the kind regular So that I considering the be a of you're think always size going see of chunk that to of platform, some new

So I balanced. think pretty it's

now. decent pipeline the right is think, I

investment up means, what will of the I their or definitely more think level constructive. committee kind being play of just a multiple-month it people I I more that month to think, to year. process we take still this. maybe were out, screened and last but gearing conversations a while quarter-on-quarter way Erik, up the up a little deals than are of is see making here some close, That for it's multiple saw

incumbency out about bit thing one of company going just because we've sell that advantage always it's because mean us over the a to Erik, new the an our active to to companies looking sponsors is And necessarily add, go being providing doesn't financing buyer. of I'd competitors. position with dialogue the of gives some sold in mean the that our is I Yes. portfolio. We're

a focus that's clearly, So for us.

me been base just sense, little year. helpful. second growth high Slide has given in given companies That's bit that stable. your which you fact pretty makes to of about pretty EBITDA said past single-digit median have the been for seen for coverage the the ticked interesting XQ, stable question on that you've rates actually notice is a And a over and And XX, up interest for year kind

for kind trough potentially a continue for come that assume is even this fair it here we cycle? if metric or of we've rates stay guess assumption to growth, down of you that bottom I EBITDA particular the see of some and So seen this a kind

would our terms of view that be Yes, in the trough.

soon. the of don't bit Now the these rates probably -- think coming reductions. up view well, are So -- is a fact more we driven that, years, kind next down over believe several don't off it's either, they're leaning to rate right? going I little that necessarily anytime that of

a uptick bit. of kind that see did You

of be rounding improved entire X.X, quarter-on-quarter. think but just the been I or I some may fair, have definitely of probably all it sort it to kind the of wasn't it out think there, of

Maxwell Our from of next Fritscher question Truist comes Securities.

Mark for in calling I'm Hughes.

-- But Or from? economy. there cracks that credit more the not any is particular are about credit and seeing your any question there -- broader just issues or staying industry-wide, sector issues is in a are portfolio, this these Just away you're in idiosyncratic? in

some has the this -- Yes. on think positive secular challenged. calls. So the ways, And that's think, I to many of be been would of in gate. staying we've we've portfolio build I -- of about the continue I away those, that But I right? talked tried sort think to the mean, prior out from decliners,

think probably care seen I we've businesses in space, a little more health the challenged. be bit

-- I of to just is not that some and do has So anything an point, had us. with -- industry think with this

roll-ups these names of has seen of to struggling. it sort some side the with do reimbursed. We've new how kind the Some get struggle, revenue and of discretionary spend, some people of of are

of historically some which I you anything probably been for time. But continues that as And else care, to viewed been think has has mixed. health want asset Brian, probably more So bit defensive a little add? a class sort

we I continuing as retail, pretty focused, stay but I health like like that's we've the services. average. earnings care, focusing mean, have resilient. Dan all number growth see said on tended that by been book well. I we're mean, Look, to away more think X% to from. are just products, solid we've We think you defensive evidenced professional an pretty it that think we clearly that business Those consumer services, industries Energy, pretty consumer-driven software, I we been look, consumer. like like across

right just we think soft said, trouble. And cautious are be to say could where that continue to It's I some been beyond situation that need industries just economy of real we problem -- -- having nonaccruals there whether are or the specific and nothing overall with a what Dan So landing there's in our about we've and not. certain specific thematically I'd you somewhat tell now credits.

focusing good -- or And do the Obviously, your their lien still investments. you switching are majority first seeing then second Are emphasizing lenders that Got have the you it. opportunities to which gears of there? portfolio. lien,

terms the you're on seeing at insight any But et there what yields, lien, you're this? cetera, in of looking how and second spread understandable. that's So

Yes. probably a probably debt be a Max, little that a sort kind lien about been I'll more bit late, about of right, mezz second because like. that is think think activity Obviously, by of probably whole they've market. as I'll it more Mark, it for or bit little -- junior has kind years thinking might things been a or active sorry, done deals as there broader And category, of several a generally muted handful top get driven of We've M&A decile of seen about businesses.

lien So there those structures. were a have in second been structures Those spread pretty perspective. actually from tight darn

up, to that as do debt going in volumes more be sense Our opportunity M&A space. pick the is junior there's

that business, will Considering more interesting that well. as a think bit cyclical. think opportunity we be little view I I an this

a in void, M&A or the get when return picks that could need are fill from up to structures time be of a to total those kind help the attractive and pretty going financing is the So perspective. and there markets someone to back yield of kind

senior lien being here, is think or a construction leading about that which that I we're secured of with, sure kind of of balance kind risk. fair all making really first portfolio mindful said, got the Now focus quite is and this of we've unitranche

we've call the the being, junior EBITDA [ talk ], And of portfolio take. or bar it, PXX weighted pretty about a average give capital. We high for

probably EBITDA at If twice debt junior you investments, our average, is that. on look

tend larger businesses. billion-dollar by checks. billion-plus be be checks in They mentioned. $X have where So they much to typically new That's activity, businesses written do sponsors junior, go to tend driven when or deal Dan as multiple we

our to no closing over Showing turn questions, it like for back I'd further to Dan Pietrzak remarks.

day. you Have again Thank and today. good that forward to might always you with We're for quarter. next follow-up any all we have, look talking you a joining the call available for points

This does you Thank in your conclude today's program. for the conference. participation

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