Fidus Investment Corporation

Good day and welcome to the FIDUS Investment Corporation's fourth quarter 2025 earnings conference call. All participants will be in 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 a touch-tone phone. To withdraw your question, please press star and then two. Please note this event is being recorded. I would now like to turn the conference over to Jody Berfening. Please go ahead.

Thank you, Dave, and good morning, everyone. And thank you for joining us for FIDUS Investment Corporation's fourth quarter 2025 earnings conference call. With me this morning are Ed Ross, FIDUS Investment Corporation's chairman and chief executive officer, and Shelby Sharon, chief financial officer. Finest 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, February 27, 2026, 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. Finest 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 fourth quarter 2025 earnings conference call. On today's call, I'll start with a review of our fourth quarter performance and our portfolio at quarter end, and then share with you our outlook for 2026. Shelby will cover the fourth quarter financial results in our liquidity position. After we have completed our prepared remarks, we'll be happy to take your questions. During the fourth quarter, deal flow was strong. driven by a healthy M&A environment compared to earlier in the year. This resulted in originations of $213.7 million, the highest amount of capital we have invested in a quarter. From our perspective, this quarter's surge in originations was primarily related to the demand that had been pent up since Liberation Day was announced last April. which essentially froze decision-making across wide swaths of the economy and activity in the M&A market for a period of time. Once rattled markets began to settle down early in the summer, deal flow picked up in the third quarter. Also contributing to the fourth quarter surge for FIDUS were a few deals that spilled over from the third quarter. Over the course of 2025, we invested a total of $498.2 million in new and existing portfolio companies, a higher amount than in 2024. Net originations in 2025 amounted to $210.2 million. As a result, we grew the total portfolio to $1.3 billion on a fair value basis, extending our track record of steady portfolio growth since we went public in 2011. As we further built the portfolio, we continued to apply our strict underwriting standards in selecting investments and niche market leaders in the lower middle market, with proven business models that generate recurring revenue and cash flow, coupled with well-defined value creation strategies. In addition, we continued to structure our debt investments with significant loan-to-value cushions. VITAS's debt portfolio continued to perform well in the fourth quarter. Adjusted NII grew 5.1 percent to $19.4 million, boosted by higher average income-producing assets and a 60 percent increase in fee income compared to the prior year, Q4 2024. On a per share basis, adjusted NII was $0.52 compared to $0.54 for Q4 2024. We continued to over earn our base dividend of $0.43 per share and continued to pay out excess earnings. Total dividends paid in the fourth quarter were $0.50 per share. We ended the year with estimated spillover income of $1.01 per share. For the first quarter of 2026, the Board of Directors declared a total dividend of 52 cents per share, which consists of a base dividend of 43 cents per share and a supplemental dividend of 9 cents per share, equal to 100% of the surplus and adjusted NII over the base dividend from the prior quarter, which will be payable on March 30, 2026, to stockholders of record as of March 20th, 2026. Net asset value grew 13.2% to $741.9 million at quarter end, compared to $655.7 million as of December 31st, 2024. On a per share basis, net asset value was $19.55 as of December 31, 2025, compared to $19.33 as of December 31, 2024. With respect to originations in the fourth quarter, $121.5 million, or a little more than half of the $213.7 million in total originations, was invested in eight new portfolio companies, primarily in connection with M&A transactions. We invested $206.5 million, or 97%, in FIT first lien securities. In addition, we invested $3.2 million in equity securities, giving us opportunities to enhance returns. Proceeds from repayments and realizations totaled $84.7 million for the fourth quarter resulting from a mix of M&A and refinancing activity. Subsequent to the quarter end, we have invested an additional $7 million in one new portfolio company, executed numerous small add-on investments, and realized a $3.4 million gain on the exit of our equity investments in CIH Intermediate LLC. We ended the year with a portfolio totaling $1.3 billion on a fair value basis, equal to 102% of cost. First lien investments comprised 86% of our debt portfolio, reflecting the ongoing migration of our debt portfolio towards first lien securities. And our equity portfolio stood at $142.3 million, or 10.7% of the total portfolio, on a fair value basis at quarter end. Our portfolio remains well diversified by industry consisting of a mix of manufacturing, distribution, and services companies. Given the current environment, we wanted to address our software and tech enabled services portfolio. Worth noting, we have been investing in software companies for over 10 years at FIDUS alongside leading private equity firms. and it's been a strong performing industry vertical for us. As with all investments we make, we underwrite with an acute focus on determining the value proposition of a business and its overall durability, meaning its ability to thrive and generate cash flows over our investment period and beyond. With regard to software-related businesses, this includes evaluating and ultimately getting comfortable not only with the company's growth prospects and market position, but importantly, each company's technology risk, including AI risk over the past three years or so. At Q4 2025, our software and tech-enabled services portfolio So our portfolio exposed to AI opportunities and risks was $464 million, which comprised of 92% first lien debt, 4% junior debt, and 4% equity. This portfolio is well diversified across 28 total names, and all but one are backed by financial sponsors we know well who have significant expertise in the space. resulting in an average exposure per name of $17 million. The weighted average loan-to-value for this portfolio was 37%, well below our total portfolio weighted average loan-to-value of 44%. In addition, substantially all of our first lien investments are highly structured investments with at least two maintenance covenants. In short, we feel extremely good about the health of this portfolio and its long-term outlook. In addition, the characteristics of our overall portfolio remain quite positive from a credit quality and capital preservation perspective. We ended the year with non-accruals accounting for less than 1% of the total portfolio on a fair value basis and 2% on a cost basis. Overall, our portfolio is healthy and well-structured to deliver both high levels of recurring income and capital gains from monetizing equity investments. In summary, in the fourth quarter and over the course of 2025, we demonstrated that our model clearly continues to work well and that our longstanding sponsor relationships, investment strategy, and industry knowledge in the fragmented lower middle market continue to differentiate FIDUS. Looking ahead, we are starting the year with a decent level of deal flow. We expect activity levels will pick up during the year as some private equity owners are likely to need to bring certain portfolio companies to market. As we deploy capital, we intend to stay focused on our long-term goals of generating attractive risk-adjusted returns for our shareholders and growing net asset value over time. I'll turn the call over to Shelby to provide some details on our financial and operating results. Shelby?