Fidus Investment Corporation

Good day and welcome to the FIDA's first quarter 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ms. Jodi Berfening. Please go ahead, ma'am.

Thank you, Chuck, and good morning, everyone, and thank you for joining us for FIDUS Investment Corporation's first quarter 2024 earnings conference call. With me this morning are Ed Ross, FIDUS Investment Corporation's chairman and chief executive officer, and Shelby Sherrod, chief financial officer. FIDUS Investment Corporation issued a press release yesterday afternoon with the details of the company's quarterly financial results. A copy of the press release is available on the investor relations page of the company's website, at FBUS.com. I'd also like to call your attention to the customary Safe Harbor disclosure regarding forward-looking information included on today's call. The conference call today will contain forward-looking statements, including statements regarding the goals, strategies, beliefs, future potential, operating results, and cash flows of Binance Investment Corporation. Although management believes these statements are reasonable based on estimates and projections, as of today, May 3, 2024, These statements are not guarantees of future performance. Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay. Actual results may differ materially as a result of risks, uncertainties, and other factors, including but not limited to the factors set forth in the company's filings with the Securities and Exchange Commission. VITAS undertakes no obligation to update or revise any of these forward-looking statements. With that, I would now like to turn the call over to Ed. Good morning, Ed.

Good morning, Jody, and good morning, everyone. Welcome to our first quarter 2024 earnings conference call. On today's call, I'll start with a review of our first quarter performance and our portfolio at quarter end, and then share with you our outlook for the remainder of 2024. Shelby will cover the first quarter financial results and our liquidity positions. After we have completed our prepared remarks, we'll be happy to take your questions. As expected, the first quarter shaped up to be very active from a new investment perspective. While repayments were on the lighter side, we put a fair amount of capital to work, redeploying proceeds from the fourth quarter, with net originations totaling $85.7 million the total portfolio on a fair value basis grew to over $1 billion. To put our investment activity for the quarter in perspective, originations of $145.9 million nearly equal the total amount invested in the first half of 2023. Consistent with our established practice, we grew the portfolio with a focus on capital preservation and the generation of attractive risk-adjusted returns. We continued to invest in industries in the lower middle market we know well, leveraging our relationships with deal sponsors and carefully selecting businesses with defensive characteristics and sustainable business models and positive long-term outlooks that generate cash to both service debt and support growth. Our debt portfolio generated adjusted net investment income of $18.1 million, an increase of 21.8% compared to $14.9 million last year, primarily reflecting higher interest income and fee income for the quarter. Taking into account the higher average share count resulting from the equity raises over the past 12 months, adjusted net investment income on a per share basis was $0.59 per share compared to $0.60 per share for the same period last year. In Q1, we paid a base dividend of $0.43 per share plus a $0.22 per share supplemental dividend for a total distribution to shareholders of $0.65 per share. For the second quarter of 2024, the Board of Directors declared dividends totaling $0.59 per share, consisting of a base dividend of $0.43 per share and a supplemental dividend of $0.16 per share, equal to 100% of the surplus in adjusted NII over the base dividend from the prior quarter. which will be payable on June 26, 2024 to stockholders of record as of June 19, 2024. Net asset value grew 3.2% to $608.3 million compared to $589.5 million. On a per share basis, net asset value was $19.36 at quarter end compared to $19.37 as of December 31, 2023. As I mentioned earlier, originations totaled $145.9 million for the first quarter. We stayed focused on investing in first lien investments, on structuring investments with a high percentage of equity cushion, and on co-investing in the equity of portfolio companies. Debt investments totaled $137.5 million, of which first lien amounted to $96.1 million, or 70%. Equity investments totaled $8.4 million. Of the $145.9 million total in originations, $94.6 million was invested in seven new portfolio companies, which were added to the portfolio primarily through M&A transactions. Proceeds from repayments and realizations totaled $60.2 million for the first quarter, consisting of debt repayments of $57 million and proceeds from the sale of equity investments of $3.2 million, resulting in net realized gains of $1.7 million, primarily from the exit of applied data corporations. Our portfolio of debt investments on a fair value basis was $916.4 million, or 87% of the total portfolio at quarter end. First lien investments are still the largest portion of the debt portfolio at 69%. Including the fair value of our equity portfolio of $131.7 million, the fair value of the total portfolio at quarter end stood at $1.05 billion, equal to 102.2% of cost, and we ended the first quarter with 87 active portfolio companies. Our portfolio remains well-structured, but is positioned to produce high levels of recurring income and the potential for enhanced returns from the sale of equity securities. Overall, our portfolio from a credit perspective remains solid with no change in the companies we have on non-accrual from the fourth quarter. While the performance of the two operating companies on non-accrual continue to improve, each of them remain higher risk situations. As a percentage of the total portfolio on a fair value basis, non-accruals represented under 1% for the first quarter. The health of our portfolio is attributable to our strict underwriting disciplines focused on carefully investing in businesses with strong and sustainable cash flow generating business models and positive long-term growth prospects. With capital preservation in mind, we remain very deliberate in our investment selection process. As we look ahead to the remainder of 2024, we are positioned to continue to grow the portfolio. Deal flow and M&A activity is at reasonable levels and slowly improving relative to 2023. That said, quality is spotty at the present time. As a result, originations for the second quarter are expected to be meaningfully lighter than the first quarter. Nevertheless, our portfolio is healthy and positioned to continue to generate adjusted NII well in excess of our base dividend to generate attractive risk-adjusted returns and grow net asset value over the long term. Now I'll turn the call over to Shelby to provide some details on our financial and operating results. Shelby?