Palmer Square Capital BDC Inc.

Welcome to Palmer Square Capital BDC's fourth quarter and year-end 2025 earnings call. At this time, all participants are in listen-only mode. A question and answer session will follow the prepared remarks. As a reminder, this conference call is being recorded. At this time, I'd like to turn the call over to Jeremy Goff, Managing Director. You may begin.

Welcome to Palmer Square Capital BDC's fourth quarter and year-end 2025 earnings call. Joining me this afternoon are Chris Long, Chairman and Chief Executive Officer, Jackie Long, Chief Investment Officer, Matt Bloomfield, President, and Jeff Fox, Chief Financial Officer and Director. Palmer Square Capital BDC's fourth quarter and fiscal year-ended 2025 financial results were released earlier today and can also be accessed on Palmer Square's Investor Relations website at palmersquarebdc.com. We have also arranged for a replay of today's event that can be accessed on our website. During this call, I want to remind you that the forward-looking statements we make are based on current expectations. The statements on this call that are not purely historical are forward-looking statements. These forward-looking statements are not a guarantee of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward-looking statements, including and without limitation market conditions caused by uncertainty surrounding interest rates, changing economic conditions, and other factors we identified in our filings with the SEC. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions can prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions can be incorrect. You should not place undue reliance on these forward-looking statements. The forward-looking statements made during this call are made as of the date hereof, and Palmer Square Capital BDC assumes no obligation to update the forward-looking statements unless required by law. To obtain copies of SEC-related filings, please visit our website at palmersquarebdc.com. With that, I will turn the call over to Chris Long.

Good afternoon, everyone. Thank you for joining us today for Palmer Square Capital BDC's fourth quarter and year-end 2025 conference call. On today's call, I will provide an overview of our fourth quarter results and full year highlights, touch on our market outlook and competitive positioning, and then turn the call to the teams to discuss the current industry dynamics at play, our portfolio activity, and financial results. During the fourth quarter, our team deployed $91.4 million of capital and generated total and net investment income of $29.8 million and $13.1 million, respectively. We delivered net investment income of 41 cents per share covering our 36 cent per share fourth quarter base dividend and paid a 43 cent per share total dividend, which includes a 7 cent supplemental distribution. As we previously emphasized, we follow a distribution strategy that maximizes cash returns to our investors. In that spirit, we continue to aim to pay out nearly all of our excess earnings in the form of a supplemental dividend. Additionally, We recently announced our January NAV per share of $14.48. As the only publicly traded BDC to disclose NAV on a monthly basis, we believe we provide a unique level of transparency and accountability, giving shareholders regular insight into our performance in the evolving market. Throughout 2025, uncertainty was the norm, shaped by tariff policy, evolving geopolitical dynamics, and a heightened focus on the trajectory of rate cuts. We also saw reasons to be optimistic toward the end of the year, including an improvement in deal momentum and increasing sponsor engagement, most notably the $55 billion take private of Electronic Arts, which will require approximately $20 billion in debt financing and the approximately $18 billion take private of Ologic. Before I hand it over to Angie, I want to spend some time discussing why we feel confident in our software portfolio, despite the heightened concerns around AI-driven disruption in recent weeks. For background, our investment preference in software has skewed towards mission-critical enterprise platforms in areas such as cybersecurity, IT infrastructure, and ERP systems. Within these subsectors, we are lending to large highly scaled, and deeply embedded providers that have meaningful profitability and cash flow. We found that these large enterprise platforms tend to be backed by large, sophisticated private equity sponsors and believe their capital structure provide meaningful equity cushions below our senior secured loans. We are most comfortable with these mission-critical enterprise platforms given they are ingrained across entire organizations, have a high cost of failure with tangible failure risk, in many cases are systems of record, and require nearly 100% uptime and accuracy levels. Given there is little room for margin of error in these types of platforms, we believe they have a very large moat surrounding them, regardless of the trajectory of AI. Additionally, in our experience, these providers frequently have a higher incumbency advantage and a longer lead time to develop in-house AI solutions and react to market changes. most of which are already in advanced stages. We believe another advantage is the fact that all of the data these software companies have collected across industries will, in theory, make their AI better than their more nascent peers as data quality underpins all AI influence. Further, as it relates to sector exposure, I'd like to reiterate that PSBD's portfolio is highly diversified by industry and size, with 42 different industries represented and our 10 largest investments comprising just 10.9% of the overall portfolio. At present, software comprises less than 11% of our overall portfolio. As we kick off 2026, our investment strategy and approach to portfolio management that has served us well for nearly two decades remains unchanged. We believe that active credit management, when executed properly, can generate attractive total returns in excess of yield alone, and that our focus on credit selection combined with our core competency of locating relative value will drive strong outcomes. With that, I will hand the call over to Angie.