SAR Saratoga Investment

Henri Steenkamp Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary
Christian Oberbeck Chairman & Chief Executive Officer
Michael Grisius President and Chief Investment Officer
Casey Alexander Compass Point
Timothy Hayes B. Riley FBR, Inc.
Benjamin Zucker Aegis Capital Corp.
Call transcript
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Good morning, ladies and gentlemen. And thank you for standing by. Welcome to the Saratoga Investment Corp.'s Fiscal Third Quarter 2020 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, go I this turn Financial Steenkamp. ahead. would Compliance Corp. At Investment like the Please Saratoga over and Henri to

Henri Steenkamp

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

during presentation Today, our call. we will referencing be a

our earnings shareholder Events XXXX last find release can link presentation our Relations quarter the third Presentations night. & our website. fiscal in press the to is Investor A of section distributed page in IR You

call also available release our A replay Please details. January will to be PM of from today earnings for refer press XXth. through conference this X:XX

to the I a like will introductory making Chairman Christian Oberbeck, turn Executive now call who be our over few remarks. and would Chief to Officer,

Christian Oberbeck

fiscal quarter and Thank you, And growing continued of welcome, everyone. our Saratoga. our financial base Henri. outperformance ongoing capital has This furthered the in progress

top of term. this BDC solutions long the us pipeline Despite – reaffirmed a robust underwriting sources diversified and has of The quarter ranks capital deal combined the competitors challenging of support over quality – propelled cost-effective greater flexible our scale. and competitive continued our our investment efforts, environment, sources, our further our to with of liquidity, to driving origination available

SBIC our and the Saratoga, X% in of the foundation our share and fiscal further As license, NAV XX% and increase this accomplishments provide decade second future increase return momentum receipt the BDC first strong this we of equity on for in XX.X%, growth. management our per complete of of under year, including NAV our a the the

recap the briefly two. on slide To past quarter's highlights

financial basis, level quality quarter having our our on strengthen to generating high loan foundation continue on investment maintaining credit we XX.X% mean XX.X% the rating; quarter highest of a return by share. this a or X.X%; NAV significantly by our and a both First, this net per ahead equity realized with gains trailing of XX% in investments of BDC annualized of and QX, of XX-month a $X.X million industry unrealized $X.XX increasing

And Censis million unrealized gain of of total in This realized includes our registered QX the XX.X% to of end a XX.X% on of we QX, total realized on of million. $XXX $XX.X of a as gain million. investment a gross our Censis unlevered realizations unlevered IRR $XX.X on of a date total for and IRR gross portfolio have

share $XX our $XX million and all quarter-end, in plus Easy including Subsequent than itself, more of approximately and to add interest investment This and second proceeds, we NAV per preferred Ice accrued interest, equity lien will or to repaid million $XX investment was of $XX million in additional par, $X.XX million realization, fees. QX. received at

Second, as million at from increase of XX% year-end. steady net our last under $XXX but a since remained quarter no management increase $XXX this assets quarter, million,

redemptions, platform and excluding the be unexpected. Even again ability to $XX which this origination million though often of we repayments the pace lumpy of can keep had quarter our demonstrated gains, quarterly we with

close quarter the XX, of January share February of a fiscal has Board on declared Third, XXXX, X, record unchanged of XXXX and ended business all per from at of quarterly prior quarter our November to XXXX. on payable the XX, stockholders $X.XX Directors dividend for the

an enabled our of on $X.XX annualized currently years five a at for has performance dividends per to increase last share operating Our level us basis. the

increased have dividends We are to one past over eight year. the of only BDCs

And finally, the strong of quarter. shares, gross sold base were our during X sold at future These to for growth. shares capital proceeds ATM We resulting raising equity provides premium a million a $X.XX share. looking nearly and of liquidity gross X.X%, in through foundation forward, NAV earnings common of a per us structure offering million our $XX accretion

that raised $XX year, total, in for of this second In million essentially funding SBIC August. requirement equity our the was fully fiscal equity received license we

accretive all-in significant provides returns. approximately X:X of X% opportunity benefits for license This with cost and of potentially leverage the long-term debt, long-term future

quarter-end, existing utilized of available $XX our also excess million we liquidity to bonds. SAB to Subsequent X.XX% redeem baby

million quarter-end, $XX.X of In addition, SAB that subsequent of we've a to February the with date called bonds remaining repayment we note XXXX. X,

dry increased opportunities and to future pricing significantly environment. a now have credit address in investment We powder changing

quarter-end of forma allows assets liquidity any bond million current grow to by Our existing XX% financing. us management $XXX redemption without external under baby post available pro new our

compared and XXXX year-to-date to November Saratoga and ended performance the quarter quarters within delivered continued on strong performance XX, return noted XXXX. August performance as our key this equity above as solid indicators XX, and

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

$X.XX Our $X.XX reflecting share count increased primarily $X.XX on quarter, share the substantial hand. and is from quarter, adjusted this down last NII per cash and last year

value year last asset our return last from and X% up is up XX on share and XX.X% X% Latest net year later. $XX.XX, XX.X% more detail quarter, $XX.XX months this And from equity will last per last up $XX.XX is quarter, from Henri XX.X% quarter. provide

and credits quarter. slide since of for risen can as X, repayments quality this management has AUM Originations high. our most see the ago part of steadily the than you more remain BDC took the over years on we But offset nine

capital. continue available as working we increased trend this to are positive our deploy diligently We

call With financial to like results and back review over well the to that, portfolio. of our to composition Henri turn would I now the as our as performance

Henri Steenkamp

calculation, was and from our adjusting million NII from to up last November key fee ended X% fee When the adjusted incentive last in metrics as performance $X.X XXXX. you, gains quarter $X.X the QX. second to compared Thank million Slide net XX% incentive million the accrual four $X.X for Chris. XX, year's highlights for of quarter related capital up

the from share year last increase reflects and quarter, primarily of quarter full $X.XX investments from XX% high and last down Adjusted year. but NII NII quarter. year last reflecting income, and higher from $X.XX adjusted from significant was interest from resultant steady per $X.XX AUM impact $X.XX of AUM the and in up with last quarter level share $X.XX, last per quarter's The down originations last last

in share steady Despite increase adjusted outstanding. to shares NII decrease year increase, number the having primarily adjusted from was per of last a due NII the in

November to X.X increased million shares XXXX for million million shares and August outstanding X.X months and the XXXX XX.X for XXXX, shares average common XX, Weighted from respectively. ended months shares November ended the three three XX, XX,

fee our second but of the the XX.X% Adjusted was X.X% NII growing impact cash last down and also last XX.X% the from when accrual. is effect adjusted our yield NAV, This reflecting yield of year, quarter hand. on for incentive substantial again

For this million million experienced on increase share. weighted $X.X or a in we per share, or quarter, third in operations net a resulting total investments $X.XX assets $X.XX net average of $XX.X gain per from of resulting

$X.X $X.X net unrealized Saratoga of on Investment's investments net net depreciation on realized expense blocker million in subsidiaries. million and of in offset million in $XX.X million deferred comprised net gain gains $X.X gain, by unrealized tax was The

investment depreciation the Ice quarter. of The company the million $XX.X depreciation reflects The the investment the the the gain net company's $X.X the realization reversal the unrealized million since net on realized unrealized during recognized its Easy previously $X.X offset investment, primarily of million reflects of recognized by realization QX. depreciation $X.X technology of following impact Censis in million

and realized Return performance includes on gains. indicator equity an remains us, both unrealized important which for

Our up ROE return was XX.X% XX.X% from for BDC an LTM X.X%. on the of annualized last and above quarter, year. is the last XX.X% the XX well of This for average industry equity months

expenses. management million base fees on touching assets. expenses, in to Quickly average interest this quarter debt a year, X.X% million from excluding $X.X $X.X financing the and representing fees, same from total last incentive decreased Total of X.X% and period management decrease expenses, to

due subsidiary. decrease benefit million related this And X.X% This deferred million. to Easy both primarily the nonrecurring. tax recognized the quarter is of to million benefit $X.X Ice tax increased The expenses operating benefit to from blocker in the quarters, was from $X excluding $X.X

historical income and the quarters through appendix presentation of in added the shows we XX at end past the have trends statement KPIs XX and our balance the maintained. XX in the slides We upward sheet that the also have for metrics

with margin rate our Saratoga Of current note tripled interest BDC, run particular is management slide highlighting our run how net than year rate more last the of took year. of ahead over XX, has since

$XXX.X as increase same quarter-end, of to as $XXX.X million from year-end the and on $XXX.X million five, million at slide year. increase NAV a last quarter Moving of from a $XXX.X million was million $XXX.X this

up or quarter-end, same from up at as quarter, $XX.XX in of $XX.XX from $XX.XX of the as increase a year-end X.X% NAV of $XX.XX per was year last last share months. and XX from up as period

So, total per has quarters. nine increased four not growth of have increases NAV now only NAV had the share last we quarters eight dollars, in sequential of in and

the You can slide on this XX. see previously referenced

and net million million offset subsidiaries. on dividends For depreciation unrealized by in were $X.X partially net blocker this million tax of investment $X.X earned, income declared past expense of net quarter, $XX.X of realized of gains $X.X unrealized and million deferred Saratoga's and

the shares or stock under addition, dividend $XX.X a the sold made million company's raised through through offering plan net just quarter. company's the ATM distributions during equity and of million In were $X.X million DRIP X were

Accretion on added stock our NAV to per our issuances share. quarter this $X.XX during

value strong and since XXXX, realized accretive of and asset net stock our performance, benefit gains has and increased steadily credit of Our growing the our earnings. history consistent our unrealized reflecting issuances

per and share sequential share a you X, $X.XX share QX. at NII the in quarter per top, on major slide changes the On decreased share Starting basis. last NII to per reconciliation from quarterly a simple in will see per of $X.XX NAV

$X.XX interest from from decrease in increases These $X.XX DRIP deferred shares benefit $X.XX the decrease increase were offset a fees, income and significant income, that $X.XX a the management non-recurring. from base increased higher a is in programs. non-CLO other ATM in interest tax and a The AUM increase dilution increase a increases in CLO income $X.XX by were $X.XX in and

Moving partially reconciles $X.XX for by lower our on offset in $X.XX dividend net investments $X.XX the NAV realized QX, the were programs on and our to and in with by $X.XX net this ATM quarter. date. record declared increase DRIP of the gains The the NII a generated QX QX slide, of $X.XX QX and share impact unrealized half for accretive the per

available XXXX, to seven Slide SBA powder million. our undrawn cash, $XXX.X This facility. debentures of of available the Madison November XX, and drive undrawn us outlines as totaled consists which

dry million debentures. undrawn approved SBIC powder recently SBA in the license added second Our $XXX to has form of our

we cash some our quarter-end, of million X.XX% used $XX to subsequent of baby redeem addition, SAB available In partially to our bonds.

more no this pricings. redemption, an need powder with accretive with capital allows also reflecting basis, our additional of to financing. $XX without grow forma XX% deployed, to current a attached our remaining based assets pro expense by capacity when cost of debentures, is external additional available and undrawn being The a cash composition total million On dry us the this on SBA with $XXX it X% million of low NII for

remain extremely sheet with balance our fact years especially our account our overall taking all position, We the liquidity four into is nature, actually that of and long-term pleased all in the debt nature plus. conservative

XX yield X on review our portfolio positions. investments in lien, like of composition through $XXX and our which Now, and million assets CLO is would XX% I first of one investment last to of first in X, with portfolio. fund Starting in lien XX are companies slide the out slides to XX% are our move and and invested of

yields. excluding can decline a yield how well market buyer-friendly X, the the place yield around you BDC as as asset CLO, see is assets, continues pressure on continues downward on our to slide XX% to our On as LIBOR total and core

last Our core the decreasing XX.X% reflects quarter change to to asset reduction XX.X%, basis LIBOR yields QX. asset point increased during XX.X% XX.X% primarily XX in to slightly overall from yield decreased core to due yield the X.X% CLO from yield although our in from The XX.X%.

in we QX, quarter. had follow-on million in decrease during investments a investments refinancing Turning amortizations investments net two new $XX.X portfolio the realized and million to XX, including million plus two in the companies for exit one of and of resulting made slide gain, $XX.X and in $XX.X

services. as nine in healthcare with highly over spread diversified on by terms education geography well Our type and a of as focus industry, distinct large business, industries investments and remain

investments often businesses services as are We companies classification represents services asked the business industries. to in that across category wide about provide variety specific a of other this

education XX in to supply resources different featured XX business services – to to of other is breakdown broadly services range in many investments website. to advisory restaurant services currently management our financial As in total. provided includes on presentation quarter-end, to companies the and classification This human from whose our IT

consists remain during of net previously of We interests, described. our of Of strategy. portfolio, as total investment part which equity overall X.X% investment QX an realized our $XX.X had important gains million

past XX, slide sale seven of sale months had interest fiscal the including years the redemption of For as the equity $XX.X of fiscal we million gains from or nine combined realized a on first of other investments. and demonstrated or early XXXX, net

a we As carried resulting took reminder, over fully being continue Saratoga tax when in NAV. over carryforwards these unused were of gains management capital for the accretive purposes, have to from that loss BDC, to

while to this have fully we carryforwards. further, our another gain As the in our loss gains utilizing significant capital unused transaction have expect Ice we QX also realized from Easy and sale increase disclosed,

performance our NAV helped quality is in consistent ROE. time healthy portfolio over our reflected long-term grow highlights has and a This credit

That the the Michael our portfolio now over concludes market. President overview my Grisius, investment review. an I financial Officer, call will for of and Chief turn Investment to and

Michael Grisius

as current portfolio describe you, of the it current market and investment comment take our minutes Henri. Thank and we performance a then strategy. I'll on see couple to

in We these leverage friendly to have significant prices the continue conditions since and not all expanded tolerances. tightened lead remains change and seen competitive, generally quarter. be to last The borrower landscape a market

activity deal be robust. pipeline healthy us, continues for still Fortunately to our and is

decreasing to another yields We basis since LIBOR, about XX June. impact to in this quarter, continue absolute reduction due point no decline see experienced with XX And to of spread adding up the to basis expansion. fact, points continue

We conditions which have reflect of been deals, reasonably current on that helps the long-term successful in decreasing obtaining new floors rate market impact of most reduce a our environment.

not downward yields but have pressure dynamics we these on served quality, to have Overall, sacrificed generally. put

continue and best. In sticking will has we to we the serve to believe face, market our us strategy

our see gains. Our approach has And reflected XX, of underwriting. you in on is focus been as always to realized can quality slide part the history our net this of by on producing

culture model. as strength business and underwriting underlying Saratoga characteristics. company remains We into investment its ownership as strong business working approach the in order management accurately possible at with assess of A to and peer endeavor directly a to the strengths each paramount and thoroughly deeply Investment. We understand long-term its to

the downturn market invest returns We With seek accretive our the our the over possibility objective best in businesses. producing term. of minds, the a shareholders for risk-adjusted we of always durable capital with long

market Our rating internal we credit quality remained at XX% face. the forces despite

We s returns believe this contributed our successful positioned downturns. approach has any and has for also well market to us future

in occurred appreciation are pleased financials million million numbers. in how this be and greatly our portfolio Ice discuss QX year-to-date, that increase QX And in Easy excludes overall further is the $XX.X net I $XX.X will also our With that portfolio will transaction exit will with we below. just that of This performing. reflected and these

the underwriting approach, of strength the reflect that opportunities team results quality our our exist and the in these market. believe of We portfolio, and

on leverage portfolio which below X.XX for quarter leverage overall Total all was slide our times across well multiples, and unchanged XX. previous basically X times, from at above leverage are the industry. year-to-date average the Looking market

or have able been new line this risk a maintain been generally quarter in investments average relatively We company historical to leverage. the our profile modest below and portfolio have

exceed our investing business and leverage, our credits profiles sustainably dollar confident where rather we attractive investments. of businesses than in models risk that last return with value highlight, the enterprise considering focus strong of the are just As frequently remains the we on will exceptionally

long-term calendar over including on originations quarter, dynamics. through have this we pace, last record despite ability company this new with criteria. portfolio established quarter, one origination addition, investment follow-ons With market and two difficult is consistent XXXX par while In our consistent slide the generate level new applying the an XX to investments illustrates year's that

including credit and growth emphasize various on quarter repayments. pipeline, is lumpy always portfolio pace next quality quarterly robust within pipeline, We dependent the one be and that factors, the of that can from to a

were and quarter an remained repayments example the unchanged. was healthy past This AUM by roughly where originations offset

continue confident market as in business development invest of longer-term execution in part the our we on AUM ranks and over and develop our expand remain focus and grow our to presence continue our the professionals. time that and We we steadily can to of

to focus skill and to significant our that set, Our of team's on have experience relationships development and mature deals. has become led continue strategic sources relationships business new new

and issued of continues increase notably XX% that market XX sheets companies demonstrated last is The three to As term of and competitive year frothy. XX, sheets on portfolio source newly XX past deal from up issued our months formed over the XXXX are number a our the in and term of is slide from new despite relationships.

a development seen variety deals more our of we progress generally have We business sources, solid expand as efforts. greater from reflecting

our funnel The investment say continue no ingrained is maintaining but breadth our opportunities continue not is our we evidences our Saratoga of discipline to we culture the deal to how of of shareholders. grow also our value credit to We maintain profile. enterprise say and a and know how will no discipline. in if preserve fit for deals, we do this lot will We

QX slide credit strong, portfolio demonstrating this quality on XX. overall with Our remains again

This XX times $X investment equity on our investment in $XX.X and total saw an Censis resulting quarter, realized, we gain. return million a our million

of XX.X% on IRR realized investments Saratoga made unlevered gross on Investment the approximately management The by $XXX million team realizations. is

IRR is to and SBIC the $XXX management. waited over unrealized took the Saratoga you of II the I, investments XX.X% our since right, combined On see on can gross unlevered chart total million BDC the

equity second last we million reported, the Roscoe of no that remaining was at value $X.X a with update investment investment non-accrual. a on zero. second We marked at still previously highlighted lien Medical quarter million this $X.X since lien fair significant our is and There

fundamental reflect continue performance as well operational weakened issues. both to as These marks

We work to in the continue alternatives near sponsor the senior with to lenders term. strategic to and pursue medium

loans Easy Easy control and equity Ice masters and were second repaid in transaction. a sold par our to Subsequent preferred quarter-end, of Ice change lien in term at

equity $XX accrued approximately interest to $XX additional second term million full, addition and received proceeds, preferred loans of lien Saratoga million $XX fees. of repaid also the the all of In Investment interest, million and being in including

share from realized and share. in is for a increase BDC, result significant at and which least in Saratoga per will wonderful QX NAV growth the $X.XX in result itself by of results NAV per This for gains this investment an

of a high-quality as solid great interacts is whole. This quarter how a portfolio example a

Moving is see license first on to million of funded, slide XX, can with $XXX SBIC as you following our to close the Censis invested fully quarter-end repayment.

license million SBIC second of funded has that of $XXX already equity, of been $X which million been cash of has with against available $XX and million equity. deployed with $XX debentures million Our

Overall, and results and and underwriting overall quarter, this strength we the of realizations Easy the and we platform the portfolio, our Ice, operating diligence our feel due especially in diligent extremely remain of team, while of demonstrate Censis procedures.

asset high-quality committed top approach. we our market. in and quality remains this tough to remain strong a culminates focus selection Credit equity within This returns and

like my I'd of turn market. Chris, the the This review to concludes our over CEO. And call back to

Christian Oberbeck

Thank you, Mike.

As outlined for level the dividend which night same a announced XX, quarter XX, third of prior ended per the $X.XX last quarter. November as XXXX share, we on slide the is

five in although this is on the an we leaders years. that we industry note the increased quarters past basis time have the during dividend our growth the dividend, past not annual XX first We in are that

quarterly foundation pause and proceeds increased Ice, which fees million and establishing liquidity than future include Censis the the substantially equity and has and on increases solid growth. Easy Consideration for for Saratoga's substantial from a recently share $XX received NAV, recent dividend the of more issuances

our we and consistent In past assets creating want with and put work. this pressure AUM performance highly our undue environment, competitive be with commitment to measured not prudent to growth, to dividend industry

dividend Saratoga of growth. has now had five years

this that very Slide only and grown XX our top year-over-year have dividends the peers X.X% shows year. that dividend easily past growth the one eight us places near of BDCs of

dividend us having quarter, in BDCs of no their continually have most our marketplace. the payments, differentiated within With which we or the dividend, has decreasing either each size increasing increases over-earned

the slide the of XX, last XX%. has months, total to XX Moving generated BDC capital both and appreciation for which includes total our return beating index dividends, XX%, returns of

slide, is Our on our next performance longer-term XX. outlined

time five-year returns Our of the three all or both for in us place three and respectively horizons. BDCs two top

Over exceeded three past over the the the index's the XXX% five exceeded return past XX% return And years, return return. our XX% XX% years, our the of index.

certain On see outperformance industry slide our context key the to XX, further can placed of metrics. you the broader in and performance specific

and return growth. value interest growth portfolio, the on achieve yield, XX-month to months continue equity, We and per NII month the XX dividend high outperform diverse latest latest year-over-year industry yield including asset categories, share on across latest XX net marks

expense grow note our that, other is scale, continue the shareholders our Of equity Notably, months we long-term XX closer industry on averages. share towards assets reflects increasingly is moving latest to and ratio as the are return outperformance NAV for receiving. and the our our per are achieving value growing

on highly all and the our of attractive is discussed a designed Investment Moving capital are Saratoga to achievements make slide markets that to community. this today BDC initiatives XX, competitive to call in

our on slide We will base, adding drive more and that including this investor outlined the our quality institutions. believe of help characteristics differentiated size

of equity as a the sold XX%, characteristics has the recent in percentage-wise decreased management. management of highest of maintaining by Differentiating which issuances industry result include levels no shares at one the ownership with

earnings high-quality grow investment long-term and assets which per substantial with receipt of Access profile. an of to than NAV NAV share, our under and expansion potential, a by low growing with SBIC attractive with base our share grade second equity current cost return rating, more asset management and NII liquidity solid and yield risk BBB strong XX%, per to growth license, on

industries, to exposure In and our oil including portfolio gas cyclical high-quality minimal credit industry. the addition, contains

to and which on conference Easy in Censis XX, returns calls. Ice, for portfolio were substantial quarterly on a Looking outsized like slide moment recent large, of we'd both and our our focus extensively at discussed investment positions in

received. total than $XX $X equity turned into we a of more investments proceeds combined value, million at of Looking million

more in began available than five more to which capital, of proceeds loan the kind in years creative capital market and represents investment kind income our Ice, smaller addition ongoing ago a in $XX resulted the middle million as repayment million to in interest and Easy of of than solutions. $X opportunity

management the than growth Partnering supported with during Saratoga involvement. tenfold company's unsponsored in company EBITDA situation, more our an

too a ago started where than years sponsored resulted Saratoga invested. and in five more on the loan Censis than transaction partnered out times in million $XX XX growth a support with a of substantial in more return equity as sponsor

management company equity with investments with along our Saratoga's and making of and feature of extension Partnering sponsors investment credit is core a strategy.

Finally, credit we from our while sacrificing long-term continue expand our goal on to base to asset scale. progress benefiting quality, without

us We also execute our management adding continued to source, our close manage increase by to and enabling to our objectives. simple consistent analyze, and on our capacity team capabilities, and investments to

closing, for I of support. their all shareholders to our In thank like would ongoing

profitability We growth that Investment ahead lies excited are for for and the Corp. Saratoga

now like for would I to open questions. call the


And our Point. Compass Alexander first with Casey question comes from

Your open. line is

Casey Alexander

as and investments. direct had as accumulation the of fantastic think Congratulations realization morning. been anybody, shareholders. I Certainly, the two the concentrated Good for outcome a about I risk Hi. of on just that's

tapping to catch liquidity Would fact so would brakes point time you ATM allowing given you that would the – SBIC investments sale the the to this start II, at you have the you that earnings up? the anticipate that much on back funded you of from and in anticipate

Christian Oberbeck

And, a We good resolution, thankfully, you, we concentration mentioned. and very for Well, you portfolio thank as appreciate your focus appreciate that on issues. Casey, congratulations. your our

your one ATM terms issuance that, which of the our in mentioned key our at equity issuance, equity $XX.X approximately In objectives question, to as think you was is million. I requirement, our fully fund license of SBIC of

we've done So, that. in essence,

are very mentioned, have of so, capitalized. substantial a as well we we've and feel accretively, we equity And amount issued we very

hand, liquidity We on as you note. have tremendous

so, this there's for And need incremental capital at straightforward no obvious time.

So, point very without we're at in time today, to feel this well-capitalized. we committing in anything ourselves future, the

Casey Alexander

Okay, great.

obviously, shift of second Ice balance in the more first and first investments off lien going next quarter. the lien Mike, towards for Secondly Easy to the lien pay once is

would kind the than to do cycle? first the see in towards time size at of credit given second the a credit lien are point deal little scale of press that changing, is And your tend in you lien closer cycle, where Given the evolving? we this BDC you

Michael Grisius

It's portfolio. good of a good in observation question, of mix Casey. terms in our securities just the And

your two me of Let address question. the parts

In highlighted thousands thousands really think terms in deal the sort end of there. it's better the of most We of that. place businesses of are market of than much size, middle BDCs time out the We've at to good spend lower like capital. marketplace we upper There where of end the being a play of market. the the deploying many middle their and

very that we of recently think end I the set that two businesses to exited successfully that most the give evidence at exists opportunity the market.

as the And to continue us in find So, on small as you'll we're recent that end $XX are opportunities do the been market. to at you'll for going stay going playbook some million, made we future and sizes. see of side, the the that is check see, of investments that's million we've to some $X to initial investments, result us have maybe making smaller And investments.

this happens is certain sheet to need many just grown, grow go they capital find they go examples, most to a sheet of to enough get often that. where, partner, profile past, then develops. as in additional another their to growth we've But firm, smaller seen in the most not and that many you've do, to they marketplace a to do get What size two continue the cases a to expanded partner sizable in that business companies is the what balance capital to our us those recent the been in but balance and as with the other companies and allows able have exits, support

the really and market, we And do an from increase capital that hopefully to our have perspective, at businesses point. have grow. to end as we'll of deploy find more likely we want check businesses to good that same historically, And middle will at lower the the those stay way then the opportunity support sizes

talked Now, concentration. you've about also

we've incredibly as had sizes the the businesses are with that comfortable knew most we exits, we reasons those of mentioned that One is, check in recent well. these were we that two

One XXXX. XXXX investment of a I other the think was and originally them was

we performance those know well very we strengths the in management confident came that as understand teams, had. of So, to the we protection as, businesses the and the came value importantly, enterprise were to most

capital businesses playbook. part support to of that those continuing more as So, said, was, I with

the it going of put X.X as have the that Now, sort can terminology to to folks never marketplace, look risk-adjusted unlike we – some opportunities strategy the that. for that return the X.X to marketplace. the the we're of relates find in securities, said best you BDC we've in whatever we of always or want or adopted other We've mix around

so do And doesn't to people in opportunities lean first It's that the more change, historically approach that result, us happens we're securities aggressive. marketplace higher increasingly first just percentage opportunities is has always we're junior seeing the opportunities. But see do a much opportunities. find that, always Has you're lien right And that's Doesn't those constant. a for higher. to mean And have changed marketplace tend always market. when then be lien will investment of to it's as we've that likely get very think and bar I investments. been the competitive first much fact more a lot us. seen just lien the higher investments. of won't that we if continue remained now, that had we reflective towards It The we've good really finding as for a

Casey Alexander

you ask back Thank answering my And appreciate thank I'll let you, and questions. some some others for I to step in questions now. Mike. that.

Christian Oberbeck

Thanks, Casey.


Thank from Hayes you. FBR. our Tim next comes B. with And question Riley

open. is line Your

Timothy Hayes

to strong excuse Good me, $X.XX where on want for the that at. – results adjusted from bring morning, I appreciate the circle Chris, to there. on Based power, My level up on back first comments questions. dividend. one, But Hey. And, EPS quarter. clearly the there's your and just room I my guys. some of it's this earnings taking dividend NII, Congrats

very putting You Easy But on to highlighted asset to on SBIC expect should the proceeds the work and be I the pressure would Ice intermediate yields. term. Censis that facilities down earnings over accretive drawing and

the Any and over continuing is should those couple quarters potentially asset be it next earnings I your helpful. waiting dividend some how just just before pressures the power you So, see benefits view factors mentioned? to that of are out or yield around color that other maybe raise offset the shakes would to

Christian Oberbeck


a and our we issuance increase. dividend mentioned we informed think have liquidity significant our and have prepared in substantial I on hand, what had pause remarks, on to we do share us that's as so

five We had years have of increases.

we believers we here, have trying as in pace trend. watch. mentioned So, drivers think, to Mike that asset are the on growth his But about I it's net of and that to continue in part

is our one make on future decision-making our And will quarter quarters. so, basis, for of And them so we've and we dividend decisions this be quarterly the we made driver not the informed decisions asset for be going a made our to have yet biggest and – deployment.

if set so, of put of than get assets to that's lot that's another facts. redemptions we If And we of facts. set more a deployed, one money work,

can we that increase that, of any more where how we of out be our lay the to growth, by capital us for projection company, it's follow, much indicate dynamic difficult very something high be if it's would a dynamic relative But our the asset that to should from relative to the work level would redemptions. driven going past in we been put we've here. but to get to equitization really of so, And

Timothy Hayes

it. Got

And the makes control? Yeah, Ice one-time exit the And commentary sense. any Easy there. additional appreciate were received fees change there that in then, from Okay.

Christian Oberbeck


need we subsequent a remarks, information our And and we – release quarter-end – reviewed this we released, thoughtful specific E&Y event have not we paragraph. as time characterization. we've is here is have the prepared audited XX-Q can be audit an think that we at a post XX-Q that in a in this I say, to and because included again, that also

So, we really more specifics don't there. a from have lot

Timothy Hayes

look do just expect Okay. a for, next I'll you of $X.XX NAV guess, Yeah. share with in release. loss the on that exit, to And sheltered the be the Ice per the increase carryforward? Easy how breakdown maybe by expected then, capital much I from

Christian Oberbeck

Well, few a things.

complete. analysis It's exactly our tax this all through. think will not I work is how

And is consumed will exact be beyond we'll certain of affected The amount something a And through and consideration. quarter. so, that still go treatment also, obviously, will NOLs, that remaining we capital and the those be carryforwards, their next amount. over by loss that's have amount under we our performance

into on we that not in call. detail great it's can go So, something this

Timothy Hayes

for my you Thank Okay. taking questions.

Christian Oberbeck

Thank you.


comes Thank question Capital. Aegis from next our And with Zucker you. Ben

is open. line Your

Benjamin Zucker

subsequent got. script for forma taking per a morning. that Thanks congratulations appears Pro seen guys be the NAV and of trading on might to you those discount guys Ice on Good to forward for the my gain investment have want I you kind questions. stock at I'd gains we And fiscal that ATM question activity XQ haven't your echo the yet, flip the two or notwithstanding big mentioned. the in other Easy share. that now

balancing mind, in So, at you of this share look I it do possible price have flip lever investment some multiple and capital? is your attractive And, use an the there a look authorization buybacks? like with obviously, NAV that act kind new capacity. of is you to but opportunities, where believe with a of always potential it's that general between could kind think you an

Christian Oberbeck

Well, I question. good a think that's

target. historically, think, periods a described And that We time NAV where we didn't at a at of would there ATM have also premium. I percentage discount. have repurchased sold then, of specific have we shares we've our a been

sides So, we past. have that of on equation in both the worked

best board of we have the as I think to the is we company in both interest the available to utilize determine programs shareholders. and

those So, and activated. are yes, able programs to alive be two

of our moving lot through today, going think earnings parts. release I a there's

positive Fortunately, moving they're parts.

of it So, our determined. exactly to share decide and as investors where to is this all put be out a result price the settles

will that significant not we really we into or it's something how can talk in it. detail perceive get about So,

our to other on. also investment side, On the we have focus pipeline

always things taken So, are through consideration they all be into quarter. those as and will both we go as quarter-end each at

Benjamin Zucker

kind incentive so the like about can is that of NOLs? could also least eat at stuff some going it might way, Easy just the over $X.XX count? million not gain $XX but well that that like, fee up there the triggers Ice there's a And So, offset in is the my gain know about a understanding based of and helpful. much off out you That's say, different only of I Okay. that we're calling be – figure and could increase NAV as that gross properly? thinking by that's as that Am be quarter-end much I share that

Christian Oberbeck

do full and think subsequent a and this we in fashion, our trying we a We – right? event. what I to again, have there have to do quarter-end proper we're disclosure tried

on to provide tried gross some way we It's determined estimate. number information might gain net a number. $XX is number. intended final be what is do recognize be to the a to And basic but the So, that's an characterized, not million that

add is And So, to think of could give that we addition. NAV the – NAV prior sense that you idea net where be. you be to quarter's the would the was directionally will it probably a

still go have quarter. However, going we months on. There's in lots two to dynamics of this

And depending so, be different in final NAV on might the portfolio. that things to the other

sure So, that have hang benefit shareholders the make material that much that. on understanding want to wanted to we of too don't We just realization.

Henri Steenkamp

pro it's as totally forma discrete old-fashioned the calc XX transaction Easy Ben, the Article item. Ice a treating

Benjamin Zucker

Standalone Henri. item, sure. I understand,

coming more weren't a notes, few X.XX% On these years. for due the

kind reduce and function so dual debt your hand up might immediate a all-in the you of cost also was motivation a of baby count So, these firm? as interest share having as this to much expense on early? Is that some it redeem what and burden just cash going your of improve bombs so well

Christian Oberbeck

well that's think very said. I

of rate I lower. issued were and X.XX%, we baby was us would If consideration. interest part a these when to baby bonds the same reissue company. amount, the bonds think Also, that for place we in substantially a very at today different the as is that time be

financial a a funds as is corporate that cost for of us matter. general high So,

able We to want we if desire bond the type reissue the been reissue so we have in the baby all But circumstances, to. readily capital equal, it's that, to world. of things market, did these – access that being not that should could past crisis in we no in

of And in point have yield on short-term than effect, the in lot use then, accounts, that getting liquidity. And redeeming rather of sit by do as cash. we it X.XX% we're having this, a a out, you

we a going further be consideration our our the haven't of gotten drawn And then, – to many fund. it, are our SBIC SBIC having on in many of investments this is summer license be are to going deals and

be are probably cost. the – debentures, relever SBIC which – we most we those re-lever, using a as when so, that again, grow all-in X% for And and our we'll investments criteria, about portfolio fit SBIC

also were a it, re-leveraging And substantially be be we would like-kind forward issue – the grade. should lower. then, like So, kind the if improved it substantially to

it decision. financial a in, was all So, a corporate sort of

Benjamin Zucker

and nice and I do are who capital, SBIC with weighted vehicle. have for Yeah. some these going things people think the there your the thinking you to really you the where about I the the earnings of looking power removal hear X.XX%, it, of it's funded cost whatever, fully all-in down line call notes then that to of at,

the missed environment operating might've challenging which of pressure, I your any, Mike, think weeks, of you if spreads out component the you downward with few mentioned, and last the portfolio all-in your on yield? settle your you're curious where I kind that Obviously, over I and LIBOR about do is but bottom just much see seeing that has over can one go guess, from competition on lastly, pick seemed to comments increased LIBOR yield, might how this, but you here?

Michael Grisius

capital which I think rate at today. of what's the market reflective we're are recently deploying most

the as downward capital is of lower are yields cost of for well. of give consideration to is, One the to even some pressure beneficiary things though on assets, we there

been it's down. than referenced lower capital think we come we've with I since that It's earlier, as SBIC cost So, program. associated the of been has

the get what in rest on that diligence end lower on, do on lower et highly I X%, math A the – has an we due X% example. first get to a if achieved the the really you where that's of investment, about middle- like, marketplace you return And for cetera, of might is I'll just about to what's the which give don't extensive leverage need in we average But on XX% done to market, so, is, you, X:X we've at one deploy investment we see that nice but all-in the at can we can portfolio and shareholders. lien that accretive historically. than capital then

sure seen every ability capital deploy our that to fast thing additional about and would capital historically. are on their on bunch as diligence. a human and that additional it's to shareholders. in companies very way in so that they they been have the capital, to mistake invest too because of on good happen add, nature, that's a I just feel guard race good we've we people as put capital we deploy accretive you're often, bit when sitting that this for So, The portfolio focused making sometimes We're we work let down that is

ramp of that up has investment Fortunately, pace for continuing business years in the the our and development have made so off presence us, talent over of is people we additional can The we in as grown. sacrificing credit look well, investment without over marketplaces we're time, for quality. paying to that kind that actively any

Benjamin Zucker

with you dividend the take Yeah. back where prudent little maybe decision And of wait-and-see there. work kind to the you share counts through the to the and portfolio as out. a I shakes watch I approach think higher goes that hear

So, that's And me, Appreciate again, taking it a quarter. strong from you guys. questions. my on congratulations

Christian Oberbeck

you. Thank

Henri Steenkamp

Ben. questions, the for Thanks


back for Thank There turn other no I'd closing Christian to in the to call queue. like you. remarks. are the questions Oberbeck

Christian Oberbeck

with and everyone, Well, you, speaking look forward next today joining for to we us you thank quarter.


this and Ladies the concludes you participating. Thank gentlemen, for conference call.

may You have a Everyone, disconnect. day. great now