Earnings call transcript Q1 2023

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

Operator

Greetings, and welcome to the Main Street Capital Corporation, First Quarter 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded.

pleasure Investor your Relations. my with Zach now Lascar Dennard is to host, introduce Vaughan It Please ahead. go

Zach Vaughan

Thank you, first operator for conference joining and good morning for call. Street everyone. Main Capital Corporation's quarter earnings us XXXX Thank you

Director portion me Nick Operating Chief Officer; Head Hyzak, Investment for Officer. and Investment and Also David are Financial Meserve, Chief Q&A Chief Executive Jesse and participating today Morris, Street’s with of President Officer Main Joining is Private comments Officer; Group. Dwayne Managing the prepared call Magdol, and of the Chief Credit

afternoon Main call and Street be available issued May of and that is Relations a the details hour This website an until XX. results. beginning the company's press available financial replay the release at quarter of call the completion A of Investor yesterday will section today's first will document after available on the remain operating company's mainstcapital.com.

access on this replay to in included was Information how yesterday's release.

that is longer information today, reported accurate on XXXX, call also page. you at reading. X, that the replay note this accessed that therefore We only of information advised as Please time-sensitive speaks conference time are company's be and live you transcript being through on no Internet can any call May advised home and the may of broadcast the this be listening or

no the believes, future this such expressions. anticipates, of projections based and statements similar performance. of date be can are management's as the intends, may forward-looking of of are statements. call, these assumptions Today's on call contain words Many of and statements there forward-looking will identified by will, as guarantees These use estimates, or expects, should,

any to a uncertainties of no results be differ statements the which materially update these the factors implied in of forth limited including, at from and or risks, Actual required result by the Street filings Main assumes Commission, or the with Exchange but these unless and obligation found expressed not law. factors, results sec.gov. company's set may can the on in Securities other to website company's statements as

management call, Generally is non-cash or GAAP, net including financial Accounting measures, in with impact excluding U.S. net Principles or today's income During non-GAAP the NII or compensation expenses. investment will as DNII. accordance income Accepted discuss determined DNII investment distributable of

Management non-GAAP to financial appropriate refer the related believes performance and disclosures that presenting the to in financial measures amount expenses most to per-share reconciliation result Main release comparable useful DNII a settlement. compensation upon do non-cash Main Street analyzing these Please for cash directly are yesterday's of not impact Street's measures. since net and for supplemental press GAAP

basis. Net that and the a by Two ROE. NAV quarterly the additional call Main Value reported assets discussing per-share Return on and minus is increase are from total net NAV total resulting assets on this net key performance on average indicators defines Equity Asset total assets. be as will also as or management ROE liabilities defined in is Street operations, divided net or

has related including information not was third-party been portfolio companies, from certain note Please and on verified. that derived call, sources information discussed independently this to

And now, Dwayne Main over the Hyzak. to CEO, I'll call Street's turn

Dwayne Hyzak

asset pipeline well. our for Thanks, investment thank current that Zach. quarter, going forward, our dividend in the our dividends appreciate regarding while We call several providing other declarations, management recent On call activities, morning's and us performance expectations our everyone also and Good participation noteworthy updates updates on provide on your and we morning, updates. you I’ll our for is everyone joining usual my this today. hope doing today's

portfolio, expectations Following take happy and we'll results, questions. second financial investment leverage, your be my comments comments, to our and our structure David and which quarter, Jesse provide regarding additional the investment for will after capital strategy,

a for return or share the of or NAV NII distributable by for performance our investment third per quarterly XX.X%, for We're investment includes DNII with new and very and pleased on and net or was share records consecutive share, income per value, first quarter. equity per highlighted asset the income which net quarter, net

performance middle differentiated quality market lower continued overall included The portfolio of results and significant our strategies These companies. positive business of unique management investment demonstrate strength continued our management of investment results diversified strategies; benefits our from asset private contributions and asset from strong sustainable the underlying the Our and business. our and loan the platform. contributions are our and

pleased We opportunities over levels with investment investment months, continuing in grow are base loan market the to investment both activity private lower to last seen few consistent of that expected pipeline also strategies returning levels. and our our our we've middle more

position pipeline, a investment conservative liquidity us quarter. outlook attractive structure continued and for together with the provides our capital second favorable Our

DNII our conservatively significant income share. still quarter our monthly shareholders, value results later. our pay meaningful most and our dividends to the and for our our favor dividend which more to deliver us announcements, recent resulted second our outlook exceeded discuss Our in XX%. pay by and quarter while These Directors of portion dividends recommendations our strong retaining positive in for NAV This I'll the in growing to shareholders the detail by allowed per performance the first total the Board to to of XX% a by shareholders

share quarter. in lower the our in retention equity portfolio factors, in wholly including and increased our middle NII accretive of the quarter investment impact dividends the our value the increases our the share fair asset quarter; the manager per owned per and the to our of excess paid issuances NAV several market above Our of due in impact

Our resulted fair favorable investments portfolio. this net and appreciation which in in continued value lower performance, overall the of portfolio quarter equity their middle another companies market

in the have next appreciation we quarters, companies, continued to last we portfolio the from value our XX few the to follow made companies benefits months, the on acquisitions companies see portfolio by As future. and to XX expect largely excited remain certain fair we forward over in market they portfolio look these to funded investments the those middle lower we debt about we completed of in expect realize

our a still in of While market quarterly activity increase a of first after investments million. in we net middle million. pleased investments repayments in investment middle normal activity, than resulted lower that the quarter lower were our executed slower investments $X market $XX These we little was

private $XX Our the of loan new after investments of investment activities in a repayments which in loan our quarter million, private increase $XX resulted in included investments aggregate million. net

position, our structure very liquidity we positioned well [inaudible]. to and conservative Given remain continue capital strong

This net our in income a to for experience of first continued management consecutive asset investment performance the manager also business. advise funds from our attractive favorable positive to produce we resulted We've amount we in in received the asset income management through quarter. management higher external for to asset investment continue result, results as fee The significant a business contribution significantly second incentive quarter, our business. our and a performance

our of We're execute of the to we the optimistic other these funds external funds the and attractive as remain that we investment plans about returns our future are and strategies excited investors each manage fund. the for we providing about and performance we strategic initiatives are

benefit internally in growing strategy the about business contributions this to three optimistic unique our our our within our management remain structure increase main stakeholders. managed asset for and also from We

fund the end for look before the to details fund our launched on next and fund to the have closing the call. to that second first loan to strategy, and we're a private fund this existing happy formally As part our on private of sharing growth forward have our we We we investment successor additional announce quarter. next our loan of updates new hope conference as fund,

supplemental each in asset declared Based earlier our our favorable supplemental upon our seventh strategies a per our management board results dividend. for consecutive payable investment the of first quarter, the for $X.XXX outlook dividend and of and benefits with of this and largest combined share, representing in primary our business June, operating structure, week, our efficient our quarterly

our Our representing the third regular board increase to X% to $X.XX from in a increase dividends XXXX. payable declared for and each also August July, of XXXX September, quarter monthly per quarter of share, the third of an

first result monthly to dividends our regular XX an of during paid period strong month quarter. June dividend in per which increase that XX% $X.XXX, share, will paid of monthly $X.XX performance for in significantly greater paid increased the XXXX regular share The excess our result a dividends supplemental the additional per of was representing the trailing June our The total XX% op are in and resulted dividend during current providing is supplemental than our the to in we dividends in quarter, supplemental our DNII shareholders yield shareholders.

quarter Including share $X.XX per dividends, our for our share dividends XX%. exceeded our supplemental or the by DNII paid per first total

support to to also against the the and to able further to our our per our significant investment pleased uncertainties share. the and be of portion to structure be in economic while realized excess value are of risks significant that our future, earnings NAV growth the We additional maintaining a may capital from current enhance portfolio shareholders, deliver

We supplemental our future the monthly of Based to the performance currently quarter exceeds stable favorable paid supplemental dividends in the to proposing we extent to to maintain currently declare anticipate third quarters, recommend dividend positive quarter, second board future regular payable dividends that upon a continued we in continue expect DNII for XXXX. significantly additional the NAV. our an and in expectations

the solutions to and even as our the attractive provide result economic owners middle middle current market solution we current economic our today uncertainty, should very of periods and pipeline, with Consistent Despite our investment we experience lower as prior active attractive strategy. expect broad in believe of broad I lower lower our to opportunities teams in financing should continue us. be to in flexible we for middle investment and to turning and today be uncertainty, can market Now an would pipeline their characterize investment companies more management unique average. that market

will are last we pipeline positive opportunities, helpful current our new We momentum the as from about quarters. work these maintain expect be to excited few investment our and we

with portfolio, for We the and our and continue pleased the be credit our provided loan asset performance have private they also team growth management very of our significant to private business.

as I our turn as investment And today, I call the characterize loan pipeline to would that, of over With will also average. David. private

David Magdol

Thanks good morning everyone. and Dwayne

remarks, Dwayne first platform, in his differentiated highlighted approach we our model. strength of demonstrate operating unique As the Street’s Main continue to our strong financial quarter believe and investment results

portfolio our that financial quarter which results. of contributed for companies report overall to performance attractive continue to pleased are most first our positive, We be to operating the

companies been direct are in a our benefit The investments dividend contributions Main of quarter fair our the appreciation of to and has portfolio the end continued is portfolio our the for diversified Both plus philosophy mature Street. future. types. our during security investment a of and XX performance of to the income dividend that key and increase of investment increased a our strategy market well value cornerstone be history, and a our a vintage lower long-term maintaining mature in to middle continue strategy years operating and income resulted by of favorable NAV provided majority our over industry, market, net investment Maintaining portfolio the to diverse will

investment to differentiated try our key highlight strategy. of we quarter Each aspects

revisit This our quarter permanent that traded and lower capital we'd debt investment a businesses. with of benefits to as in capital middle equity structure match with our investing why market significant is publicly and like we several focus reasons on the both believe company great a

value We uncertainty current also the investment situation. capital depressed believe and during permanent additional equity provide capital can to economic and increased economy's times our similar of activity, debt that structure

structure we origination capital believe privately on and permanent ideal us First, partner management that to allows the our teams be owners, lower new side, for held permanent the of employees to businesses. an market long-term middle

limitations period of holding relatively private a a of they typical a is for are that to longer-term fund, and permanent One owner required term-specific generally or partnership management underwrite team. generally solution a represent business cannot short-term their to equity the or

transactions flexibility traditional provide. for flexibility believe cannot the structures a on private Our as structural considerations our on funds that superior valuation. based investment to us allows Ultimately, highly more equity we generates opposed long-term structure solely to investment compete attractive

their businesses allows the companies, In be a addition, the maintain company we and of to these stakeholders. invest while companies of for and ability the permanent the owners to to also their in to the best management teams achieving our independence long-term partner identity ability outcomes their

for generally time. portfolio typically deleverage a seasoned lower and holding decade. our Out quarter relative a have been our operations in have These lower have long-term leverage a in greater generate been portfolio for companies. companies, greater XX our of used cash since half portfolio profiles portfolio our five over lower flow they years market than free from middle than investments to portfolio diversified Second, periods of over market middle have seasoned

long opportunities This companies. performing pay attractive we opportunity initiatives advantage middle arise. value. The to for growth of teams tends pursue portfolio aligned efficiently and to dividends, the as to best the shareholder take market opportunity portfolio three opportunity equity our create the appreciation, Because to of external our and internal create they are owners high our and term for and alternatives help them company equity well with management ownership, lower evaluate to

capital are companies both companies, ideally quickly our add-on to capital and situated solutions provide debt Alternatively, Street's headwinds to given difficult portfolio with strong to or they industry economic arise. their through availability to cycles to work portfolio growth should we our relative and support the equity portfolio Because be ability acquisitions and face well profiles, company opportunities. move other when leverage positioned of Main lower tend negative they to our

portfolio Today, in middle long the our opportunity as at make incremental welcome shareholders level. We to remain companies the Street's acquisitions companies our market environment Main for lower we create alongside portfolio company strong. term by investments value for partners the to our strive portfolio add-on

Now, we portfolio XX, market loan XXX highly investments than to March companies, overall private continue a across portfolio with industries different composition portfolios. as results our more from in spanning among the turning XX middle our middle of and to lower market, investment diversified maintain

and Our represented of portfolio income of our investment X.X% total fair largest for our X% total our represented of portfolio of our assets. months. the XX investments majority income our than value last portfolio X.X% The less and company investment

approximately on in aggregate $XX the activity and private repayments capabilities included in of completed lower middle last increase million. in and million, loan portfolio in million. investment of debt credit the private after million repayments relationships total $XX net in aggregate capital loan we capital, of private in our invested and of portfolio in our resulted middle resulted investments investments, of return our of quarter $XX lower net investments total market of portfolio which also Our debt $X market increase return by after Driven equity investments team, equity which our invested

companies, to billion the market basis. quarter, our decrease our our we middle portfolio the we in market over included of net a had the continue strategically million is over of first in as At fair representing this during lower $XX value, portfolio Finally, quarter, end cost deemphasize $X.X of middle above strategy. XX investments which XX%

had in also million portfolio had related $XXX end basis. fair was private at our of representing companies in We in And $X.X XX our portfolio value. investments billion loan quarter value of of value. cost representing XX XXX% investment The fair investments middle the market fair total companies portfolio at

investment to Street's continues and In summary, high our goals. level Main at long-term portfolio a on deliver perform

portfolio in at that are included details Additional our investment release quarter on issued the we yesterday. end press

results, capital call the turn our I'll liquidity financial position. cover that, Jesse With structure over to to and

Jesse Morris

you, Thank David.

first total the and share, operating for As and share. quarterly for those including results number for records, which mentioned, investment pleased we per NII David income, very share are Dwayne quarter, DNII per a per our of with and NAV include

our the million the XX% that increased Our quarter increases half for continued periods, over benchmark the in total both in million fourth increases driven $XX or a million. in $X.X continued total by We rates the remainder and $XXX.X in million investments. period drove index the investment increased just income with the over benefit $XX.X and same first the quarter. debt the primarily estimate quarter ago for $X.X income fourth year or Interest from growth of from XXXX, by of a million for by XXXX, X.X% over

increase market from over quarter lower of primarily by prior the the dividends companies. from the by was was $X.X increase million companies, the over income investment middle million increased portfolio and of increase year external in The dividends a lower while market by fourth from middle increases fourth quarter. in portfolio manager, over over driven received driven our year by ago Dividend the and $X.X received our

are per million investment $X.X The approximately quarters. and dividends income consistent. included the other the four of these $X.XX pre-payment were the or and In first average aggregate, quarter considered activity prior accelerated above elevated share less that

by over expenses, offset Our XXXX, expense investment manager. by million by related largely expenses compensation increased in interest to increase the partially driven operating external $XX.X increases of quarter and the in expenses first an allocated

expense certain and investment activity, average interest higher Interest debt million increased benchmark growth increases increase the borrowings by in increase the year, $X.X prior by of in and of obligations, to rates, over on the addition driven interest our an with fund rate primarily from our an debt in investment portfolio. support index outstanding resulting rates, combined at our

compensation of to our compensation a by result and driven in and primarily support by compensation million, $X.X of investment levels assets increased headcount compensation operating of accrues $X favorable under performance, set expenses compensation by a higher increased expenses. deferred increases Non-cash increased Cash including activity million, share-based in and as increases management. expenses

deferred in assets. based As value change the planned expenses compensation the a the fluctuate fair will underlying on reminder, of

The ratio our and month XX X.X% expense lowest quarter to interest percentage of expenses for our in our be total of excluding assets as industry. continues was amongst total trailing a the average for period, and operating the X.X% the

the An million $X quarter. the income million external of and investment during will quarter. same million to period year our investment contributed manager fourth the to increase compare prior Our net the $X.X compare $X.X of to will

management over as performance $X.X increase of of of X.X under assets ago, earned fees million ended management, improved during million $X.X result manager year and under an with and the a the quarter, the the quarter total million a of incentive $X.X The over the assets billion. quarter fourth

appreciation appreciation our We fair losses a of investment recorded the appreciation, of net value value net our portfolio, $X.X market by middle companies. $XX.X million of portfolio driven including recorded quarter on portfolio performance and the we unrealized the in net-realized fair lower net During continued million.

a non-accrual, that resulting during no investment market loss recognized fair realized a long negative In the fair had middle value in for but basis been lower we on quarter, to a carried years, quarter resolved multiple the standing, zero dollars net value. at impact

prices, recognized of and fair investment multiples We value increased specific in combination middle $X.X of our in private million $X.X net loan increases and the by and portfolio companies. the depreciation manager, peer million a of spreads driven market in our $X.X by underperformance appreciation market of our in portfolio and revenues in value also quoted a driven trading market fair of million external portfolio, changes

increased share of non-accrual by a per and $XX.XX by and on fourth $X.XX NAV X.X% year portfolio ago compared XX at when approximately fair X.X% quarter $X.XX We the total ended comprising the at end costs. of to or of March XXXX. XX, over first with investment investments X.X% approximately to the the or quarter X.X% status, value

one lower middle had I two quarter. As middle earlier, non-accrual non-accrual, previously market investments market investment fully mentioned realized we added to and the on during

continue and have access future. that to continued the liquidity We strengths are capital strong that to our well-positioned for a leverage, significant believe conservative

debt-to-equity our to was and ranges leverage, are asset as debentures, respectively. X.Xx SBIC was and end, excluding total X.Xx debt X.Xx calculated asset conservative quarter regulatory ratio coverage more X.XXx to Our target X.XX divided X.Xx than of intentionally at our slightly value by regulatory and our net

corporate million, notes of the credit one the the additional unsecured raising ATM the new total facility, lender the issuance commitments $XX an to a under million the our program, front, $XX execution quarter net $XXX of million. active including in increasing placement revolving million equity by In additional our were capital and private in $XX we on

our including throughout profile. under facilities attractive this of opportunities maintain opportunistic with be with to ended conservative while to We credit pursue investment ample quarter believe continuing the million. liquidity, liquidity, provides continuing and XXXX, and us $XXX availability strong a We cash leverage

on to period, our share, the increase or compared the year back results an for industry. for to and and month fourth on representing equity quarter DNII the quarter $X.XX a for results, the over Moving XX same $X.X $X.XX both the return operating basis per period was XX.X% or strong annualized XX% X.X% the share per for first trailing XX.X% of ago. quarter was an

impact per The above quarter per the compensation of above share was deferred and the investment $X.XX quarter and not combined last of nature year considered certain income the the share $X.XX same recurring consistent expense, four ago. on less average

of board quarter our an our a to to operating outlook our of As dividend for increase the June Dwayne results mentioned, and given $X.XX dividends for the per third XXXX, payable and per the approved in monthly share $X.XXX XXXX. XXXX supplemental share strength of

a the quarter and the monthly quarter XXXX representing $X.XX increase share, the Total the XXXX. supplemental over a of over of total quarter of dividends dividends first X.X% in of increase paid and second declared dividends XXXX XX% are paid for the per in second total

at we given during strength portfolio in of per driven level, exceed quarter quarter of by the underlying forward, DNII with share with share the and Looking the $X.XX investment the income opportunity activities expected XXXX per the to another second least our quarter. this level expect strong of dividend of portfolio, and

I that, the any the we now over call back will so operator take to questions. turn can With

Operator

question Thank Instructions] you. Raymond Robert James. Please [Operator ahead. from Dodd go with comes First

Robert Dodd

the then lower the of questions Hi companies quarter and dividends portfolio asset portfolio guys, the – on congratulations the management. middle obviously. A market on couple and of

mean it, looks I mean looking high about somewhere by and But that's million the from income. companies, portfolio second the companies, considerable I managers, between the million margin. highlighted quarter companies at portfolio dividend the take QX dividend you profiling asset the to some and on a So I there I-XX. unusually the the from $XX highest income, was $XX it ever out take those highest mean,

component messages or now, it unusual or non-recurring businesses QX a unusual obviously – give see this us any or that – much is Can lot a some know just those strong sending quarter? is it how to of if just is so you doing is such any there mixed quite economy was you are maybe right the dividend to particular income of lumpiness better that

Dwayne Hyzak

say to have companies, last certain a that, well. they market thanks lower we middle just you continuing hear do economy Sure, really about and is would our headwinds are the number What that what overall and of quarter, the I like despite concerns, Robert.

so through Jesse a XX% highlighted of market activity have lower non-recurring XX%, you continue different that large outside chunk, from middle do good about the of across one have his the to those portion dividends, market have elevated or There dividend or of that to a in that first we that that company represented there. good the lower-middle number did some comments we companies unusual first that was the going had quarter. production portfolio contributions contributing of quarter. But dividend for income a

Robert Dodd

that thank paid Got received never with asset look it, It more than million. quarter, you. the I obviously at And well. is fees which has MSC, then $X.X and million, doing this think $X base the management seems, manager, it

and a as five So separate filings is loan starting this of in – private is MSC up The the the think is the we obviously, quarter, fund in that, maybe that growth haven't excess an it’s X.X well. MSC seen I yet. Is X.X. indication AUM

So How beyond is that there? initiatives? advisory growth other of relationship MSC ramp management and in is of to due much success the the asset kind that your a

Dwayne Hyzak

across is Robert, what entire the would we're seeing that good platform. I say performance

as You Fund, fund. Main numbers, MSC the at Street, Street given private assets well see as overlap it between loan our Income Main in our of

fees. incentive seeing also the at that funds that through performance and we there contributions You're that's good manage, driving

portfolio funds see incentive the for fee from say given an you results benefit and significantly significant the that of increase just fee, a quarter-over-quarter, the not we're management overall base performance those each but drives that managing. So did of I'd did the

Robert Dodd

Okay, thank for you. That's it me.

Dwayne Hyzak

you. You're welcome. Thank

Operator

Bryce with go question, B. Please Riley. Rowe ahead. Next

Bryce Rowe

or with so pipeline you to average about that at wanted quarter up. Thanks. a the last have of pace I all like actually I the picked to seems state bit average kind to year. picked a and to pipeline, in start it speak. feel up It the point morning. surprised little Maybe this here just Good of the below talked

seeing could we're better the credit Is moving what's tighter other you are David, driving seeing given from just and speak maybe spring winter opportunities maybe pickup to maybe guys of pipeline? the conditions you to in Dwayne So from or lenders? it kind

Dwayne Hyzak

December Bryce, first a I'll response, give looked and I'll quick the on for that knew we the first quarter there a was we question. when of started Sure say flow What you that slowdown saw in slow were is, deal would the and through slowdown David impact add the let we quarter. really to thanks I down at The our on. last call, then experiencing.

the we couple forward as of a months, as the the over as we the view move know marketplace, the as have which comfortable equity investors say on private that would whole, debt that be sellers As of change is gotten have you market with dynamics well new of the last cost would I capital the biggest the capital side.

whole. a you've the as market seen So

has normal, and in continue direction. those improvement can our they're that just heading opportunity on make transact, say both ago, good debt pipeline, in make their new been market is at from equity, as to again normal the difference decided months market understand tweaks have whole returning transacting to and be to still there they parties investments, less that as more but market might a nine There or that the structure. a price concluded transact, they have you're may if a but may standpoint, to that more that other I reality, a going a to evaluation is that's an and and our lower, purchase would six there where of I'd somewhat a not either least or private it result middle whole be loan

add want if to anything that? know you David, I to don't

David Magdol

deals volume is last done is so we much far what more visibility catalyst better that environment, they normal more much so like takes market as to equity the have The increased biggest that gotten hearing debt but on the the to market's of market current to of come conditions, from Not referenced are for takes year the is on add, the nervousness, fact it more so accepting are we're in to Dwayne new there acclimated up that which lot opening intermediaries deal with and I the what willing think they get the of availability. was flow. that buyer to as the the contributions, but deal that, because current sometimes the side they a

Jesse Morris

of that one capital and seeing, would overall would the the environment private lower we're loan I really the market deals. us comfort Good add think they're on despite is from of good over that side. uncertain on, a one good, standpoint that market I economic we've couple credit I last things the quarters, debt thing The we're we're investing deals middle lower sponsors and gives said deals the side, into Bryce, additional an fact private this but from that an just quality on of executing very and that attractive, standpoint, side, say they're the middle the

in you those and private newspaper, invest are about sponsors are opportunities. companies seeing the that equity opportunities those in So we're with everything and read and doing there economy well the despite those to teams with

David Magdol

to dynamics that environment, kind are coming equity that both that, more of you intermediaries element concerned if add-on regularly about one-stop-shop to this powerful in us, means they know are market. become ability financings the debt the debt in the of are more and this last are our might the they there if the about one Just environment. that do is knowledgeable has The exist us in

Bryce Rowe

it. Got

to capital in obviously the structure, a be a little of active private in revolver, to ATM. different the Maybe expanding quarter, active the on Okay. past bit notes, continuing more here lot ways switching the gears

a senior to maturity kind some Just want your get thoughts around, notes. is of there ‘XX, in

piece Just curious using point. that around the that? Would revolver you at Just redeem capacity about would the comfortable maybe you're of or any a that be be thoughts on revolver how to thinking this great.

Dwayne Hyzak

I'd have definitive we Bryce. say answer Sure that don't a for that.

I think maintain We our think position. we've job good in of a and and issuances and our our an equity always to the opportunity, to so have the is stock significant performed to goal given position. position, liquidity support conservative flexibility, got we've utilize or capital we've ATM ourselves a trades other putting liquidity done that how always structure, our capital how as price option structure I

things. as going us the But I monitor placement to private side. continue see grade just could market you improves, we on we're today, or to the here think expect we investment facilities If active to If in secured ATM, doesn't, flexibility other we to the deal have other it of options the of sit give with XXXX. that maturity options, think our a that us or number May

to and so. here next I opportunistic over it maturity as be the that think or continue what's to the deal XX we'll available So marketplace with months in relates

anything Jesse, you if I to know that. don't want add to

Jesse Morris

I mean Dwayne. the thing add think think covered three months Street think the I six quarter, sources. in addition from continued but I over did the has in quarter fourth we to I the it, only you've to last our diversify first going what to is to to Main you seen back what funding

Dwayne notes. something As the ATM, add on in did did private quarter, unsecured then placement mentioned, SPV historically fourth the we the some we've and we active, been

as May sources different of a it's get we XXXX. combination of closer to and think closer I So

Bryce Rowe

one okay. for it, Got Last me.

there press made added was release think I note the headcount. of

up? more tackle some you of folks maybe of adding to you're elements Just curious market? middle kind how Are the staffing lower

Dwayne Hyzak

Sure, Bryce.

heard Q&A I expect you've active. comments and here, think be as to we in the of some us our say

We market have on credit and both large side growing the lower a middle side. the private portfolio,

the doing can team, we're that. the to add we to So extent members

additions had So we've here. some

his more have Jesse to the quarters couple of next over that that's expect activity and comments. was referencing the We in

Bryce Rowe

great Got appreciate I right. the all it, Well, quarter. time.

Dwayne Hyzak

Thanks, Bryce.

Operator

ahead. Please go with Next question, RBC. Lee Kenneth

Kenneth Lee

question. for my Hi, good morning. Thanks taking

one your on M&A sorts slower see see seeing you potential wondering the in wonder share if of impact the across market do there. following-up there. of – I could you economic activity, impacts pipeline broadly middle down from industry, what an Thanks. thoughts pipeline any could line just slowdown or Just the you terms that on lower the

Dwayne Hyzak

Thanks lower add market over XX cost the a the Ken. then in for or middle in to say I'll Sure, I answer I'd I'll credit and on. the the capital we've change activity let also debt so. Similar been but has our impact what the months earlier, business, of biggest seen, quick give in said David private both the question. that last

as market has I comfortable gotten been and as a accepted maybe change think a not reality, a with, the I that that has new earlier, that's said think has but that I that improvement the our that, on least you're that's of think or and driver the result side. at terms biggest in recovery, pipeline activity of we're that the seeing an I in seeing

Main more can But middle environment. in solution really economy. the a really, feel any investor, uncertainty is for our you look I at financing like market environment be do we Street, solution good including think when concerned in any in companies this lower headwinds overall the the and

control at material ownership or allows some portion That a get maximize couple least that in that a will that can allow equity years, environment. in realize them or also to both acknowledge an liquidity retain that of minority provide team it significant management but change future probably may today, liquidity amount environment similar company of operator, to good effective a either benefit from the unique today's that to investor, in position an equity from a try middle what structure, of to they lower retain higher and an today, of owner in liquidity them won't of think continue allow a of attain standpoint equity, We can but enough to we the sometime significant realize a as be they market them this next owns control. value majority out would significant they investor where to achieve that a valuation minority hopefully of particularly equity type than company wants a our full and will that

David Magdol

at add-ons quick pipeline, years. When points. do portion one I'll over have we significant grown market just lower look the as our we add middle two that's a or

portfolio I comments, market economy. as look in middle go companies the and we or time a as in of is, they opportunistic as to at this the my overall So concern said deleverage, lower overall more dislocation the in our for market, have be capacity

to in same The as the is transactions, opposed second the larger lower middle market thing

downs separations, transact. certainly to planning take that transact the every planning, and one like but estate reasons and we after place year has transactions succession of partner that types ups year, market, to still market and like same is see so look people

should environment be good us. for it a So

Kenneth Lee

helpful very One there. you, follow-up here. one Got just

Is the be thinking that you the like in there add-ons, companies market that values increase mind middle could for potential appreciation the time enterprise about value potentially with else fair acquisitions we therefore it's follow-ons some you keeping is going talked the from sounds come in these here? remarks, appreciation there further equity lower or prepared it the think within as something portfolio, could should to or and or I and be over Thanks. there investments, mentioned.

Dwayne Hyzak

reference Sure, Ken. I Thanks say for that portfolio have we of that comment was our What what to that acquisitions. completed is would question. some intended companies already with

future referencing little that And the acquisitions realize on. acquisitions, in a synergies, referencing to We but acquisitions realized or front. synergies been after over not XX executed and completed the as to XX we're they've they've they recognize others So months. last than those may those conservative get we up they've be more recognizing we're them integrated prefer been

seeing synergies those we're going realizing we have of forward. their really value, the at as some benefits benefits completed on are that acquisitions natural synergies. several seeing through good activity statements, those our those to flow fair expect financial And quarterly and see same companies and we're now So

we that's were So that what referencing on comment.

Kenneth Lee

helpful again. Thanks you. Got there. Very

Dwayne Hyzak

Thank you.

Operator

Hughes Truist go Mark Please question, with Next ahead. Securities.

Mark Hughes

very you much. thank Yes,

asset versus of market that by areas On dynamics is in? just the driven that much you're you're income, your fee doing how outperformance management, the incentive where well in in favorable some the

Dwayne Hyzak

we number say a combination don't of the breakdown. say it's exact I two. would an would I of have Mark,

portfolio, I we're job so good seeing on feel a think side, we benefits you're the portfolio company like doing there. really existing

side, in see on just interest income risen the interest Income as Street like the Main fund. at our the MSC same sees income, clearly, across of we it that both benefit type see rates a our can referenced as have through our dividend loan you But benefit You earlier. Fund as well floating platform, rate private

much see Lower having weighted to Market may which through larger side, there, to its heavier our private loan investment those be a strategy. environment You more even Middle on towards Main portion a debt the weighted as our is opposed rate are strategy, investments because floating heavily fixed Street rate funds more of

answer your question? Mark, did that

Mark Hughes

the meaningful Oh target curious that? not of If sort catalyst just have of that yeah, sure I'm does established that a up, lower did, at those be look that tighten much the ecosystem, regional might for middle your credit a question, Quick banks they sorry. with relationship or sort perspective on is are with? to that banks? looked Is do companies, transact how you you market of regional part on companies going maybe even when

Dwayne Hyzak

market would focused are regional These Sure companies lower middle say businesses Mark. activity smaller, amount general. a with have higher I do our banks. locally in that probably of

result So than inclined as based larger probably more national national, relationship regional to bank a have a they are business a a with would.

middle strategy – don't our of So wouldn't by only be debt regional the our impacted financing, banks of typically of because capital, and we're both while lower source they portfolio equity. companies source market in a from

transaction if organically, we growing standpoint, needs, seeking growth capital So providing their they're but they're from acquisitions. initial both also if all an are capital needs through their future

a portfolio in I companies regional banks broadly. existing in regional see don't current do portfolio impact our relationships negative a of pullback But banks. upon we with our would So have more based think

Mark Hughes

you. thank good, Very

Dwayne Hyzak

Thank you.

Operator

Instructions]. [Operator

Eric from comes Zwick Hovde Group. question ahead. next go Your Please with

Eric Zwick

been kind morning, in Thank in a number back Which the from interest year if has highlight the going over you terms the or kind could of topics summarize just important rate would everyone. benefited the of XX of Most but rates, impacted most most maybe you. covenants, you the ways from of characterize from as wanted changes of have regional being bit dramatic of to Good what past to ability forward kind has spreads your the a hit months floors, banks, changed of how just and already, as most discussed the that originations? characteristics have of kind of Curious I of market either interest of on some well. kind markets. a ago, quite kind pulling or maybe

Dwayne Hyzak

our of the are from type middle the we fit so least to transactions, because people strategy, Eric, debt of in that's that that lower actively they're for why Most all. to our I say experience, they in not lot lower haven't lower at there's market be middle much the the active our leaving at regional place. banks, where seen capital an is providing a business, Sure solutions well, M&A in thanks players question. impact really market would middle financing market going not market strategy, capital

our So middle a that, seeing really lower impact from banks significant having the though our issues, regional see not market perspective impact because even on their and of we're or you headwinds any strategy.

and you've markets In – my broader a availability in basis spreads I that capital impact of achieving points. the risk more XX impact as our impact private loan it's an less a purely have expanded that we're XXX banks the our the of by private and to expand. people overall just That’s the probably of less investing seen more months, and new of environment. availability, transactions you perspective, over loan we've is I'd regional the economic are and the result broader in marketplace would current capital as on seen the perception inclined are people it's from based a it's last say debt what less that that strategy, on invest, say probably that seeing capital

side to the So on I'd broadly concerns the and attributable been headwinds inflation Fed, that's the economy broader the of activities not more It's to what other would I directly economic business, private credit attributable but or say that's about regional banks. say has the the impact just our by loan concerns. in private and

if side. anything on add the don’t I Nick, private know you’d credit

Nick Meserve

lender than covenant, borrower. the right of the Across board rates, now drifted XX and lower lower across board spreads the gotten a advance better start. better the and we've across that's slightly overall terms would that terms LTV ago, so widened less to to documentation the I was more start, its leverage towards than add Yeah, whether the but months out, board it tighter also so your have also

Eric Zwick

That's all you very very helpful. much. Thank

Dwayne Hyzak

Eric. you, Thank

Operator

closing This would to management the turn over floor remarks. concludes to I for our like question-and-answer segment.

Dwayne Hyzak

to Thank again look to We early August. everyone you talking joining this in for forward morning. us everyone again

Operator

teleconference. today's concludes This

time at lines your thank and disconnect may this participation. your You you for

Main Street Capital (MAIN) 5 May 232023 Q1 Earnings call transcript