Chicago Atlantic BDC, Inc.

Good day, and welcome to the Chicago Atlantic DDC first 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 your telephone keypad, and to withdraw your question, please press star then two. Please note, today's event is being recorded. I'd now like to turn the conference over to Tripp Sullivan with Investor Relations. Please go ahead.

Thank you. Good morning. Welcome to the Chicago Atlantic BDC conference call to review the company's results. On the call today will be Peter Sack, Chief Executive Officer, Martin Rogers, Chief Financial Officer, and Dino Colonna, President. Our results were released this morning in our earnings press release, which can be found on the Investor Relations section of our website, along with our supplemental earnings presentation filed with the SEC. A live audio webcast of this call is being made available today. For those who listened to the replay of this webcast, we remind you that the remarks made herein are as of today and will not be updated subsequent to this call. Before we begin, I'd like to remind you that certain statements that are not based on historical facts made during this call, including any statements related to financial guidance, may be deemed forward-looking statements under federal securities laws because these forward-looking statements involve known and unknown risks and uncertainties that are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. We encourage you to refer to our most recent SEC filings for information on some of these factors. Congress Atlantic BDC assumes no obligation or responsibility to update any forward-looking statements. Please note that the information reported on this call speaks only as of today, May 14th, 2025. Therefore, you are advised that time-sensitive information may no longer be accurate at the time of any replay or transcript reading. I'll now turn the call over to Peter Sack. Please go ahead. Thanks, Chip. Good morning, everyone.

It's been six weeks since our fourth quarter call, and I'm more convinced that we've created a tremendous investment vehicle at Chicago Atlantic BDC. We are uniquely positioned among BDCs as the only such vehicle focused on and able to lend to cannabis companies, together with sub-strategies targeted in markets where the more traditional lenders don't provide capital. This distinctive focus allows us to deploy capital with differentiated risk-reward, and I would like to highlight our relative strengths. Our weighted average yield of debt investments as of March 31st was 16.6%, compared with the BDC average of 12.1%, according to recent BDC research from Leidenberg Thalmann. All of our debt investments are senior secured, compared with other BDCs who have an average of 19% exposure to second lien subordinated debt or equity. The weighted average secured net leverage of our portfolio companies is 1.4x, an interest coverage ratio of 3.4x. The portfolio is entirely unlevered compared with the BDC average of 1.1x. Assuming full utilization of our $100 million credit facility during the year, we will still be well below industry averages. We have no non-accruals compared with an industry average of 3.9%. Since October 1, 2024, we originated $52.8 million in gross fundings. In Q1 2025, we committed $32.3 million and funded $20.8 million. The total amount of originations was in line with what we expected for the first quarter, but the back-end timing limited the impact on our gross investment income. I expect that we will continue to ramp deployment with focus on proven operators, strong markets, diversity of cash flow, low leverage, high amortization, and robust collateral coverage. Today, we announced a $0.34 dividend, marking the third consecutive quarter at that rate. For the last four quarters, we have now declared a total of $1.27 in dividends. Our intent is to grow this component of our return to our shareholders as we continue to scale the platform. Our hope is that with more settled equity and credit markets, certainly with less volatility than we've experienced since early April, our total returns to shareholders will increase as well. Since our last reporting, the expectation for federal regulatory changes remains relatively unchanged. While the outlook for common sense reform, such as rescheduling, is positive, the timing is unpredictable, and we continue to underwrite our investments based on our borrowers' cash flow and collateral profiles in the current environment. Amid industry uncertainty, we believe Chicago Atlantic is a constant that borrowers and investors can count on. We deploy capital with consumer and product-focused operators in limited license jurisdictions at low leverage profiles to support fundamentally sound growth initiatives. Operating in a niche strategy with limited competition, we both generate yields above our BDC peers and can better manage risk. This focus positions us well for 2025, and I look forward to presenting our growth in the quarters to come.