NASDAQ:ICMB Investcorp Credit Management BDC Q2 2024 Earnings Report $2.82 -0.08 (-2.60%) As of 12:50 PM Eastern This is a fair market value price provided by Polygon.io. Learn more. Earnings History Investcorp Credit Management BDC EPS ResultsActual EPS$0.14Consensus EPS $0.12Beat/MissBeat by +$0.02One Year Ago EPS$0.16Investcorp Credit Management BDC Revenue ResultsActual Revenue$6.24 millionExpected Revenue$5.94 millionBeat/MissBeat by +$300.00 thousandYoY Revenue GrowthN/AInvestcorp Credit Management BDC Announcement DetailsQuarterQ2 2024Date2/23/2024TimeAfter Market ClosesConference Call DateFriday, February 23, 2024Conference Call Time9:00AM ETUpcoming EarningsInvestcorp Credit Management BDC's Q3 2025 earnings is scheduled for Tuesday, May 13, 2025, with a conference call scheduled on Wednesday, May 14, 2025 at 12:00 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Earnings HistoryCompany ProfilePowered by Investcorp Credit Management BDC Q2 2024 Earnings Call TranscriptProvided by QuartrFebruary 23, 2024 ShareLink copied to clipboard.There are 5 speakers on the call. Operator00:00:00Good morning and thank you for joining today's Investcorp Credit Management BDC Second Quarter Fiscal Year 2024 Earnings Call. It is now my pleasure to turn the floor over to Rocco DelGuercio, CFO. Speaker 100:00:15Thank you, operator. I would like to remind everyone that this call is being recorded and that this call is the property of the Investcorp Credit Management BDC. Any unauthorized broadcast of this call in any form is strictly prohibited. Audio replay of the call will be available by visiting our Investor Relations page on our website at icmbdc.com. I would also like to call your attention to the Safe Harbor disclosure in our press release regarding forward looking information and remind everyone that today's call may include forward looking statements and projections. Speaker 100:00:53Actual results may differ materially from these projections. We will not update forward looking statements unless required by law. To obtain copies of our latest SEC filings, please visit our Investor Relations page on our website. At this time, I would like to turn the call over to our Chairman and CEO, Michael Mallory. Thanks, Rocco, and thank you Speaker 200:01:17to everyone for joining us on our Q2 fiscal year 2024 earnings call. I'm joined by Suhail Shaikh, my Co CIO and President of Investcorp Credit Management BDC and Rocco DelGuercio, our CFO. Before I begin the call, I would first like to address a change in leadership and the news that was announced in our 8 ks on November 28, 2023. Rocco DelGuercio has decided to resign as the company's CFO, CCO, Treasurer and Secretary effective March 31, 2024. We'd like to personally thank Rocco for his partnership and all of his contributions over his 8 years with us. Speaker 200:02:00We announced our revised financial results on Wednesday for our fiscal Q2 ended December 31, 2023 to reflect approximately $388,000 or $0.02 per share of adjustments relating to the incorrect accrual of certain expenses reported in the company's consolidated financial statements contained in the press release issued by the company February 12, 2024. On today's call, I will provide an update regarding our performance in the quarter, the market commentary and our non accrual investments as well as our leverage, the dividend and our outlook. Sue Hill will walk through our investment activity during the December quarter and after quarter end. Rocco will then go through our financial results. And as always we will end with Q and A. Speaker 200:02:56During the quarter ended December 31, our net investment income was 1 point $6,000,000 or $0.11 per share. This was a decrease of approximately 3% from the previous quarter's net investment income. Additionally, net asset value per share declined approximately 6% to $5.48 per share from $5.83 per share at the end of the prior quarter. The decline in NAV was largely due to changes in valuations for 2 investments, Klein Hirsch and American Nuts, as well as the restructuring of ArborWorks, which closed on November 6. We remain highly focused on portfolio management and risk mitigation, especially for our borrowers that are experiencing periods of stress. Speaker 200:03:47We did not add any new positions to non accruals during this quarter and our positions on non accruals declined to 4.6% as a percentage of total value of portfolio compared to 10% as of the previous quarter. We continue to rotate I'm sorry, we continue to make progress rotating our portfolio and expect progress on the remaining non accruals in the next 12 months. Regarding 1888, the company has entered into a sale agreement, which is expected to close in the next week. We do not expect any changes to the value as a result of this sale. We slightly under earned our December quarterly dividend and the company is expected to earn its dividend through the next quarter ending March 31. Speaker 200:04:39We are pleased to announce that on February 8, 2024, the Board of Directors declared a distribution for the quarter ended March 31, 2024 of $0.12 per share as well as a supplemental distribution of $0.03 per share, both payable on April 5, 2024 to stockholders of record as of March 15. Our gross leverage this quarter was 1.7x and our net leverage 1.51x, both above our guidance of 1.25x to 1.5x. As of February 16, our gross and net leverage were approximately 1 point 6 2 and 1.6. With identified repayments, we expect this to reduce this leverage to approximately 1.5 during the quarter. I will turn briefly to address the trends in market. Speaker 200:05:36Deal volumes have picked up compared to the previous quarter in this environment. We are focused on reasonable leverage and solid structures. Since quarter end, our investment pipeline has picked up, primarily driven by add on financings, refinancings, Speaker 300:05:52and to Speaker 200:05:52a lesser extent, new LBOs. We are specifically focused on lending into companies that are sponsor backed at financial covenants, high free cash flow and recession resilient. As we look at our borrowers' operating performance, the credit quality of our portfolio continues to remain solid. Our weighted average loan to value for our portfolio of debt investments is approximately 50%, an increase from 41% last quarter. We continue rotating and diversifying the portfolio. Speaker 200:06:29Our portfolio diversification has improved since prior year. During the quarter, we had investments in 44 borrowers against 25 industries, which is up from 37 borrowers and 19 industries in the prior year's December quarter. Sue Hill will now walk through our investment activity during the December quarter and after quarter end. With that, I'll turn it over to Sue Hill. Speaker 300:06:58Thank you, Mike. We saw an increase in this quarter's activity purchases. We are also focused on managing our watch list names such as Klein Hirsch, ArborWorks and American Loves. As we rotate the portfolio, we're seeking to invest in credits that are generally larger in size. We have rotated approximately a third of the book within the past year. Speaker 300:07:27The weighted average EBITDA of the portfolio went from $55,600,000 at the end of December 31, 'twenty 2 to $59,900,000 at the end of this quarter. In the same period, the weighted average leverage of portfolio companies has increased slightly as we continue to rotate into larger, more stable credits. We continue to be highly selective in looking at new buyout financing. Sponsored middle market direct lending new money volume in the quarter ended December 31 was more than 20% higher than the quarter ended September 30, but still lower when compared to the quarter ended December 31, 2022. We saw a similar trend with primary deal flow picking up during the quarter compared to the previous quarter. Speaker 300:08:14Our pipeline continues to remain robust and we believe we can continue to execute on our mandate to invest in sponsor backed core middle market companies as Mike mentioned. During the quarter ended December 31, we invested in 5 new portfolio companies and 1 existing portfolio company. We also fully realized our position in 4 portfolio companies. During the quarter, fundings for commitments and new investments totaled approximately $19,100,000 at cost with a weighted average yield of approximately 13.9%. In the same period, repayments totaled approximately $29,200,000 from core investments with an IRR of approximately 13.8%. Speaker 300:08:59First, we supported the LP of Althea by DAI Partners. Althea is a contract manufacturer of premium drydette food food ingredients. We invested in the 1st lien term loan and our yield at cost is approximately 10.7%. We had been invested in LPL through our other funds and were able to re underwrite the risk for the new LPL. 2nd, we invested in the 1st lien term loan of VICTRA, also known as LSF9 Atlantis Holding LLC. Speaker 300:09:29VICTRA is the largest exclusive independent retailer for Verizon Wireless. We purchased Vectra in the secondary market at an attractive price. A yielded cost is approximately 13.7% and our team has had a long standing history with this name, which is what led us to re underwrite this risk. We also invested in Medic Fleet Solutions. This was a directly sourced opportunity from Brightstar Capital Partners and we supported the sponsor in rightsizing the capital structure. Speaker 300:10:01Amerit is one of the largest independent providers of commercial fleet maintenance. Our yield at cost is approximately 13.7%. We invested in the 1st lien term loan of North Star Group Services. This is a good example of an opportunistic secondary purchase of a credit that we have been tracking. Northstar is a portfolio company of JF Leaming. Speaker 300:10:23It is a large provider of diversified infrastructure and environmental services across the U. S. We were previously invested in this name and were able to be under active with us. Our yielded cost is approximately 10.7%. We made a preferred equity investment at Discovery Behavioral Health, a Webster Equity Partners portfolio company. Speaker 300:10:44Discovery is one of the largest providers of residential and outpatient treatment for behavioral health services across eating disorders, mental health, and substance abuse disorder. Our yielded cost is approximately 20.4%. Lastly, we made a follow on investment in the incremental equity of Visa Power listed in our schedule of investments as Envescor Transformer Aggregator LP. He says one of our equity co investment positions alongside Envest Corp's North American Private Equity Group. On the realizations that happened during this quarter, first, we fully realized the position in the 1st lien terminal of Advanced Solutions International, also known as ASI. Speaker 300:11:29We originally invested in the 1st lien term loan and preferred equity in September of 2020 and remain invested in the preferred equity. Our fully realized IRR on the term loan was approximately 10.8%. We also fully realized our position in the 1st lien term loan of Book and Portman, which was repaid as part of an LTO by Platinum Equity. Our fully realized IRR was approximately 8.7%. We also fully realized our position in the 1st lien term loan of NWN, which we have been invested in since May of 2021. Speaker 300:12:05The company was sold during the quarter and our fully realized IRR was approximately 22.2%. Lastly, our position in the 1st lien term loan of Archer Systems was refinanced. Our fully realized IRR was approximately 13.2%. After quarter end, we fully realized our 1st lien term loan position in Evergreen North America Acquisitions LLC. Realized IRR was 13.3%. Speaker 300:12:33As of December 31, our largest industry concentrations were trading company and distributors at 13.6%, commercial services and supply at 9.6%, professional services at 8.8%, containers and packaging at 7% followed by IT services at 4.3% and broadline retail at 4.3%. Our portfolio companies are in 25 GICS industries as of quarterend, including our equity and warrant position, which is an increase of 1 industry from the previous quarter. I would now like to turn the call over to Rocco to discuss our financial results. Speaker 100:13:14Thanks, Suhail. For the quarter ended December 31, 2023, our net investment income was $1,580,000 or $0.11 per share, a decrease of approximately 3% from the previous quarter's net investment income of $1,630,000 or $0.11 per share. The fair value of our portfolio was 207,400,000 compared to 223,400,000 on September 30. Our net assets were 78,800,000 a decrease of 5,000,000 from the prior quarter. Our portfolio's net decrease in net assets from operations this quarter was approximately $2,900,000 The weighted average yield of our debt portfolio was 11.5% compared to 11% for the quarter ended September 30. Speaker 100:14:08As of December 31, our portfolio consisted of 44 borrowers, approximately 85% of our investments were 1st lien, the remaining 15% is invested in equity, 0.4% in fixed rate investments. The average floor on our debt investments was 1%. Our average portfolio company position was approximately $4,700,000 and our largest portfolio company investment is Bioplan at 14.5 $1,000,000 We had a gross leverage of 1.7 and a net leverage of 1.51 as of December 31 compared to 1.58 gross and 1.41 and 1.41 net respectively for the previous quarter. With respect to our liquidity, as of December 31, we had approximately $14,700,000 in cash of which $11,500,000 was restricted cash with $30,000,000 capacity under our credit under our revolving credit facility with Capital One. Additional information regarding the composition of our portfolio is included in our Form 10 Q, which was filed on Tuesday. Speaker 100:15:31With that said, I would like to turn the call back over to Mike. Speaker 200:15:34Thank you, Rocco. As we look towards the second half of our fiscal year, we will continue to work on rotating and diversifying the portfolio. We are optimistic about our pipeline, our ability to deploy our capital in new high quality investments. Our credit selection remains disciplined and we remain focused on maintaining the quality of the book. Our investment strategy has not wavered as we remain increasingly focused on capital preservation and maintaining a stable dividend. Speaker 200:16:06That concludes our prepared remarks. Operator, please open the line for Q and A. Operator00:16:13Ladies and gentlemen, at this time, we will conduct the question and answer And our first question comes from Mr. Christopher Nolan with Ladenburg Thalmann. Go ahead please. Speaker 400:16:47Hey guys. And Rocco, congratulations. Good working with you and I hope future endeavors are good. Speaker 300:16:55Thank Speaker 100:16:55you. Thank you. Speaker 400:16:57Suhail, in the comments you made in terms of the was it the size of portfolio companies that they're going to increase going forward or is it the size of the investments the BDC will make or is it Speaker 300:17:11both? Great question, Chris. It's more the size of the portfolio company. I think the size of the investment, as Mike pointed out and as I may have alluded to as well, And so we're trying to diversify the portfolio as much as we can. Okay. Speaker 300:17:28And then, and so we're trying to diversify the portfolio as much as we can. Speaker 400:17:34Okay. And then for these the portfolio companies, where do you see average EBITDA coverage? Speaker 300:17:42Interest coverage? Speaker 400:17:43Yes, please. Speaker 300:17:44Yes, interest coverage, we typically when we are underwriting a new deal, we're targeting interest coverage of at least 2 times, Christopher. And that's it's a sort of rule of thumb, but that's a we look at cash flow and the ability for the company to service the debt. I mean, we've laser focused on that obviously in this market. So isn't it it's 2 times, it depends on the industry, it depends on the business, and in most cases, it's north of 2 times. Okay. Speaker 300:18:192x. Operator00:18:30I don't see any other questions. Speaker 200:18:34Thank you, operator, and thank you, everyone, for your time today. Operator00:18:40And this concludes today's conference call. Thank you, everyone, for attending.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallInvestcorp Credit Management BDC Q2 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K) Investcorp Credit Management BDC Earnings HeadlinesInvestcorp Credit Management BDC, Inc. Common Stock (ICMB)April 30, 2025 | nasdaq.comInvestcorp Credit Management appoints new COOMarch 27, 2025 | investing.comThe Trump Dump is starting; Get out of stocks now?The first 365 days of the Trump presidency… Will be the best time to get rich in American history.May 5, 2025 | Paradigm Press (Ad)Investcorp Credit Management BDC, Inc. (ICMB) Q2 2025 Earnings Call TranscriptMarch 26, 2025 | seekingalpha.comInvestcorp Credit Management BDC, Inc. Announces Financial Results for the Fiscal Period Ended December 31, 2024, and Quarterly DistributionMarch 25, 2025 | investing.comInvestcorp Credit Management BDC, Inc. Schedules Earnings Release for Second Quarter and Fiscal Period Ended December 31, 2024March 21, 2025 | investing.comSee More Investcorp Credit Management BDC Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Investcorp Credit Management BDC? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Investcorp Credit Management BDC and other key companies, straight to your email. Email Address About Investcorp Credit Management BDCInvestcorp Credit Management BDC (NASDAQ:ICMB) is a business development company specializing in loan, mezzanine, middle market, growth capital, acquisitions, market/product expansion, organic growth, refinancings and recapitalization investments. It also selectively invests in mezzanine loans/structured equity and in the equity of portfolio companies through warrants and other instruments, in most cases taking such upside participation interests as part of a broader investment relationship. The fund typically invests in United States and Europe. Within United States, the fund seeks to invest in Midatlantic, Midwest, Northeast, Southeast, and West Coast regions. The fund primarily invests in cable and satellites; consumer services; healthcare equipment and services; industrials; information technology; telecommunication services; and utilities sectors. The fund seeks to invest between $5 million to $25 million in companies that have annual revenues of at least $50 million with EBITDA at least $15 million.View Investcorp Credit Management BDC ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Is Reddit Stock a Buy, Sell, or Hold After Earnings Release?Warning or Opportunity After Super Micro Computer's EarningsAmazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousRocket Lab Braces for Q1 Earnings Amid Soaring ExpectationsMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernVisa Q2 Earnings Top Forecasts, Adds $30B Buyback Plan Upcoming Earnings American Electric Power (5/6/2025)Advanced Micro Devices (5/6/2025)Marriott International (5/6/2025)Constellation Energy (5/6/2025)Arista Networks (5/6/2025)Brookfield Asset Management (5/6/2025)Duke Energy (5/6/2025)Energy Transfer (5/6/2025)Mplx (5/6/2025)Ferrari (5/6/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 5 speakers on the call. Operator00:00:00Good morning and thank you for joining today's Investcorp Credit Management BDC Second Quarter Fiscal Year 2024 Earnings Call. It is now my pleasure to turn the floor over to Rocco DelGuercio, CFO. Speaker 100:00:15Thank you, operator. I would like to remind everyone that this call is being recorded and that this call is the property of the Investcorp Credit Management BDC. Any unauthorized broadcast of this call in any form is strictly prohibited. Audio replay of the call will be available by visiting our Investor Relations page on our website at icmbdc.com. I would also like to call your attention to the Safe Harbor disclosure in our press release regarding forward looking information and remind everyone that today's call may include forward looking statements and projections. Speaker 100:00:53Actual results may differ materially from these projections. We will not update forward looking statements unless required by law. To obtain copies of our latest SEC filings, please visit our Investor Relations page on our website. At this time, I would like to turn the call over to our Chairman and CEO, Michael Mallory. Thanks, Rocco, and thank you Speaker 200:01:17to everyone for joining us on our Q2 fiscal year 2024 earnings call. I'm joined by Suhail Shaikh, my Co CIO and President of Investcorp Credit Management BDC and Rocco DelGuercio, our CFO. Before I begin the call, I would first like to address a change in leadership and the news that was announced in our 8 ks on November 28, 2023. Rocco DelGuercio has decided to resign as the company's CFO, CCO, Treasurer and Secretary effective March 31, 2024. We'd like to personally thank Rocco for his partnership and all of his contributions over his 8 years with us. Speaker 200:02:00We announced our revised financial results on Wednesday for our fiscal Q2 ended December 31, 2023 to reflect approximately $388,000 or $0.02 per share of adjustments relating to the incorrect accrual of certain expenses reported in the company's consolidated financial statements contained in the press release issued by the company February 12, 2024. On today's call, I will provide an update regarding our performance in the quarter, the market commentary and our non accrual investments as well as our leverage, the dividend and our outlook. Sue Hill will walk through our investment activity during the December quarter and after quarter end. Rocco will then go through our financial results. And as always we will end with Q and A. Speaker 200:02:56During the quarter ended December 31, our net investment income was 1 point $6,000,000 or $0.11 per share. This was a decrease of approximately 3% from the previous quarter's net investment income. Additionally, net asset value per share declined approximately 6% to $5.48 per share from $5.83 per share at the end of the prior quarter. The decline in NAV was largely due to changes in valuations for 2 investments, Klein Hirsch and American Nuts, as well as the restructuring of ArborWorks, which closed on November 6. We remain highly focused on portfolio management and risk mitigation, especially for our borrowers that are experiencing periods of stress. Speaker 200:03:47We did not add any new positions to non accruals during this quarter and our positions on non accruals declined to 4.6% as a percentage of total value of portfolio compared to 10% as of the previous quarter. We continue to rotate I'm sorry, we continue to make progress rotating our portfolio and expect progress on the remaining non accruals in the next 12 months. Regarding 1888, the company has entered into a sale agreement, which is expected to close in the next week. We do not expect any changes to the value as a result of this sale. We slightly under earned our December quarterly dividend and the company is expected to earn its dividend through the next quarter ending March 31. Speaker 200:04:39We are pleased to announce that on February 8, 2024, the Board of Directors declared a distribution for the quarter ended March 31, 2024 of $0.12 per share as well as a supplemental distribution of $0.03 per share, both payable on April 5, 2024 to stockholders of record as of March 15. Our gross leverage this quarter was 1.7x and our net leverage 1.51x, both above our guidance of 1.25x to 1.5x. As of February 16, our gross and net leverage were approximately 1 point 6 2 and 1.6. With identified repayments, we expect this to reduce this leverage to approximately 1.5 during the quarter. I will turn briefly to address the trends in market. Speaker 200:05:36Deal volumes have picked up compared to the previous quarter in this environment. We are focused on reasonable leverage and solid structures. Since quarter end, our investment pipeline has picked up, primarily driven by add on financings, refinancings, Speaker 300:05:52and to Speaker 200:05:52a lesser extent, new LBOs. We are specifically focused on lending into companies that are sponsor backed at financial covenants, high free cash flow and recession resilient. As we look at our borrowers' operating performance, the credit quality of our portfolio continues to remain solid. Our weighted average loan to value for our portfolio of debt investments is approximately 50%, an increase from 41% last quarter. We continue rotating and diversifying the portfolio. Speaker 200:06:29Our portfolio diversification has improved since prior year. During the quarter, we had investments in 44 borrowers against 25 industries, which is up from 37 borrowers and 19 industries in the prior year's December quarter. Sue Hill will now walk through our investment activity during the December quarter and after quarter end. With that, I'll turn it over to Sue Hill. Speaker 300:06:58Thank you, Mike. We saw an increase in this quarter's activity purchases. We are also focused on managing our watch list names such as Klein Hirsch, ArborWorks and American Loves. As we rotate the portfolio, we're seeking to invest in credits that are generally larger in size. We have rotated approximately a third of the book within the past year. Speaker 300:07:27The weighted average EBITDA of the portfolio went from $55,600,000 at the end of December 31, 'twenty 2 to $59,900,000 at the end of this quarter. In the same period, the weighted average leverage of portfolio companies has increased slightly as we continue to rotate into larger, more stable credits. We continue to be highly selective in looking at new buyout financing. Sponsored middle market direct lending new money volume in the quarter ended December 31 was more than 20% higher than the quarter ended September 30, but still lower when compared to the quarter ended December 31, 2022. We saw a similar trend with primary deal flow picking up during the quarter compared to the previous quarter. Speaker 300:08:14Our pipeline continues to remain robust and we believe we can continue to execute on our mandate to invest in sponsor backed core middle market companies as Mike mentioned. During the quarter ended December 31, we invested in 5 new portfolio companies and 1 existing portfolio company. We also fully realized our position in 4 portfolio companies. During the quarter, fundings for commitments and new investments totaled approximately $19,100,000 at cost with a weighted average yield of approximately 13.9%. In the same period, repayments totaled approximately $29,200,000 from core investments with an IRR of approximately 13.8%. Speaker 300:08:59First, we supported the LP of Althea by DAI Partners. Althea is a contract manufacturer of premium drydette food food ingredients. We invested in the 1st lien term loan and our yield at cost is approximately 10.7%. We had been invested in LPL through our other funds and were able to re underwrite the risk for the new LPL. 2nd, we invested in the 1st lien term loan of VICTRA, also known as LSF9 Atlantis Holding LLC. Speaker 300:09:29VICTRA is the largest exclusive independent retailer for Verizon Wireless. We purchased Vectra in the secondary market at an attractive price. A yielded cost is approximately 13.7% and our team has had a long standing history with this name, which is what led us to re underwrite this risk. We also invested in Medic Fleet Solutions. This was a directly sourced opportunity from Brightstar Capital Partners and we supported the sponsor in rightsizing the capital structure. Speaker 300:10:01Amerit is one of the largest independent providers of commercial fleet maintenance. Our yield at cost is approximately 13.7%. We invested in the 1st lien term loan of North Star Group Services. This is a good example of an opportunistic secondary purchase of a credit that we have been tracking. Northstar is a portfolio company of JF Leaming. Speaker 300:10:23It is a large provider of diversified infrastructure and environmental services across the U. S. We were previously invested in this name and were able to be under active with us. Our yielded cost is approximately 10.7%. We made a preferred equity investment at Discovery Behavioral Health, a Webster Equity Partners portfolio company. Speaker 300:10:44Discovery is one of the largest providers of residential and outpatient treatment for behavioral health services across eating disorders, mental health, and substance abuse disorder. Our yielded cost is approximately 20.4%. Lastly, we made a follow on investment in the incremental equity of Visa Power listed in our schedule of investments as Envescor Transformer Aggregator LP. He says one of our equity co investment positions alongside Envest Corp's North American Private Equity Group. On the realizations that happened during this quarter, first, we fully realized the position in the 1st lien terminal of Advanced Solutions International, also known as ASI. Speaker 300:11:29We originally invested in the 1st lien term loan and preferred equity in September of 2020 and remain invested in the preferred equity. Our fully realized IRR on the term loan was approximately 10.8%. We also fully realized our position in the 1st lien term loan of Book and Portman, which was repaid as part of an LTO by Platinum Equity. Our fully realized IRR was approximately 8.7%. We also fully realized our position in the 1st lien term loan of NWN, which we have been invested in since May of 2021. Speaker 300:12:05The company was sold during the quarter and our fully realized IRR was approximately 22.2%. Lastly, our position in the 1st lien term loan of Archer Systems was refinanced. Our fully realized IRR was approximately 13.2%. After quarter end, we fully realized our 1st lien term loan position in Evergreen North America Acquisitions LLC. Realized IRR was 13.3%. Speaker 300:12:33As of December 31, our largest industry concentrations were trading company and distributors at 13.6%, commercial services and supply at 9.6%, professional services at 8.8%, containers and packaging at 7% followed by IT services at 4.3% and broadline retail at 4.3%. Our portfolio companies are in 25 GICS industries as of quarterend, including our equity and warrant position, which is an increase of 1 industry from the previous quarter. I would now like to turn the call over to Rocco to discuss our financial results. Speaker 100:13:14Thanks, Suhail. For the quarter ended December 31, 2023, our net investment income was $1,580,000 or $0.11 per share, a decrease of approximately 3% from the previous quarter's net investment income of $1,630,000 or $0.11 per share. The fair value of our portfolio was 207,400,000 compared to 223,400,000 on September 30. Our net assets were 78,800,000 a decrease of 5,000,000 from the prior quarter. Our portfolio's net decrease in net assets from operations this quarter was approximately $2,900,000 The weighted average yield of our debt portfolio was 11.5% compared to 11% for the quarter ended September 30. Speaker 100:14:08As of December 31, our portfolio consisted of 44 borrowers, approximately 85% of our investments were 1st lien, the remaining 15% is invested in equity, 0.4% in fixed rate investments. The average floor on our debt investments was 1%. Our average portfolio company position was approximately $4,700,000 and our largest portfolio company investment is Bioplan at 14.5 $1,000,000 We had a gross leverage of 1.7 and a net leverage of 1.51 as of December 31 compared to 1.58 gross and 1.41 and 1.41 net respectively for the previous quarter. With respect to our liquidity, as of December 31, we had approximately $14,700,000 in cash of which $11,500,000 was restricted cash with $30,000,000 capacity under our credit under our revolving credit facility with Capital One. Additional information regarding the composition of our portfolio is included in our Form 10 Q, which was filed on Tuesday. Speaker 100:15:31With that said, I would like to turn the call back over to Mike. Speaker 200:15:34Thank you, Rocco. As we look towards the second half of our fiscal year, we will continue to work on rotating and diversifying the portfolio. We are optimistic about our pipeline, our ability to deploy our capital in new high quality investments. Our credit selection remains disciplined and we remain focused on maintaining the quality of the book. Our investment strategy has not wavered as we remain increasingly focused on capital preservation and maintaining a stable dividend. Speaker 200:16:06That concludes our prepared remarks. Operator, please open the line for Q and A. Operator00:16:13Ladies and gentlemen, at this time, we will conduct the question and answer And our first question comes from Mr. Christopher Nolan with Ladenburg Thalmann. Go ahead please. Speaker 400:16:47Hey guys. And Rocco, congratulations. Good working with you and I hope future endeavors are good. Speaker 300:16:55Thank Speaker 100:16:55you. Thank you. Speaker 400:16:57Suhail, in the comments you made in terms of the was it the size of portfolio companies that they're going to increase going forward or is it the size of the investments the BDC will make or is it Speaker 300:17:11both? Great question, Chris. It's more the size of the portfolio company. I think the size of the investment, as Mike pointed out and as I may have alluded to as well, And so we're trying to diversify the portfolio as much as we can. Okay. Speaker 300:17:28And then, and so we're trying to diversify the portfolio as much as we can. Speaker 400:17:34Okay. And then for these the portfolio companies, where do you see average EBITDA coverage? Speaker 300:17:42Interest coverage? Speaker 400:17:43Yes, please. Speaker 300:17:44Yes, interest coverage, we typically when we are underwriting a new deal, we're targeting interest coverage of at least 2 times, Christopher. And that's it's a sort of rule of thumb, but that's a we look at cash flow and the ability for the company to service the debt. I mean, we've laser focused on that obviously in this market. So isn't it it's 2 times, it depends on the industry, it depends on the business, and in most cases, it's north of 2 times. Okay. Speaker 300:18:192x. Operator00:18:30I don't see any other questions. Speaker 200:18:34Thank you, operator, and thank you, everyone, for your time today. Operator00:18:40And this concludes today's conference call. Thank you, everyone, for attending.Read morePowered by