Fidus Investment Corporation

Good day and welcome to the FIDUS first quarter 2025 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist 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 touch-tone phone. 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 Jody Burfering from LHA. Please go ahead.

Thank you, Danielle, and good morning, everyone, and thank you for joining us for FIDUS Investment Corporation's first quarter 2025 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. Vitus 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 fdus.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 Finest Investment Corporation. Although management believes these statements are reasonable based on estimates, assumptions, and projections as of today, May 9, 2025, 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. FIDUS 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 2025 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 rest of 2025. Shelby will cover the first quarter financial results and our liquidity position. After we have completed our prepared remarks, we'll be happy to take your questions. In the first quarter, deal activity in the lower middle market was at more modest levels, continuing the lackluster M&A trends we have been seeing. Including a couple deals held over from the fourth quarter, we continue to build our debt portfolio on the strength of our durable sponsor relationships, proven industry expertise, and investment experience. carefully and deliberately selecting portfolio companies that fit our strategy of investing in high-quality companies with resilient business models, strong cash flow generation, and achievable prospects for growth. Consistent with our strategy, we co-invested in the equity of nearly all of the new portfolio companies. As a result, at quarter end, assets under management stood at approximately $1.2 billion on a fair value basis, up 6% compared to December 31, 2024. Adjusted net investment income for the quarter was $18.5 million compared to $18.1 million in the prior year, Q1, 2024. On a per-share basis, adjusted NII was 54 cents compared to 59 cents for the same period last year, including the impact of incremental shares issued under our equity ATM program over the past 12 months. That asset value was $677.9 million, or $19.39 per share, at quarter end compared to $655.7 million or $19.33 per share as of December 31st, 2024. For the first quarter, dividends paid totaled $0.54 per share consisting of the base dividend of $0.43 per share and a supplemental dividend of $0.11 per share. For the second quarter of 2025, the Board of Directors declared a total dividend of $0.54 per share which consists of a base dividend of 43 cents per share and a supplemental dividend of 11 cents 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 25, 2025, to stockholders of record as of June 13, 2025. Originations totaled $115.6 million for the first quarter, $102.1 million of which was invested in seven new portfolio companies. Reflecting our practice of investing in industries we know well, most of our investments in new portfolio companies focused on business service companies with relatively high enterprise value multiples, and we continued to structure our debt investments with attractive loan-to-values well less than 50%. Debt investments totaled $111.6 million. First lien securities accounted for approximately 94% of the total. We co-invested in the equity of six of the new portfolio companies for a total of approximately $4 million. Subsequent to quarter end, we invested $5.8 million in first lien debt and equity in another new portfolio company. Proceeds from repayments and realizations totaled $57.3 million for the first quarter, and we monetized equity investments in two portfolio companies, MedShare Holdings and HealthFuse, both of which have been evaluating strategic alternatives for a realized gain of $13.3 million. With $58.3 million in net originations for the first quarter, our total portfolio on a fair value basis increased to approximately $1.2 billion, equal to 100.5% of cost. Our debt portfolio totaled approximately $1 billion on a fair value basis, 79% of which consisted of first lien investments and our equity portfolio stood at $137.8 million, or 11.9% of the total portfolio, at quarter end. Our portfolio is well diversified and is structured to produce both high levels of recurring income and the potential for capital gains from our equity investments. From a credit quality perspective, the portfolio remains healthy, with companies on non-accrual remaining under 1 percent of the total portfolio on a fair value basis and 3.9 percent of the total portfolio on a cost basis. With respect to the macroeconomic challenges and uncertainties associated with the administration's current trade policies, we believe our portfolio companies are reasonably insulated from the stresses and challenges that may lie ahead. Not only are they domestic businesses with limited tariff exposure, but the vast majority of them are niche market leaders with pricing power and proprietary services and products, and they have effective risk mitigation levers to pull as necessary. While M&A activity overall is currently slowing down because of market turbulence, a fluid macroeconomic environment, and a higher level of uncertainty, We have a decent outlook for originations in the second quarter based on our new investment pipeline, which consists of both new investment opportunities and add-on investments in existing portfolio companies. As we look forward, we believe we are well positioned from a capitalization and liquidity position as we expect a more interesting investment environment, which we have experienced historically in periods of high volatility. And should economic conditions deteriorate, our debt portfolio is well positioned to weather a storm, as a vast majority of our portfolio companies possess resilient cash flow generating business models that can absorb economic stresses and possess moderate leverage levels and robust equity capitalizations. As in the past, when we faced uncertainties and challenges, Our philosophy of managing the business cautiously and deliberately in the long-term interest of our shareholders keeps us active and focused on generating attractive risk-adjusted returns while preserving capital. Now I'll turn the call over to Shelby to provide some details on our financial and operating results. Shelby?