MFIC - Earnings call transcript Q4 2024 | MidCap Financial Investment Corporation

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Operator

Good morning, and welcome to the earnings conference call for the period ended December 31, 2024, for MidCap Financial Investment Corporation. [Operator Instructions]Â I will now turn the call over to Elizabeth Besen, Investor Relations Manager for MidCap Financial Investment Corporation.

Elizabeth Besen

Thank you, operator, and thank you, everyone, for joining us today. We appreciate your interest in MidCap Financial Investment Corporation.

Speaking on today's call are Tanner Powell, Chief Executive Officer; Ted McNulty, President; and Greg Hunt, Chief Financial Officer. are is of call advise today's today's and Chairman, the available everyone Executive call portion Q&A call.Â I'd webcast Widra, on and the for that Howard recorded. being like to and they that any of Investment broadcast the Please that strictly note unauthorized prohibited. are any is MidCap property Financial Corporation form in replay audio the is about this call available in Information of our press release. press include call call your safe statements. in our customary and attention harbor conference information.Â Today's may the to release to like forward-looking also forward-looking I'd webcast regarding disclosure

headquartered this the to use Bethesda, will and information You SEC business call, should supplemental either today's Officer. the the Tanner or visit at we've our filings, SEC's most update Executive Throughout do our website the statements performance. over BDC, time, forward-looking recent everyone At website package filings information risks that We with to Powell, our the or we refer to for please To to projections Maryland. or required our I'd to refer to to by may forward-looking either lender www.sec.gov as any Financial unless call company's MFIC www.midcapfinancialic.com.Â I'd like financial a Investment the that apply well and MidCap affect make. law. undertake about the which turn portfolio remind MidCap also Corporation as contains will SEC to as Financial financial refer adversely we we our in website, to at posted our like statements MFIC's not of that obtain on Chief copies

Tanner Powell

market capital morning, by and then end I investment reported who discuss results earnings call. review us will Ted, turn yesterday overview update MFIC's the per observing providing everyone, quarter portfolio the quarter call I'll our These for perspective we an current year. detail. NII net Good Beginning year. begin a annualized with XX.X% will for our on was the for the The or then environment. And portfolio.Â Greg $X.XX for results to million $X.XX thank results and of the on we commitments. and $X.XX and you, or metrics. and of in of joining fourth-quarter return XX.X% our net call to are position and the full for an quarter, you end approximately per the investment income in we X.X%.Â During conference provide or our new ROE December income the fourth-quarter financial $X.XX after year, made for correspond investment full credit close, over share an billion performing results December we certain $X.XX NAV full the of was the made our the will of vast on is share today's share the activity of per more quarter December MFIC's Thank for market and year.Â GAAP new for of $XXX stability the down well, share equity $XX.XX December, at $X.XX commitments. for majority Elizabeth.

intense middle increase existing to observed attractive than by driven believe entry to borrowers market. market see the at core our previous middle we the in we has a in be remains compression market competitive, to been our quarter, what modest points.Â Spread we compared upper commitments commitments the on in While what new spreads leverage less

well-positioned future to results over grow are we straightforward We have to believe MFIC's coming we portfolio a the level. clear relever back quarters, our as benefit and and to gradually target plan the

assets continued that the the floating align by Income quarters.Â Taking the Rate the from acquired mergers rate significant MFIC Financial.Â Our mergers a leverage in credit as the Fund, couple deal a capacity into to took middle mergers with and generated Floating investment sell middle advantage the in completed provides loans deployed first quarter through Apollo Apollo along CEFs. do in approximately of of the or strategy, to the strength next market in liquid certain We originated proceeds the not be with with sourcing MidCap, July, and with prudently its markets leading Tactical during a able lender of Senior expect target to back, reach step We our X.Xx Fund lien a affiliation our advantage. market MidCap reminder, and

strengthens fortunate full overall the Financial. over closing billion in year includes has has access MidCap the quarter In given commitments, capital record, closed fourth a notable M&A the to lending track deploy $XXX MidCap are MidCap's given billion to U.S. we have and $XX.X and long to investment in lending $X.X what the this to of largest MidCap be billion activity with believe compete our necessary which high-yield of of more the the origination structure, the origination we not including Merx. on quarter. particularly sponsor will believe one volumes believe XXXX, origination commitments with volume provides CLO balance are by including We commitments significant teams detail, the of aligns the founded investment or close to the originated to syndicated professionals.Â MidCap of does Financial muted in market. was with closing XXXX sheet direct MFIC's capital and approximately market financial market.Â As in the for makes the XXX informed MidCap experienced middle lenders in strategy.Â Moving optimize us with core This directly discuss track to company a end, investment of the offers second market loan market vast information and across We industries, since market. cycles which in middle opportunities Greg believe either all of our and and most attractive continue our Financial we the record data XXXX. post-quarter set middle we one across broadly

like to servicing provide on I'd our As an we business. aircraft discussed fleet Russia previously, reducing Merx's are our leasing update in on focused insurance claims. investment and

totaled Those Ukraine aircraft time imposition of the MAP held to a the total approximately representing invasion at on Russian investment and sanctions from end of to MFIC's campaigns a aircraft directly are yield the originated Russia mentioned we should for providing further the of corporate as known included reminder, the terminated XX.Â In in the as invasion, Russia's Merx imposed securitization X portfolio of The have the majority lease value the Merx and due XXXX beneficial on process sanctions, February with and purchase call, portion blended were has policies insurance our EU in a airlines. capital the insurers.Â As quarter's value. updates remaining progress those last first its leases aircraft, the at agreements to in not in balance have are English multiple Merx rotation approximately the $XXX aircraft returned but and million, of investment those current of income. was compliance are covering attractive. the fair action owned is lessee announce December, finalized fair Merx portfolio Merx's certain continued across own claims Merx in on the with very X on then. contingent reinsurance of into coming on on X.X% As under substantial months.Â At and that X.X% remained MFIC's forward environment believe contingent seeking X Russia selling sales in during since for both of impact aircraft legal settled a quarter, pleased of sheet. on brought has payment our loans in aircraft total We Merx to made we look its the policy, the we courts at aircraft

we campaign, coming MFIC's with Assuming exposure quarters. sales in we are to successful decline to Merx expect our the

of Moving on to federal focused increasingly impact consumer infrastructure coming that that tariffs significant strong to economic increase are and direct recession of tight backdrop, run-up and uncertainty declined higher. The for solid market, the layoffs. remains Credit over permanently goods to economic The their stock to investors and lending past policy spending has We debt significantly the they probability low environment. XXXX. Specific a despite have sponsor-related a the for potentially the months with be AI near-term the around entered view we financial spreads and stabilization economic more sponsors in government rising. of a return seeing and environment M&A by capital rates. interest in implies mounting interest regulatory encouraging prices.Â However, capital, strong favorable rates pressure underpinned a strong to including on signs are economy, spending, decision remained activity, XXXX are a long-term on increase will the Fed's

has seek sponsors an are the levels maturities. record Repricing of increase financing debt observing of to has transactions, and and screens, extensions investments continuing important a especially in become vintage increasingly at are know, where deal you increase number we activity. middle the in to as activity source indicating notable a market currently private with in for focused.Â We As refinances address upcoming pickup sponsor continued

XX, on XX, payable over our turn XXXX, Board of dividend dividend a Ted. the of to March Turning March our declared for $X.XX XXXX. will share now call as XX, of that, per XXXX, record shareholders I With to February quarterly

Ted McNulty

the million. going everyone. our some MFIC's deploy portfolio. Thank activity capital details commitments from and December provide $XXX our mergers. you, minutes new to I'm quarter to on then the spend In Tanner. prudently in we the Good few reviewing fourth totaled investment December acquired morning, investment a quarter, continued the quarter

terms a measured As and obligor of manner, vintage this we've steady discipline in emphasized before, deploy we maintaining intend in to capital and exposure.

up new grow to desired December of is are the new gradually of to the leverage decreased in The be diversification. fortunate this weighted order commitments the market increase Financial from of borrowers on this was leverage level the spread the access We by prudent deals, points. commitments significant the to to points compared volume have X.Xx entry the to lender existing $X.X mentioned, at on spreads the MidCap maintain quarter, reflects return for presence quarter. Despite commitments closed Financial.Â As capital we believe basis necessary in MidCap approximately December made believe attractive we modest commitments We in a as commitments compared in to in quarter, incumbency. in by power commitments points, XXX it the what driven a on profile during billion originated middle believe to observed to down competition and significant risk to Financial's September given new quarter.Â We new attractive December of X.Xx the our in commitments new Tanner deploy the strong origination previous basis December to quarter the MidCap net while portfolio XX quarter, average

from was had the loans of industries. million, portfolio and excluding million. the $X and different Net $X.XX gross revolvers companies including our of million fundings totaled directly repayments, last nondirectly revolver the value acquired includes the quarter, of acquired for The repayments the have assets less XX% we from originated end high-yield investment broadly excluding assets from fair CES, CES, million. total quarter Sales XX% $XXX than were the $XX XX the and revolvers. down invested net mergers. continued syndicated across quarter. X%. to acquired the quarter, $X XXX our loans other, represented positions total, in billion mergers.Â Turning to originated At million, totaled were which December, including current Direct structured X%, In a of origination For $XXX portfolio, repayments loans the represented progress bonds, up credit make portfolio. from from from the and In acquired selling

from originated the see assets nondirectly X Page mergers. of supplement, can the you we on acquired the break earnings that we As out

Merx approximately of Lastly, total the accounted portfolio. for X%

basis.Â Specific At basis. fair figures covenant from was of one our Approximately XX% The the XX% more at which on substantially of All all funded The median had Covenant million. sponsors, on compared weighted backed down yield value and for origination million.Â The these December, portfolio at the was direct larger origination without have by decline another value average of portfolio, end of September points, XX% one XXX portfolio was a a a was to September. X December, middle the the on covenants point is in primarily the lending average or basis compared end December our from financial market approximately the direct quarter, was key in on deals, to at financial due of cost base lien to was weighted average directly the upper corporate rates. yield first average for to basis. are the the both the end cost position the generally basis on deals quality as EBITDA up differentiation The covenants. was $XX originated point XX.X% of fair of spread $XX.X are quarter. XX% least decline

Regarding credit quality, we of quality direct MFIC's remains overall credit believe the portfolio origination stable.

of any not weakness. are general observing credit We signs

and to and continued are have management show support. companies situations, managing positive The been a portfolio of by seeing handful good EBITDA liquidity.Â In teams as performance challenged effectively more evidenced of continue financial sponsor borrowers revenue and growth. financial sponsors good our Our growth we financial

portfolio. investments a higher X.Xx, of leverage commitments which end companies percentage utilization X.XXx At decrease the seen up amendment At with seeing of weighted of quarter. of base believe improvement related steady our is was decline our revolver of the portfolio interest coverage primarily believe the in covenants revolver or drawn ratio have we unchanged last for slight origination to an financial the average origination additional increased last stability. coverage ratio, health stable the of interest slightly utilization indicator that direct of coverage new weighted the December, lending are the liquidity. quarter-over-quarter. from X.Xx, revolver a December, We is up interest ratios. end the net our level the an the of in We from the was of end average in is X.Xx rates an average were saw sign from We essentially to requests the leverage quarter.Â We weighted December, and attributable At portfolio to rate

our last loans Our X is which on We net by performance mid-XXXX, to think investments were sourced value co-investment portfolio the underwriting is upon the loss down points this how value, of nonaccrual fair the December, proven data basis Financial. on date amount both be on has and nonaccrual rate MidCap quarter. began realized strategy approximate sound. the from utilizing sourced on unrealized on end cost Based basis on data prior performed.Â The the shows our fair well loans decreased quarter. around of which X.X% of investments at order, we since has and At status compared MidCap to X.X% annualized a

During income status, we exited X% total CES, the remains December for second position acquired the was nonaccrual placed representing on we of quarter, status. MFIC's PIK from investment the X.X% relatively and position the nonaccrual for approximately income one on low, that we which one full legacy year. lien and quarter

underweight past tariffs new will to the emerge. exports process turn call to the In are impact other limited we other our for results be put impacts Greg in tariffs and rely in place. policies. and as We're closely businesses I imports We any our that countries With addition, supplement over reviewing or government our portfolio will on to from to potential the well underwriting detail. changes targeted potential financial from believe should that may be in and response risks that, to the generally tariffs thus as discuss now and

Gregory Hunt

$XX.X interest a you, of by $XX.X a increase The decline driven quarter everyone. mergers, in offset Thank Total morning, income approximately impact in leverage, income our incentive the expense $X.X sequential prior in was G&A. in income quarter, fee management was for interest income compared the with results. Dividend quarter The from Ted, quarter the for good primarily as on partially due prior was increase and weighted was December $X.X at million operating an our million and $X.X December, a income million, million, down Starting other partially higher rates. compared quarter interest to by to Management the sequential cost lower offset average for quarter. to XX% the base directly by full prepayment of was December was portfolio last flat a declining investment originated expenses quarter-over-quarter.Â Net rates. in compared million by an fees, driven in from XX.X% to and increase average the by quarter approximately higher the for fee impact yield offset increase flat were income. decline

with to The pre-incentive incurred December quarter. of the increase the look subject for loss XX.X% our the due million $X.X fee fee not return the total is from offset was total MFIC's quarter. the lower is higher reminder, a a fee rolling rates, the partially and impact September fee did in As hurdle income. assets is assets during on fee merger the incentive December MFIC's a quarter. management net the fee higher of XX.X% base beginning XX-quarter net of management as during resulted back.Â Given but the look-back the feature base in quarter or and calculated the incentive quarter period, Interest declined in expense return to leverage the in by net X.XX%

full per share, For year investment per income net $X.XX. resulting a was the December $X.XX in net quarter, of income share investment

quarter, $X.XX, EPS full year or net For resulting EPS share GAAP in per of was December GAAP share income the per $X.XX. a

equity the and return on on For income XX.X% the was net investment quarter December year, annualized full and respectively. based XX.X%,

the quarter, and of of nonaccrual $XX was X.X%, were the $X.XX the from leverage for net XX% or the and that equity at on of per net quarter on approximately return respectively.Â Results that based year December million ended share. We the X.XXx. was include loss For net full a of with X.X% loss beginning quarter. annualized income the year positions net Approximately

our target July in We mergers MFIC's of in equity are connection of closed-end operating impact the with X.Xx the the with issued deleveraging funds. around given below

had $X.X we debt billion. do mentioned, see we $X.XX $XX.XX As to over a We December, no our share.Â Shifting per value approximately fair had $X Tanner prudently of and intend assets the to were end the portfolio in or leverage to and total impediment billion coming Ted of so.Â At increase and quarters, our billion capitalization.

market, points and sold earlier XX concludes million In in to forward. financing the and this of we does 'XX, on we XXXX. tightened the the corporate past has $XXX expect approximately tranches tightening was for one CLO million be have the levels are investor our proceeds being come the XXXX not basis CLO CLOs term-based on-balance market A believe year to quality CLO week. success of November to notes, points. composition We the of attractive of to until basis period spread portfolio a XXX adding XXX revolving market middle in nature due reinvestment high important April MFIC point going MFIC basis balance remaining sheet our the questions. financing of CLOs MidCap basis remarks. was on Financials, $XXX which The through CLO, The low-cost million $XXX senior late amongst tranche, closed unsecured the blended reflecting CLO, mature points the over to the which cost Operator, compared expertise, January facility. used our debt December, the CLO, down AAA inaugural an used closed priced a a of in This pay secured source XXX call open the achieved loans. tightest week repay CLO spreads in leveraging our We CLO second underlying CLO, of in single of and second Given from the next the please spread.Â The to considerably credit of this our with at a strong effectively interest. debt of due which middle

Operator

Securities. Instructions] Wells take We'll Finian first with from Fargo O'Shea [Operator our question

Finian O'Shea

full any the about if what there's Can for you post-quarter you valued in headwind Merx. was that came insurance if or recovery short? appreciate earnings comments, there talk recovery that I any of have a if or impact Tanner, the

Tanner Powell

are our The approximately thanks. recoveries mark. Yes, at

with happy very we're results. the So

Finian O'Shea

well? there a of like imply expedited capital wind-down return that or more does And as

Gregory Hunt

X Well, have that we you yes. planes I on. insurance if we do have mean, recoveries think

in mentioned, the Tanner court proceedings done are London. As

resolution of claims those And year. so expect do this we

Finian O'Shea

you a Merx likely I guess maybe franchise-wide, like feeling year nowadays next or this are year helpful. for That's thing? exit Then what the eventual like more

Gregory Hunt

that think with so has. sight significant Tanner of line reporting of be Merx able mentioned, I as a when we'll of the some sale do And we have to amount the signed are we portfolio good contracts. for

Operator

[Operator Mark next our question with Instructions]Â Â We'll from take Hughes Truist.

Mark Hughes

Or Ukraine, would is down calm and for that locked an Russia that in opportunity things already the be better If in? recoveries?

Gregory Hunt

are I insurance-based. recoveries this locked. mean, The No. is

insurers pre for. settled finalization So It's claims to it's of the that because very the what essentially the were claims the willing we hearing. are resolve the positive court been

courts, the insurance it insurers of the will by on which more trying basis. So positive think an front of to we the ultimate be was get in momentum some out conclusion the

Tanner Powell

to ground. are inextricably the claims now process what's resolution Yes, emphasize, the the insurance linked to unrelated the of to on happening

Mark Hughes

talked some You that lower. and in spreads a was the mix? leverage of then market in movement increase that? was was that Or bit How to little about contributed there much quarter the

Tanner Powell

Yes, sure. the capture Mark, remarks. Thanks, and prepared the tried in we to nuance

at pronounced or compression, the compression in our The market, than still as increase relative syndicated portfolio upper what in to We spread companies. deployments we to significant now. spreads new is as as existing at the middle right tried book or noted, are our of other do spread lower and call not rating out some still overweighting average seeing maybe run had are but we prepared as market remarks to notwithstanding more with quarter-over-quarter parts broadly

companies existing for our better we creation of drive do continue did to power not imply are the widening, to of where opportunities, incumbency so but typically this be we that new borrowers we're tight spreads just at existing such friction costs when to rather relative book. able portfolio our rest we're of credit which the to into what redeploying the versus with are kind spreads that and And intend

Mark Hughes

more How consequence for this of to kind How much book you think existing Thanks investment might just a that natural is anticipate detail. do into in recent spread current do you borrowers, your refi, more much of compression? there be the spreads?

Tanner Powell

estimate. to tough it's think I

been our lot a notwithstanding, harder would the muted. part of on and will deals account particular going average. cost of M&A higher of I there already a can is do see result, the level to, current relatively question companies. it at repricing XXX deploying answer is our made market function at into account average where on get in little a for portfolio spread or were XXX Obviously, we as look have at well. that financial can quarter, you with has But repayment XXX with so spreads than that of has alluded reinvesting on bid-ask higher the what capital your as You spread or a to done.Â And is a of sponsors The as is and of level that to of that bit

that tough to saw in would pickup certain some extent caveat bit So a that's than are i.e., and credit cases significant still creation overhang estimate because the new with we credit opportunities, true on across markets. widening and one in seen and new as stabilization in to yields a that M&A, even the grappling the you average that's market could see is of reasons creation little have, there's tight spreads as technical go of opportunities, they all capital a you've where more there and

Mark Hughes

progress XXXX? maybe in And of I year. assume should bit that's as compared income through Where merger. earlier that then a part up the we to PIK the little trend

Ted McNulty

Yes.

So thanks, Mark.

where the we should a said have interest of help. quality PIK is our that I quarters. to few performance performance and with income, watch we component of that don't as over rates names terms even be it. In be come large. handful That closely. interest you which at portfolio, down kind we the overall the last I obviously, to Street, in But the We've forecasting as with prepared rates think then underlying by remarks, of seen remain borrowers, forward.Â But the comfortable lower look very anyone's one everyone think continue does stable. else of And will credit overall, the the we in going when

Operator

question Sean-Paul next James. Adams Raymond We'll take our with from

Sean-Paul Adams

quarter. did legacy what's nonaccruals the see did there's existing of from the status nonaccrual nonaccruals only the correct the Is dip the it remaining on X And prospective for resolutions? books? portfolio I a take CEF

Ted McNulty

I'll in kind sure. that reverse. of Yes, hit

current has So too more into in or those there put going place. quarter much detail, transactions in which the that quarter, restructuring of the positions into the were on nonaccrual, number a a without stable fourth occurred

And process of standpoint, of we'll watching so kind lays supplement from a And going et a of from. nonaccrual, and all details the portfolio forward.Â Obviously, around we on cetera. be in those monitoring names the where have list, on out what's the of XX terms what's earnings watch Page nonaccrual, a came they in

mergers. And there the X names on are so yes, nonaccrual from

Operator

We'll take from Matthew with Hurwit next our question Jefferies.

Matthew Hurwit

conversation, you just can those give companies and the then on the quarter? following being on what an Naviga might recently? update to led what list happening Renovo, be nonaccrual this Seqirus Just for And added to

Ted McNulty

Yes.

try ultimate maximize So X going outcome is be amount I I mean, the addition what working we going is and well in be both the lenders And of out where kind the there by guess, going nonaccrual and of to carried and the do are those are processes going to recoveries these of underlying forward. processes Seqirus performance together as through names recoveries collaborating company debt forward. all right where of ultimate think come I as or to restructuring to of driven the for theÂ companies those terms and the of where by keep those of on

Tanner Powell

talk made issues to lot about a cash of would we been companies that flow by and all it been we also, prior that of underlying to impacted interest idiosyncratic increase about in talk a are these lot kind from of had the what has rates just the And issues these Yes. vintage say -- in COVID, each the the in I interest current by have worse business less the of companies. environment names be those the rates exacerbated within would types increase in and reinvest in and have

Matthew Hurwit

obviously of compression, headwinds you the rate and in current your And But well just sustainability then forward? earnings. spread interest supported dividend dividend, That's going Okay. confident helpful. it's by given are on how the

Ted McNulty

profile with expected origination comfortable our considering and it, very our where pace. We're is leverage

Operator

with take our from We'll KBW. Johnson question Paul next

Paul Johnson

certain the in of observing. if the on metrics, terms that you're terms what seeing, I just credit of just expand credit was little metrics that that you're stability bit In the a in wondering you could

Ted McNulty

Yes, sure.

utilization. of revolver coverage capital pointing that positive the that we pulling things capital and pretty of without are the And we've and interest terms companies kind to ratio, their also the been of working been produce facilities has in shows one on able noted that stable last out improved. which quarter-over-quarter, flow.Â And grow working then is cash just for manage quarters overall So several that has that,

part of of of interest a the I in that's opportunities in seeing rates, is of the also what new that out and interest think is but leverage box. reduction terms we're there combination the rate, part then of

leverage a few number did average tick overall, portfolio positions. at obligor if that's on weighted to down. Our you that's overall steady But primarily based a look up but an basis, that's on little it's bit, it a

Tanner Powell

Yes.

to of is emphasize consistent we it's last what and a a average. it's Ted report be we on historically, weighted composite with that and Just that reported how to part said

And on and we names remarks, mentioned in so the to it stability influenced the we in in do the with when be in or underperformers. outside coverage.Â And of that, some see idiosyncratic we've commentary called nuance across with look prepared look the the that the interest out can fact dynamics have yes, in improvement there, And consistent seen also to underlying portfolio borrowers supplement. made overall of we by the our some had we then a comments quartiles the performance some

Paul Johnson

in just restructurings. then of quarter, And helpful. some understand That's I kind the this were of there terms write-downs

that Was it were anything that few investments in this a driving particular that? of on. was depreciation the quarter? kind net driving particular there legacy going in there's Or any were assets? of But was So kind things there

Gregory Hunt

have and our that Well, nonaccrual. you of the that it, and Ted those those remarks, that I Those on the over of companies with think as were both restructurings Tanner in of in decline positions if through sponsors, were XX% we're sales looked and/or working addressed already are we said at businesses.

the going -- more they're based So value. be to valuation upon enterprise more is

So therefore, fluctuation you have more quarter-to-quarter.

Paul Johnson

Got it.

I comment. And missed Okay. last one that for then me.

the congrats In pretty That's of CLO financing, on terms pricing. that. attractive

that -- pricing with unsecured attractive at you do potentially change more market? the funding So mix all expect more in the spread going forward attractive to securitization

Gregory Hunt

have our XX do. that CLOs MidCap We with think over been out portfolio the leveraging credit I They time there. we -- Yes, off we've of to and Financial. relationship it's building

unsecured convergence the have Now And spreads spreads. if we and think X. look -- BDC space, when secured not a you you of at of there's I kind only

us spreads of But it's And that credit look favorable we use secured a source of the borrowers function you it's strength the at of type if portfolio. have, believe the of we are portfolio, for going the and the -- so unsecured, capital of what it's we inside a and -- very therefore, have forward. or it's

Operator

Wedel next take Instructions] JPMorgan. Melissa We'll question [Operator our from with

Melissa Wedel

bit been answered, the but of on wanted activity exit in Most have of volume just a follow to up and repayment activity my asked little or questions already I XQ.

post-merger to of in the think upcoming from like saw of understand you some like virtue anticipating elevated. seem the at But in bit talking you over It getting though surprised sort sort quarters, all by period. next little by about activity I'm Just of repayment just sounds net of you doing recycling deployments it to lot about capital quarters. the XQ? Even you're might like curious, leverage are you you a would the target that. few of it I'd were a of that just how been have

Ted McNulty

Yes, sure. Thanks, Melissa.

portfolio So of on and dragged side, I quarter, deployment all, the target quarter point to CEF. next third first the back minus we'll sales the every as few out, last fourth commitments last new leverage quarter -- mean, The of of or third year, we target you down the quarters. be the XX% plus by kind in of were of if of

on -- were that target. there think I was

none of that the done we're was of the almost surprise. from the say I'd CEF. with capital So a recycling

looks And track record well, with comfortable MidCap's recent will really deployment, record, -- recent be a and given will very of relevering track going it be the feel forward, deployment which pipeline really of repayments be long-term function we so what in us then our to achieve to And kind and what like. should that it will terms of I our allow relevering. goals course normal would say, back of

Melissa Wedel

the that. correctly. want realized Appreciate Okay. question. And losses we're follow-up understanding I just sure to then one make

going it pretty tables most were more those by through where close the of XQ. of some you exited had mark. drove those Just the larger positions K, losses to investments like I'm that realized that looks in to the referring in

Gregory Hunt

We're end They into right? kind also it the -- also -- we Yes. exit were of cleaning -- you come those. it did yes, to and the was what unrealized do. we realized, SOI, of And moving were the -- that's from of up you was year, typically up kind cleaning

that in correct you're analysis. So

Operator

Casey next our Alexander from question take We'll with Point. Compass

Casey Alexander

I'm capacity. of see about just quarterly has you talked because in as MidCap that how in in up substantial originations year was its leverage past, often quarter the curious limits. the the average was for you've reason the because the were didn't well And against it lower BDC origination the as actually BDC repayments. your than more And the

So was decision. is and you size -- up you it speak conscious moving given this was mean, ratio the of from not the I to seems that statements the you to previous leverage to the higher increasing What the value spreads. portfolio the that a Was up me there quarter? -- that? Can take total kept about that there of portfolio talked those it decision

Tanner Powell

think a the of sure. and we tangible think very Thanks, is estimation our tried emphasis you most I Casey. level as portfolio. for there for And I when to kind of we book quoted of MidCap, been origination, the run but in us Yes, granularity look the has that true are to stay factors, at the how management deliberately swath requisite numbers all-in team the within that a of to the number

are to quarter. number deploying last in and/or don't it as of deployment that yes, in granularity. larger chose BDCs position the as we past, the we've of its lower but was of the sizes. went that of the average build to selling kind as result we of a this aspire quarter versus are said substantial, names can to wanting given were to to see deliberate -- names you so that finally, not whatever ideally the to time, down across XXX the up. And lagged of then one in name ideally lower fact That into and in And we're was to obligors it a and But out the The get this very decision we flows -- that really, now, show that won level not Ted was part cognizant what the does about business, like wanting and what X.Xx the as a a on back or XXX really over get to average deployment, to lost to. in comfortable we we're a reflect decision number are CEF to lot level. some would quarter-over-quarter that to. quarter. with and up at And right goes ebbs get and of function obligors diverse of were We and ability alluded not decision things a actually are of comfortable any over-index feel very the happen. There of happens doesn't a run we we not XXX number And a and

not your take was deliberate the this overall, lower last not quarter, on representing a to about access comfortable and comment, part management with the this granularity, So a bit to a the of little commit than do Casey, has origination objectively, decision but deploy. very to

Gregory Hunt

as having because the cover to Yes, cover targeting have but interest and gone theme general rates maybe -- the now, just or stabilize dividend. jump the to in only is dividend, not continuing I we Casey, obviously are have down cushion think to

few redeployment added we think, then -- And quarter, projected. As the we we have Merx. which tailwinds got is some have you repricing we know, which we another headwinds, that, I have is which we is levering Obviously, to of this a cheaper up than tailwind the most and notably. financing, and

like we have to And we level target of time cover dividend sort sure comfort expand our that sort that's the when and of to to continue so make actually that, line.

the like which end of an we're right the up about point, are making, is choosing things take, at know part flexibility leverage So sort but the right want that some levering like our meaning forward, to when have I not. don't strategy, carry is the word, how be exit we choices when -- level. But we of at important we Tanner is also -- and granularity, talking in we if terms we we of luxury have loans

that. And so of we're advantage taking

into have will read levers. think don't with is some room hopefully, think I right. X into, cover exactly out Tanner the I you sort consistency should lay read that a dividend But cushion story of you in and to we can to continues the So have hopefully which quarter. different

Operator

management for questions I'll further the are there this program to any comments. no the closing line at And time. on turn back

Tanner Powell

free you of listening to today. behalf thank have team, for you, entire questions. Thank your other On to Have you you, operator. day. feel if Thank good reach everyone, any out call. Please for us the today's to a we time

Operator

Thank you you and This participation, for program. disconnect. may today's now does conclude your

MidCap Financial Investment (MFIC) 26 Feb 252024 Q4 Earnings call transcript