New Mountain Finance (NMFC) 7 Nov 192019 Q3 Earnings call transcript

Good morning, and welcome to the New Mountain Finance Corporation Third Quarter 2019 Earnings Call and Webcast. [Operator Instructions]. Please note this event is being recorded. I would now like to introduce Mr. Robert Hamwee, Chief Executive Officer. ahead. go Please

good Finance And and to welcome Thank Third morning, Quarter Mountain Corporation's XXXX. Earnings New you. everyone, Call for

line President of and NMFC. today here of NMFC; NMFC of with Kajee, Klinsky, COO Mountain the CFO Shiraz New Kline, of CEO and are John Capital; and Chairman the On Steve me

Steve going some make to Klinsky introductory is remarks.

Before statements regarding important to make he some does, I'd like to call. ask Shiraz today's

everyone. Thanks, Rob. morning, Good

and advise available get are into X I everyone is Corporation Finance the earnings Please unauthorized that form that being release. webcast about to in November is in prohibited. of any broadcast press note property call we recorded. the Before of a would today's and presentation, are audio Information that strictly our any like replay Mountain call they New this

forward-looking call, and throughout access referencing to presentation. the Page X call Steve at attention presentation like statements our highlights in on undertake that of not required give to release and that harbor NMFC's also projections SEC call with filings the important projections. will those like turn do slide you Chairman I'd forward-looking will of forward-looking and for some to regarding visit website the refer statements. webcast the the customary to safe results the SEC call and our recent our or Page factors At Klinsky, disclosure Steve? to over conference be and to and to by update that this www.newmountainfinance.com. our I'd statements X slide most to copies time, may beginning on unless include of slide statements press your cause differ materially latest law. To filings our actual We to from we obtain please we presentation could projections, who Today's ask

for New through me the of Mountain let quarter go start in Finance. a the highlights will another team presenting by strong The details moment, but

New for high XX, $X.XX the investment than per share $X.XX income quarterly $X.XX above XXXX, ended of more of dividend the net guidance end per was of quarter share, and $X.XX our covering Mountain Finance's our September per share. to

book New valuation $X.XX generally to market conditions reflecting portfolio financial stable per was limited $XX.XX share, Mountain and Finance's changes. down value company

also of a are our for sheet $XX continued announce part which target growth issuance generation, funded quality in XX% able balance our for the annualized no quarter. yield with Credit XXst per investing close. us consecutive dividend, an again to and quarter fifth new in record nonaccruals fully in the gross originations This million. moderate be net We of will based levered regular our quarter deal Friday's significant range. company $XXX on share, repayments had strong was approximately The of by versus last recent remains straight equity $X.XX million keeps

I today, New and equity very shares ownership other continue most of recent of owners million to in our inclusive purchased aggregate issuance. Mountain stock, XXX,XXX the large our shares XX.X members with be of of

with over overall. grow, billion management members. New team approximately performance that $XX and NMFC's to are with we XXX supports and broader summary, NMFC assets the Finally, of platform progress pleased continues continued Mountain under In

turn to Hamwee, back the me Rob NMFC's let that, call With over CEO.

Steve. Thank you,

details the of review into diving a and as give NMFC Before like brief of everyone quarter, always, strategy. I'd the to our

within already achieve really applied corporate conditions. private equity to resource. generate New market of equity models debt XXXX, externally like. well-known us we industries are extensive approach of this investment cycles consistent private that a and credit businesses our managed New the differentiated by invest changing Capital, firm. that with business X and Mountain's approach we existing investment of to New it NMFC underwriting risk-adjusted on defensive in taken have research attractive focus Page we a and to across growth Mountain fundamental that on presentation, we sustainable put, program and return Since our inception results the we rates leading that outlined in to know simply As We utilize model Mountain. mandate, as recession-resistant allows primary Mountain believe the in team more and To Or our a New really is

Turning to Page X.

generated the our points the May above in see X, High X.X our annum meaningfully In benchmarks. You years, IPO XX.X%, we can annual from approximately per since to XXXX. Index, and investors IPO, of our return Yield risk-free higher to basis our XXX initial peers total have November in return a XXXX compounded our public performance than relevant

Page the XX into peer as as against public that more BDCs little benchmarking have. detail at a X relative largest our around least set, long been against goes managed we have externally performance

income. Page shows be which by continues than dividend, cash our is Total in more X driven by return cumulative investment XXX% covered return attribution. to largely a net turn

years on shareholder in an bar fully over focus and the of generating XX.X% efficient our have of platform; an underwriting two, three, covers been that the management dividend; stable we X-plus one, structured on a to majority alignment our shareholders. return accessing always inclusive expensive while the four, leverage maintained with interest value, cash-on-cash far and our of we for appropriately generate attribute differentiated interest. effectively book NII We amount right vast cash to: illustrates, dividends, success stable the the inexpensive, our from running As have a ability our equity; and business before sheet more consistently special public, our utilizing balance our income our

biggest we on total time which return to BDC be is performance, single continues risk differentiator the control Our in space. highest a over of believe and credit focus our priority

quarter-over-quarter to and our credit deterioration a been which an number Cayman with of PPVA, under in law Credit material effectively performance has internal trust years, as be one name, liquidating continues ongoing only significant added strong, list which been has for watch AX. to

entity to lot continue a from our spend asset, of to time we the state. maximize to troubled significantly one our attempting As PPVA recoveries

assets significant the around of mix while claims, valuation midpoint. underlying of reflects believe complex and $X.XX exists litigation of fairly our currently volatility we likely the the midpoint Given scenarios,

and the XX consecutive last no XX new have had nonaccruals. quarters, For we quarter the fifth of

If out you the XX, and our our both investments the once of of XXXX, our portfolio investments, lay to cumulative performance basis what show migrated business inception the cost Page down ladder. since and refer current again then the we credit in has

representing value approximately which cost at Since realized internal in far inception, nonaccrual, million made of only of portfolio X million cost currently XXX of $XX thus billion have investments default of X have fair $XXX over X Furthermore, only migrated which of we our to representing or companies, X is rated just have market in resulted scale. XX% on losses. our of portfolio $X.X

our of of recent XX period. $X.X and an we the the leverage leverage holdings, reporting Page over multiples of investment, shows levels for the most entered as for end million when same all investment

metric, for some perfect of and leverage degree While multiple fundamental internal our marks. trend of good a empirical, not a asset-by-asset snapshot and helps support is the and ratings provide credit performance

or As can direction multiples a looking only leverage you in flat by exceptions. see few with at trending table, are right the the roughly

missteps Edmentum, CO is future to be operating discussed the a to where and sponsor optimism CL have results or improving but the more. trends weaker for for our capital about had are The three Unitek list CN, of restructured turns company's new with providing where secular of to and continue negative led in on have in name meaningfully prospects equity combination X operational improvement operating support few are results the restructured value X.X operating loan. representing the results of previously make the previously contribution XXXX, Two financial the enterprise we key and confident names in many through division, There and names previous strong Company different ongoing for us continue us quarters, migration currently that XXXX. securities, where improve;

performance covered investment Page At XX helps being its IPO. is of overall the out net we regular page, company's income. the on The track quarterly economic the dividend of top show how the chart since

cumulative continue out than XXX% you can we our As see, of dividend more of to regular NII. cover

we on the focus page, items. the below of bottom line the On

at we other First, realized realized look credit and gains losses. and

can losses, been less of default you through we've generally year trading economic company every and poor losses, dividends and As highlighted by nonaccruals looking material had success see combination avoiding at frequent, not portfolio realized green, highlighted typically row, the gains, are in in loss Conversely, smaller gains at equity orange, selling actual profits. a a real have we default. and including to show credits that prior generating

continue have gains, we realized stands net at to a in highlighted million. cumulative blue, $XX which As currently

million yellow, see and is Looking in million. cumulative unrealized $XX unrealized can loss, income net $XX The including over down cumulative our X earned at in stands this highlighted net public total realized and against all we net losses, cumulative the investment million. $XX that as of we depreciation, is $XXX have only in of net company, million, at highlighted result further that years a of gray, unrealized, net page,

Page to XX. Turning

We growth with we in Consistent we've have authorization when leverage equity this the year articulated last October our X.XX to over of increase senior while shareholder X.XX, portfolio inclusive liens the have billion. have the an by of we absolute $X.X from increased seen shrunk growth first as come has statutory offering. significant actually to our by received assets $XX assets than sales, More lien securities through leverage. million, repayments from in basis XXX% non-first and on grown as strategy,

call over to John conditions NMFC's discuss and John? President, the I market Kline, will turn portfolio now to activity.

Thanks, Rob.

and flow a exceptionally the on direct summer in QX, slow deal has into XX, core in outlined As lending Page fall. the strong start been throughout sectors after our

NMFC's attractive levels, New at which investment issued support priced loans income are targets.

heavy multiples mid-teens, over deals that We competition there be the in observed recently have lenders shown have to trading are quality continues the Overall, for quality the increased although businesses, EBITDA. for XXx loans some for businesses structure pricing. and enterprise best high on discipline with to value

around have caution businesses that more to financing is there markets. Additionally, end uncertain exposure

best be from the we we and select very forward, and in marketplace. until the now well expect year, available end to the to the remain positioned transaction steady access of Looking deals flow

Page XX. Turning to

represent LIBOR shown by been XXXX, we in in the our curve could forward will from quarters. have would far We basis the current LIBOR move XX occur, headwind. ramp sensitivity on to trend LIBOR a does X.X% suggests successfully that liability decline that SBIC seen asset the Based points base potential and our environment modest mix, Thus today. Given January our in headwind The mix, decline inclusive in the Page ongoing has to early if investing a coming rate. in this spread on in program, LIBOR X-month improved X.X% business. LIBOR believe currently debt-to-equity quarter downward us per XX, the of enable our $X.XX current of this address

$XXX by Page on XX offset activity million repayments, quarter with and million $XXX originations NMFC sales our strong XX, portfolio and very of a in $XXX to of increase a portfolio. Turning XX, representing had total million,

Our club third highlighted value of new we our year, on healthy enhance the with discussed percentage of the target. purchase supported have I investments were fresh growth market senior attractiveness by as strong defensive at new validate trends and multiples, most price market total over program. indicate the deals that purchase and enterprise trading which niches of with loan-to-value a number amounts of that lending ratios historically our loans, middle that high past steadily These of of our increased buyouts, are my sponsor Consistent are remarks, equity support opening very multiples deals the in price. the expansion a the

new on originations QX in loan-to-value XX%. was average Our

our momentum which origination and continued net new our and investing X with where invested end in have sales the transactions in we purchased new included continue shows transactions, repayments. our a million XX million the REIT post deal expand. end of quarter lease $XX quarter, since to $XXX of in subsidiary program, Page loans new originated we Notable SBIC

our Looking pipeline core investment a solid new growth verticals. forward, of in we opportunities have defensive

Page XX. to Turning

mix originations for loans, skew first towards to of meaningfully new continues XX% originations Our this of total accounting lien quarter.

portfolio balanced level were first our mix a to consistent lien repayments more lien plan towards showed between with first our Overall, leverage and assets, asset mix. avoid with sales evenly senior-oriented shift a assets. stated QX continued Our increased and second

X.X%. XX, the yield of portfolio is by to level the in since since on asset decline LIBOR basis XX to QX, QX. The -- NMFC's declined decrease Page X.X% from due about from points the end primarily shown end As has approximately

we of While we the with the continued portfolio quarterly in rate, base very dividend. supports comfortable which our remain potential decrease yield, mindful solidly are our

that the our shows the chart bottom portfolio XX insight left Page across the to towards larger our of services that the the In lower we call. within in on type, portfolio defensive presents oriented we chart only discussed structure. where The broadly on of sector. X/X break right capital in top the is assets asset investments of page shift performing of the The Currently, portfolio vast a expectations. sectors. section pie first the into out are our in our earlier see diversity The majority junior line lien balanced our can chart, shows of give growth-oriented the significant by subsectors better with the you

Page at value, largest with and investment XX, on diversified of of for XX% portfolio our illustrated as value. Finally, investments fair have we top X.X% XX accounting fair a

we to lower one can to our decrease the in you have the right page, As added more diversity see quarters each of position on of risk last side the borrower. X any

forward. going We expect to trend this continue

and over metrics. key now that, it turn Shiraz financial I'll to to Kajee, CFO, statements Shiraz? financial our With discuss

Thank you.

today's XX-Q the to results was refer last filed commentary, more in please that evening on For with our Form details the financial SEC.

to Slide was XXXX, at billion, approximately billion asset XX. from $X.X at assets of to fair $X value total the liabilities had billion, $XXX per $X.X XX, like Portfolio of prior September in $XX.XX billion which I'd million attention your outstanding share $X.X statutory $X down total excluding debentures. year. of investments of turn with and was of Now total SBA-guaranteed billion, $X.XX drawn Net value or debt

the to million per the offering, had in a forma for NMFC In equity raising million by was investment that to netted all $XX.XX we Our X.X company inclusive raise shares, above $XXX X.X such this accretive statutory million ratio adviser proceeds IPO, in we above proceeds, pro payment offerings, had X $XX.X in value. issued $X.X debt-to-equity have Since of cash was the had book million October. which NMFC to netted and XX value share, our NMFC manager. which follow-on in always book over subsidies, shareholders. the

this the leverage statutory the show is our also NAV value debt-to-equity we historical over impact our adjusted special in our historical cumulative leverage Slide with of shows dividends, show slide, which X our past ratio. On line XX, ratios. quarters in Step-up IPO. On target book current our the for since we of stability

most performance. On show and to the results. the line, highlights our volatile NII stable our believe we is Slide quarterly appropriate statement that realized income above below quarterly unrealized of slide gains losses We we that continue net generate XX, This measure be and income line. while our can investment the

of XXXX, base quarter interest quarter due increase the a $XX.X earned approximately an net cost on to income prior from million September were from Focusing we a investment Total of million, $X.X asset increased $X.X income and ended the million, increase XX, total stronger fee from prior $XX.X quarter. quarter borrowing and higher due million the fees. the expenses higher to

per the It effective As certain in that adviser investment this prior weighted share. dividend million quarter investment guidance more quarters, note than This $X.XX waive recoup or continues the covered regular $X.XX The and third fee to average fees. was cannot our $XX.X management of is above NII annualized our quarter X.XX%. adviser waived. important QX management per fees share, to results of previously is in which

unrealized of the result net for quarter with assets in quarter, $XX.X a resulting XX, in the from increase As ended operations September XXXX, million. of the net an depreciation

paid our investment XX recurring total in in Slide income nature predominantly and cash. demonstrates is

income cash XX% the remains investment quarter. shows our of recurrent predictability As believe and total this this consistency We income. strong is you income and XX% see, of investment can at stability

XX. Turning to Slide

the QX briefly NII dividend. quarter As covered our earlier, more than third discussed for our

which will be XXXX declared Directors $X.XX XX, our share, of that QX XXXX, a to QX per record December on within on dividend holders has XXXX. $X.XX of to of fall will belief guidance per XX, paid December Board our NII our our Given share, of $X.XX XXXX

billion On into capacity Slide XX, SBA-guaranteed various account total Taking end. we debentures, highlight our $X we sources. financing over at borrowing had quarter of

$XX we QX, million, successfully respectively. Bank our million and both by Fargo upsized Wells credit During Deutsche $XX and facilities

investments any our credit the both reminder, and the facilities businesses are As tied to that Deutsche lend time. operating performance of we given than a underlying to our of the at generally marks Wells covenants rather Bank Fargo

XX, Slide on maturity leverage show Finally, we our schedule.

at we better manage to like we've the over been near-term our successful maturities. would diversified no maturities currently to call debt turn Rob. our have laddering As issuance, have We With that, to liquidity. back I

say consistently to importantly, remain continue to current for I interest. closing, the to expectations. Thanks, intention Shiraz. again, credit It your dividend continues with like healthy. $X.XX Once NII and to thank to our quarterly pay just our quarters we date. our perspective, would portfolio share overall to on with so be be from a in like we'd support per our long for line the to pleased future as In basis that continues quite a you performance Most covers

Q&A. back to begin at point, And turn to the operator this things Operator?

Instructions]. [Operator

first Lynch with comes Your Ryan question from KBW.

wanted one, this some particularly quarter, to I the care in industry. of First at health discuss looking was, your originations

As to through businesses , I several strategy. some traditional center of Dental, fit kind pretty several MyEyeDr., there meaningful Affinity sort investments market, PhyNet look of other look of care in seen are have sight that for Dermatology, We've investments, roll-up those of parts some the issues. the health

if investments the commented care market? these some you on. So the in speak kind maybe traditional guys other health the broader of of get light some comfortable, that of I Particularly in weakness in Are can just your so, care this to particularly someone how roll quarter? up? maybe some you And health companies

Yes, absolutely.

arguably years success in on So overall. and equity XX credit care, great our and vertical I incredible care strongest there firm health the success private is as the health at over mean We've well. side had

And an those between two the area and intellectual is capital having where you absolutely I clearly losers. is distinguish critical. think care Now health to winners have

importance. I an is particular platform think, the so area And where, leveraging of it is

of mentioned, platform winners historically be definitely of losers, losers prospectively those that and space. winners and some In companies, specific there terms and will you are in

sectors it's focused best the issues or are derm whether level or dental underlying we of have, around conviction, important. that, think have what around trends, within I have that possible that other care micro we the the macro best are reimbursement believe, all the on eye high elements

Obviously, execution is critical.

in. know team we a believe management it's and So that

they years. knock very, we're of like we we So And our I think we're them, to these And track done them, over I obviously, date, but to -- we of definitely, have say I we we've lot many we well. record, think in worked invest very with the comfortable. it believe ones think know And because And every but well. a incredibly prospectively on conviction out reason space well. that wood, a these is

this helpful talk maybe guys after the very growth deployment, have efficient Can raise this in look very Can that's why of you talk the there in are investments. efficient You I quarter? had Okay, tranche particularly capital a about a invested manner. such size, robust about deploying of tranche you you typically capital deck then slide than a and portfolio amount and commentary. you you guys less really at that is which quarter? the been robust size into if investing your XX% the growth also, in And that shows

increase in is when there? of the capital can deploy, guys that have is you closing, if strategy some you one size additional capital you just were So to deals that guys these your on planning hold guys

things on that. So couple of a yes,

to think, the I pace it. deployment, some idiosyncratic of terms in So there's X-month any element in of period,

core Mountain sub-verticals I've think part have is better platform, within overall to growth that deployment is, X period, in New due grown and it private amount as we're into bigger And as or the that and has think a enterprise, of And provider, of frankly, in that's services into particularly gotten to of doing. certainly equity the market us. I've flowing said away, the past, the over is focus certain is coming verticals right, address part a technology-enabled you economy business frankly, overall and and our into has expanding. at it's sponsor Although, I And we're at pace significantly. And things areas funds said the XX-month formation, business what we incremental the capital now our and, to going, like I of software before, look services. is manufacturing health and our when fundamentally care where finance in basic space rolling capital

deal capital I is equity overall, So private to bigger. flow think, us. formation drives getting That

take are that the overall verticals generally, on already growing faster private than say, I'd to share we growing lending industry. equity continues direct the and focus

lead So the when the platform I think Mountain with equity business. that overall our growth coupled all those drives things New of credit private to again continue

All have time a And to in growth. on less that quarter, depending things bit then lead any of short little those relatively you more continued period. or can just

and percent In observations. I'll that, the make bit One tranche of BDC the percent follow-on is couple just think terms issues of a of how is of about oftentimes, tranche little we misleading. a investments? at the

few other, private here, you As a other funds know, we BDC. funds have the with that co-invest

secondly, are So the a the question, of platforms of a put over and incremental the side. need in Does you then the than we lend that, capital like larger the shows businesses right time. Ryan? capital typically themselves and institutionally, of certainly know the like tranche that period answer And of on up that for time, and are we piece percent we for behind to that many businesses we to additional just will that BDC have growing

businesses equity leverage answers the a get there's because on X businesses. to of for written was it high-quality That lower good maybe equity of of that commentary. your for higher question, but wanted larger a Slide last on and that a ago. it I loan-to-value gap. business XX those philosophical than bridge about, has how a Yes. operate One you in XXx where higher or a checks, It's the X thoughts question. XX, maybe those Yes. there's guys it's in years business view larger EBITDA, you some on to that's there's somewhat leverage, risk kind talked interesting checks But

on These businesses. are businesses flow. ABL lending that lent aren't these cash are Now

lower of businesses because you a view view business safer versus as which leverage loan-to-value you equity larger in check? amount a how higher those risky? a more So is Do of the do or

of I that there's a couple question. wrapped items up And think in

I Xx But a real cetera, amount flow, in XX%. whether reasons, and there higher or XX% et or of reasons, have said, cash relative world, up the in are I think, the of itself reasons of but by value Xx, the that think, are listen, for it's actually think whether the the these generating of is to has definition, past. business same I that intrinsic lot levered one businesses that one a are businesses seen growing the and multiples the these gone is we've a businesses rate, cash than at loan-to-value

types So business That multiple the just same it's commands Xx inflation purchased lower multiple multiple. at of years for now businesses not exact ago. think I a pure a same five were that higher actually

multiple inflation mix some but a clearly like-for-like is on There the basis, has shifted.

past that So free different from the about that equity, perspective profile, I is than XX.X sponsors in business a growth just turns in at putting my margin when profile, think pure of we financial terms businesses the we've has profile. the analysis in of talk cash the XXx, that trade seen academic

So years to of level we're think or talking of capital. we about support debt. to that turn X do these higher or relative modestly ago, half that businesses And so equity X a I turns can X extra X or probably a relative feel are

sponsor People the would to after incremental a then value that. a absolutely in no having at again, turns money I or And it there in capital apples is money help have, was apples, in And ground. of end event behavior needed the is look equity X is So impacted good comparing check. I the by to X going bit, there. that in equity. even think are margin the if more impact These in say, the is of to will the That a down to oranges little pure one magnitude way you're road. do out at throw the significant apples

all Is an truly think piece, on that even basis. So I a is do makes helpful that sense? apples-to-apples

but Is versus makes Yes, more it. than the yes. makes more five was I it comparing has a And but sense, an more and that appreciate even has I ago? that the today all yes, that sense. years business And that. grown same now leverage, business commentary multiple risky So -- apples-to-apples,

Instructions]. [Operator

question comes Lau from Your next Owen Oppenheimer. with

So I have a modeling question.

the of strong, the was since end million. quarter originations Your $XXX very over

given second the you have pace think the end, this quarter know expect towards your this your clients, going down little to seasons? should XX% subsequent to compared about quarter? holiday how rest And the first originations there of of the about total will into for portfolio. of Should of originations conversation I Additionally, shifting XX% were into Is about So the with the anything the we we look slow lien a should this? been lien. bit we

Yes, absolutely.

-- origination we QX to be So heavily question, wouldn't QX. originations on the quarter, the first for QX of pace as for the of balance expect

was clearly, quarter. see we January. December. the have a pipeline, the John push we the things idiosyncratically through year. early of strong as typically into week shut But into The market see and remains robust. we'd certainly And end addition mentioned, I robust then very significant to the and to that an portfolio think what And for the I do of holiday second, down third is think a expect

of terms obviously In second very the question, a that. It's would I size. not tiny sample anything into no, read

our look fact, see at And lien. pipeline, back we think forward X you I to that's when first percentage deals. in significant

so Does the So XX I or answer what of we've seen question? course our be last the will months. with to continue that the over think that consistent mix

what If continue perfect. think to about the interest XX dividend could elaborate downside more that's coverage? Slide I potentially rates go down, then -- maintain Yes, scenario. some And concerned on you to pull and can please you investors the are about still levers

a Yes, the -- which modulate I one think, within obviously, band. absolutely. one is leverage I lever is leverage mean we

within second lever modulate again is think which a band. we I the mix, the

I think certainly there continue lever, between rate and correlation not we something is but a to see spread. an base inverse is

in base offset, a the spreads see, material expect to So the maybe rate offset we down, not one-to-one but continue to as goes environment. a

confidence continue So continues rate I the to ability confidence the in environment, irrespective dividend. our of high us of base to all give have we that earn think that to

Instructions]. [Operator

question Wells . Fargo Your Securities. Fin next from O'Shea comes with

expand I on philosophical a the couple of to Ryan's just not ones. one, want earlier but earlier questions, the

I which to care But [indiscernible] health market strategy. tend a accommodate your the to on into On looser often new this from roll-up quality. want deals, services these think entail to I observation, be tie higher companies. documentation days, focus

what in days? down how let's So road? the where LBO coming higher does a And And sort entail some is adjusted much can EBITDA or, give you're in the say, these stories? you context new for what on of these that -- EBITDA

Sure.

I two typically in questions. enough of typically So with of enterprise timing, well $XXX that we're in One, coming million. mass scale when critical values we're there's north guess, such dealing and terms

I think $XXX probably it's to average, million million. $XXX on

the there's think So we're very stage risk once for mass. early less doing We not necessarily roll-up. has critical the execution platform financing itself a

adjustments, EBITDA. we a a between is all of EBITDA terms know and GAAP look, In financing chasm that there -- oftentimes

the One we cash time of what on think is to it we're real-world and flow, is it do really and at job all our underwrite of big actually PE elements our side. because we big, the earnings good

sense, we We're decisions. away And to as strive and a agreement things real we headline an we're the view factor on. presented in a of those thrown have either is types things reasonable. things and earnings with there, makes not focus our sort what effectively what that's that seeing draws think to that's we the that and document or get number. infinite add-backs that's investment constrained as forward And of roll-up into on walk in so allow we we obviously interested are come where facilities about own have as we committee And comfortable the level We're our of up allows we unable around for interested and that lot with go number, we a to and to credit from definition, we do what for in continue. the in be investment

larger, in consistent you're the you sizes terms to the is Obviously, million. are amount consistent million, pretty grow of some originations, invest, then investment. sort And continuing looking at question new of pace are mid-sized, another at new the on tranche That $XXX much $XXX and a some of helpful.

$XXX quarter, we're lot the private much context you was your larger now Do million, seeing the pushing are facility. on $XXX an million, the $XXX What million tranches today and $XXX deals, European of the wise going looked opportunity that This gems syndicated normal been one, your $XXX of a attractive those million, these $XX side as -- to? as connect are markets million $XX more those million how facility -- you sticking so Like like million, $XX size? even viewing bite see compared you've was a size core you to forth, all in there towards that private. where million,

we're that enterprise industry good a it's is look, on the what first and and we that if quality. great in And business less value $X focus third. industry whether we $XXX intimately, And a principle I there's is Yes, question, first, know second great that said million but we've really always concerned billion. think or kind is company of a

are middle-middle it down sizes, to further market. through we're middle growth and there that lower beginning is as a always list but flexible upper the and we middle think we be know the market, can wanted that from been about defensive We've much as focusing around that. great we're cons pigeonhole businesses PE, It's So you ourselves intimately different of on. market, pros what never then

from its that reemphasize when we market want. direct business in to sponsors So know to seen, that. provide share We're scale that that solutions And yes, ability -- well. participate incredibly lending with the the going sponsors great we take increase as the continue that intersects we've of to syndicated sort and

Instructions]. [Operator

follow-up question KBW. Lynch a with is next Ryan from question Your

Just one question. follow-up had

BX. about have early liquid are or rated We of some, or -- little and bit particularly be the a of markets. credits on, that read heard to softening some maybe some some in around perceived some that bit of seems But little B a minus riskier credit

noncyclical, dural viewed quality. very the that businesses on highest of focus as strong are guys You some

it to better market? be structures So last softness. or bit little been guys seeing of has Or the terms I'm as of different competitive or in it little having your bit than increasing case? it's bit softness the wondering, what any or Are a of just market a is is a as seems you that over year.

on this BX. technical, our yes, CCC? we absolutely to a get the -- typically first it's is late you cycle, seeing about certainly worried for thing their et very What cetera, but year mostly it's and technical, competitive, think CLOs are buckets. BX mostly would but are do CCC be that How touch is to an I benefit, important Look, is you which market

business BX. deserve shying is BX CLO are view, classic effect. probably be liens definitely And knock-on so syndicated the from and to are some BX there in structures businesses there paper, And our are there don't that be and of to buyers first capital that deserve away

off benchmarks Our us market. occasionally, ultimately the for liquid the markets. bigger they're actionable things of actually more illiquid In market in

doing is over So that always turns not full, certain yes, CCC What's to because piling the areas means a There are things in desire is that a they're and CLOs get just their or a and seeing really you'd is worse. that a the buckets, numbers are it as of we're BX CLO And hasn't of there changed that But at anything It's economy away. effect means that? up us lengthens, from which market, one spread changed. avoid to to time, And add the a worse. John, CLO-driven. are is you're are into starting if the is in that the getting cycle industries fundamentally a manager step exposure to you're that general pretty knock-on having bit margin perspective. which helpful overall

the clear, would around at syndicated market, weakness only in you been market. thing syndicated the it's I I of the is add mean have pockets the there some press look of when

the article there Bloomberg observation the sector, fair in we would proactively of have areas retail, sectors, in health a below are typically say there's about I in are It's an to couple think market And I industrials. is loans those make there trading energy that the there of X.X% XX. avoided. restaurants, in loan that care loans in

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Instructions]. [Operator

time. at I to Mr. this Hamwee We are any our would session. . questions question-and-answer for showing like no to does back And this remarks. further conclude turn conference closing over the

Yes.

we're As to on always, look otherwise, to people obviously, for just time And to next But any our forward their speaking call. for attention. thank and want follow-up. here everybody

So Bye-bye very now. thanks much.

The today's conference concluded. now attending has Thank for you presentation.

may You disconnect. now