FDUS - Earnings call transcript Q4 2018 | Fidus Investment Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the Fidus Investment Corporation's Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions].

As a reminder, this conference call is being recorded. to host like Ms. today's now would introduce for your conference, I Burfening. Jody Ma'am, you may begin.

Jody Burfening

quarterly the and with everyone. Executive copy Relations the Investment is of quarter press good for press ID Lauren, Corporation's conference fdus.com. Officer. morning you, Thank morning, company's A being Fidus available replay today's on everyone the Fidus Ross, Shelby the details for release. in call. at recorded. provided me release yesterday Investment Investment release results. Sherard, the press are conference Financial Ed is of joining remind and And call a Fidus financial of Corporation's website and today's numbers earnings to the page Corporation I'd earnings using will fourth Chief of telephone and call issued A XXXX Chairman With by afternoon this Officer; us that be Investor you thank Chief like company's available

information today today's beliefs, archived including Corporation. included this regarding The conference page operating call. of results, call of potential, to In addition, website your Relations future the disclosure Harbor also to conclusion company's regarding the the call webcast Safe of in flow will Investment Fidus forward-looking statements, forward-looking available an strategies, contain on statements customary goals, and cash like following attention fdus.com call. the Investor I'd conference the be will replay

or or result may differ Actual XXXX, be replay. projections in turn like may of other and statements update over materially at guarantees with company's the management filings no any no to forth Ed. statements. of Although are With are statements would X, information any SEC. the and limited Ed. now results as time of based to of Good accurate risks I performance. assumptions, set that, believes obligation forward-looking these these longer Time-sensitive factors, Fidus a telephonic including to the future as estimates, of webcast reasonable undertakes today, revise morning, March these the on the not factors to but uncertainties call and not

Ed Ross

in thank results, our you I'll start a levels then and I'll everyone. performance more into expected we cover from quarter with fourth quarter early was portfolio, detail market happy on fourth regarding Once the perspective. high-level The our busy will the our results the And and questions. XXXX. activity with good Jody. and go and prepared we'd and perspective quarter to today's our conclude very view investment and our as morning, our Good completed fourth originations about morning comments of your financial call remarks, be liquidity. Shelby of have take realizations

investment flow service of that have served of long-term debt strategy outlooks well. us quality our positive Continued excess for selectively in execution high companies cash generate investing and

and over Solid and execution of per delivering capital the short, when was dividends growing In attractive over discipline, our to quality value stable vision asset solid short-term. have primary goal generating the comes quantity matched time investments, we of debt our our equity and it shareholders. over share a risk tunnel net on focused our benefit for preservation returns by from adherence adjusted the underwriting to long-term and

investments. or quarter growth recurring net investment fourth Our operating and a continued to in from reflecting per equity adjusted results XX.X% income generated an with boost for in Diversified $X.XX increase in dividend fee the interest income million year-over-year were strong. income share additional portfolio $XX.X

XXXX. income adjusted net was $XX.X share $XX.X million per full-year, investment fiscal per or versus for share $X.XX the million $X.XX year For or

gains excluding or unrealized realized income net fees losses. gains investment investment to we reminder, capital any define and income a incentive As as net attributable adjusted

share, or the growth. On X.X% NAV XX, of NAV fourth At cash December December net taxable net of XX, XX, value excess will March Board March share. From quarter $X.XX to of December XXXX, was year Fidus special of was estimated share. an quarterly quarterly per record has active. XX, XX, December dividend $XX.XX asset or value share fourth Directors XXXX, perspective, per or dividend of X, as of and of on the of $X.XX and regular XXXX. per asset of a income originations spillover higher consecutive XXXX, $XXX than representing or XX, a As million in On payable our which income share paid $X.XX of was the dividend distributions as $X.XX regular January per $XX.X million the be stockholders declared a per

year. there and expected, the was before the was of securities debt channeled million three $XX.X companies. We new end deals in a portfolio As push equity to $XX invested close million to

debt financing completed In addition, returns. made of in debt subordinated companies Diversity investments acquisitions. strategic generating risk we several reflects attractive to customized that ability lien remaining solutions, focused our adjusted encompassing add-on on first offer and lien successfully debt, second investments while these

portfolio for We three opportunity also shareholders. of companies two our common new in invested for us the in creating to equity the the enhance returns

and software; markets. and debt of Corporation, leading the debt provider Turboserve common outsourced million prevention recap of investments. clinical in subordinated provider trial new modeling lien Argo provider. $X.X parts equity debt Treatment services analysis decision Center, million They disease. trials targeting second our Alzheimer's Let portfolio lien of each risk of in first on services Palisade We and management common the and in company Company, treatment in a equity industrial million in Alzheimer's site a the to briefly invested me in and $X.X focus aerospace Research leading leading and $XX and and logistics a

for little a including $X.X payments Gregory, of including totaling to full realizations investments year debt the to on of related and payments investments Microtechnology, $XX.X in sales companies & the in subordinated equity Finance, in prepayment fact our in related what Thermoforming Equipment, close in to Caldwell our alternatives fees for investment from million of investment and the Rock. Technology that Research, related second total million than our prepayment our Management from robust mentioned As lien Plymouth of are we to came our lien related going were of payment as million payment Restaurant fairly the a investment of million in in debt portfolio of million including SimplyWell, the including exit $X.X calls, strategic fourth a And prepayment earnings investments to on Apex through prior our our expected see totaling Die, investment our payments of Proceeds exit evaluating investment & more $XX.X $X.X I on to of Toledo $X.X totaling the is as several on million in Transit million fees debt full fees equity investments on $XX.X exit in and processes. Solutions, second and level $XX.X to debt payment of of subordinated of payment Midwest exit amounted quarter representing realizations in payment Group, $X.X happened. debt payment came the second and million repayments equity in in a year related subordinated our debt equity and our investments million full Molding million $XX payment on of $X.X half the to in fees Revenue exit the prepayment lien in debt of in debt full second Far million equity lien

Finance. a of by totaling result we million $X.X a $XX.X offset our lien generated mentioned on investments As four from exiting million, equity debt second partially in companies the Restaurant above, realized investment gains loss

$XX.X quarter the fourth very to of quarter from originations by $XX.X was completed closed in level portfolio acquisitions and realizations that and million investments received into million. was perspective, amounting by helped some part Subsequent and first in quarter part the stretched we companies. year-end, repayments some from While fourth to activity an busy holdovers the by XXXX, totaling

In of Group terms common BCM deals, in Inc. preferred additional and the One of of subordinated in the One made invested Holdings $XX we subordinated investment debt, Holdings, in provider equity, Fiber prepayment in and commitment a we payment Tile form payment Inc. Search, equity, tranche. in $XX executive our And on debt search in in LLC, investments Group a terms is BCM million penalty. new of we payment million a designed direct and exited our second Technology our $XX.X of lien $X first million Solutions debt, repayments, in $XX.X included debt investment common lien and of of We exited on of and full million subordinated enhance in our subordinated our in $XX.X and debt in provider Services. received Redi, full and mail firm. received debt. Inc., processing, in our and and and debt lien solutions of leading software debt received common Diversified BCC Holdings, million first equity equity million Managed data $XX.X debt, to LLC, exited full Materials, million and on multi-practice leading retained debt Optimization, a which LLC, of Gurobi

Inc. Industrial January. was late in sold Services, addition, KX In

As status totaled KX $X.X third you may debt fair recall, during September and of as investments the our million. non-accrual the XX, placed we approximately of on value quarter XXXX,

control took successfully sold of we and identified rights, business. creditor our strategic the company, buyer, Asserting the a

proceeds interest. including which of We past full proceeds debt prepayment investment realized. of We our have remaining be debt in in will $XX.X total of two a to believe we representing and and will which receive our payment original investments hope our million due point residual investment cash received debt at fully cover fees

we million of part the transaction, As equity our sales $X.X approximately recognized investment. loss of a on

in underlying companies XX.X% market that of portfolio ended of quarter million basis have and between portfolio XXXX, fair sold metrics, three debt XXX.X% December on The breakdown equity operations. cost. active with Turning and value in XX, equal and value fair their to XX.X% investment totaled We XX the construction portfolio debt a our of investments. and portfolio was equity the $XXX our as companies to

debt As investments status. December had XXXX, on in of non-accrual we two portfolio XX, companies

we quarter. market we regard in our placed portfolio value I on addition just to of to this with Industrial basis. active January, We're extremely This represents the investment Services, non-accrual In a U.S. GreenFiber KX X.X% substantially exited, mentioned, fair on and which situation. during

remain In performance, basis monitor overall metrics the and quality, measures on us solid. portfolio. fourth several to our quarter, investment quarterly Moving a to stability, help of performance portfolio these track we correct the quality

the track we portfolio's five is average a our system. of outperform Under of rating internal methodology, on our loss. an based rating is a expected rating investment one and First, weighted

average two investment December weighted of value with periods. fair basis line the prior the portfolio was As ratio XXst, for the in on

we by total to investments combined EBITDA. metric the measured total credit is the track our of Fidus' portfolio which is ratio portfolio debt through companies net performance Another of debt

largely reflects this times For average deals for X.X compared same past ratio the months. last leverage fourth and of to the over times in the XX quarter, is year invested the quarter we X.X

The is cash third measure their portfolio to our our we to portfolio interest total debt the to of which track ratio indicative of expense total of cushion the meet us. obligations have is aggregate in service companies EBITDA companies combined

the fourth We our of borrowers quarter, metric philosophy X.X maintaining metrics was times significant income soundness this the value enterprise debt preservation and these our compared to times in capital our X.X goals. of For support to structuring last believe quarter the year. for reflect of same cushions

pleased at and Looking investments out of exited flushed portfolio investment and proactive our successfully the a deliberate Through have back XXXX, situations. riskier with end I'm we the the of on management, some couple health year. underperforming portfolio

the in investments time, quality debt in the some XXXX; a we of on losses of fair capital strengthened amount our invested At also same overall investments. new realized we we portfolio. While

our result, along us with returns. ability a the debt a portfolio income portfolio from recurring and opportunity As high enhance to to to current of reasonable of margin generate levels safety investments remains through provide well-positioned our equity and with

competitive. we As investments and ability ahead. flexible mindful slowdown we're new of where our to cycle relationships to Nevertheless, growth and to marketplace. solutions economic are majority us likelihood expertise, any our deal middle discipline to macro we we underwriting continue the too of distant the future. strong choppy may that highly continues remains customized and to deals the operate that look active the evaluate. From in forward, navigate In lie may the drive not sponsors, a perspective, late lower us provide our the enables with the in waters differentiate we transactions and environment, market with in financing economic this industry M&A our regard

in have companies excess time, that are the in positive companies in investing investments growth. same avoid on industries operate focused stay industries will know At and We long-term profitability operating swings. to that cyclical we will for characteristics free and flow debt we that well that defensive sharp in cash and service subject outlooks generate more

the for remain a we result, As future. well-positioned

net brought perspective. In million addition, us us offering proceeds in about recent our capital positions $XX.X well debt a from which

in deliberate returns. Our generating preservation goal portfolio to an our capital remains on maintaining and cautious selectively focus a grow manner risk acute in while adjusted

our Now I'll details over Shelby on call operating financial the turn and provide some results. to Shelby? to

Shelby Sherard

expenses Ed, our I in for million was providing fee fees good in and increase by morning XXXX, note Dividend the to liquidity December million our QX I'll income primarily versus in various investment ended quarter Total a million primarily million, PIK excise XXXX. was from QX XX, due the to QX. by million capital $X.X debentures. quarter. the on of a more $X.X million. Thank commitment $X.X to well million was income million, and QX incentive fourth and taxes you, versus expenses fees by a accelerated increase results be by accrued Base $XX.X $X.X review $X.X increase detail increased quarter comments $X.X million dividend quarter and accrued QX including due from will a $X.X prior $XX.X expense close months prepayment unused were $X tax comparative by increased increased incentive Interest higher and with Please totaling $X.X fourth $XX.X commentary position. and million G&A everyone. in million, for million, Interest increased the million, three structuring increased any income million while XXXX. QX advisory $X.X Interest decreased repayment income and and million million prior income million million the in by higher synergy. management equity of as $X.X including than includes of $X.X non-cash fees. total interest Total fees line $X.X investment SBA $X.X amortization $X.X expense gains as our income expenses provision fees approximately related a

average interest our XX, outstanding was December debt of weighted X.X%. XXXX, As the rate on

debentures, As $XXX.X XX, had of of $XX.X outstanding $XXX we million public on of comprised line of of $XX SBA our credit. of December outstanding debt million notes, and million million

investments. debentures. for to SBA million per QX. versus realized NII equity NII or fee or per posted press $X.XX is and earnings issued months leverage also release Investor share QX. excluding Adjusted NII was time as share in share exempts debt can Net our times defined statutory unrealized that NII per income investment found gains our page of versus share XX, income was excluding three capital NII any losses $XX.X to net or Relations is gains incentive X.X ratio expense Our in reconciliation of website. reversal yesterday was on and was Adjusted ended the investment $X.XX the per afternoon XXXX, in adjusted attributable and X.X on A be QX December or $X.XX $X.XX in to

gains Research, realized by Thermoforming million & For Caldwell Co. write-off debt our our net in investments of exit FAR equity related ended Apex Fidus December in and Gregory, months Microtechnology, Restaurant XXXX, offset XX, the primarily Technology partial the Group $X.X of had of three a Finance investment to

Our net December. $XX.XX of reflects as share XX, $X.XX asset in value a the dividend dividend per of special XXXX, and regular a per was $X.XX December share per payment share which

December Turning of XX. now portfolio to as specifics

consistent equity XX% oriented debt, of basis million Our subordinated cost lien X% strategy, XX% value had portfolio investment on securities. approximately debt, our a total of with XX% debt, $XXX lien comprised fair second a portfolio our and first debt was

the million of that three investments their cost fourth a companies portfolio end on the down. have investment in the was sold process company portfolio which winding operations $XX quarter at basis average during excludes of Our

fees weighted on if We with and of of loan average including investments effective diluted at The equity debt in rate discount the portfolio as using interest excluding for XX% the ownership approximately yield investment of on issue fully investments any. original average yield our is have origination computed investments equity debt of Weighted an effective accretion December cost companies but X%. average XX. non-accrual XX.X% was

QX, facility we our of which SBIC to debentures line in Now our repaid $XX FMC $XX.X down. SBA I'd and credit million first In and our is upsized liquidity. available briefly the of process of like million to winding discuss fund

offering, X% XX, $XX million million December addition current aggregate $XX.X included Since of million due million our on principal cash completing raising million. a events overallotment. resources total capital the of million line a beginning had of liquidity liquidity we on debt proceeds resulting million notes we debt net number offering and and in $XXX.X and of availability to the of in approximately our $XX.X and credit, $XX SBA the $XX.X approximately subsequent comprised of line million paid As resulting of of of including XXXX debt million exercise of a in cash the of availability $XX of down $XX.X of of year, $XX.X In February, in of public in our of liquidity credit. completed

the for comments. Now concluding I'll turn to call back Ed Ed?

Ed Ross

Thank you, Shelby.

As our Directors now I of Fidus our to support. the for their Board continued Lauren? thank Lauren call for hard and always to work Q&A. turn for dedication back shareholders team over I'd our will their and like at and

Operator

[Operator you. Thank Instructions].

with from Robert James. comes Dodd Raymond question first Our

Your open. is line

Robert Dodd

if much accelerated one Hi, first fee income interest rather the Shelby, in us fourth was quarter? income housekeeping if can. just it, the that tell it, one you line in can I line you the OID I have may than gave missed how

Shelby Sherard

other ask at let back let me look know get right me -- what -- just I'll and You to. reference you don't some question, why your

Robert Dodd

environment I mean the do highly difficult of remaining has really continued us you in elevated kind the XX% the forward? Or it's on doesn't you predict quarters QX. that portfolio and elevated and plausible what's compared mean then isn't your of conducive front QX very the really lot Then kind to Perfect. mean level going in I in to in of two QX is seen the of pushing word, color to repaid we've high that what fact the repayments what's last repayments on it's expect, repayment including I give any environment, obviously but you obviously levels have right can recently?

Ed Ross

great Robert question. a it's Sure,

refinanced different. the I was then situations here bit and had that them really certain of -- realizations four the and company driven. think a large QX large was repayments in QX have what the We had a if M&A repayments was of and debt the just M&A one of majority we majority and for transactions. where in too KX little would here a performing a We you or repayment a sure our have drove proactively the did well, three I but large was couple that's a push several loans last in for over it's be been there would realization repayment situations. months of will, to say

like And What have management. continue today say same is pursuing been that M&A same frankly so M&A portfolio to in going fall. quite level alternatives to a we're and of last companies a I number healthy the the level have it's portfolio our proactive or combination were activity we are of of would they strategic don't but

three the some think I of on repayments past. we've I'm anticipate to months a don't had that point forward in we will the it So different sure next change same level call a at four that little over look it's the scenario but basis.

Robert Dodd

or portfolio without, in these of Got strengthened by remarks, done quality right you And that about books to But mean into corner. strengthen you proactive talked trying prepared with I seek that measures? continuing it, you that on course with the the you've back mean proactive the not of to I the measures you Are portfolio a today you assets of by rotation got that quality portfolio have completely are I’m. it. now? your the

Ed Ross

do look answer corner risky would way done, in not we're position it I are then our looking I a they backing a we're portfolio get We're optimize would say for are we think situations ways at into and riskier is always the never you that. but always But done that. move could not to and you're to time. do to same if Yes, me we the

never success so of And and moving but in done. opportunistic that I'd had basis we're out some obviously have some we the say situations underperforming on portfolio we're

overall to it's trying looking I portfolio time, always always But very -- think about the something I think at same we good health the and at we we're our feel -- accomplish. of

Robert Dodd

it. Got

Ed Ross

been lot slowdown, may been position is of of may have here happen. it's or couple we As And a we years we to unclear are a that purposeful we if eventually not or the recession that working hard It for portfolio there but kind will a for -- today. really an -- have a when sit the what event. have moves if we of

so we that. can withstand And

So about again valuation. we good portfolio. a But the feel been it's

Robert Dodd

Got really I it. appreciate it, Got that color.

in Okay north one more of can. and equity look If really two that's assets in two if million $XX of Pinnergy assets, at Pfanstiehl. concentrated we your like book unrealized I in course appreciation

give you well. piece value income assets been with on update us two on anything and the successful can that's equity have going from that generated So Pinnergy those very as actually your there of obviously an

us any on two? So those you update can give

Ed Ross

and our to the is should they monetize we the out always opportunity continue investments than material now basis, wait. we're also but other perform looking say operating and the time very future evaluating to our on or well in financial Nothing we're right

that I with we the both perform our update but ways but than very equation expect give names to are only equity more of continue monetize have of would to don't regard as we'll I you. that's part investments So you looking the part the mature and more to for update an continue to any and companies always so that's can do well

Robert Dodd

you. Okay, thank

Shelby Sherard

a Equipment to Midwest issued was had QX. question, to back in debt will. remainder But were of your debt closing got $XXX,XXX the and the acceleration if related the fees OID, against warrant repaid to that you Transit that Robert, was related XXX repaid in investments we about QX, was So from of that

Robert Dodd

you. Thank it. Got

Ed Ross

Thank talking you, you. Robert. Good, to

Operator

you. Thank

with Our next question from comes Paul Johnson KBW.

line is open. Your

Paul Johnson

Thanks guys. wondering talk had you question. I about quarter? book that your during last in taking morning net also resilience, time also guess quarter the And valuation maybe guys that you then I that value was the guess space the that, my volatility? Good And be you given Thanks. could had appreciation saw market would for if of you then I conjunction could that what in also quarterly interesting lower process your middle with helpful. if describe you

Ed Ross

I'll value. in let absolutely. Sure Shelby on take the the valuation jump process. I'll book

I valuation in think revenues was our were what what average I the would growth say process found growing mode that and companies slow portfolio in we is the on EBITDA. in a both

of majority were of both perspective. a is the facets So obviously helpful growing a valuation on companies from those which

so the the was very good in period. continued year portfolio throughout time of to strong the And our performance underlying and QX be

was is write-up a And that prepared value KX of so remarks what's we that end the reflected in the in appreciation. nice mentioned book at things the our quarter. obviously Other

the positive portfolio. probably in as generally a while But so portfolio in underlying and speaking what companies as as were also And performance that QX. strong a was is their to overall the say they've been I'd

And $X.XX stability book value. the appreciation. And what's that so dividend Shelby? if also of by drove so. the or you -- some was, at of look NII the portfolio also exceeded we driving of the that's And the

Shelby Sherard

we'll internal our as a third-party all from our cradle of team and we more present securities which all complete information does potentially we the valuation the quarter. I team we than assets. once of members more quarter. Lincoln's of touch Audit members at them looked the highlight some And that of our valuation. investments team Audit take senior we And our Lincoln Committee the of valuations pretty at has larger investments the sometimes After independent XX per Committee Lincoln the XXX% and of portfolio have to Board. have the on fair riskier look that of of every which of frequently value used so our a terms represented in recommendations, to investment team that's year. consists would every every we would I them quarter. the lengthy the that's investments valuations financial same we grave of very ultimately it once companies the to at do valuations, into in full review internal are that And and at on QX, And fair does have usually it's all do least the terms business of origination, So and presented And and what incorporate all XX% did valuation at say our that in will three about their to hour that any also of and will then make Board which our five year. typical our quarterly probably the board recommendations probably final look to process, The per deal a portfolio Lincoln discussing In the do investments relates statements. review potential conversation They'll approval as update. financial companies, to changes and then the statements inclusion recommended values for value.

Paul Johnson

the helpful. that's Thanks Okay. very for detail,

Ed Ross

you, Absolutely. Paul. Good talking to

Operator

with Kotowski comes Oppenheimer. Our Chris next from question

open. is line Your

Chris Kotowski

Yes, us it but more SBA good I maybe missed could financings? update an morning. wonder you give if accessing I on

Ed Ross

good Chris. morning, Great question,

but We are obviously think through would work are I continuing we government through understanding our bit work process, in to of we're to was and little a down I part hopeful the what the slowed February is continuing say. things is the just January process shutdown and

Chris Kotowski

letter a been not had or Okay. Greenlight issued? yet had And us remind that you

Ed Ross

been has that No, issued.

Chris Kotowski

okay. been, has That

Shelby Sherard

of the making be towards continued tail the at end just definitely should progress. we're process. the finish not We're We XXX% but line yet

Chris Kotowski

building is rare see curious and is stocks -- there's housing and I'm GreenFiber under I'm the wondering you do since and issue is just then you idiosyncratic rates year when is or And concern sector a stress Okay. new have last with -- guess in there housing obviously rising, a it is pressure building, about company always there I were then more products as and non-accrual the listed a there issue?

Ed Ross

was recycled company The couple being plants company's then year a types hurt and called plant issue; and a or company industry it's it few death insulation character, year of years manufactures actually a more prices many ahead negative paper events attractive the CFO as paper last cellulose that's And more the product, tough relative subsided. not also the it's several could but to as traditional a company-specific competition many the which prices more, things. consolidated was fire which of including the a Yes, Green ago four. recently against -- characteristics competes and company a issue. paper amongst was But not that an of insulation of sells certain other execution a

the situation of the that's wasn't specific this of investments reflects really issue, the very industry the it's tough stuff. end company in yes, but was We're just it year. more a an situation of it as risk active So XXXX, our

Chris Kotowski

at otherwise overall are I And it on the are Okay. in constructive companies like you general, outlook still question. portfolio going your and for things sounds how is generally, the guess

Ed Ross

question for us. it's of No, Sure, subject great it's mind sure. and obviously a top

to and the got pay side the on there's pockets at of growth also EBITDA obviously out QX NAV, looked to mean seeing real increasing, I and healthcare very was regard attention that aren't and so look moment, there from paying we of portfolio I like things to, think issues I obviously what with we're input mean careful we're continuing at just really regard I it, from valuations have at revenue perspective services, the our an as just we're to at its there also the and we to and tariffs feel with the discussing I underlying I away and good good things But we as is in trying investments, moment. at we being something and to that saw we the like pretty in think was uncertainty. consumer reimbursement very its you today, to stay any when portfolio attention trajectory about risk rate overall things health that. look costs certain

very it's place in moment. So the it like feels solid a at

Chris Kotowski

Okay, great. me. Thank for you. it That's

Ed Ross

Chris. talking you, you. Thank to Good

Operator

from question next Mickey Ladenburg. Our comes with Schleien

is Your line open.

Mickey Schleien

quarter? understand how credit Could on valuation? for that question. Yes, spreads a the the everyone. you good NAV And us tailwind impact in current I could follow-up wanted morning potentially valuation provide help to

Ed Ross

the Well it then goes it much of a our private the with regard with with into cushion perspective, go saw impact debt our impact into degree when an in of kind take a those than down we in it call the investment I'd lesser to whipsaw also see equity liquid it does XX% that debt from valuation, cushions didn't December. say, equity that but markets marks. on comps to and side We that that then does in does an valuations. it's and input account and our we do We volatility more

I And so uptick think you don't NAV see material a from perspective. an would

yes. answer uptick, jumps, a I would wouldn't modest I there is be think what is material that to say, the Mickey. could But for look I

Mickey Schleien

else? to If is dividend I was Okay. true-up heard Shelby Pinnergy, of some from sustainable -- dividend taxes something the the was or perhaps or the large that due correctly, in quarter a that sort

Ed Ross

a it's I the on very unlevered -- is No, performing mean very in company position. well very a

So an dividend make. there's the that don't a decided opportunistic debt board company. lot control of and on there's so books more this to But we not of the

So the it the and about ever. prospects I are not of But more? control would of And say the Could unlevered. I Then it, would do not I a also we're it's in would not definitely to But can't manner. I say type you business so say is I is sustainable. that wouldn't something dividend. quarterly that's it's that answer it in good expecting do not think very what yes. of is I But of repeat. we feel

it So an more but that control of aspect. opportunity not -- to of there's in dividends we're do

Mickey Schleien

understand. I

going the what in principal the Turning presumably and company amount of is the approval; KX, be debt that that's new on right? to to back is

Ed Ross

That sold. is was company correct. actually It's the in company. The not

term residual think call the I we it's risk left that So behind good our it's residual million from and feel probably that entity come much those feel a in variety $X.X expected have sources the XX about would prospects still expect we But type situation. you but as over proceeds back into current it's might prospects. would come month that there. those medium we full repaid that of don't expectation where are of be getting good proceeds a are be side to that it a too without detail. But There's about

Mickey Schleien

a assumption? looks a just of Okay. fourth is modeling correct of And that quarter sort questions. the weighted; like It for couple backend exits were

Shelby Sherard

I'd probably say, it's just have didn't done we really spread throughout the quarter but lot it. a of

Ed Ross

bit the but what in was say our quite call, I'd sure is spread general we a At across of preview. I it for time quarter in would say. had had the We October some

Mickey Schleien

the just And SBA, at the comments your appreciate Greenlight looking on right. I letter. All

to do expect flip debentures? side, Fund One's you remaining the when On repay

Shelby Sherard

made possible, really February what So we $XX now finish we year when underlying repayment million processes closes since we September have truly investments. X. left various we really on and It's repaying sales it but get depend and dependent of could this between just payment last that and about that'll the be the will on in

Mickey Schleien

Okay.

for leaves were future; So million the that month $XX right? repaid $XX this million that and is

Shelby Sherard

That's right.

Mickey Schleien

it. last maybe announced have you've last And you've leverage apologize my Okay. already announced? that -- number I a Do you question. target

Ed Ross

talked Mickey, X.X is operating we've think the is we've -- comfortable long in the what something haul with. No. long X.X past been for I about that to very

of we one, SBIC legislation us even higher a debt, frankly up going debt; we're SBA comfortable but going see there don't also we're the With up have over with we're one. new lot going quite I fine. to comfortable

to X.X say. would in I more range, is X.X target Our

Mickey Schleien

this my all your are time. questions Those it. you appreciate Thank I Okay, morning. for

Ed Ross

you, Appreciate you. it. Mickey. talking to Thank Good

Operator

with next Raymond Dodd James. is follow-up a Our question Robert from

is reopened. line Your

Robert Dodd

But just quarter at controlled the obviously at the quarter. question investment that Hi, fourth in a end on the a detailed was of the occurred it on KX, beginning. mark-up the wasn't

million what unrealized unrealized it exited. line appreciation? it where -- the So non-control embedded in $X.X that that that the appreciation towards in mark-up control to Did did was where get was the was it line or on

Ed Ross

line. controlled The

Shelby Sherard

Oh, was investment KX controlled QX. a in yes,

Ed Ross

So line, would that be embedded right. it in

Robert Dodd

got Okay, Thank you. it.

Ed Ross

talking Good to Robert. you, Thank you.

Operator

questions back turn call to would remarks. Instructions]. the I any now like And further [Operator any CEO, further this for showing time. at you. I'm Thank not over to Ross, Ed

Ed Ross

a forward you, great quarter a for us in Thank first great our everyone day to on this you you Have and We joining and thank weekend. May. speaking morning. with early call Lauren, look

Operator

day. participating This conclude disconnect. does Everyone conference. today's Ladies for all wonderful today's and may you and program in thank have you gentlemen, a

Fidus Investment (FDUS) 1 Mar 192018 Q4 Earnings call transcript