Kayne Anderson BDC, Inc.

Hello and welcome to Kane Anderson BDC Inc's second quarter 2025 earnings call. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to turn the conference over to Andy Wedderburn-Maxwell, Managing Director. Please go ahead.

Good morning and welcome to Kane Anderson BDC Inc's second quarter 2025 earnings call. Today I'm joined by Doug Goodwill and Ken Leonard, co-CEOs of KBDC, Frank Karl, Senior Vice President, and Terry Hart, CFO. Following our prepared remarks, we will be available to take your questions. Today's call may include forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about the company, our current and prospective portfolio investments, our industry, our beliefs and opinions, and our assumptions. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict. Actual results may differ materially from those expressed or forecasted in the forward-looking statements. We ask that you refer to the company's most recent filings with the SEC for important risk factors. Any forward-looking statements made today do not guarantee future performance, and undue reliance should not be placed on them. The company assumes no obligation to update any forward-looking statements at any time. Our earnings release, 10Q, and supplemental earnings presentation are available on the financial section of our website at kanebdc.com. Now I'd like to turn the call over to Ken Leonard.

Thank you, Andy, and thank you everyone for joining us on the call today. I'd like to start with an overview of our financial results before discussing investment activity during the second quarter, current market conditions, and our recent investment in SG Credit, announced just after the quarter end. I'll then turn over the call to Frank Karl to go over our portfolio makeup and performance, and finally, Terry Hart will conclude with details on KBDC's financial results. As of the close yesterday, we reported solid second quarter results, generating stable net investment income of 40 cents a share and net income of 35 cents a share, representing .8% annual return on equity. During the quarter, we distributed 40 cents per share regular dividend and a 10 cents per share special dividend in conjunction with the final of three lockup releases occurring on May 21st. Our NAV at quarter end was $16.37, a .8% decline quarter over quarter, due in part to our final 10 cent special dividend payment coupled with some minor unrealized losses. At quarter end, our estimated spillover net investment income was 12 cents per share. Despite the trade and policy related disruptions across most markets during Q2 25, we had 129 million of gross new private credit investments. In the quarter, we also funded a total of 129 million, of which 101 million represented new investments and 28 million represented existing previously unfunded commitments. This is in line with private credit fundings from Q2 24 of 136 million. While Q2 25 generally represented something of a market wide slowdown, we remained quite active, particularly in the latter part of the quarter. We firmly believe that our ability to execute on our strategy, even in challenging market conditions, is representative of our value add to our private equity clients and shareholders alike. While Q2 25 was a slower quarter industry wide, we're seeing signs of improving market landscape for transaction activity. Our deal team has seen a noticeable uptick in market sentiment in recent weeks and we have seen a significant increase in total activity to match. We believe that this will lead to a solid second half of the year, anchored by a reasonably attractive macroeconomic backdrop, along with rate cut prospects, but tempered by the likely continuation of tariff noise. Transactions that we have reviewed recently and in Q2 25 mostly have average spreads over SOFR in the 500 to 600 basis point range. And our second quarter middle market loans had an average spread over SOFR of approximately 540 basis points. As always, we remain very selective and disciplined in our capital allocation. Repayment of private credit loans during the quarter totaled $72 million, up from $41 million in the second quarter of 2024, but down from $86 million in the first quarter of 2025. Given the continued relative strength of the broadly syndicated markets and our success and originations, we continued our previously stated strategy to reduce the size of our broadly syndicated loan portfolio and replace those lower yielding credits with higher yielding loans within our lending strategy. In the second quarter of 2025, we had repaid or sold out $47 million of broadly syndicated loans and have continued to strategically exit these investments in the third quarter. We remain focused on winding down our broadly syndicated loan portfolio and rotating into wider spread private credit loans over the balance of the year. When considering all funding and repayment activity, net investment activity for the quarter was $10 million. This increase raised our debt to equity ratio to .91 times above our first quarter 2025 debt to equity ratio of .86 times. The third quarter is off to a strong start, bolstered in part by our previously reported investment in SG credit, which we'll discuss later. We feel we're on pace to hit our target leverage range of one to one in a quarter in the third quarter, also continuing the execution of our arbitrage with respect to exiting our remaining broadly syndicated loans. Shifting to the portfolio, we are very pleased with the performance and health of our loan book, which remains conservatively positioned with 98% first lien senior secured loans with an average loan to value of approximately 43%. As a percentage of fair value, investments on non accrual were flat quarter over quarter at .6% of fair value. Although we did add one very small position in non accrual status in the quarter. Given the high proportion of investments where we are lead or co-lead, coupled with our highly experienced workout team, we believe we are well positioned to drive positive outcomes for our shareholders in these situations. Turning to events post quarter close, in mid-July we announced an investment into SG credit, a leading lower middle market credit platform. The investment, which is structured as an $80 million term loan structured inside of NAV, with a $34 million delayed draw facility, is immediately accretive to earnings with a yield on funded debt north of 11%. KBDC made a $12 million equity investment for .5% ownership of SG credit. Lastly, on August 5th, we launched a private placement unsecured notes offering and will provide further details post pricing. Given the recent strength in the private placement market, with spreads near their tightest levels compared to public markets, we felt this was an opportune time to continue to diversify our sources of funding. I will now pass the call over to Frank Karl to discuss our portfolio in more detail.