First Eagle Alternative Capital BDC (FCRX) 10 Aug 222022 Q2 Earnings call transcript

Good morning, and welcome to First Eagle Alternative Capital BDC, Incorporated Earnings Conference Call for its second fiscal quarter ended June 30, 2022. It is my pleasure to turn the call over to Sabrina Rusnak-Carlson of First Eagle Alternative Capital BDC, Incorporated, Ms. Rusnak-Carlson, you may begin.

Thank you, operator. Good morning, and thank you for joining us.

call and Flynn, Accounting Jen Treasurer. today's Eagle of Officer on Credit; Alternative Wilson, me are President Chris First and Joining our Chief

are results we reflect Commission. in actual ways of concerning Form are factors the made to with and beyond Act Securities unknown of Capital from cause the and subject most constitute Before on BDC amended. report anticipated our section statements factors by as statements. Securities note some other and not periodic other Such control First filings uncertainties as The future call the include Alternative the recent statements by forward-looking on meaning annual that to uncertainties this performance report materially assumptions XX-K and our differ quarterly guarantees Management's included Exchange XX-Q may statements other Form the within in XXXX please begin, various Factors factors results updated and the on known of our Risk and that are could and Eagle in such entitled and that

Although we forward-looking reasonable, are prove assumptions those any incorrect. of on believe be assumptions are result, could And on to statements the those assumptions inaccurate. as based on which any be based a statements forward-looking that the also could

these statements. reliance forward-looking should not place on undue You

made herein this of by Capital undertakes as call. update required BDC forward-looking no unless Alternative Eagle statements All to First of speak forward-looking duty law. date the only statements any

to this our we on of replay and be afternoon, call. our along Our A QX copies with during XX-Q refer webcast earnings of found yesterday that released presentation may earnings can please after over announcement XXXX, website, turn our were until this starting call visit the I'll access available we website to replay, the August hours Chris. be will this www.feacbdc.com. at that, morning. call With To conclude X approximately which XX,

ended specific Matilda management of The initiatives. our the And middle discussed a structure by as in refinancing last of the I'll impact the call earnings million the Wilson, the on share was in review then CLO the into closed more mixed. of call, results quarter our follows you went net $X.XX who to a for $X.XX book The The strategic QX. to the incurred $X.X increased refinancing Leveraged today. Jane, the morning, our results follows: the XX.X% second JV April, powers balance primarily cost quarter. in of Credit hand results Suisse I'll for In $X.XX and quarter-over-quarter given asset on the our We reduced highlights. the the our is a Sabrina. the our this to increasing on Logan as joining Even quarter our share, thank Good down over the second that the quarter. we related has NAV portfolio decline investment's: with to in JV decline approximately earning portfolio financial On Logan $X.XX off $X.XX; Board in market end, in down $X.XX. capital received call write-downs, on of with has This from to be call, during we FCRD per Thanks, the OEM $X.XX by the next and drop us more much support were Logan QX value discuss which related basis. generally the offset broken NAV the Index on JV, quarter today's detail. will some to our dividend can distribution drop fee Loan Jen efficient of and shareholders. X To Loadmaster, improved the structure.

investment. to exposure FCRD's As XX, of June the was total Logan of XX%

a was further to of The BDC there net This transaction, quarter. our XX% of capital from July. to follow-on Logan return reduced return to this $XX.X of our brings new the in and be portfolio. distributions in exposure loan in of investments direct capital to results our part the million capital will in July invested XX%. The for return As received me

shortly. $X.XX net Our line of with expectations in in was income investment go more share. results operations through at Jen will per our detail

As to X.X% or NAV previously QX. mentioned, approximately the Logan from decline JV in contributed the $X.XX

NAV by in the transitioning Logan structure, million. is Logan decline environment round the which sellers capital have benefit in any from flexibility. declined credit-specific order is to credit in and non-performing volatility begin the the portfolio Suisse pay Logan end, event have a line average Subsequently able was retain change positions, off the facility the may over structure, which covenants. with primarily coverage exit outstanding leveraged to loan agreement. is broadly declined value more as pay consistent LLC the previous April JV, current used to the middle Under our of Logan $XX.X with asset recover terminate in JV of and XX.X% market syndicated market structure, latest of opposed goal market JV capital this XX, to the Logan loans to index, in the quarter proceeds Credit maintain us From CLO we price down Logan prices credit period. impacted forced a to early allows were the been The In sold Aurotech, to This XX% reminder, and the the In of seen volatility the to average issues. recovers. March same investments million market reinforces a driven syndicated recover. composed broadly on to price As JV from June and to $XX.X was XX to to the market

From Jane, quarter. non-accrual and mindful end result of second an placed the As the related valuation the but geopolitical Matilda ongoing X.X% non-accrual. was markdowns the credit a an issues market economic world. quarter, the on and value the was origination of of we around volume on deals healthy total a second portfolio recent during perspective, At of performance of based are and the saw on of fair

in we putting result, are new recession-proof a businesses. cautious for are to work looking As and money very

carefully potential include verticals, We services, information the are and services. which current financial our of lending, industry technology and asset-based care, consumer future considering business health state

total million, First was new the $XX.X during remainder all of million. Lending $XXX $X.X the received origination at $XX.X investment participated had We with was for in was investments, delayed Eagle's portfolio fundings. with investment. on over and add-ons million realizations activity draw Lending Direct the capital new quarter across one follow-on in portfolio a platform FCRD and invested million plus quarter. including X in mainly revolvers deployed the which proceeds focused Total quarter Direct

to I'll to Lending XX growth QX call portfolio to over which middle the with to First to First while flow it More is a BDC said, First Direct Eagle Eagle more has to With capital holding of The Direct in asset-based the remained up investment continues generated robust, opportunities. from Eagle's the provide steady. XXXX pipeline provide of deal is and of to approximate platform allows the we this attractive this we with $X turn us market Lending platform billion companies. The benefit cash for have BDC to loans, positions found recently, expect continue quarter, that platform. XX also hold allows by number Jen. from up demand more flow diversified

good Chris, you, morning, Thank Great. everyone. and

First, start with portfolio off and I'll some highlights. investment

QX As Chris addition new new the $X.X for with million. relatively mentioned, was portfolio quarter activity X muted at to

benchmark capital million in on as totaling However, investments in underlying $XX.X we an investments additional June new based of commitments did of spreads have deployed. was and rates funding several blended of yield XX. follow-on The X.XX%

we X had proceeds realizations Additionally, receiving million. the of during notable total quarter, $XX.X

$XXX.X at was our million, invested lien the end down portfolio and at XX.X% in senior from in June secured of XX.X% million It of valued As Logan XX, the debt first $XXX.X was QX. JV.

was The XX% is the JV X.X% our second-lien holdings, equity-like lien in of Logan held invested producing was remaining non-income assets. the including other reminder, restructured equity a debt second first based end portfolio in and BDC's of as and in lien As is QX, and average from and the X.X% investment The the portfolio, of on weighted up income-producing costs end of the at OEM. including yield on X.X% Logan QX. debt slightly which

first on placed term non-accrual. Matilda we our revolver lien QX, During loan and Jane,

paid was assets. in Total were as Aurotech X.X%, and X.X% and no percentage at our non-accrual a portfolio our off fair respectively. longer at cost of Additionally, non-accruals included and value

I'd like second Now financials address for quarter. the the to

of The approximately and increase by contributed During of interest was QX, earned we OID QX QX. an realizations driven primarily recognized $X.X income on $X.X These positions. million from of dividend realization to income. primarily investment of approximately accelerated to of $XXX,XXX. for the increase million X our also $XXX,XXX $XXX,XXX of the premiums prepayment increased amortization income from Interest

one-time was facility in result our Logan credit the QX decreased fees slightly in $XXX,XXX significantly a million, the a JV connection for decrease in approximately leverage this decrease expected, income waiver associated $XXX,XXX of in of ratio due slightly offset the of was quarter by the and charges were of and Other debt-to-equity down The the borrowings in up QX. expenses, issuance decrease with write-offs and the rate. million $XXX,XXX JV biggest QX fees X.XXx. dividend management This $X.X to we reference increase with QX. fee Logan refinancing income certain a of This $X from management Logan JV Total an the the increase decrease of of driver $XXX,XXX is in management on from As an to from to QX. to QX of full interest middle with waivers market was From ended perspective, fee. due the of underlying net CLO. termination

in driven of increase the was end in by at ratio quarter. our debt-to-equity asset net the decrease value our Our

on the our capacity I'd back our and over continue like to to commitments. our ample call calls fund untended to have turn facility grow any portfolio Chris. on to We to credit With borrowing continue that,

designed. time quarter We the provide shareholders to this raise raising to sought the on Jen. a discount dividend. FCRD's narrowing clear were dividend line and to able as We NAV Thanks,

be the accepted, is turn in that, operator. I will rectified. NAV is As will we we With articulated until have current to call that discount the and management back the as not previously, over not satisfied

conference concludes Thank call. participating. today's This you for

disconnect. now may You