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SAR Saratoga Investment

Participants
Chris Oberbeck Chairman of the Board, Chief Executive Officer and President
Henri Steenkamp Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary
Mike Grisius Chief Investment Officer
Bryce Rowe Hovde Group
Casey Alexander Compass Point
Sarkis Sherbetchyan B. Riley Securities
Matt Julian Raymond James
Call transcript
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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Saratoga Investment Corp's Fiscal First Quarter 2022 Financial Results Conference Call. [Operator Instructions] At this time, I would like to turn the call over to Saratoga Investment Corp's Chief Financial and Compliance Officer, Mr. Henri Steenkamp. ahead. go please Sir,

Henri Steenkamp

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

to our quarter and release be like earnings available X the Chief Please few page release p.m. today through can our our will is distributed Chairman will our website. Chris of the press would Executive You remarks. replay A last now introductory XXth. a call presentation to in Relations July I conference XXXX and Presentation fiscal Officer, press of IR Oberbeck, section also our refer to the this over Events first in to detail. Investor who find night. link be shareholder making earnings call A turn from for

Chris Oberbeck

capitalize well the to demonstrated our and overcome weather from substantial of devastation financial this Saratoga transition welcome of and which and ramp activity. time challenges we of our pandemic, last have recovery the this companies. financial fortunate, on everyone. the up COVID-XX, the Henry, as a past you, opportunity perspective, resilience strongly and quarter the very over to portfolio in Thank the to given same underscored all to has year, of feel on Reflecting versus impact unprecedented the year, challenges, the felt as this the so aggressively Despite we market quarter ability tragic

highest reaching of levels. $XXX This grew to $XXX with million, both management we originations, quarter, under their million our assets

existing grew While maintaining this all credit NAV also portfolio per originations. bar our and also to quarter, of share record. X%, The a set extremely high we our credit quality for our $XX.XX new performance by

XX recent slide presenting reviewing as and the this in We X. of our on most the portfolio to our on our look recap XX.X%. solid months latest forward results performance capitalization. Our financial quarter of return past structure To briefly equity quarter and was

First, quarter return continuing loan quality, financial continued credit our a foundation maintaining on quarter a of high of with our industry BDC basis our to strengthen of end, this to generating by XX.X% average. XX.X% XX-month equity investments the a of level QX XX% at rating on have we highest ahead investment in trailing

As total gross unlevered our unrealized unlevered gross to of of total of $XXX date value million. QX of with IRR X% a fair cost our of current a XX% our of portfolio IRR our on and portfolio, XX.X% registering on realizations total

We originated Second, $XXX to XX% $XXX million million time quarter. investments of this offset last million last million new by the our $XXX a repayments of from a record assets as the quarter, year. under increased and quarter, XX% increase of increase $XXX this of as same from million $XX management

the four Importantly, companies well is as portfolio nine included as current portfolio with our investments, company existing new new originations robust. and follow-ons pipeline

NAV remain economic preservation Third, sheet paramount us. liquidity conditions, despite for and improving strength, balance

equity covenant end long-term million quarter was supporting with of free of Our strong, current capital mark-to-market $XXX debt. non-SBIC $XXX million structure at

draw includes at end. regulatory Our our credit leverage on $XX requirement quarter facility quarter our XXX% million exceeds a substantially end XXX% of and

debt $XXX opportunities total this is cost have portfolio all SDIC SBIC X%. to $XXX dedicated new in million the available of million our We new available to The than II with liquidity at support our II-VI of quarter in end fund. currently companies less of

to outstanding strengthens are liquidity March, commitments lending year our and $XX both issued million. XXX that position, five $XX capital undrawn existing committed by capital almost of importantly, unsecured points. we million basis also bond total In portfolio X.XXX% cost our current non-SBIC and a companies Our reduces

our of increase Directors Board share June and ended on for performance to overall XXXX. paid dividend XXXX portfolio per strong quarterly $X.XX resiliency, reflecting our the $X.XX XX, Finally, May the again XX, to quarter by decided on

least dividend payments visibility term to and continue the will portfolio intermediate on we We basis, quarterly evaluate gain fundamental a our on better at performance. economy as

as our XX, to and within XXXX quarters performance February the strong May saw key indicators, XX, ended compared quarter This XXXX. performance

year last Our $X.X million adjusted and this versus NII is $X.X quarter of quarter. both X% million last

$X.XX per XX.X%, adjusted up is up return $X.XX quarter. year, last from and Latest X% $X.XX X.X% last from up this $X.XX months $X.XX quarter, equity from on Our and share is quarter. last NII last year, XX

Our industry from $XX.XX these share And per is up XX% last X% significantly year, exceeding performance. NAV last will up later. quarter, $XX.XX, from $XX.XX provide more on and matters detail we

to committed and in the size base. remain we overall of asset long term past, our quality the advance in further As

As the than credits took has quality more you since of remains high. XX slide assets management over BDC consistently we on ago, can years X, our risen our and see under the steadily and

turn of the the diligently financial are results, deploy cautious in credit call over into same our to evolving and environment. time I would pipeline, Henry our continue to as positive that, growing working composition available now as performance while to We back review to we the this this being like as portfolio. well our trend capital With at appropriately our

Henri Steenkamp

The compared $X.XX, X% capital last Adjusted to same QX. highlights incentive $X.X second accrual $X.XX of metrics quarter our net to the Thank last million for was last shares NII from outstanding incentive weighted you, ended up per remained the from last quarter last unrealized increase common from X year's reflects $X.XX quarter. million year share Slide primarily largely per average higher and May the up year, investments income from interest shares and up amount the quarter million and was XX% for adjusted calculation, results last up adjusted from the share per When higher XX.X $X.XX NII Across $X.X and fee level NII three share key adjusted of $X.X XX% unchanged XX, in XXXX. in in as quarter fee up quarter. last Chris. with year. at and the other gains from and for performance each related AUM for last quarters,

quarter. adjusted portfolio up year Adjusted XX accrual. Our yield basis BDC incentive periods. our XX effective This the basis X.X% core whole fee yield last for points from and three is at X.X% yield unchanged and X.X% remained during have when last NII was up from points relatively X.X%

value net share. deferred comprised on $X.X share, was $XX.X market million gains multiples of net remaining $X.XX million generated driven or total in revised EBITDA unrealized in $XX.X assets rest Village gain total gains of investment. of a fair investments increase $X.X portfolio in in million in of portfolio, The increase the related unrealized a primarily realized the value a Saratoga the net of in the gain For $XX.X as company This million was of expense net in and/ per average million operations $XX.X weighted net net includes net improvements by or The appreciation portfolio, as fair $X.X Realty increase were our number sale this $X a from or well million Village CLO the The million across spreads, per the on to our excluding quarter, X.X% performance. appreciation a million the offset we Realty million $X.XX million investments unrealized subsidiaries. $XX in value resulting experienced Investments by $XX.X on on of appreciation investment, net investments, realization. tax from realized of and Blocker in increase

during the XX, value XXXX. We in have portfolio more the reduction May non-CLO than recovered net the of

unrealized fair includes portfolio performance gains. for value total is cost. an equity on above Return realized remains the both Our which now indicator us, X.X% important and

this remained last Our and of but $X.X equity X.X% months ahead for total management for million XX.X%. assets. quarter, Total at increased and incentive QX fees return to year interest was on management debt the base expenses, average of average $X.X fees unchanged million XX.X% expenses industry financing excluding from the of last XX

We that the of appendix the also sheet nine XX statement and past balance starting again through at included XX have we presentation income the upward slide end trends quarters and KPI our slide for from the shows the matrix in the maintained.

same of end on as slide NAV million, from unrealized the this quarter a Moving year, from million realized end, and of driven last $XX.X $XX.X $XXX.X primarily of and NAV was year million increase quarter increase at NAV $XXX.X to X; gains. $XXX.X as million by million of

end, year the last were X.X% as of up quarter was past per XX,XXX cost shares at an of per from year. $XX.XX share. repurchased at price NAV quarters. $XX.XX has same of During million average period of up $X from XX.X% end, XX a increased as share the NAV XX $XX.XX per of share of as $XX.XX QX, and

Our net has since XXXX. increase steadily has And the been per as by asset share. accretive demonstrated NAV growth value in this increased

simple basis. decrease was gains. $X.XX changes We in to share continue expenses. sequential and increase last decrease unrealized NII partially a of the X, other management $X.XX QX. the a increase $X.XX to and per see and due $X.XX increase quarter Starting in the history to increased you in of top interest non-CLO On by operating in share consistent income at of slide from the per a a in per our share offset realized on was fees. $X.XX This $X.XX base reconciliation will benefit and per from quarterly a Most major NII income share and in NAV

impact reconciles and our share including tax programs undrawn of year. well. net declared for unrealized by outlines ATM totaled May of the as $X.XX was available and powder XX million. as the the net QX on and us This The cash, Moving facility. spread were fiscal Slide realized the to of $X.XX QX dividend diluted debentures $X.XX slide; of SBA XX the QX quarter. our the half in between $XXX this by per generated dry $X.XX the available in deferred which lower X the $X.XX this and There impact XXXX, to was gains, a NAV DRIP undrawn primarily NII offset increase

quarter $XXX net additional million quarter in accretive. need the since for end all SBA This external the very fully deployed, later allows end. touch million of to an XX% assets when level And grow and cash. liquidity with debentures Mike us without accretive cost available also will an that's being by our to of it with approximately financing in of X%, origination NII $XX on

with we on net million $XX especially of recently position, XXXX, X.XXX% overall the have million. debt conservative million the into sheet. still leverage schedule $XX.X credit we fact in resulting March and facility, the public liquidity due no And in on currently term notes first for partially the our with taking offering account of mostly our rate. However, XX, time all outstanding drawn. and pleased a our next balance repaid long within remain our Included We that nature approximately nature closed proceeds $XX.X non-SBIC all four of years, the is debt maturing fixed with XXXX

would end; and we of have like fund. through Now, portfolio. one yield X X I value the on portfolio composition to fair as review Slide XX $XXX and our million investment XX companies at to quarter highlights and that in AUM move invested of CLO slide of

our core our Our X, our that assets over of last On you in is positions. yet as BDC our how assets, healthy. remains investments, time slide total X% can dropped our is of first which see lien has yield lien yield excluding well XX% as first total percentage on CLO the of

overall our quarter, yield This X.X%. decreased to

However, in increasing has positions our combination at remained unrealized is to investments core for relatively of existing primary equity the reason due our The income. and from increase is portfolio, quarterly presented yield of yield equity unchanged overall on due of a dividends positions. new that gains Much is preferred other X.X% earns to in the XX.X% to equity decrease X.X%. equity in new and asset overall equity positions

income. LIBOR points generally is lowest we floor do further greatly so XXX interest to in As expect impact a basis not see our decreases reminder,

Our an quarter, XX.X%, outperformance CLO reflecting and last yield of CLO from CLO current and our XX.X% is increase performing. is

of XX, investments terms geography. slide in highly to diversified Turning remain as by our type well as

slide in net During a the repayment $XX.X and breadth industry investments quarter, our $XXX.X made in in resulting follow-ons On $XXX.X million four amortizations the portfolio investments companies of can see million portfolio diversity in nine of you and that million represents. we and had increase past one for quarter. and new the XX,

services education services, Our and healthcare education large investments with are XX IT software. spread distinct over industries focus a on software,

as structured important has reflected remains overall in an XX.X% part CLO securities. portfolio Our to our the of finance investment interest Of total equity investment investment is strategy. and that total increased

fully equity had $XX.X years, sale million QX, investments. of or took gains past unused the two over gains nine thirds carried were to that realized or the from redemption of a the we from fiscal net other For accretive these About of to due forwards including over were capital the interests, of when sale of carry management NAV BDC. combined Saratoga early loss

market. Officer my investment performance realization an loss again ROE turn carry a Elyria our we and will this will realized the long-term grow NAV financial are like quality Grisham, over capital Chief for portfolio our portfolio Michael last quarter, Investment our healthy, position, offset now credit That call helped highlights quarter. Following forward our of in tax we to concludes future overview and cumulative I in the This consistent which review. gains has is reflected had our

Mike Grisius

Henry. you, were robust. conditions market. state market of on pre current since exceptionally conditions then minutes on comment two their the only And performance been last There where our continue couple to we a see the return to portfolio COVID-XX. investment our they I'll months of strategy. is our update. Liquidity perspective Thank describe take And current and remain

the That timing looser We as With tightening for at in and in multiples in greater in the most current wary the a for of are lenders aggregate credit seeing are first still restrictions. half of and minimum overall. staying there an volume close part thinly covenants yields, increasing regard there be pressure posture the equity terms of levels XXXX. of such leverage such to is are year deals ways, and disciplined capital requiring aggressive our and said, market outlook and levels, increasing for transaction aggressive investors deployment year capitalized covenants. pricing remainder appears quite calendar to in the and robust. base compete positive reasonable other of accelerated was And this Deals volumes, to leverage

remains notably, demonstrated be of and calendar avenue achieved seeking fiscal investments balance past this models underwriting Our continue sheets Portfolio nine platform capital businesses as strength to in continues the existing actively compelling to and companies. borrowers of be finding we are usual. XX risk deployment, our important actively in as believe this can engaged invested including with strong returns that high and adjusted we throughout have investments demonstrated the portfolio We important onset quarter. since environment. new with and be an COVID capital. with capital by we and have supportive opportunities to bar follow-ons four that deploying Follow quarter. Yet on deploy remain business critically Most with pandemic, past this management durability

term generally to have the right steps their they on that found have COVID-XX both taken We businesses. and help near long- the mitigate of effect

of the alarm $X.X only investment COVID. our are basis bankruptcy, written cost There nonaccrual. which Mac, my to been a in new this through completely have to terms. is through loans and nonaccrual prior and no million, With restructuring according quarter. off our on of All portfolio Taco their has payment paying now

of stress industries historically believe strong overall our of values durability. X.X%. portfolio reflects performed and supported exceeds an value portfolio its We that of this is $XX.X additional an fair appreciation is in the that enterprise by And debt, portfolio more strong overall also million well than last generally lien which that situations. asset our unrealized recovered now overall certain XX% quarter, in its We recognize means have of the QX basis has the performance first our in in unrealized Saratoga year. in appreciation attributes bolster by cost

no or have direct commodities exposure. We energy

is the businesses In revenue, retention. have majority portfolio a our produce revenue degree high strong comprised demonstrated of of recurring of that addition, and historically

performance and over in strategy always as approach assess our investment risk We and Our thoroughly appear order Saratoga. into slide and resulted quality business our each strong We And the business to long to understand and a to on sought BDC has has at past shareholders portfolio its of list management its the adjusted being a been the working BDCs you for accurately to our remains of strengths as a ownership possible see underlying the as long-term always to approach durable culture the paramount invested underwriting. seven characteristics. XX, approach net positive company the underwriting producing with of have returns model. realized directly focus businesses our endeavor portfolio top this can as years. had strength best with deeply stick and the We with has cost A of term. objective at the the capital accretive only in of three gains over that percentage on

Our been of in portfolio internal end. our businesses reflects but investment that for our at portfolio when strategy. overlap is credit and our significant quality has This that our we're equity quarter as attributes impact has our underlying returns. of of when we given equity meet between potential. and augmented writing to make attractive are invest those strategy to yield of strategy not also that our continue the that and shows We equity investments. those believe It portfolio, there that equity as meaningfully of protection our possess served only highest intend rating XX% experience COVID co part portfolio them strict overall this our co selectively rating companies the opportunity the in A investment upside requirements,

new certain Looking portfolio using previous at was the leverage increase investments reflecting leverage of the X.XXx slide EBITDA for X.XXx, from deals. slightly quarter, underwritten up for XX, the overall in total an

been relatively profile is maintain multiples, past industry. are able average have Now a to across which market modest risk volatility, Through about throughout. all Xx that our leverage said, the our year-to-date we below leverage

in Although, exceptionally on value the we last never profiles, rather return of consider businesses in investing are investment. dollar attractive the we confident credits strong exceed leverage business isolation, with enterprise focusing where the sustainably and models of risk our will

this generate strengthening over new In term. illustrates to ability addition, investments our the long slide

our of origination six on underscores calendar continued This and months our ongoing broadening since investments. six ends. our first This companies year follow-on the During capabilities. and have we XXXX, strong success deepening has made the emphasis XX pace added new origination portfolio quarter fiscal relationships

control to three from portfolio in originations Subsequent and of However, significant we and $XXX repayments acquisitions. for approximately a end, transactions three also of in realizations new of $XX executed we repayments exits seeing million new four follow-ons, and are change approximately resulting companies, of in $XX have with investments reduction million. quarter net million

XX; has to relationships set, new become sources led for have our relationships development continue focus our strategic slide and team's new deals. on on Moving experience that business mature. And skill to significant to

XX number months. deals Our the of environment difficult of dropped, reflecting during source last has the sourcing much

first steadily months, sheets past this portfolio XX our and competence issued Although, in of XX that X/X last and sheets actively development of us as term progress company notably, over Similarly, we as are give seeing during the XX Most volume business we our of term. relationships, loan the expand that months of we healthy year's are calendar grow notable is showing our newly pace. of the markedly increasing factors is calendar half reflecting compared environment, AUM up XX four number as are from we formed issued that that over us new inquiries. last our new from year What first goal. almost is well XXXX, investments up the shots the term XXXX the half especially a are continue as can There is pleasing of measured to to year to generating on more long efforts.

reach grow the to have First, formed is made by several continue we recently investments evidenced as our marketplace with relationships. newly we into

active Second, firms financing. with we source developed looked numerous as have preferred deep, and their to that long-term relationships established us of

growth that opportunities are industry and of expertise. to Third, see experiencing we intentionally within developed long-term continue trends, secular plenty investment which have segments we in

made XX.X% on realized of Realty see quality had on on IRR of and our solid. slide XX% gain Saratoga $X.X credit realizations. can Village unlevered a you The remains realized As approximately million single Investment portfolio of investments approximately management by repayments is gross the QX $XXX team XX, million. on overall an The IRR

C BDC gross and right, of On management. IRR SBIC XX% remaining unlevered their unrealized X% since value X unrealized the not see on overall appreciations can is Group are which interaction. view more total changes person total COVID remaining took due costs. in fundamental on also investments million is chart above the unrealized to to are you Education long-term our investments, those Saratoga our appreciation human performance. our do The combined $XXX current two our believe with We fair of the Even now in weighted over largest and its of the dependent both portfolio markdowns, Nolan

yielded approaches realized investment inverse returns. Our exceptional

Moving $XXX see SBIC as of slide first you XX, on license is invested million with fully can to our funded, end. year

asset on in focused and turn the call intensely Our like equity, already $X.X increase quarter the to time confident way over concludes second proven Investment. strength $X.X levels. of has down such always portfolio procedures. value, platform primary remain year, with focus, still million at that the at against team, available million have Credit of when in to high of same currently $XXX preserving CEO. comparing overall against the portfolio. COVID-XX the into ventures our due our of debenture changed diligence of the team times There our the We demonstrating activity This debentures resilient impact back with Saratoga which been $X last equity, equity really still itself And the been I'd the deployed. is equity. last the would our for steer, are our SBIC underwriting million of have future million and market underscored, $XXX million review $XX and which well of significantly cash our and world is to SBIC constructed has since QX to and million. while license of portfolio has and When SBA our of and the by and this we Chris? especially availability unfunded quality dropped remain be funded my

Chris Oberbeck

you, Mike. Thank

As increase quarterly outlined XXXX. dividend XX, of declared Board from Directors continue quarter, of will the share quarterly the quarter economic per at dividend both XX, last on This slide a basis, increase. reflected to the reassess $X.XX least ended for sequential this considering May company specific Board a Directors fourth on a and factors. $X.XX

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

term is slide. performance our on longer Our outlined next

three and Our returns year all at horizons. time BDCs top for the one, places five end of both

Over our index. the of XX% return return XX% the exceeded the years, last three

share years outperformance five past context see key equity on portfolio, XX, remain XX coverage debt placed broader industry our XX return dividend latest XX% months you certain above We index's and return further the XXX% yield dividend equity, in the exceeded and On interest NAV return. slide categories, the specific growth. the per to to the including Over regulatory can diverse on industry the average metrics. latest our growth, of ratio, performance months across year-over-year

it to focus are BDCs receiving. shareholders share equity return outperformance also have industry the accretively at the have latest of NAV XX of are per growing share. are only top both Not NAV the growing our which to our per We by for few reflect value done we the and one months and NAV, on we grown continue on

designed of institutions. and BDC initiatives make this attractive highly of to discussed including slide base, are in our slide differentiated is to call markets this that to drive our help more Saratoga all Investment investor We outlined capital adding competitive the our will quality size on the believe community. XX; Moving characteristics a in

include our active characteristics upgraded and recently the was BBB industry cost should of ownership X% of differentiating plus license management accretive liquidity, liquidity. investments. cost in which public A sub levels second bond grading of XX% make and Receipt portfolio in SBIC private long-term maintaining providing investment and access to our the support Our issuances. one highest low at

the equity both term quality per Solid earnings for an and under strong per management and us return NAV attractive industry high risk historic share profile. yield, accompanied historic growing at assets long industry on NAV putting NII of the and by and share, of expansion leading top

portfolio current future the remain high addition, historically quality term. and like investment balance In I'd well shareholders liquidity our oil and capital in battling Saratoga ongoing the shareholders and the to and long that of confident the contains thank And tested underwriting historically for industries all as exposure team, management strategy sheet, again call We standards including the that will strong conventionally minimal our gas I credit challenges to serve cyclical through industry. experienced open like environment. In to our our for and structure will closing, near now in benefit their support. questions. would in

Operator

the line from Rowe Hovde. [Operator Instructions] come of Our first from Bryce will question

BryceRowe

interesting about up ask portfolio prepared see that Hi, of the good comments wanted of some really equity certainly and to you remarks. go to around the piece the composition I it in your morning. made

about it in quarter that levels, kind first I terms of equity is this guess around strong coming question that talk I being able investments. future to So investment do in make or opportunistic more was equity and investment why you just anticipate that those level you guess, of of equity can

HenriSteenkamp

So that's quarter, in you evidenced companies the where and especially that this valuations see have some particularly that a have performed the portfolio of noting ones good were we question, well, that past in equity of of meaningful our we're part to say, our been thing invest opportunity. given equity portfolio the would is co that always playbook has Bryce it investments. when I that companies The

that I as and that doing found good my underwriting not to upside broad to prepared very we have businesses our very that that net indiscriminately. Now, overlap well we're the well. number very very the upside. with underwrite strict requirements that we're businesses have equity very meet tend selective just remarks, We're in that indicated debt in doing respect, But careful of equity as

tend So good run the things also have to strong very business that with management potential. industries teams, that good that tailwind ownership, a in for strong have management by differentiated equity businesses model businesses good we good be upside look and

would so had thing that for well that's worked the has us, emphasize this that out of one I Saratoga. And our playbook management throughout we've is a been

the we our businesses and put where many of Realty we've So most if an Expedited, And not be recently, over or of nice investments the but look those at experiencing of of the our their and we of good potential with you or in and playbook that are some businesses look investments, support have growth, portfolio and companies years, support cases debt that only growth. debt capital, appreciation as equity Easy businesses we something invested doing. in at capital strategy highlighted a over initial for businesses can something can just been and well. continuing playbook, other recently, established you of fit is market, bearing that that are the But evidence the most Their then see, that I've amount it's whether because which Ice, we've HMN, we've fruit. years, it Village that some end in their or

MikeGrisius

Bryce, an you're of And Thus, seeing. quarter things was came well. as together this those both so sort in we same really example, the increase quarter the

BryceRowe

because yield of is And up -- to of your composition guess I that's equity this of in was kind down portfolio, follow a portfolio. portfolio it basis came to on prefer, because yes, sure. for the a calculated overall Right, that increase see interesting or that of

of detail equity coming and of income look on types within what the could only kind through maybe of about see line there's income those trying off we that other be. think statement of understand to of very you in income investments, to the schedule investments what terms might how So and that little and dividends

us helpful that I think for understand. would So to be

HenriSteenkamp

making attached a debt current most them. investing the nearly an have equity alongside equity time. we're time, when securities Typically, all the of investment, that We're return to

So doing management. we've certainly, throughout and been our that

So equity that strategy have to certainly, will opportunity portfolio. term, do yield that caution, our and term we to term that. the terrific our will near careful certainly with the that can make current is our make if on see that we But really we're occasion, our those that measured we'll And return have augment on a returns portfolio. outsize investments. over on on overall investment amount impact affect a when long we But upsize what balance near blended an confidence

not avail future. won't mean as you ordinary the wouldn't welcome that to in we that going two opportunity preferred just you preferred hopefully the a wouldn't a equity I it ourselves be equity to few future. that are I I preferred were in us. question, Now, standalone past there at straight and that I your unusual attached and thinking quarter, in equity course was two and if made look activity debt investments up one more securities with that's opportunity a have them, was common are preferred equity securities to think some strong, that investments unique bit Those combination work investments of we as specifically, put Those relationships to an that much. opportunistic capital for our to answer that investment. we investment are somewhat had a this and there and really wouldn't were little with opportunity. to in somewhat say

so that. I doing. excited we'll say have be But And we're core that's that wouldn't what to to

where of for quarter sizable in would kind deal of activity I procedure the our alongside equity an through operating you a other think making standard we're be more us. what investment investment see debt some

MikeGrisius

they And course, income see dividends, presented not growing net standalone in you or preferred it's so margin, why other interest other income dividends. Bryce, all interest those income quarter. paying are partly that line equity this correct, positions, you presented the of line, But in

the overall on the not And that yield doesn't so because therefore, overall dividend. included the X.X include in portfolio

BryceRowe

Right.

Okay.

increase I standalone Henry, to equity so part other investments. of those in part So the two specifically tied -- income is of mean, that

HenriSteenkamp

Correct.

And the obviously, big This we noted, spoken receive bit. we've as main was a fee, a origination two quarter. fee, reasons income, as one, in And the the I quarter, in other generally X% past, the put obviously, quite income. we put jumped other we structuring

then obviously those one preferred dividends the of absolutely reason positions. that's So and second is the received standalone on reasons equity

Operator

Point. Compass the question of Alexander Our from will come next line from Casey

CaseyAlexander

seeing when did morning. fee and my originations. advisory into $XXX,XXX structuring should said, already be million I I new you baking look done I instance, model structuring that? income in because in want growing How is And of broken because $XX about good you mean, at has become fee the to recurring it out. that? portion. it hi, that income, ask Yes, I I'm For you've advisory a

HenriSteenkamp

Yes, bps generally and so the income between way bps Casey, received XXX fee structuring is I would debt. think XX advisory we of of on and it

somewhere on sort noted, view record that couple back would for you because So, it last generally, again, the quarters almost, way have right to been us. to back growing, be bps. And of originations of obviously, the and of XXX between XX it's quarters as been

definitely yes, there our Absolutely. originations. a linkage interplay So, there's with and

CaseyAlexander

the by balance your quarter right. nearer $XX the get the expect the subsequent end quarter noting looking end with amount repayment the to as to All Okay. additional to to of in quarter. information, of we described that time the at you, that end usually of of Mike end million significant new out at originations the a probably what quarter, Thank come but to arguably itself net of also this originations comes generally

HenriSteenkamp

-- Oh, answer. question gosh, that's that would just to tough be

capital of unpredictable we've And calendar year, the observation the the something reflective I and to of up I good can typical pipeline, really is directly sync to they quarter. have We shaping is so of of about that a like at To of said, investments grow to the is about very interesting our how motivation done the long of of calendar in try get the rest that people we closer to more of of we do and and and of we're up. we your for for feel pace terms in Where You that's we answer feel gauge. we calendar undetermined. pace invested the haven't exact do terms we of out quarter year an is with right? the development, I of of, the about still a think, for business make. to hard as good it's an in in investment. haven't look strength as origination end our end is exactly quarters business thought given timing originations say too, that but continue shake see businesses people. the and in business don't terms really, certainly most feel going confident portfolio, a of the you I can our that our rest the see quarter the quarters question would sort that experience. that as lumpy that exits our we've lot especially have, happening just payoffs we run, to versus really so predictable Casey, making of the within lot a appetite to have lot well the relationships it

ChrisOberbeck

we the it's the to what's in, I to state have a of that's as as influence week there. Casey, but And it's Henry obviously, a matter that have deals not fairly the that really probably Hey, as maybe Mike jump the timing are delay I other. this. in just hands, all time random, and these But the one or our plate some our try deals of on And land that are things; much, pretty think, as we or what and coming our might long the something, like close and But way influence days obvious, soon fairly to would extent can. saying we way the ability able we repayments way or to some can. it's we be we

CaseyAlexander

to easy And Mike to so. questions, you. here, Thank the great. not here ask hard ask one we're fortunately, Okay, we're

MikeGrisius

That's okay. guys. Always

CaseyAlexander

portfolio one been. ever management, under it's Chris, And I looking that step assets here, ever you, a it's that been function a largest by larger is I'm than and for at the have

is the it third $X.XX quarter was XXXX. You're looking where at a in of dividend quarterly below that

increases in the portfolio, work back way acceleration its to sort reasonably the towards prior of the Given should expect growth in some level? the we pace dividend of

ChrisOberbeck

Casey, That's as at had and very substantial than you question, can level very we I recent something ever flow appreciate have that actively. origination consider we've two that more most board quarters the good before. mean, the a a had like,

ago. of growth our half quarters what like and I the horrible a a really differences the three year we're I last just pretty and into but solid So really a into like mean, pretty like don't then two, assets. you a and years And we're if XX sort in occurred. maybe outlook from look that scenarios sort looked amazing, pretty like quarter really recovery of it's have how know a looks what many substantial months,

project increase at very a all commensurate we did the that's, able you this has we've what to were last And pace our our year, to we earnings going exactly us. in not come to But so, because has it, know, as approach increasing necessarily and earnings. a not cautious took dividend been to be, with weren't stuff been

$X.XX our So yes, a -- out earnings substantial we're sitting outperform on of dividend.

so have, have the whatever have discussed prior out think hard where, I laws this deadlines out we've income. calls, tax have flexibility as they any some time, to There's to some within periods are, where but taxable and we earnings tax there's we we have, our situation distribute, we in ultimately right. there's spillover what we're and given to of earnings, going are pay

we've of but at have modest be. now what fingertips could heavy mentioned our I my have spillover last statistics have is may it spillover, and our payout, the actively, in spill year, and amount right pretty know, were at forward then to zero our reconcile a not income, dividend going you spillover that to of to quite peers, now, is equation. that we're our peers the And spillover And most quarter I to a mean looking allowed taxable levels. we're and you're of we right sort level multi of So of look, have part as with at relative as over, also our most very

enormous an right quarters to So quarter, rebalance. there's next couple not now, pressure this

have, to need have continue if address little bit And how to a plays going our so we performance, out, we're of have right. dividend. we in And time we obviously, to like see to this robust that

Operator

Riley. line from B. Sarkis Our the from comes question Sherbetchyan next of

SarkisSherbetchyan

Hi. for Good here. you my morning taking questions and thank

a little wanted go on basis, regarding kind comparing to question do and amortized to equity even Just up going of cost right. the back interests, Bryce's an

when was us investment Or some say, a which if some the part dividend? off also, driven kind to, this other do And predominantly preferred examples investments, of, will it monetize historical to or let's question would that. security expect you and then there interests, you can there? was to leave parcel So new give be, those of you opportunistic

ChrisOberbeck

past. an it much I of terms in investments, two approach we're taking that likely how And haven't that -- could with the is Henry preferred the comment only numbers of that the what in outsize investments. those thing think I investments the drive would co but in you consistent we've preferred was would the equity exact done on in be way

HenriSteenkamp

you to more Yes, some Sarkis. give color,

related And I additional increased of sort bite preferred two that say of remainder us. do that to our would equity it sort increased if pieces because thirds just the of which of think always about because just were small our of by as part in debt equity sort and positions that's of So new think was do, helpful. is to May, the from sort of investments. equity you little two that up. was of of the marked about that's investments And of investment. it dollars, purchase equity, sized, just of then I equity it playbook February hope absolute And a third value then the again, we probably, thirds, the over if existing investments, we is standard you those of, or half that was

SarkisSherbetchyan

that. Yes, Thanks super -- And helpful. for

ChrisOberbeck

an could of you real to strategic of and I no relative earlier, And we're just just what if sort just thank think repeating change said some equity. of -- Mike doing kind describe, had I our there's overlay, what in I'm what--

debt third want our of have, is sort always a per we in share. underlying of in it and just As is for of our equity. it investing And that's our as in the NAV NAV regular of about important always equity; equity, A we from with conjunction Henry accretion kind been it we get appreciation investments. our said, always way, third

right. positive, very that's So

doing, they like so So of kind this a they're really the raw pure in and return, return, other common they're will, called not opportunistic, agreed type Mike Those like of, or equity and because or, nature guaranteed duration, what are credit we're you as called they're third, of but opportunistic. was, are just to in we but remain equity, of if want of those structure exposure. really that quality bucket, is of -- think and the said terms equity we earlier preferred debt

HenriSteenkamp

but of you the be typically, think investor, we're -- the may in I influential We I a driver's the portfolio. had in we're on not of seat have mean, in respect, also typically, co question duration in seat, a that you a exit. in not terms most question an our companies the that as in have driver's we

time, sort realization exit go going of then at same if pace with supporting pace, we're team, it's debt see and what of a look the alongside sponsor, they're is certain we exit the different business exit, or And a to where our it's So an independent in consistent portfolio. maybe for a a ownership structure. would at typically, directly you sponsors to that If supporting capital management look and sponsor, that realizations that we're investing business.

Some of long investments. a more bit those are dated little

some that I also be with ones think, consistent Ice realization of, in other a of the the but pace that you today of ones our category; generally, think way was instance, little were of are realization, bit pace was dated, in one long debt. fairly category. the should the more about the Easy on it's that that those to in for tend And pace

SarkisSherbetchyan

that. Because lien on I of on into even recent in I it concerted push unsecured your kind really at basis, hasn't second obviously, cost and you're look now book first guess of a way. a a budged loans and thanks quarters, roundabout if for the this in No, more coming making And much, kind I'm to lien.

a in capital or must to to let's wanted more understand is digit much first coupon, to with if and way preferred just get is deploy that have duration So lien not I Is it's form color some something for that unsecured about different loan of of want three around right like attractive there. double call paper investment a categories this shape the it average low more just other there, more some and out increase been the years single you kind summation lien there. attractive? of kind thought you'd to Just process second to there or the

ChrisOberbeck

you're look good which the investments. first our to a of investments. wouldn't have make is directionally But alongside think I Those intending opportunity business debt mean those investments that's that of historically, I co equity to love observation. to think to is we to going done that's invest preferred just standalone circumstances; strategy what do we're we've in I suddenly and lots more unique we'd what at address see make. Yes, that pretty that are the

investments in themselves. and by to is we've out the debt returns present approach just where Now on taken securities large, trying really risk best the that any making find adjusted just

of Sometimes the see and there's debt lien. in done we risk the real that's of you in a we've return the we're think opportunities lien market, solid fewer positions. And that's in percentage first and the doing times adjusted the greater that the historically majority first much we marched junior where have second as of where There unsecured even has been are capital presently deals in lien that well, on, as positions, why market positions.

has opportunity and we really to good continue returns formula a then with intend stack, of invest and large, equity do. a a augmenting generally by well. market, opportunities the there's in Now, in at shift different will investing capital sometimes marketplace, been And that's to to us. in But what those that as correction for an the top change the the when could the

HenriSteenkamp

preferred thirds Sarkis, just look it a looking the a the his which step you and at the And whole, And companies, earlier mix, value, asked were way different obviously, over on two that, at. the look if was our growth of me just exactly other many last has investments. preferred just this of as was And from take -- But that we've obviously much than quarter called in quarters. and quarter, Mike at we've about that than for you if obviously, so when a of big million, if little one portfolio quarter two investments, one $XXX originations And at back, different. overjoyed which you dollars quarter our this total back, look you equity for maybe think And of new at we've are quarters morning. other done consistent you were and you I add I we would this follow a actually in a this of this portfolio is our sort together Yes, ones. the quarter. Mike mix our just playbook come originated, it, as and with not and but thing, follow is or years, no office third

ChrisOberbeck

investment bother less of than make capital businesses the I close are in the add get because middle many that substantial maybe can you part quarter diligences The out BDCs best co a get value to And some our grown, this on worked of of the covenants of there that thoroughly our in equity company lift though as companies they continue fall grow, our benefits bigger a those the our in really the that to investment. an and acquisitive, of source to for we're investment enjoy to play and it if we we've can would do Just with. that's to of thorough small intending structure. equity upsize to allows market, or has the we our a see initially, a us that real close a deals to we to right performing need either but they quite enterprise handful as is And will we're us to investment company's where been And been made that some us. that's allows duration relatively to in us, well. then category as our benefit work be then portfolio that grown, smaller And side do of and particularly upsize we've of underwrite for investing hopefully very of to the co the debt, deployment the well what capital, that And has where extends into which in also debt also growth capacity investment. the and business have the something do. is, think

Operator

from Our Julian Matt Raymond comes from question next James.

MattJulian

of EBITDA quarter. like appreciate on appreciation a you came good Kind three of all, morning. write-ups, GreyHeller. Anything in the color on it you and would during Passageways, looks taking names they my for first one those can Hey, And were Netreo a me or It market whether questions. there or unrealized improved from multiples? be of Any us function primarily give expanding interest? of the bulk not performance

ChrisOberbeck

Yes, good question.

So reflective exit. was Passageways of unexpected

so that's other both. a of a just valuation that two are reflecting And of up the And then that write exit. mix

have gotten scale, expansion the as of equity of quite a occurred the multiple those they've it's multiple performed scale of we investments they've But multiple both companies grow natural reason to as to that those at different So portfolio definitely And of value expansion level valuations both grown, there's the well. has for that the -- increased portfolio where well. is the in. have companies, which that has substantial portfolio because

of performance. So it's a combination

And expanded some of up to business higher well. as value the that to strong enterprise has performance a and size grow multiple

MattJulian

Okay, then. the question for different kind on me second a of term

Any still at is private Are pull potential on be seeing teams level sponsors levels. high COVID guys in forward high a obviously, to management originations are seeing. like strong. you stronger Anything commentary So levels, tax quarter originations of or changes? kind some are level, looks what from there's you're origination equity continuing elevated looking

ChrisOberbeck

wanted deal is wait and bit as to how last knows, happen I there see activity didn't would year, make I everyone The that the experience play were deals COVID quite observation down was would and because only think out. some thing a people -- the that

sold were the deals sidelines, some our so that we're companies on that of them going And to even in there were get portfolio.

a seeing a place that getting up quite to that respect, Now come you're volumes in bit. we're better transaction

from last slower spilling that I environment. current So of is some think year pace into the

in with there's seeing Fortunately, deploy origination in And in to a tick opportunities comes also well. potential though new what it result capital will in seeing up as our payoffs our you're portfolio. some even We're that that activity. in

Operator

Rowe Bryce from follow We from have a up Hovde.

BryceRowe

Thanks pricing, funding all now. are capital kind you as And right in is the attractive to of for of follow about about credit sheet. how of context market revolving the in then the month perspective thinking on the being up, callable of some balance being the as ask the of are the a structure next it in baby bonds context in taking And using you context debt wanted of capital here facility. debt future the terms the of where from

I credit use that haven't obviously revolving think here. used couple you you facility really And look back in years. that you a

about portfolio talking was bit. a Casey grown quite has your As

you'll can credit better that facility, for time bit of if kind So if puts I'm from you of takes evolution the credit Thanks. start guess it just to origination perspective. the -- a manage wondering on I'm for repayment from to some if you I look of another the facility, add use so it's source to more, use and

ChrisOberbeck

Bryce, Sure, an excellent question. that's

that bonds, addition, in call in those revolver do capital, modifications do We was us. constantly are of and us. are things open you And open markets to so do you possible these last have with. us. recent have dates the of have to revolver been our and couple see, [Indiscernible] have those are and markets to we new We also baby mentioned. diversifying we've on those And still all our we level and sources something issuance, financing low fixed the we And our can quarters, bond as evaluating foreign which working most rate a for

at looking we're So them. of all

careful call. I think, forward on here obviously, on statements we looking need this to be

right give have will, recently, of fund, facilities if like for a the So answers in been you of and we but been fronts, A think our line SBIC been us, that's yes, and we've all SBIC our SBIC our amount you for point we use to be our, had to those it that outside that an where it's a it's what we're very investments to be are needed now all as attractive and of we've environment more of to robust exactly are incredibly have out haven't for us out planning swing credit those credit point we actively that that, which of credit that, often. what SBIC in fund. specific on we are have on kind as qualifications, to considering hard be been and revolver, terms investments investments that had I accurately outside say -- revolving lot in our to to liked, those of our able on also required kind can draw drawn would I fair you,

in current you in you'll end, mind. been the reinvestment. significant these I assets I last on lower environment again, high, also management rapid, that then then of had And new get subsequent of of and important to of also, think end we kind of but for after in us think some right significant are it's in were rates growth to quarter the bonds, a capital, see But has think also, cost the terms quarter repayments, look that, quarters, our up we've under at sort of that realize so, opens two our so top I for was able institutional lending the there very all those

keeping net that's a an eye our and driving asset pipeline, and right, lot are on we our So of this. addition,

so the do of snapshot how is a are ebbs our very to but that our ongoing of do, not And sort necessarily completely we us sort and to over revolver it what important because quarter, of reflective required. the bridge flows able of, capital were element, allows needs is

our are answer a all do, markets. in what available say and a going to to try to that's going your now. just those we give goes non you pipeline as tremendous well SBIC question pipeline, how as versus a as about know pointed than overall, of we markets, we available do, but those our SP better And what's capital, into Because and at to what right, right specifically of So, can't we're amount very much exactly exactly we're our million looking of IC. from our into have $XXX our presentation, not debt SBIC you

the So for financing, XXX% there. we fund, there put because equity qualifies can already anything in funded that debt SBIC we've with

So really manage and that to type markets that we outside the need and about revolver is of relative SBIC the it's availability, pricing, right capital thing. incremental now, really, capital how

BryceRowe

was cost from to I helpful, But debt a debt. positioned perspective, Chris, of sight That's opportunity good of to extent non the all answer for are market your continue a how think that capital I a from sure. you good but only loses reduce and a kind not to appreciate an And of answer. the certain

So thanks for question. taking the

Operator

follow And Alexander from we Point. have Casey Compass another from

CaseyAlexander

Yes, mine was and answered. much. Thanks very asked

Operator

Thank moment. further you. in And I'm not questions this queue showing the any at

Chris Oberbeck

we'd Okay, of thank for and to with and you quarter. support us and speaking to for joining like their well, forward everyone attention look our And today. time call we next

Operator

participating. Thank for call. conference you today's concludes This

now may You disconnect.