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SAR Saratoga Investment

Participants
Chris Oberbeck Chairman, Chief Executive Officer
Michael Grisius President, Chief Investment Officer
Henri Steenkamp Chief Financial Officer, Chief Compliance Officer
Mickey Schleien Ladenburg Thalmann
Casey Alexander Compass Point
Tim Hayes B. Riley
Call transcript
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Operator

Good morning ladies and gentlemen. Thank you for standing by. Welcome to Saratoga Investment Corp’s fiscal third quarter 2019 financial results conference call. Please note that today’s call is being recorded.

During today’s presentation, all parties will be in a listen-only mode.

we the remarks, for prepared management’s will line open questions. Following Mr. to time, Chief call Officer, I this turn Financial would Compliance Corp’s At Investment like the Saratoga over and to Henri Steenkamp. Sir, ahead. please go

Henri Steenkamp

from required like these to cause quarter the our forward-looking do Today most actual results refer third conference so a statements Thank you. materially projections. earnings our referencing for I welcome projections. to update to important ask Corp’s factors presentation XXXX call by Saratoga conference Today’s with to We recent be statements SEC that everyone We call. forward-looking differ not our could and call. and forward-looking to law. filings to fiscal undertake will during statements Investment includes we unless to would you do

Officer, press XXXX IR our our will You Events to link and X:XX introductory turn be refer Presentations XX. will section the can find Please website. this conference like is our third for page also to A in distributed and earnings call fiscal A presentation over the would press relations through earnings be release call last investor making night. release to January a from pm details. Executive to who today Chief I available Christian of remarks. replay our our of Oberbeck, in shareholder quarter now Chairman the few

Chris Oberbeck

Thank everyone. you, and Henri, welcome

to implemented we quarter actions improve strengthen from benefited last we quarter, our and This capitalization.

X, quarter X.X%, briefly our mean unlevered high we debt with total loan million. beating growth of To our a strengthen XX.X% recap with highest gross unlevered investment with financial continuing investments, BDC in earnings XX.X% year, credit resulting industry and level a IRR newly of standards. maintaining return capital investments while on unrealized of quality and past to XX.X% foundation last fully having quarter continued rating, new XX.X% originating realizations the our basis gross maintain assets on raised portfolio was equity IRR our XX-month this maintaining $XXX high Slide our the Our of equity by a a of deployed first on generating of and trailing in to on and credit consistent of total on

over our longer management Second, years. under reflects as we $XXX XX% from of QX XXX% last grew five up million an from term $XXX assets as current million, our $XXX of increase past to perspective, AUM time million From increase the the and a million year. $XXX same XX% of from

origination company, May. success continues quarter to the $XX platform demonstrate This new eight including our of platforms healthy since million to bringing new in investments one portfolio the growing originations, total with of a

the a the quarterly increase for of the of fiscal dividend the paid share continued per per quarter increase third strengthening XXXX financial $X.XX dividend foundation us to dividend Third, consecutive has We per January $X.XX past our $X.XX This quarterly over was quarter. of X, enabled XXXX. quarter’s of an again our share. XXth for on share

our by most comfortably which been for currently dividend our net dividend adjusted over-earning adjusted share, same at of our XX%, and per looking us income still QX BDCs. are exceeded periods, All NII payments distinguishes we by have from the when investment our other

existing eight and January year. CLO, past We final we to maturity dividends XXXX. January XXXX over extending are Fourth, only the period increased the one the having reinvestment of to BDCs our refinanced

provide about this $XXX from the addition, further million Henri In was of will components CLO million. investment. $XXX the assets details in upsized to

Finally, our access liquidity of base and strong. to remains

and in opportunities pricing to meet We to powder a environment. dry continue credit maintain potential future changing

debt credit Ninety-six allows our rate only liquidity assets without under is current Madison new QX management structurally by external fixed of end available of financing. outstanding rate, existing important with $XX floating any environment, in to this credit facility. X% rising of our quarter us X% million Our grow very our percent

plan. million issued $X.X of DRIP were QX, and issued equity During was XX,XXX under our our under ATM shares

reminder, and As long-term in we million in July and almost August. offerings equity raised debt $XX a

our quarter, XX, This registered performance as XXXX key XX, ended the we quarters indicators to and strong performance with August November compared XXXX.

NII adjusted quarter. X% last $X.X quarter, is Our million and million this last versus $X.X up up $X.XX year million XX% versus

last from quarter. Our last adjusted this up X% from quarter, is down $X.XX share but $X.XX XX% NII per year $X.XX

slightly equity quarter. later. our down Our per XX.X% is on with provide year year, last $XX.XX QX $XX.XX latest share last NAV XX.X%, consistent will $XX.XX, last Henri X.X% from XX months and detail from is but return up more

we’ve mentioned base asset the remain past, quality. high our overall size the to in we while of advancing committed As often its maintaining further

As to portfolio. of Henri turn you of over the Slide management back financial on our results composition X, can including to call our high. now of well have as XXXX, months credits the steadily to quality our under review since XXXX, nine and would performance these With as that, risen see I like assets our the fiscal first and remain

Henri Steenkamp

last XXX The Slide year last and quarterly XX $X.XX quarter. XXXX. accrual AUM Adjusted as reflects yield points points The to share fee metrics, net X.X% and calculation, as key last interest QX. see can higher tax primarily the deferred level $X.XX higher you gains the for metrics up quarter. all resultant ended increase for $X.XX and positive down from our impact was share Across million XX.X%. credit well up $X.XX, adjusted quality. basis When related X adjusting last up performance the from income Adjusted year’s due while per of from to repeating, from incentive year $X.XX quarter last highlights strong X.X% was $X.XX last from of to XX% NII impact NII from compared increased these Thank primarily you, up with equity Chris. XX.X% in per investments decrease $X.XX share the year. incentive and is raise capital shares. last last was last maintaining quarter’s of was the from increased XX% year our full $X.X fee unrealized as up basis per yield quarter million QX’s November not assets second of million benefit down from outstanding NII This sequential but XX,

million $X.X upsizing on and For depreciation resulting refinancing end; a unrealized early the loss adjustment on a this CLO, share. on HMN a Saratoga of third closed assets on quarter, necessary Health on positions to unrealized two quarter the unrealized in or of that has been and $X.X reduction recognized loss warrant for realized $X.XX reflect tax investments unrealized experienced a The of operations we investment. debt, This share, million expense redeemed being of fees our $X.X of our reflecting million the to net The investments Saratoga second, value gain $X.X per million a end million full gains. deferred depreciation previously and $X.X in block items: $X.X of actually partial that million overall total average reflecting $X.X was includes investment, and million in increase with Media unrealized unrealized in net company’s the of on post-quarter per depreciation depreciation subsidiaries. mostly the weighted net a was million gains transaction net December equity total realized $X.X in $X.XX $X.X discrete net Network or subsequent depreciation from comprised of Investment’s million first, unrealized resulting

million. of for Excluding $X.X is total the these investments, value portfolio remaining two unrealized QX fair the appreciation changes across

both focus the continue We equity an to for on and as also realized gains. unrealized indicator important which return performance includes on us,

the million increase total primarily fees, on $X.X decreased Quickly in total quarter XX.X% last debt in expenses increased excluding well management touching and the average return on incentive X.X% average expenses, as XX XX.X% expenses management equity interest last the $X.X of above to Expenses in to and X.X%. Our period a but year, from BDC same to expenses, similar the for from percentage of reflecting industry earlier assets was financing this X.X%. the cap the base months, fees last administrator year. million year’s

upward have the past balance sheet that nine the slide income end statement our the Slide also maintained. our appendix margin the since Slide Saratoga over shows took note of at XX, starting in the KPI interest We metrics for highlighting rate particular from we and and net how the is Of management than BDC. tripled quarters the again added trends more of XX presentation, have run has

as quarter million as XX $XXX.X end, of of $XX.XX was $XX.XX year. of million last NAV of same from NAV ago. quarter up per from increase year-end period share months $XX.X million of from the Slide on $XX.X Moving and NAV at was quarter end, X, $XXX.X of at $XXX.X a increase to million a year-end NAV million $XX.XX this as as and

by NII nine tax and net $XX.X For million block months declared. million net of gains November XXXX, unrealized earned, million unrealized ended $X.X of of million dividends net and $X.X offset of of on expense $X.X realized depreciation our gains on $XX.X in the investments, subsidiaries, deferred XX, million were

year. the million during ATM $X.X distributions DRIP of addition, company’s were In shares the through also plan. were offering stock dividend equity company’s through made XX,XXX sold the

tax The this Starting dilution asset incentive to reflecting excluding over DRIP our Slide on in also quarter in and of steadily consistent the QX’s share realized changes a couple and XX, to has history $X.XX of value the increased base gains. continue a due $X.XX share offering per net seen years, deferred and $X.XX fees. were from per as Our quarter. of per increase NII increased shown benefit by we past the share a changes X, decreased in to you in of simply All are net quarterly Slide decrease margin, basis. NII On the net offset $X.XX on NAV the asset equity at the top, shares a benefit significant last reconciliation a sequential will share per issuance. interest from from our see CLO, major and increase changes $X.XX

The slide, QX is NII the record the realized QX a facility. cash as on loss share by by $X.XX reconciles net quarter. on and X the to million. undrawn available declared this us decrease date, our of to Madison This investments. outlines end, unrealized Slide powder between per spread QX Moving and dry available with half and $X.XX for is totaled which the the our of generated for dividend the offset lower in $X.XX $X.XX NAV $XX.X quarter a

overall substantially our equity in with all remain our This all years-plus. into all five our invested the especially actually debt QX’s the bond issuance. that quarter, account term long fact balance position, raise is taking the capital of liquidity raised and baby of and new we nature, nature We sheet conservative pleased during

primarily our all our rate--apologies, part, being with rising environment interest rate. most the except our we fixed fixed also borrowings, rate facility, For have this in cost Madison floating

on sheet the have through investments X, balance short-term across our a big rates, LIBOR and we we XX% floors, of floating Slide which although our means rising Moving them rates. of asset of beneficiary they the to side of have remain are all

as of and Assuming hypothetical rates all a earnings that incremental to the income a $X.X quarter end increase to existing per our would or approximately changes. no compared interest to XXX by points remain were quarter other terms, income. our investments interest current taken actions were of our as existing fiscal basis million constant any to increase is in X% without rate interest alter full for our quarter This

relatively the years, core CLO average I remained would assets, XX portfolio. XX, investments weighted portfolio fund, million on the that assets. shows On our yield the and the current Slide in in with first X CLO consistent BDC just of as X levels yield despite these as see companies high and composition repayments the move review replacement of loans, continued to total how our of well and XX several XX% with and composition range Slide in can yield investment for of above through our has XX.X% you our or one our invested remained excluding yield Slides lien. our assets the syndicated and relatively and past, on $XXX.X past Now to consistent like and

refinancing of to compared impact closed is increase due That decreased Core QX our yields LIBOR to This XX.X% this CLO the unchanged XX.X%. BDC at weighted The quarter, XX.X%. increased rates quarter. factored slightly our of to the in the increase remained as as yield yield in December. overall asset average we that in to primarily

nine and increase third fiscal amortizations XX, made in million $XX.X of the company Turning one to resulting investments net of and new million. during quarter had million repayment Slide $XX.X in $XX.X one and investments we in portfolio follow-ons, a in

XX amongst distinct healthcare, services, terms in diversified and spread and business well is spread also industry, as services Our a with business, investments by focus industries still numerous end type remain on of as and highly markets. education over geography large

the gas have investment large interests, portfolio, of the industry. exposure continue remain Of QX strategy. part originations following quarter, oil and to direct of no equity consistent X.X% an total to important We consists our investment our which and with overall this

President overview my Chief years an of fiscal early factoring the now credit our That continues ROE. equity six these healthy combined long-term $XX.X the grow million is available over helped NAV, realized the of or our past to review. When in Officer, the indicator sale and portfolio our will redemption us. turn QX, including gains market. had For and reflected investments. other NOLs, has we Michael I for This of a in investment for quality, from sale interests our good consistent Investment concludes or equity call and raises of Grisius, of our are similar to net financial portfolio be performance to a

Michael Grisius

of take continues describe you, I’ll supply-demand competitive price. last investment The to it a them, since Henri. and environment. Leverage be is Thank performance I’ll portfolio to quality for comment strategy. borrower-friendly continues a still and market as to we current drive we credits has and then imbalance remained the our conditions minutes couple aggressive market met, on see

of but indicate LIBOR no yields we market and large of beyond evidence increase would again ebbs can middle particularly in continue It in have the from increase by experienced the that newswire quarter. end the Although have market. to absolute in massive immediately volatility leveraged recent the in the leveraged at the suit. lower follow was observation be our observed results spread seen to flows capital that like We expansion valuations some address LIBOR, the the metrics just of markets, daily benefit available this the increasing also loan we our affected and is in loan capital market, that

value and on leverage As are to a occur and capital to by weekly leverage driven that behave is To portfolio supply leverage spreads to and markets. manner. changes daily spreads The market our determiner market basis. the and tends market, valuation points clear, even we result, can overnight capital, are in demand spreads portfolio, Loan of and the subject in certainly this larger factors incorporated our rather, of levels performance volatility value. same tend and the quite into credit based the not to generally loan metrics of middle our market be change our credit loan be process broader of where a a term greater sizeable not lower do invest longer points thus they does do on in be markets; portfolio whims impact the but and the less exposed

fair impact our with portfolio LIBOR company most changes value estimated For X.X% performance. basis value, was market increased example, the our from past in this of where valuations than less quarter approximately fair points, to XX coming

our market. majority is much even the constructed market, a As the have in vast and past, mentioned loan portfolio than fashion of more the in hands-on larger the leveraged BDC we

with ability as portfolio to for and differentiated our over they businesses work with believe follow-on this returns company structured of contributed where many In long business the our be run. with the We We a our protections. returns our strength directly successful so model. to finding management capital of better addition, the shareholders the to companies and each invest are of capital ownership capital has more working We we of and assessment of grow. can approach underwrite put to to our with investments produce thorough long-term its support make investments our objective believe our accretive

over on while investments we long term you criteria. closed modest investment and Looking we achieve continue nearly companies year despite strength eight of platform our difficult Slide over leverage however, cash originations risk calendar relatively can being both debt at last the platform. past industry increased leverage see a most record XX, to With and deals with business five remain our rather past we these and profile; With risk-return of will our end the of generate the calendar quarters, results over where not new in our origination follow-ons, an X.XX times, slide four follow-ons, illustrates three AUM executed thereby term, XX quarter, of that multiples past times. long enterprise steadily for year with grow we including last deploying pace our last nature, that from total through portfolio confident dollar maintaining new couple confident established can significantly leverage, have exceptionally our the attractive market ahead over the focus dynamics we of of to but We the four profiles value while the to of at QX. also models growing This applying pipeline. that portfolio also strong one sustainably size in of originations, the consistent are on continue This investing our than and that year’s and exceed the with consistent illustrate only considering businesses remains just is our ability investment. investments credits sourcing growth new level XX available of four health quarters’ in the

new platform for Moving deals calendar period the three of of XX, to could formed as and often development during our that serve focus follow-ons. Thirty-eight led second new relationships have continued lead most are future to and recently in XXXX. issued percent on of new deals, with sheets term to and that has companies sources deals, this Slide relationships strategic sources have of half our this we new notably business significant on become

number the ownership, years sourcing. over vital private of term materially conditions. and component with to slide, deals sourced evaluated couple companies XX% deal percent of from increased relationships equity Fifty companies As you has past a market our issued sheets these remain are see proprietary our institutional can come despite competitive deals on ownership. the although Nevertheless, without of of to

portfolio credit remains quality Our overall strong.

As you $XXX team the can gross XX.X% Investment’s million on on Saratoga realizations. of see made investments Slide realized management IRR is on XX, by unlevered

of in is the took with Z couple consider On assessment was and as to the A on not Center in first of them the is investment look classes the the zero A result is investment, Alarm we My at we preferred can the company unlevered made this equity total three over reallocating A whole significant Class be to quarter. The our Class right, My our the in of a weighted in Alarm This may of million Class same encourage investors B senior-most way. Longer is with combined two overall change the preferred existing the accreting Class its gross term, together investments: of among In B SBIC of and to noting if management. you unrealized to since to Class of primarily the company Class A the various investment Easy IRR the plan. of as value My introduction a Ice. and BDC classes further investments preferred also equity. and on caused our the A evaluating executes our preferred preferred million write-down Saratoga worth enterprise In equity a and $X.X Class expect $XXX.X new down the B preference, see existing the value so Z chart written of term, appreciate - decline equity would did write-down comments our near XX.X% appreciates. the equity It positions equity a and of the preferred new Center class we Class significantly. that Z. Alarm

has forma position. incremental million in increase the investment You debt, in credit increases strength will has accretive acquire count acquisition, company’s gains. improved in Easy now second to of This base much have pro investment. market lead which EBITDA competitor. statistics more this note The of to $X.X growth lien should it’s increased We the EBITDA a made business also our a Ice is Ice this double-digit in investments. opportunity, significantly has leadership a was with overall follow-on approximately Easy machine and Despite to been which its on and service efficiency Easy remain exposure, it’s regional and our customer and created With equity Ice’s positive meaningful the substantial market largest significant. investment the with our footprint,

investments We the the in mix the equity will see continue opportunities to vis-à-vis at SBIC and growth these the Slide investments. remains conservative highlights The XX of XX% to compared with first investments company’s to profile especially sizeable X senior capital to securities portfolio our structure pipeline is market continue attractive expect evaluate of X.XX our comprised overall of debt relatively times, that leverage. of in leverage lien acquisition when low opportunity.

cost us this returns the spectrum. to highly favorable program out shareholders capital Our deliver risk stretching without to allows accretive of our on from

see can increased of representing portfolio. you XX, of Slide fully end, to quarter are SBIC assets on $XXX.X our This to as million overall means our SBIC XX% funded. Moving our assets

at concludes SBI SBA and their quality continue SBIC this in term. us result working assets second light on required on overall we’ve the to this approach. operating of Credit us debentures. of remain we increased of quarter previously power market. to additional letter committed this diligence we Chris? as focus will a growing the and to noted, year. issuance our this results is results my total of scale million review approved, us the with Overall, for issue, turn our to high and has with The visible, our following cash, CEO. producing procedures, SBIC our market, a culminating underwriting guaranteed already origination our investment If capacity, approval, diligent like to extremely available in base quarter’s the our demonstrated license license, within this application current As capabilities, to over subject million and of $X green a had all the high the remain This to quality operating call top sourcing growing selection $XXX tough process leading I’d to of end, earlier and of remains again our allow to up long we quality SBA asset due but strength

Chris Oberbeck

you, Mike. Thank

Slide As increases, by giving XX, third us increased adjusted $X.XX. outlined of over-earning dividend we recently in per our currently on dividend NII sequential the our quarter to XX dividend based share, dividend coverage industry. we XX% on QX are quarters After our the third highest BDC

see have XX, decreasing top year. the had can continually dividend BDCs the no who the you we at of size on BDCs the either easily grown having of peers us past have places which and or dividend dividends growth has differentiated Slide increasing most our increases With in only X.X% year-over-year our seven As dividend their us payments, of one within marketplace.

Slide as return of our BDC of places longer January appreciation Moving two and when management at Slide can for has both all includes capital three of the months, X%. of and the beating see time over performance periods. a total of on and week XX index took we returns the BDC, total us which XX, is X%, you both for as return dividends, in our generated negative the over five-year which last viewing BDCs horizon, the to first significantly When top XX,

triple years our XX is return. metrics. performance industry ago, return invested BDC the XXX% became the highlights XX% the our specific than certain management of exceeded team return the and our the the Over to XXX% key index’s manager of index XX% broader alternatively, the return context more eight past outperformance compared and the in as when of three Slide our years, to

investment share, we averages. industry NAV growth, Of outperform achieving are note is per across portfolio, ROE, is grown diverse assets the dividend our our ratio industry to as scale including dividend and core and economics, coverage moving on year-over-year interest categories, yield, continue closer that BDC and towards expense We the NII yield high XX-month and latest achieve XX-month capacity. the have marks latest

the outperformance, emphasize months on per We latest and which equity continue growing our our receiving. to share are XX reflects NAV shareholders value return

outlined our to We to that NII capital long solid protection have markets potential interest share in a growth and with our is obtaining expansion that BDC characteristics make designed Saratoga NII on characteristics rate with a institutions. risk. maintaining term of which industry Slide dividend and and initiatives the available maintain including all and discussed the this at the on offerings, substantial XX%, earnings base, Moving current adjusted of the against highest baby equity, rating, triple-B yield attractive high addition per return potential, investment Investment and levels quality call differentiated of we more grade the include liquidity grow cost strong profile growing share management steady XX, are slide size bond of community. the highly quality long-term XX%, drive per ownership by risk and one recent strong our will equity of help this AUM to an on of to in attractive investor a low with over-earning our base, competitive QX asset including These

overall minimal contains gas marketplace. oil this cyclical among the to exposure industry. With and Saratoga the credit has high portfolio BDCs including premier performance, recognition achieved quality industries, Our in the Investment

scale. at looking benefiting grow Finally, XX, while asset Slide we our credit goal to course on sacrificing with base from without long term remain quality, our

our objectives to total continue leadership I our consistent result by and ongoing on of source, shareholders their adding team capacity shareholder our analyze, and to support. industry would thank for should simple all continued increase and also performance. and in our Executing capabilities. our manage In to closing, return investments We our to management close like

Investment Saratoga lies We questions. for are that excited now the to and call like for profitability ahead for the growth and Corp would open

Operator

[Operator instructions] Our Schleien question Mickey comes with Ladenburg. first from

open. line is Your now

Mickey Schleien

the the everyone. in and the good prices to I’m distressed Yes, curious the advantage were an at effect. pull deals and the buy you had remarks, you perhaps syndicated you seen months. prepared whether some of of couple that morning thought to to par opportunity capture volatility to markets alluded we’ve interesting, some In take volatility last of

Chris Oberbeck

Yes, are how you? volatility. a clearly of year. Mickey, lot there’s new Happy

broadly then moment, loans, don’t exposure behind more redemptions so getting of back Again so there credit is had affect lot creates in discussed the volatility you in and have have volatility fund income-oriented space, some Mike that for as but in funds underlying the some institutional of characteristics necessarily a articulated, Just the that that valuation. value syndicated redemptions, these are dynamics buying a reflect and and the capital remarks, been retail. the and flows is and do to the mutual less there’s the flows been markets that Mike credit-based swings as a as into this leveraged his and portfolio, they companies, get over market volatility. in spills There’s

Michael Grisius

our But - so less less much portfolio, in so.

Chris Oberbeck

primarily the base CLO, I’m in and Yes, speaking our portfolio I it think hasn’t. BDC in

we down had so of we advantage marketplace fill, So specific able some did our and we and to and swing price purchase the take a CLO. question, and to the when your it, upsized yes, incremental capacity also warehouse we were in assets had CLO some upsized to our we

comfortable or the our of will our by Now, portfolio long with that be companies. whether the and the game prices as available it’s but a quality risk that’s volatility--you the measured of unclear; characteristics it’s whether we and not, feel ultimately lowest know, underlying fundamentals the

Michael Grisius

have way. to and opportunities. opportunity in past that an outside add the to eyes that anything for anything those good, not the opportunistic outside we was felt our a did we We see invest in CLO done also always that CLO. didn’t term open our shareholders presented in But We’ve to the long that, Mickey,

a outside we diligence, look those corrections of to something the homework do know homework when so diligence. time we that participate didn’t anything and don’t in challenges the do that’s like we independent the face to CLO. even of that due short-lived see do so lot Oftentimes there bill we’d market us the want you One time offer that do to we how do syndicated, we kind of more our broadly quite are like, of have the fit and and is to that the we

Mickey Schleien

you perhaps markets like do I didn’t to to have do. the would time thank moved understand and the you that do Okay, that. all usually quickly you homework for

the in notice component, Another which you but includes I income reconcile a the controlled investments in and the the PIC have what Ice, PIC to can’t why Was lien on did Easy outlook I question PIC company follow-on is investment the the something the almost I get income second down level? to non-recurring is there in quarter. a for doubled manageable quarter, more made

Henri Steenkamp

as QX one-time sort that relates of re-invest in cash some Mickey, and of you what the right. $XXX,XXX this about original therefore so was hi it transaction. on income investment, part between Henri could overall Easy of are assessing Ice as about at allocation the obviously look in as PIC you the if a PIC, our Ice re-invest this QX Yes, reclassification and decision transaction reclassification within overall total is cash interest There and quarter, In the to they business. Easy of of half it it’s percentage more overall occurred an between made PIC, we there. of part to in and QX for that percentage - PIC almost so into of

Michael Grisius

bit remind to a invested add give business question to business. has XXXX this a But remarks, was Henri’s little it, we’ve when you very small an you folks, a a good deal to that performed it’s Easy since well. Ice, on add exceptional to just it exceedingly to Mickey, that It’s The of business To perspective model. is been asked.

lot have team and very with their We in enterprise management them and actively have they grow confidence value. as a very we’re working the well, strong with of them as relationship a

around significant very and business the fashion, scale we a business, well. six for business of some we the of opportunity shareholders investment look couple Easy to we upsize business. in business us an to, should meaningful happy that the reference execute in and to we that our the our an put location we meaningful our optimize based geographic take fairly in our felt very Ice to that to able were as we in did, significant in fashion company upsized is were where able balance to with and it, offered drive a at we the very significantly sheet, frame the and and later, a think on did of therefore because the in in About concentration. transaction represented reduce efficiencies Just the on transaction that allows with recall the most the months the that transformative acquisition equity very structure ago-ish, very were strength significant big balance were better to, we and the recent The our ownership might a exposure recognized our also that of At you investment we and able a it a business point, respect. get capital partnership and years sheet that of company relationship position to to, the

looking that we exposure. recognize at very overall our exposure that credit, Now, meaningful to it’s

business Certainly cash to look much comfortable as out credit party want third way we’re goal there, exposure more But to income have opportunities work very sheet. in with evaluating that, is the we balance as on. into the best but always and We’re more something continue ordinary that very at the in goal capital to as it we’ve the our of we’re PIC success, the business progress, that’s income. continues focused business, business the bring as in conjunction that drive we our with to to model, how is and grow we said, the especially optimize is and to and what’s

Mickey Schleien

as some little Easy providers risk bring bit? your of selling your of to profile you other into manage in perhaps capital Ice, order position would a them in to Mike, you simultaneously consider

Michael Grisius

be going for don’t given in lot--we’re that to a I balance that’s best we’ve our know a to shareholders. optimizing open-minded the sheet way Well,

created of we’ve here. management a created--we I think and have value lot

and we’ve all credit the we’re company. So investors, grow continue I returns options our the in lenders, improve far, is the brought in to we’re what and senior best looking but we done for think the to at leverage as way the position that’s

Chris Oberbeck

and current think so we’ve and larger company had proves optimize EBITDA and was chances at the our company most our acquisitions as was earnings, mentioned think, we’re and acquisition more it smaller, to as taken Mike originated past, quality to than improve. we place and it Easy to different before double-digit and out grown smaller so to and sustainability was financial earlier, it was it I through the that, have together, as add in structure Mickey, Mike credit is The Ice leverage said, those ability going attractive to to when recent structure. substantially the the now company’s is when put rates started it gets structure we going capital and this have of this in capital first do a very place a

so focus long-term Our that assets accretive, capital assemble acquisitions to as has and optimize the of are work where we is structure and and our focus high the to accomplish highly some well. near been that’s will

Mickey Schleien

So in EBITDA, meaningful into protection Chris, also any gets your said, words, just Do as have the refinancing be them? Easy other risk increasing; in double-digit call to your Ice capital. may more to presumably loans you as have might they company access

Chris Oberbeck

protection in all call have we Yes, loans. our of

business business, is clearly very the the capital the much rooted highly plan. the We’re of involved so in structure optimizing company in

relatively is capital junior. Our

helped plan, very company’s going our those PIC I forward. think have we of us growth our the supportive and characteristic maintain so should characteristics of think capital is the position

Michael Grisius

don’t near credit term have add lot being Mickey, to. risk into that, of a be risk And confident it’s of because to good We unless respect. very don’t to very feel any that to a just chose clear, just in that see we question, we we refinanced

Mickey Schleien

last most My in at of on I’m reset? XX% impact could from Could the probably understand. it is attractive you the in with market. expect and switching reset with question, noticed on of CLO, which move the upsizing quarter, it I meaningfully spreads. assuming What gears, of debt more forward? going yield sort we refinanced number line estimated the recent I the in based terms came down the the that to the

Henri Steenkamp

is this Mickey, Henri.

more in same the as year have the terms think fee with the ago will our the to I that to the past, like we to the increase incentive has the past; that fee, return level. date mid-teen be interest been $XXX P&L, CLO, fees so upsized there three now using sort $XXX to weighted - interest your would it of forward; will we in as how disclosed from income there’s as to we’ve sort there’s on of or question, [indiscernible] no will proportionately income, pushed interacts rate incentive going and to more and we that interest million which million discussed to which be a management and reinvestment then average CLO with that’s what our out, normalized similar was the recognize existing

I think use for income. interest good proxy you that’s a you sort as of to think of

$XX.X an investment. course, cost increased Of based income that interest million basis we’ve equity as into be will now CLO cost on put the extra investment an

Mickey Schleien

thank for Understood, everyone. That’s new happy time and to me appreciate morning. year you your for it all I that this comment.

Chris Oberbeck

Mickey. Thanks

Operator

Thank you.

As that’s question. ask gentlemen, one a to and then ladies star reminder a

Our with next question Casey Point. Compass from comes Alexander

open. Your line now is

Casey Alexander

a understand data quarter? attachment lot what this the the is times, an I new point maybe a Michael, portfolio point, this the was portfolio asked Mickey that that came point X.XX my is entire morning. of good Hi, of portfolio the attachment loan I the have company of couple. questions, but idiosyncratic do and into but

Michael Grisius

that, but answer. than thing--I Higher to hesitate the

As the stronger on we therefore much certainly higher company There we’ve careful the look are based just think look be done the of the often profile that over than deeper trying we model, we’ve a and have it’s--we’re has business the at comfortable add we’ll a we like said, reflective to is credit as get I an that what average, sheet. so important strength past, as we that is but we’ve I a not The use at very metric, a That’s we It and balance in year think look said to much are portfolio a we what of average and did but them do to new that of leverage. this, a of the of deals that--because profile of metric period would to, a do leverage, provide there businesses say and not lately. at business and one the underwrite this they’ll folks leverage capital into other we because directionally and time, we business. lot sense profile that though. dollar the for could never some we turns them at so other three are will businesses give think--I that seeing just you’re being think of

be that it in We model will of still what with some below companies and exceptionally opportunities may profile company leverage invest a opportunities the have if to capital in reasonable that deals strong SaaS have very of the are are business metrics There that credit other point. balance plenty the we that at that leverage to be north business attached the models, of points we instance, we north sheet. still for invest In we’re invest are many it of south that, seeing seeing support be them, that. has and think to see average that that; of cases where will

Casey Alexander

you. Okay, thank

until ever you and replacing where their just them point dollar at such time sheet position a of puts addressed. reopens through, forward spends are that can’t on point maybe the no available have can availability, replacement second capital because until the development how you’re further in they of close as something now your wondering I’m government right a repayments, because the at they last and SBA the we be in this looking should cycle capital. of think really Secondly, license sort license to comes balance next point guys nobody from

Chris Oberbeck

quarter A couple reflective liquidity. total so a that not the of things is assets do repayments and front. the We absolute level at that of necessarily occur, on have end

have a have essentially facility that available. our the We in full pike things we coming down Madison couple

terms of-- In

Casey Alexander

- go facility to you’re Chris, going just the you’re of dollar but the to not not. Yes, last

Chris Oberbeck

the have markets. ability to--we but Obviously have do bouncing the do increase but we a to access to do we equity No, the have we capital our have amount, we access marketplace on to bond side around have--so know, fair and the facilities. access baby is debt you the

Henri Steenkamp

of, my in I successfully we have repaid right quarter guess, bond programs added our remarks baby noted if $XX million additional been that end, increase open very just said, quarter I now to to that’s liquidity. as Casey, is Then we Chris and after wanted subsequent HMN Yes, so end. liquidity that’s

Casey Alexander

All Thanks right, okay. very much. great. Great,

Chris Oberbeck

you. Thank

Operator

you. Thank

Our comes Tim from Riley. next question with B. Hayes

open. Your is now line

Tim Hayes

for you Hey, my Thank good questions. taking guys. morning

question the Casey’s Chris, Just to upsize off the have last think piggybacking quickly you ability you there, that facility, Madison I mentioned facility.

that haven’t other entering Just facility, with but your wondering any with know any really talks and that it if any I to other Madison on counterparties know, much upsize drawn now, or about conversations been--you been on into new you there’s there’s part if if credit in appetite you’ve facilities.

Chris Oberbeck

relationship facility Let for - me with longstanding a very been obviously important us. way this just we have say and and a flexible Madison it that’s

We very other have role positive the clearly have but and we with raise do we that’s access with array, know, us, cash financing parties as year, and positive also that be other and to a to we had available have past with credits. current If for a very our current a some development that growth off we’re provide to substantial we dialogs to all With to we’d to marketplace. comfortable business have. forward us capital, bond we’re be incremental go were also period would Obviously had coming over that the position, to the of would and continue, very baby of we and very facilities dialogs that and capital have look all very with that. the we the positive--you in a joining form parties feel in possibly that our pipeline, current our comfortable liquidity facility, our

I over-earning of a dividend other terms think by financing some metrics metrics the amount, looking our in from that standpoint. at are very healthy our just substantial we’re fact a financial

Tim Hayes

shutdown much like believe? and ball you Do been timing how government up, have Got more pace, at the you back potential its what does recently? do it, know approval, don’t any own okay. clarity I you a crystal into SBA things and have the around have but moves discussions

Chris Oberbeck

number a in but in down resolved much. different there’s making progress of things don’t administration soon, at focus believe the hope that SBA of we’re down overall works perspective like again, moving. progress. them. and own really the we’re SBA, is government at and of will an with this be feel want shutdown, with forward the There that change area at making Obviously we some a is working they forward there the where Well our to we its The pace. aren’t SBA, are--and speculate and we’re very Washington we that terms from We progress

has of been the view tremendous would either as of like a a don’t making the that of to that, not and SBA so our of pace period necessarily. or our say What demonstrated close something very predict last of lot outside time. can SBIC, as is a that that’s to item outcome our growth. something it We growth view gating and to to last As of investments time recently, we we outside project we’ve attractive not I like we’ve as this in certainly exact and clearly it’s ability program, the but amount quarter to deals SBIC a that grow impedes would been this and to

Tim Hayes

or early then that? the repay Appreciate there. you prepayment one repayment you and comments investment of in Would able the Okay, quarter quantify an OID early that I I in after fees realized repayment, repayment got be had the amount to quarter it. think just had big said you said also end, think but well. as quarter how Henri, you accelerated was the you you from

Henri Steenkamp

investment, not was new a technically of it a Because it had the because of part the so just repayment repayment or actually investment, as Noland restructuring Noland. perspective. that accounting also it our a was technically from on Noland a just was investment a any purposes. from regarded was just we actually There restructuring was repayment accounting an the took exit the of it for a of of our changed, in but was QX, full accounting it repayment perspective place, in investment an a of Yes, [ph] portion origination effectively instrument

Tim Hayes

the my taking for questions. Thanks in back hop will I understood. Okay, queue.

Chris Oberbeck

Thank you.

Operator

the showing to time. I to Thank would turn at Chris Oberbeck for back call I’m any further you. now remarks. any this like over questions closing not

Chris Oberbeck

today Well to again, look for with we’d next us quarter. everyone we and forward speaking like to all you joining thank

Operator

today’s in have the may a you does Ladies day. This participating wonderful disconnect. and and for thank gentlemen, Everyone conclude conference. you program all