MidCap Financial Investment (MFIC) 7 Feb 182018 Q3 Earnings call transcript

Company Profile

Participants

Elizabeth Besen	IR, Manager
Jim Zelter	Chief Executive Officer
Howard Widra	President
Tanner Powell	Chief Investment Officer
Greg Hunt	CFO
Fin O'Shea	Wells Fargo
Terry Ma	Barclays PLC
Rick Shane	JP Morgan
Ryan Lynch	KBW
Kyle Joseph	Jefferies
Doug Mewhirter	SunTrust Robinson Humphrey, Inc
Robert Dodd	Raymond James
Christopher Testa	National Securities
Casey Alexander	Compass Point Research & Trading

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. And welcome to Apollo Investment Corporation’s Earnings Conference Call for the period ended December 31, 2017. At this time, all participants have been placed in a listen-only mode. The call will be opened for a question-and-answer session following the speakers’ prepared remarks. [Operator Instructions] I will now turn the call over to Elizabeth Besen, Investor Relations Manager for Apollo Investment Corporation. ahead. go Please

Elizabeth Besen

And operator. everyone joining for Thank thank today. us you, you

Hunt, this call in to the and Zelter, of regarding call Corporation broadcast call the Chief unauthorized webcast Officer; conference form audio Greg and press disclosure I’d earnings release prohibited. webcast today’s is call Harbor note today’s information. on Investment our in to like recorded. available they about everyone Information Chief is may to Investment Financial release. advise like are any strictly attention and are customary Powell, also Speaking Apollo include call Tanner our are Safe Today’s any Jim Executive statements. forward-looking press in the replay I’d your and forward-looking that of Officer. that President; Howard Officer Please being Chief that Widra, property

prospects future to Forward-looking business prospects and statements statements involve risks the as our including, but to, results, our limited of not portfolio our uncertainties, and companies.

to webpage, refer call financial please and update projections and Company’s risks to over like apply affect everyone which the our also this financial contains visit our statement should forward-looking the make. portfolio to that about well I’d by do package At Zelter. our as remind information or information required You to obtain To our website our law. of like SEC time, we on turn to at for not www.apolloic.com. any filings, supplemental business statements may posted a performance. as Jim I’d adversely We undertake to that statements unless shareholder that copies we our reports forward-looking registration the

Jim Zelter

quarterly the over we results some us call. And for who'll approaching then joining our turn earnings highlights. begin how discuss this additional call and followed to discussing the as morning, call thank Thank today's overview are well for had various you, an of business and for results Good briefly I'll everyone. will by our conference market; by an Elizabeth. finally, Howard, environment, the the I'll on progress Beginning activity you update We'll our in strategy. period questions. the the financial made debt investment review environment, market And detail. private our to extremely remains greater the provide open Tanner then our will quality. for call we with executing Greg lenders. then competitive cover as credit

We That And conditions. believe origination our of array continue opportunities. loosening allow strong terms funnel wide size given issuer The a to to friendly suite sponsor general us product that combination We of broad and relative of see structures. and relationships our see platform, to our find only investment the if it today's we remained long deploying credit We we of put patiently very makes in capital. our to to competitive shareholders opportunities, are capital to market. said, on term. selection opportunities for focused able while in work attractive sense expect

on of overview moving results. an to Next,

end of During was we invested net was investments leverage $X income for at which made investment the the a our nearly quarter, Net And quarter order. negative million. half was the the co-investment activity investment $X.XX strong. of Repayment pursuant was per indeed activity $XXX Net share. million quarter X.XXx. were

strategic separate long-term which During our occurred quarter, positioning. events the advanced three

combined $X.XX book power had Our long-term earnings share. stability value and but our a per loss

X.X% As decline. value $X.XX $X.XX, a net asset or result, to declined

X.X%. three share items, per these Excluding NAV declined to

redeemed funding reduces and our recognized the debt. baby our extinguishment and mid October, we last $X.XX period. approximate an XXX share call, redemption in our mentioned as of This one cost realized on loss per bonds quarter's has this year First, in payback

by oil investment $X.XX loss on gain partially marks. share offset per Second, hedge, our given reality oil per there oil, $X.XX in unrealized the of was on share

fair oil decline based hedge in value significant from our As value downside term prices hedges fundamentals. long protect us oil. investments. a The is of protected fair is risk, us upside on to based in in our of price believe investment to designed that We of of our oil the participate our against hedges whereas of reminder, underlying the our while quoted the allowing the

exit, we Third, asset Subsequent greatly a the Solarplicity unrealized portfolio share quarter as our below quarter. the of assets. long-term Despite investment quality as or enhances on of pleased fair of exited risk $X.XX reduces slightly which a are we and calendar end, recognized during the in Group investment the loss, loss exposure it our believe end the the conditional in Solarplicity our we of to income, quarter. per non-core value concentration with the our we Group, to majority non-core PIK

to stock. repurchase in during repurchase continue March quarter. have quarter, we the continued stock to And Lastly, the

Regarding NAV, the believe a that moved in in and decline on continue have the of repositioning, $X.XX distribution call focus our And we shareholders our Widra. the as on the with record With In are distribution, of returns to to we shareholders and summary, the of approved XXXX. stage strategy, yield executing term. long for in XX, the over to Howard comments, we'll those overall will March activity quarter. despite the turn believe Board a now we our pleased which next predictable to stable I'll

Howard Widra

Jim. Thanks,

halfway perspective, progress strategy. a more quantitative with we And our on our repositioning now our stated, repositioning are are Jim we portfolio plan. we believe through than As from executing pleased

hedged we of exit, qualitative we to More importantly, majority from have those non-core a or were have vast asset. we the looking exposure exited to positions or sold our perspective,

lending, Apollo finance. companies, loans We opportunity deploy lending continue market strategies which in sourced life sponsor and minor capital to asset well core backed platform, our sciences based in as corporate as by direct origination middle include

million. strategies current excluding co-invest into Apollo. weighted excluding of $X.X average weighted of all Merx, other rate continue take size billion of average ability with marks and these managed with asset advantage approximately end yield of is we core to yield July a addition, our to strategy XX.X%. with repositioning our were In core of funded the by in XX.X%. December, $X.XX have our core approximately an commencing XXXX, average we funds entities floating At Since assets The $XX billion deal

All of on this represent AINV affiliates to of are of are these Coinvestment Apollo capital $XXX we from represented total To watch and and half a our has the assets the million accruing benefits opportunities scale give lists. to coinvestment sense approximately today, seeing and amount. or you of committed by none XX% transactions. nearly coinvest its ability are

debt approximately of progress $XXX repositioning of exposure in mentioned, our the Approximately As the our portfolio, all exposure With floating approximately have lien the our their strategy. of commenced who our overall are will million in XX% turn or and average legacy assets Pro made risk outcome. investment and concentration two of XX%, of are from of to to over great hedged the forma and had first rate profile improve when remaining have floating average exposure exit increasing $XX.X lien portion shipping our loan, the corporate significantly XX% portfolio. non-core our call progress oil for million. to our improved will The improve of to non-core borrower Pro assets to in assets. average XX% Tanner and reducing forma Solarplicity, to $XXX names XX% At first rate that to $XX.X debt our borrower portfolio are million, our asset. non-core of reduce by total end approximately million exposure and increased decreased steady now we the And will value. portfolio to potential value by the continue down for for to decline we've risk Further, fair our at make exposure. as of December, the the which Solarplicity, been to volatility increased discuss had I'll exit decreasing activity.

Tanner Powell

can In competitive environment, also Howard. areas on to Thanks of of scale focused managed and ability Apollo. to our expertise we coinvest are entities take with on funds advantage Apollo's and this other opportunities by capitalize that

During $XX in of in deployed or weighted new of was $XX companies total we existing across The million investment companies. million deployed million, X.X%. and XX% made XX approximately Of yield was coinvestment the companies. portfolio million deployment average debt we the $XX eight quarter, life the eight broader capital market in a base. transactions, elevated. million activity, deployed into as the with finance activity coinvestment in asset we corporate Apart well the was trend, lender proprietary from other and lending; was Consistent into few $XX and sciences transaction. as balance $XXX repayment syndicated few

before the totaled was sales for payment Investment million During of the included quarter Appriss, activity SunEdison, the million on repayment the was sold full XX.X%. million. negative investment investment the repayments a $XXX in average of our two yield activity average on of and among and exit for XX.X%, million quarter. Teladoc, CLOs totaled was and Poseidon debt partial total IV-held repayments others. $X.X $XX The was after weighted included our repayment million repayment net investment weighted Merger, debt Debt quarter, $X Velocity in $XXX and repayment per yield Sales

the received partial reducing our structured in Craft investment exposure non-core and payment assets. on credit our also XXXX to We

XX.X% September leasing, in million XX.X% at compared of Merx million $XXX end at of December investment Turning representing was or to the to as AINV portfolio aircraft value. of end the fair $XXX of XXXX, total AINV's

well. million the of $XX.X to During net monetize we resulting And underlying AINV million compared during able strong the portfolio performance, we million. million Merx, quarter. assets. of successfully dividend $X.X $X.XX Because been the has into $X Merx's deployed $XX paid and to perform repayment quarter to a in to period, million last certain approximately repaid team Merx continues

value million across represented the Regarding X.X% at of our gas oil energy portfolio, portfolio $XXX fair December, three or and the of companies. at end

prices options If of the offset losses hedge so our an producing by prices options with mitigate partially barrel, decline, by should the selling and at on barrel. the received we partially call collar. our The investment. loss per during quarter, we work September team with may in the we hedged capital names During management project. deploy these closely million we continue into the our coming accretive additional oil against AINV more some with development Spotted Recall the hedge collars on net so premium -- options into into $XX.XX put should the our our $X.X least quarters options should of oil we to offset Hawk, entered collar structured We costless underlying prices quarter, If designed are to were respected as ranging the the from investment. third a and quarter. offset increase costless hedges purchased the WTI. $XX call support in options paid to exposure December These rise, put by costless protect value strike oil, to oil in the decline in in entering fourth X per that on price gain for premium partially underlying $XX.XX to the asset on specifically price and be of significant a funded

Given a oil, and investment of on of prices value oil in company marks. other the oil of and $X.XX these and of function the contracts of share million $X.X a The gas million oil our a loss the hedge we while is value or per current on gain the increase during function long-term or of recognize quarter is $XX.X underlying items. option share unrealized curves $X.XX

result, mismatch; while short-term mark of price gains a allowing that drop As in only realm. the offset to in oil, portfolio hedge long-term losses in a partially and price participate expected significant the the protect is us the hedge we designed the against to believe place us oil in despite

overall discussing spend Now few me the quality credit and let portfolio. a minutes

the status Behavioral near-term on Health portfolio at non-accrual status. The as the measured the over quarter. cost. interest was During No for call discuss removed Greg represented The our value performance, weighted to non-accrual the the quarter, Elements on investment by leverage remained performance other weighted With turn end relatively companies December, average that, of priced was will lien were interest I'll our financial leverage risk or our quarter. placed fair in average shortfall. to investments unchanged and weighted of at status At now of net of X.X% current X.Xx. on second X.Xx. current coverage profile and portfolio coverage portfolio who X.X% remained at non-accrual from compared investment The the liquidity due to for and investment the debt prior poor at

Greg Hunt

Thank you, Tanner.

and to the the million to for XX% for million reversal our a down the in incentive was to $X.XX accrued income investment million, down This recurring incentive Expenses Our Elements to million quarter-over-quarter fee small $XX.X revenue quarter-over-quarter quarter or fee $X $XX.X $X.X offset and $.XX $X.X fee interest to dividend September in higher quarter million the for slightly due a million on The quarter. income, to level also quarter Merx. million for primarily investment rate was due was received Elements higher We previously per a Securities. increased income income the compared income, lower related in million last quarter. per compared dividend to million Fee lower Expenses portfolio $XX.X partially non-accrual. income were quarter. of prepayment Dividend lower from and to $XX lower from by dividend quarter compared $X income income was included from was $X.XX primarily lower quarter. totaled income due to a quarter. share last compared December PIK $XX.X last Merx slightly our incentive compares $X.XX interest share million due Prepayment million income. or Recurring to quarter. the for in average primarily quarter-over-quarter slightly declined interest placing the September quarter the expense. Net

quarter, a during $X.XX the For or a quarter. the oil fair totaled portfolio to $X.X measured share of strategy a gas are We our the value. per net on $XX.X loss million compared loss net and quarter. contracts The contracts $XX.X at the from hedging September recognized million loss on million the for options

As investment our fair investment December reduced estimated at quarter Solarplicity group group Solarplicity value amount, portion The group portion mentioned, of a mark slightly the retain end, XX, value approximately upon in $XXX.X XXXX. of to December And XXst. Solarplicity the of of subsequent the our below as to lien repaid partially a significant $XX.X was including exposure first is repayment million. fair as based price million in our by debt escrow

a mid-October, acceleration X.XXX% $X.X of $XXX the end our investment a of the value realized we notes had issuance callable Solarplicity to unsecured still approximate redeemed associated notes due fair addition, In In hold we due in a our during the million. XXXX. recognize or million quarter UK loss on the Group We of of at approximately in those share declined the which September $X.XX of quarter July to Holdings, or million unamortized debt of share the net $X.X the $X.XX extinguishment they become compared of per quarterly the increased to million $X.XX operating XXXX by cost. or total, of an this the or X.X% to Net intention million $X.XX year. per notes our share It share per is current value $X.XX in per increase our In share redeem results quarter. when $XX.X our assets end at during asset of quarter. $X.X

composition, had at Turning end industries. of XX portfolio and our value to December, consisted of across XX companies the fair the a portfolio billion $X.X

the unsecured weighted XX.XX%, First preferred quarter. of at and and of lien which the debt X.XXx during includes quarter. the the equity was debt impact debt end of second common our at balance X%, the of on portfolio; liability X.XXx the cash XX% transactions, yield outstanding quarter. of represented debt million The compared And XX XX%; X%; end net September $XXX XX%. bps products And lien the we our average represented to the increased prior at unsettled had and interest to quarter structured cost of at sheet, portfolio up leverage,

cost stock buybacks for an total $X.XX, we period, the commissions, inclusive a of shares approximately Regarding price million. during $X.X purchased at of XXX,XXX average of

our operator, million, total under quarter questions. cost outstanding $XX please continued and quarter Board's remarks. call of end. to shares which have the under the our million shares XX.X to initial to repurchase for our we we $XX program shares end inception repurchases open This current through million utilized We the on prepared of fully yesterday, repurchased post plan, also the available $XXX subsequent XXBX-X approximately future And, or concludes leaving for authorization. the million of X.X% Since a

Operator

Wells Instructions] from Fargo first question of comes your [Operator And Jonathan Securities. Bock

Fin O'Shea

guys. Jonathan Hi, Thanks questions. for O'Shea this taking in our Fin for morning.

delta the you that between between to derivatives the couple of imperfect oil Just the on the explain components the through understanding companies kind a start an us of understanding hedging the that with Tanner, energy science. can Maybe price side. performance company portfolio and portfolio of is or walk delta just the

Howard Widra

you a into hedge No. account companies, a short-term I'll market price it. value the The by obviously far underlying to It's know takes do greater degree volatility. Howard. current is than that

underlying great, the the of change much because sort while better oil So of higher companies fluctuations price, that are performing the to we into volatility. don't methodology take to although oil changing account the

hedges more its presumably do, those the just doesn't value so long-term -- And change. doesn't although that mark than the much up it change doesn't because as methodology goes

of become levels company if the a the out other put and oil period loss to time, stay volatility up these go prices over stable would lesser would way, the one more. So be long the have it because hedge -- washed would at

Fin O'Shea

we some on of thank can the kind reach the expect looking at you. just sense, targets. the And line are mid-cap we allocation what percent Makes I policy What then sort know you for of healthcare as worrying life platform mid-cap names, of you think going competing down portfolio sciences like platform has lot steals, the priority looks a the on funds the other there the --are names? of it for of

Jim Zelter

the The a overlap does day-to-day what we Well, A you remember, talked considerations variety where the does indeed of that and and variety economic where the sciences knows presentation, how things is our the that in doesn't well-documented on BDC activities those been in can it into of and senior as do AINV. we the today's they that can basis activities because merit maybe care, mandate that. when up allocation said BDC of and or taken before the yield. is purchase a a this dialogue life means, like loan not the you underwrite of have actually code when for AINV constitute process as mid-cap system some of of to do, those structure ZIP is the yield the potential of run second the part other a the do much is described vehicles what team and mandate about assets that see by have mid-cap does

But the a I is have it goes does past, degree. of we again, not overlap a those concentrated there There a are a breadth as the do, and portion objectives have less in and our allocation within to is So, risk have process for that of is to those. mid-cap Howard process long-term our great which in expressed legal which portfolio.

the forward. able AINV been the appropriate to date, And transactions. So we mandate comfortable of that's has going appetite of of by AINV size be to the handled are the very

Fin O'Shea

Thank any more go views sense introduced it you Washington. on us through Thank the perceived days? how we you being just Jim. And question Can seeing you. are items you, a BDC of as on these Apollo's for your legislation into BDC regulatory give are the leadership And one given the in on pending bill senate? and other

Jim Zelter

I and company, that the terms would changes the handed affect Greg. to I industry off with leverage are shelf in getting and comments legislative ability. couple test as fairly objectives filing of would a as we aligned it say are an say and of - give our what would

of Listen, A on a and our peers. as We now. and Greg industry Joe well are at myself in and very lot Apollo DC right well going time many coordinated of as and spent lot coordinated an lobby.

that last some the may I make lot was is on, sense. some maybe there being get making getting But can this great and there that momentum. case, update legislative I think week. he we of in environment? are a what's And good going But granular intricacies Greg with know effort passed positive

Greg Hunt

Yes.

we that fit simple bill, House on I where have financing for improving Senate. working the that we supported slimmed the it's that the we think on vehicle, note to first as been when in of time the spectrum is very have important bill by both and down

a House Stivers in the both very is bill, Senate support which more introduced Also Heller and of and more Congressman, You the Congresswomen have House. bipartisan which Senator XXXX. Bill HRXXXX, Senate, Congressman a was well by in supported Senator bill Manchin

the two BDCs and down for were last in bills know And So conjunction think houses are that I -- several with down where supporting are met the we time, were the looking in SBIA have both first bill. we at we scoring on going. week also you

I the forward. am be think I that with moving legislation, tax on hopefully new will positive

things is getting But lot of there said, in easy. isn't Washington a momentum. Jim as very So done

Operator

from with Your Terry Ma is next Barclays. question

Terry Ma

the Hey, good cash morning. tax your a of of profile deductibility? how the lower the lower given also rate sense Do tax you then interest impact and have the companies, portfolio guys legislation will flow

Greg Hunt

lien don't circulated quite the be more unique And think we of we companies' our has clearly, kind Yes. any rate from affected. increasing any I benefit acceleration the on the I'll be leverage, there's it. -- the honest, less suggest than have number that first market. of been insights expensing. take would don't I analysis they think math also floating to with have Clearly, of And should focus expenditures, that lower in a capital

not our So insights unique. be would

things the players our as the as of I place. players. better not competitive that obviously of in company of in cognizant only un-levered we in company, effect frankly is look are being but Because dynamics with specific is a industries the one with much un-levered at what think

full spectrum not been like similar more and a just than kind to is yourself. goes by it the broadly think market analysts of have an industry, but and analysis our which I the So published -- that

Terry Ma

debt have term? any going for or forward you expect see in Well, Okay. changes seen demand any or to longer

Greg Hunt

Certainly and in for of not returns is an function not that arm. use debt just which a of the Often the levering to tax times LBO equity sponsors, date. of context supporting

capital. affected has demand, how model is flow model debt in no for And to It think in sponsors resulted change about our we there flow. so not material and it how and cash and cash been mitigation But of a date. demand our demand certainly has kind

Jim Zelter

is the like typically Yes. would impacts higher I a to would done just underwrite than where normally anyway. add, analysis leverage in really firm, deductibility we multiple the that as we've

it's be are of taxing in current to of X.Xx, this enterprise you the are that's we XXx buyouts or Xx, going some as our if where nor part when a rate acquisition environment, to the impact currency. desire is really Xx our get to affect debt points what really it sponsors array the being underwrite XXx, of of amount, doesn't small Xx it Xx, but that to impact to because which north ability So securities use value broad

Terry Ma

Okay. I Got you in that can prepared next you And mentioned about of steps your hanging imagine your in kind XX% it. repositioning. for most I the think low remarks to But so you talk to are a just fruits completing timeline of already repositioning? picked,

Jim Zelter

the one is I you're Sure. it think mean hanging And of just I has low fruits got right of completed. qualitatively fruit one high-hanging said, very reasons much got done I done. was largely because

time right that assets it gas will just over this of natural it some And pieces happen is oil are oil but will of move of for likely market versus in value things to as how exit after they today. And don't think a like in is the which time which term it's remains are long just sort come what the out so up. is sure, becomes because prices will we we things. their which then we short-term more bits shipping know exit and and and cash -- names, course of in ad a And when expect producing you where

a of a because it's for of clearer in it's to understand terms company, and lot to almost just investments. sort easier lot picture in invest looking so us people as the we focus and for few feel it's a like So

currently long-term worth for what what are they largely it's done. asset think we when -- what in we on it them based to neutral exit relatively impact we And the So and P&L think returning those are --regardless our has depending is

Operator

Your next Morgan. Shane from question Rick comes JP with

Rick Shane

you One the potential the for rapid. guys. about to am think, and to if context the hear potentially this you this compression? liability on before pretty and spread with the modestly that down curious going taking states. look of talk severe my little bit company Elements, you the things And it I that side of two like Hi, offset took any your things. Really value historical what you thematically in given questions happening a had what's the to of curious about what's funding written very impairment you is this recovery I'd is everybody the quarter morning. also Really in spread think is some see there? is to brand about one I of reduce talking cost the opportunity compression Thanks on then

Tanner Powell

came with $XX issues. or do various result, company of operational the and significantly company option problems to is billing. more of now be those operating proved to and the some other the more so have sponsors less, acute losses company to Yes. The is first and abuse the fund recently problems related the were And and sponsors been problems issues, losses. you background, treatment substance funding evaluating lien the the stop to those prospects over rectify as long-standing chosen for plagued a discontinuing your that question the predicament. support time contribute million year try last give this give this a and by the by way quickly of an to third-party of the Sure. to It I'll treatment new including is US. is in company's services still so the attractive substance provider the the Elements abuse the space, company, really the operational think relates prospect into it it, issues of are to and The and to to including over the across number pick census of it to But and us. reflects operational catalyzed goes recovery equity drilled kind think we their about for current having likelihood I I as mark operating

Rick Shane

issue. you're an to go of bit, that's is this describing in I we operational got Before questions little billing element just very actually what and wanted intriguing back second my

said policy issue? me to an a related changes that sense, something is If to operational more it If have reimbursement it fixable. issue would you was that's that been presumably made almost

Jim Zelter

towards recently is strategy company, said so, of case, a Well, this means in sort right. capital so operationally. the operationally driving yes, better invested census things new pretty as Tanner And of

of It you're get that it normally more just is right, efficiently. not it's side. wasn't And so to think you it operational, revenue running to -- operational streamline, it the from was get operationally it

census particularly there on ability They they valuable And their the to. positioned. is census their they And really, especially of so including census was. where sort that really strategy margin of just why here. which able they because with on to which were strongly it high spoke capital believe number not a capital market can fixed the new cost drive drive And of is well that XXX facility were third-party on is facilities

in not to this if fix operational something in as as control, totally you just So case, will. their is easy

Rick Shane

to the we say breadth remember you patient you census what And again when mean enrollment. doing, of again are --

Jim Zelter

Yes.

Rick Shane

Okay.

wanted to question. clear be the dumb rather Just ask

Jim Zelter

good No. That's a question.

Rick Shane

And then can you that and spread the to industry seeing of offset opportunity compression we talk wide. some are about funding

Jim Zelter

mean use took, say XXX. to XXX balance on but will in think, we may tried if our going But our we've on you credit long-term And out probably little credit -- we same you of our than compression be improvement but there other the if the you secured XXXX, the strategy. use some redeem notes that think to amount we as as Rick, probably I XXX I to look notes the XX% was as so Yes. just noticed probably a that we us XXX, at if better indicated our of there instead think XXXX marketplace spread help bp reduce think and you forward. of to around just some and unsecured probably bit looking facility, that's do then you unsecured but I without if you XX% is the I opportunity facility, look historically, that at opportunity bps

Operator

you. Thank

question Lynch next KBW. Our is from Ryan with

Ryan Lynch

Good morning. growth to want sets. I about opportunity and kind portfolio outlook just of talk the

actually big a can the your very So then the set, opportunity business, an I to for less has more two look has niche you at And businesses, a which into we within that backed have fee or opportunity sponsor seemed strategies flow of which lot main if mid-cap all businesses, maybe think smaller the competitive be about but AINV. competition. set maybe deals

growth when mid-cap to growth coming do growth you by more or for back that to funded about strategies? think be expect forward, do the that from fee investments So portfolio guys traditional I the the more that going sponsor

Howard Widra

we about So be too say deal, guided we are and think of first strategies, leveraged with. XX% sort will portfolio XX longer-term portfolio of legacy which mid-cap the lien another fits remainder you lien will, being we will or about some the keep still either we XX% and comfortable maybe slightly be percent Merx that right stuff to that higher if to the second other

So long-term. that's our guidance for when it's

stuff As only a more from result, of I about the portfolio. think right comes mid-cap mid-cap growth now is of because stuff the X% the

goal. achievable level, to reasonable a short-term in to playing areas. more of would expect But get and still to field the the of terms come you leveling that growth out think that So of that's long-term, of that level sort niche from we

Ryan Lynch

that quarter Okay. That's in first at accelerated XXXX the helpful. date. slowdown? repurchase if throughout continue guys certainly a remainder then the of it And pace we to quarter Should share quarter expect is that the calendar they of you

Jim Zelter

We've it's and and been pretty accretive think consistently. we company. we our We will. portfolio our to know We shareholders our know

as programs Tanner expect place, it's to accretive you in that. and us said, and should So Greg continue

Ryan Lynch

kind I I to income so. kind Should in saw $X the million forward in run significantly level quarter? of believe dividend calendar the you of larger the due going fourth or Okay income Craig the expect then to $X.X remain and increased quarter on rate mentioned think of million we increase dividend Merx Merx million dividend $X we and from from

Greg Hunt

the It's activities more quarter. Merx inside of guide a function in of a $X maybe would assets. I really of million you and towards trading No. the

Ryan Lynch

Okay.

quarter this So of portion -- it kind dividend. of was was it nonrecurring a

Greg Hunt

Yes

Ryan Lynch

just Okay. far one then one And modeling goes. as as last

negative with portfolio calendar in growth at quarter. flat in to quarter? growth portfolio in of exit we the Looking expect to term large Solarplicity a a first first be quarter, near Should

Jim Zelter

that's running position off. large Obviously,

a So do good expectation. right I think, now. We yes, pipeline I have that's mean reasonable a

quarter the through already. way partially we know You

So end we'll up be so will we where - band in we've feel like of in it been. ultimately the

you obviously of still better -- past that thing the quarter in off of by getting absorb portfolio there are in as some and year the the the terms things it's Over to other is end but paid well.

but a won't So any not of million filling be it's at as are bit with say replaced in, position to I obviously $XXX it's little just all we hole wouldn't fill --it it more.

So it takes a of transaction. bunch

Operator

next is Kyle question Your Joseph with Jefferies.

Kyle Joseph

portfolio try yes here. strategy bit Rick predict in Good sort intermediate-term? alluded for on ongoing little could I rates, future morning, just your you portfolio and year yield been the to well, that and give to that a for with short-term to I shift, combined you touch actually not, of outlook the to have if compression guys. answered. the Most But trends the am ask the spread of near-term yield mine increases wanted given

Greg Hunt

Well, give the if be. us future you can will our exactly particular tell anytime you in yield date I what a

Kyle Joseph

That would be great.

Greg Hunt

having question, you well, how we us think think I don't should in. or long-term give assets have are projecting know for business guided positive credit we the we the new been LIBOR's mean our asked we And factored that I said, that No. it. XX% that be then increasing; are you have for is we based And we building but originate. we us yield on know

compressing. more it's the market would Yield compression. yield balance know I the out the yield But compression you is you terms capital that in structure. issues. By us are we the two although know with some, Let what compressing way moving aggressive in frankly yield getting also be think

or then let are those you have, what meeting where So net we today. closely are things roughly say is out we

or which of was lower XX.X% the as XX.X% We like running sort with that. yielding Solarplicity are at really something refinances around

portfolio So compression. in that absorb we room have the to more

would rather it and of have of are at and we to that we think we fact continue XX%, we than the it think way increases the given that the LIBOR above bit saying, say So model there, now. right and we think quite cushion a

Operator

you. Thank

Mewhirter question Doug with SunTrust. is next Our from

Doug Mewhirter

you Hi, little level me capital specific BDC hedged a that about entity Could you issue that the to had to hedging subsidiary? maybe might you level. efficient the think if to a would at went -- level? bit a be in why Is dial a I more numbers production good remind program. question it I morning. and not entity the

Jim Zelter

those own so No. to There there all aren't is some decisions they these but And always in. hedge. we what hedging the don't want may levels own tied reasons companies at we sometime and done don't -- for different

So what we has sort, definitely it have what is done is done. company the informed it by

Doug Mewhirter

said of have entity? desire that you a do imagine you how an and guys they always or their interesting attractive valuable them sense. balance remarks that had bit oil for the you to any of oil the like, prices realize or offers the control And and owned higher those companies relatively exploration. downstream and assets are have just that so Okay, assets these you pay do the on you maybe -- would you your selling I don't little capitalize offers in maybe or prices looks have receiving how more versus getting makes theme, they do oil being I full balance price to operationally for at more opening further you with gas a continuing capital And elevated,

Greg Hunt

things of couple A Sure. there. Yes.

them. try we to of one each hit So

those level particular are the drilling. its a the of of will where function there a have to programs activity are you happened operated they What part obviously right, ownership yes, activity Hawk as the can the Hawk, cash is it supported into are the as asset so companies partners small a of is Spotted case is exactly draw portion of we cash Spotted themselves the percentage underlying activities has wealth company of where within Hawk that perk drilling of they flows the of expected balances said where should increased of the of they others is obviously well and the to where interesting kind --that So, be portion and period. the from in Interestingly, up? those disbursement Spotted our particular operated companies be investment not level partners. in it and

more of think reduce relevant, not in non-core to this and assets, we'll interest partners environment sort relates only to these are alluded are the in it which there including dynamic oil this. the to remind over looking exposures with themes exit, we but like the expect As gas. in repositioning; consisted be but the other illiquid that asset you that to too are of also are so they and you there would is I One time

value oil oil environment of prices companies function the of enhance done sales So as value that we to as the as irrespective and partners increased but well well. that are have encouraged drive hopefully are M&A and in by things long-term prices, these and salability the increase the

Operator

you. Thank

question with Raymond comes Dodd next James. Our from Robert

Robert Dodd

Hi, guys.

or proprietary aware I originate When at that back to into you purchase. loan in borrower? hedge actually what Going Are you the positions of to investment play oil are to and impact How question. -- take looking hedge much you does the either are within aware originate the gas whether they've part taken the presumed or you of the are loan?

Jim Zelter

and year team What our with back last the and over when made if to Let and do capital what aspect. we what of they broadly in Obviously, a hedged companies productions, and company over Tanner critical on we our and me too the downside it's invested understand did were impact And I half, portfolio. need have guys we answer this sat make not the very did. you they the a probably would that Howard an as to we a were a sure because portfolio risk doing known want repositioned above portfolio so that variety the was themselves. on decision

was up greater a value in did broad over to hedge companies of was the but and at they time the expect our loss have down this I would long in point that in place. hedging degree a go market lagging believe policy because the of time. which of have certainly and process protection which something same term we And issue. we not than done We our not the this very quarter. was so that calendar the hedge, speculative underlying commodity hedge basis went pay we valuation the value some The the is active for nature have And downside of insurance. longer-term,

production would hedging goal to a sustainable invest therefore companies methodology a in Our be lend good and pretty have that and place. to money have successful,

it necessitate are do that right to one-time, have. supportive It's now. long-term in future So very we of it. But was little but the timing we comfortable of a us calendar issue would investments not it with got

Robert Dodd

than to just is I oil on be Okay. you essentially it it you if What industry get I more so obviously hypothetically, pointed is that those hedge I company appreciate. can lending hedging stop right, say start even restaurants. issue components. for way, may more an an you the can, issues to specific

cheese E you hedge prices. can Cheese's, Chuck For

degree, to business that a something a then you the hedge change you hedges kind the you in and you industries you consumer of here to on done sale the just be that character clear, way. intention gas consider? you've oil number if is can would would of can manner actually is Can or the retail. can Does create any of in that retail synthetic brick-and-mortar You did hedge the

Jim Zelter

is intention. this So I intention. would not, say not is our that NOT our That

us our have have in underlying multi not for be active to engage AINV I in a couple future circumstances revolver. would hedges at hedging time. of to look this portfolio time of dynamics. make we We've currency at currency into expect that any degree. do rare for great We but activity One been engage long sense, done in we event, business not

Robert Dodd

I appreciate Okay. that.

Jim Zelter

directional type whole either by way being investments core exposed repositioning. risk that underlying to take the of our to the Or That's volatility. of

hedge cause trying to mitigate meant to that to kind, volatility in are sort to it this of happened commodities so So any less we of advance being of it. be exposed them, is by

Robert Dodd

Right, then that this to are through experience the there, want problems, yourself. as go Element. got what done that's just the on its issue fix on the lien due to and see be process second had in you business, quick needs over does look If thank national can right rehab you to play kind down make have lien the take one going what of a it happens the it to or some always second be your you. a you and I US likely rehab marked Because and whether it. Obviously, to of just now, substantially, business it, with

Howard Widra

of when alternative into one possible mean the will minimizing But of us other the some of we've repositioning situations downside. investing situations evaluate was for will I tenants is I to as the already obviously say value. best as any what much which we maximize created

how we that will -- us the doing will so of inform likelihood And that.

Robert Dodd

I strategy, remember that component of the Thank yes. you.

Operator

you. Thank

question Securities. with National next Testa Christopher Your from is

Christopher Testa

my questions. Most morning, good have Thank Hi, for guys. asked answered. taking you been and

Just bit given times Should obviously to curious expect one of we that steam within portfolio non-core able pretty to pick on this remaining things tougher credit the be market asset. a sell? the the still structured become that up small but probably book, asset be sales to it's that the or selling best is a to and class that

Howard Widra

but likely to come are would will they relatively because Yes. you are easy subject still and off not quickly going, to few are sell there controlling underlying our of to holders refinance still I them refinance. the equity mean parties holders should them expect or you expect--

So you in near to to dissipate should expect term. those the continue

Christopher Testa

material a along kind there originations for change and whether of and your the portion of been us quarter? the Could give to that specifically. the originations And Okay. this the weighted a And that borrowers for Got co-investment of compares on change average how your them I it. quarters color past any strategy? EBITDA in you all the appreciate sense what with has were the in

Howard Widra

we first would little EBITDA because it bit the is market the lien because a say doing a lower the bit is. opportunity on a that's where EBITDA lower loans right were I think average little

have in returns ballpark have is market. deals I think doing average that covenants the do EBITDA for better Company. is and that higher $XX now right And loans the million companies EBITDA million better we of sort and structure, you stability feel So generally first second bigger have risk-adjusted that the the that are because $XX more to we those for do lien, want lien we

million and give Company, the Company a spot of it's it's million to Because and if -- EBITDA. you but to be million million give meaningless, could sweet I $XX $XX be right. $XXX -- you So hard large by just mean $XX there it is would

Tanner Powell

comment. EBITDA I'll look the investment. And EBITDA spot-on at another have second to strategy our our quick so Howard lien it that is the at times be too of over of in average million clearly part syndicated syndicated influence of if part you we've syndicated. talked we can a our you the $XX if to a deals lien million excess our hope book strategy time past that make and $XXX look of for those with and respect still reflects But actually across in less of first but and

our origination expect our origination bit. to we and efforts So platform time focus on we that come as or would maybe over a deploying down more efforts specifically

Christopher Testa

large lot non-core portfolio some recycled that of adequate them? but from Got net obviously Do really guys might that of you've one guys assets. last the given know should Solarplicity that being just expect mentioned it. out a is for think exited obviously that And fiscal start you for portfolio investment growth your you me I that and seeing a the it seems kind pipeline we that is of modest some that enough contraction, after XXXX

Howard Widra

I an Yes. -- know already it's given unequivocal answer.

amount know the the any of necessary growth to the excess short-term we have amount that believe we type equivocate any we see, but stuffs have far Or for origination just things. me originators we those of -- keep of of of let of Obviously, in necessary objective amount AINV. second. pipeline, measures, So don't we sort

comfortable very on ability to are our we So there. get

Operator

you. Thank

is Compass Alexander with question coming Research. from Point final Our Casey

Casey Alexander

two footnote Hi. talking fourth pennies mentioned you And some are that's a share, that would this mean know. I of below of is was disposition us a a Solarplicity the slightly you just you and real think the in give quick. value would pennies penny three share, that number a Can we fair I Solarplicity, sense the mark. On a quarter that share?

Howard Widra

are it's a we I kept Yes. a also around portion of -- share escrow. at mean the proceeds a penny that but received

it's evaluate, of receive been it's under escrow, evaluation. you the XXX% if a So

pool right it's that. Bu assets revalue about you whole So at the now of we'll XXX. know

Jim Zelter

any want the all at. a great So Apollo, your for in thank Have we have on of time day you behalf Elizabeth to to or your today. team out any if you support. further questions. reach continued And of Please

Operator

conference conclude Thank today's you. call. This does

You may now disconnect.

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.