Kayne Anderson BDC, Inc.

Hello and welcome to Kane Anderson BDC Inc's fourth quarter 2025 earnings call. All lines are in a listen only mode. After the speaker's remarks, we will conduct a question and answer session. To ask a question at this time, you'll need to press star followed by the number one on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to turn the conference over to Andy Wedderburn Maxwell, Senior Vice President.

Good morning and welcome to Kane Anderson BDC Inc's first quarter 2026 earnings call. Today I'm joined by Doug Goodwillie and Ken Leonard, co-CEOs of KBDC, Frank Carl, 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 canebdc.com. Now I'd like to turn the call over to Doug Goodwillie.

Good morning, everyone. I'm pleased to report another quarter of solid performance that demonstrates the resilience and consistency of our value lending approach despite the headwinds that the sector has faced this year. I will provide an overview of our quarter and share our thoughts around how KBDC's differentiated portfolio has managed to perform in a more challenging environment. Frank Karl will then provide a more detailed overview of our portfolio and performance before Terry Hart concludes with KBDC's financial results. For the first quarter of 2026, we generated net investment income of 43 cents per share, which represents strong coverage of our 40 cent quarterly dividend at 108%. While this was a slight decrease from the 44 cents per share we achieved in the fourth quarter, it reflects our disciplined approach to capital deployment in what continues to be an uncertain market environment. Our annualized return on equity for the quarter was a robust 10.6%, underscoring the effectiveness of our investment strategy. Our net asset value per share ended the quarter at $16.23, down 55 basis points from $16.32 in the last quarter. The small decline was due in part to some markdowns in the portfolio, which was offset in part by origination activity, some positive portfolio marks and by a creative share repurchase activity. I'm pleased to announce that our board of directors has declared a regular quarterly dividend of 40 cents per share for the second quarter of 2026. This dividend will be payable on July 16th to stockholders of record as of June 30th. Looking ahead, we remain confident in our ability to sustain our dividend throughout 2026, as we stated on our last earnings call. This confidence is grounded in several key factors. Our portfolio's defensive positioning with 93% in first lien investments. Our value lending philosophy that focuses on companies in stable and staple industries, which allows for a conservative average borrower leverage profile of just over four times. The weighted average yield on our portfolio of 10.1%. provides a solid foundation for consistent income generation while our minimal exposure to volatile sectors like software and technology at just 2% positions us well relative to many of our peers. Our portfolio continues to demonstrate strong credit quality and resilience, particularly relative to the broader private credit market. As of March 31st, 2026, non-accrual investments represented 2.5% of our debt portfolio at fair value up from 1.4% in the prior quarter. In terms of specific companies, we added SCORE and regiments last out tranches to the non-accrual status during the quarter. We also moved Arborworks off non-accrual, and we see a clear path to further improvement in the near term. While many BDCs have significant exposure to software and technology companies, often 15 to 25% of their portfolios, Our consistent adherence to underwriting standards that stress disciplined industry and loan level diversification has proven prescient as we're witnessing the private credit market's first prolonged stress test since the early stages of the COVID era. We remain focused on traditional, stable industry sectors, including industrial services, distribution, food products, and business services. Companies with durable cash flows, substantial tangible enterprise value, and discipline leverage profiles. Turning to our investment activity for the quarter, we maintained our disciplined approach to capital deployment while continuing to find attractive opportunities that meet our stringent risk-adjusted return criteria. During the quarter, we made new private credit commitments totaling $93 million, demonstrating our ability to source quality deals even in a more selective market environment. The pricing environment for new originations remains favorable with our new floating rate loans averaging 549 basis points over SOFR during the first quarter, which was 20 basis points wider than in the fourth quarter. Our total fundings for the quarter were 99.1 million, which included both new investments and draws on existing unfunded commitments from our portfolio companies. We received 74.6 million in private credit repayments and 17.4 million in BSL sales during the quarter, resulting in net funded investment activity of 7.1 million. Our balance sheet remains exceptionally strong, and we continue to maintain a conservative risk profile. As of March 31st, our debt to equity ratio stood at 1.05 times, positioning us comfortably within our target leverage range of one to one and a quarter times. Our total liquidity position of $569.7 million provides substantial capacity for accretive capital deployment. This includes $32.7 million in cash and $537 million in undrawn debt capacity under our credit facilities. The private credit market is going through a period of bifurcation in terms of performance across different investment strategies and market segments while presenting challenges for some participants It's creating opportunities for disciplined lenders. Our selective approach means we're comfortable maintaining higher liquidity levels to be more tactically opportunistic as spreads widen. M&A activity has remained lower than forecasted at the start of the year as geopolitical tensions have kept the cap on activity. However, we continue to see steady transaction flow in our core middle market segment with a noticeable uptick in activity over the past four to six weeks. The quality of deal flow remains solid and spreads have started to widen in Q1. I would be remiss if I didn't mention one of the bigger clouds hanging over our sector right now. The rapid advancement of AI and automation technologies has created significant uncertainty around business model durability and competitive positioning for many software companies. We're seeing several managers report pressure on net investment income per share, higher dividend coverage, and meaningfully declining NAP per share as they grapple with softening credit performance and increased markdowns on those positions. While we believe the general negative sentiment towards software loans is somewhat overblown, our minimal 2% exposure to the sector has insulated us from this pressure. Public BDC valuations have lagged business fundamentals with many quality managers trading at discounts to net asset value despite maintaining strong operational performance. As the market continues to differentiate between managers based on actual performance rather than just asset growth, we believe KBDC's consistent approach will be increasingly valued by both investors and the private equity sponsors who drive our deal flow. I will now pass the call over to Frank Karl to discuss our portfolio. Thanks, Doug.