Release Date: March 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: What was the generator of the realized loss in the quarter? A: The realized loss was primarily due to former nonaccrual investments in Robertshaw and Palmer, as well as CLOs. STG Logistics, which was not on nonaccrual, also contributed. Most of these realized losses were previously reflected in our NAV, about $10 million of the $10.8 million. - Brandon Satoren, CFO
Q: How much of the repurchase is there to NAV in the quarter? A: The repurchase was accretive, contributing about 40 basis points in change in net per share quarter-over-quarter. - Brandon Satoren, CFO
Q: Given the lower base rates and spread compression, what are you thinking in terms of controlling costs and improving returns? A: A major driver of the Logan Portman merger is cost savings, such as reduced board and audit fees. As we grow, we spread our back office and financial functions over a larger base, leading to lower per share admin costs. Additionally, we're waiving some incentive fees as part of the merger, which should help with run rate NII. - Ted Goldthorpe, CEO
Q: Can you provide details on the current pipeline mix, new versus add-ons, and any better risk-adjusted return opportunities in particular industries? A: Post-election, our pipeline increased dramatically, but recent volatility has slowed some deal flow. We focus on sectors less impacted by tariffs, with minimal consumer and retail exposure. We prefer providing incremental opportunities to existing portfolio companies for better pricing and understanding. Most investments so far in Q1 have been to existing portfolio companies. - Ted Goldthorpe, CEO & Patrick Schafer, CIO
Q: How did the nonaccrual resolutions come to fruition, and do you have any line of sight into additional resolution opportunities for companies on nonaccrual today? A: We continuously work with portfolio companies to resolve issues. For example, Getronics Pomeroy involved a year-long process that culminated in Q4 with a merger and debt conversion. Robertshaw emerged from bankruptcy in Q4, resulting in reinstated debt with no NAV impact. - Patrick Schafer, CIO
Q: Can you elaborate on the dividend policy restructuring? A: We've been resistant to change, but the industry is moving towards a base plus supplemental model due to volatility in short-term rates and spreads. We conducted a benchmark analysis and set a base rate on the higher end of the comp set, with supplemental distributions guided between 50% and 75% of the overage. - Ted Goldthorpe, CEO & Patrick Schafer, CIO
Q: What is your view on net deployments given the political landscape changes? A: We focus on good deployment versus just deployment. While spreads have tightened, private new capital activity is muted. We had a strong pipeline entering the year, but some deals have slowed. We remain optimistic about deployment prospects despite recent challenges. - Ted Goldthorpe, CEO & Patrick Schafer, CIO
Q: What is your incremental capacity for net deployment given the decline in NAV? A: The net deployment of $19 million can be redeployed. Our NAV and credit facility availability are not directly linked, as some assets are outside the JPMorgan facility. We have flexibility in managing our borrowing base availability. - Patrick Schafer, CIO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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