FDUS - Earnings call transcript Q3 2019 | Fidus Investment Corporation

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Operator

Ladies and gentlemen thank you for standing by and welcome to the Fidus Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today Jody Burfening. Ma'am. ahead, go Please

Jody Burfening

Fidus and Fidus everyone. XXXX Investment me Sherard, Ed call. Josh Executive and joining and Officer; earnings you us With Shelby Ross, are morning for Corporation's this Corporation's good you, Chairman Thank Chief morning for conference Investment page Thank third Chief the press company's the release results. quarterly of afternoon Financial A Corporation Investor release the fdus.com. with copy press Fidus a Investment the is financial on available details Relations Officer. of at website issued yesterday of company's quarter the

to I'd provided the ID is call telephone replay everyone can like recorded. today's conference and in remind call the today that of using numbers being earnings this be press by available A release.

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

Fidus to revise the these Securities statements. or limited projections today, uncertainties company's be accurate reasonable at are on management with these replay. in information the longer Exchange no forth other guarantees Time-sensitive of may results Commission. webcast factors believes the telephonic as may differ factors, including Actual of materially are to Although statements of the November any undertakes these but not update of not result and estimates, as assumptions, statements based forward-looking a obligation XXXX, risks, and of X, future any filings or no and performance. time set

Ed. I Good that, call to turn to the now like morning, over would With Ed.

Edward Ross

high activity results and with level and the then XXXX. our XXXX I'll results, and quarterly we today's commentary quarter completed our levels, a and liquidity be good financial into Shelby the portfolio quarter and regarding earnings view Welcome market we'd on to the I'll our we morning, quarter prepared open move conclude Good performance call Once more comments morning, call. of our questions. conference to with our Jody final everyone. detail cover our third will third have happy position. take remarks, of as about go into your investment

middle the executed of From opportunity current through we portfolio high equity well income us debt my a believe market the perform investment businesses well boost to will over the lower and strategy offer we building perspective during third investment. and recurring well-diversified monetization of the levels quarter our that investments and of in on generate returns equity long-term,

of growing primary against addition, goals execute continue our net In to well value stable we and per asset share. dividends delivering

share for Adjusted net capital quarter share excluding attributable income net losses fee was period and the million per income, investment which million to compared any investment or for $X.XX and $X.X gains, we gains realized define per $X.XX to the year. $X.X unrealized or as last same incentive

million excess net paid Fidus share, asset or XX, September of spillover $X.XX a was share. in regular XX, dividend share. per per distributions September per value for of of $XX.XX was As On $X.XX NAV income our or million XXXX income taxable XXXX, quarterly $XXX.X or estimated $XX.X

seventh will year to consecutive of and $X.XX to declared special dividends per XXXX represent XX, the the distributions dividend also stockholders of of as paying quarterly QX share, Board of the per record total share, of year be dividend bring dividend. share December December X, XXXX. per this Directors both a regular which special week, a on payable of $X.XX and this declared Earlier $X.XX

the The and XX largest United debt we the to locations eight first the remaining securities was the anytime investments states. invested weighted originations, million of in activity on during to in second portfolio Inc. add We XX of of gyms on company quarter, fitness, in existing invested was amount equity with across subordinated in a Bandon new States, companies, $XX.X franchisee fitness $XX million in portfolio and were quarter quarter. element total toward equity. roughly portfolio M&A to hematologic add say amounted biopharmaceutical end quarter third Terms invested we Subsequent originations a contrast companies. services another XXX. portfolio of a our to In the Substantially in allied technologies, to of company $XX.X which industry. million by these GMP products million invested all a of the common and and $XX.X $XX new Largest debt that testing supported investments million. investment debt compliant provider biologic Inc., leading lien these

equity. We invested million first that the $X lien in in common

$XX.X some during gains three we gains of received the initial the totaling in were from came new $XX.X we in these the As equity and strength demonstrating generated repayments million positions expected, strategy. investment totaling times connection owners. our monetization which we In our sold that each we of investment three capital companies the proceeds private case, quarter of million recorded $XX.X of with realizations portfolio million equity exit generated and terms over

of approximately won subordinated quarter debt company. the our received and a system plaques $X.X and realizing on We sold of gain million We investment $X.X million. manufacturing investments debt October full in of payment our on million, and after equity our $X.X exited X. Just investments our

Including we the of gains million in manufacturing end million $XX.X sale exit simplex the the since quarter. totaling $XX.X realized second proceeds received positions from totaling the our of and equity

of FairValue by the our as [ph] of investment XXXX was XX.X% value of our September XX, million construction $XXX.X a September the as breakdown fair equal of metrics, read investment and XX portfolio type cost. to follows. the portfolio of On Turning portfolio as basis,

This positioning portfolio with and companies XX%, lien XX% operations. sold and XX%, companies, active mix that second opportunity from the returns our four We equity us XX types current debt along lien our ended to income of have high equity First portfolio debt debt from subordinated their underlying investments. of with XX%. incremental quarter the with investments recurring for provide that level of reflect investment a the

September X.X% debt equal nonaccrual portfolio of on As our and fair Center on fiber of to XXXX, investments Oaktree companies Medical US status, two portfolio XX, we had basis. Green on value a

the to sufficient the in liquidity its control early is September, in million, This With Green lien via respect investor to previous investor. provide $X.X intended company company US execute debt, the recapitalization control fiber we a the transaction to in primarily of a with investing recapitalization plan. new second alongside strategic took

several portfolio the our measures they basis stability our to and quality and and on of help monitor quarterly portfolio. us a quality investment track Moving overall performance performance

internal we in at the investment is average system, our First, investment rating expected September track of portfolio value based one on line ratio weighted on the five under is with rating average and portfolios prior our methodology a periods. for X.X XX, an a the loss rating outperform the weighted basis is of fair

we to total companies credit is the track it net to metric, debt which EBITDA. performance portfolio portfolio, measured of Another debt, investment total combined by ratio, our

to is the quarter. With this ratio the for second quarter X.X X.X times compared times third

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

capital to for soundness value and quarter second debt believe we income times preservation third of this reflect X.X the of metric our our structuring these For X.X the our support quarter, of philosophy compared cushions in enterprise significant was to metrics the goals. maintaining borrower’s

our In lower experience closing, delivered in leveraging of relationships. solid, targeted we in XXXX, our providing middle end conditions grow market remained as in us opportunities toward selectively with our believe portfolio manner look business to cautious and while the a we

Our that remain income we remain high-quality that on and have companies market service cyclical underwriting generate excess and focused for assets. mature and that business flow debt into and strategy At investment on time defensible rotating same equity cash investing principles focused growth positive models producing long-term investments in they positions less outlooks. the possess ensure

investment with good the even economic on current in and is recurring softening portfolio to well-positioned for provide conditions shape horizon. the with and us income Overall potential

to business addition, the in through equity preservation on attractive with to emphasis an returns. continue our capital we to generating continues intend risk-adjusted long-term, show portfolio a manage promise execution with In solid

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

Shelby Sherard

good on commentary Total prior months $X.X and decrease comments quarter Ed million note will more in our XXXX. you, everyone. from our liquidity for I'll with the XXXX. morning providing three third be results XX, QX, Thank million Please XXXX, a was comparative QX, September quarter the ended versus and $XX.X income investment close review I position. detail

dividend QX. provision, the in quarter, including million episodic expenses, to dividend incentive due from higher fees. management. by increase decrease than our by income X.X approximately during $X.X related under income X.X primarily million equity than investment more QX and declared in increased Total to by were million primarily PIK Fee to and income due tax third which increase prior an Interest in $X.X the quarter, million in incremental offset an income assets is $XX.X strategy million,

by QX versus to of in Capital gains both incentive portfolio in primarily million overall status $X.X investments Center in and by in incentive million, Medical fees the Oaktree down income of $X.X related increase fees appreciation increase the new QX. write

G&A which annual differed and million will volume well on amortization by as by was of increase estimated the million million base X.X incur we in Interest cash expense as as quarter G&A by X.X increment includes expenses fourth in increased In the QX, cost expense expenses. Interest base. fee as QX management our financing expense. use lowest interest, decrease offset X.X

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

of we million $XX.X million of the debt our remaining SBA $XXX QX SBA of for outstanding surrender license. notes and outstanding and first As on we SBI million the $XXX $XXX.X million of paid our XX.X of XX, September line XXXX, comprised debentures, fund million credit. SBA of public debentures In of had

ratio equity to leverage was excluding debt times times debentures. SBA statutory or Our X.XX exempt X.XX

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

to related the I as the investment repayment realized For discussed. XXXX of losses related loss approximately associated expenses. ended of accelerate had extinguishment primarily million debentures to incurred our SBA realized We the Fidus net million amortization equity and of three of XX, of $XX.X months September on exit debt $XX

net the of $X.XX Our value as QX XXXX share XX, benefits versus increase the share asset as half overall our September an strategy. highlighting of equity $XX.XX portfolio $XX.XX per of in per was

our debt subordinated debt oriented fair our Turning $XXX.X lien XX, X% and now comprised XX% equity statistics; securities. portfolio was investment to cost on approximately strategy, total had debt, portfolio second million. a XX% lien value basis of September with of portfolio first XX% a Consistent investment our debt,

average cost the in $XX.X companies on investments third process operations portfolio down. winding basis their at Our company the portfolio of excludes investment they're end a that in sell quarter of the four million which was

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

available to Now I'd discuss like briefly liquidity. our

debentures million and approval, As liquidity our credit, have SBIC respectively million in under requirements we and to resources million million on availability additional access million. $X of regulatory an Subject $XX.X total capital to cash September and of of our of SBA resulting $XX license. debenture FNCX our line liquidity SBA included of third of XXX.X XX, $XX.X and approximately

credit proceeds we We're that million XX completed to of the exercise a debt public approximately aggregate overall in net down in the attracting Taking the of debt pleased of was we offering used October including We of pay into of and option net line million issued X.XXX% including principal which the liquidity. account at pricing. the repayment have the raising million $XXX.X event allotment due credit. of subsequent report $XX.X proceeds from offering of XXXX currently line to

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

Edward Ross

Shelby. Thanks,

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

Operator

first Dodd Robert Our James. question with from comes Raymond

with question. may You your proceed

RobertDodd

conditions between the in near-term a is know and really Is On and obviously basis there already new more to your one that we economic about on versus the softening you uncertain once connection little credit the been that is the forward better comments follow in of horizon two, do. should shift follow economy the because the the was on risk? well potential maybe then you on swap activity expect rather them a credit most to know have you any there to than that's newer

Edward Ross

in but longer cycle's seen mode. growth, about portfolio two. question, for economic still Great because Robert. a our an been is X, we thinking From What in it years, it's perspective, frankly have quite economic obviously X slower the than we've conditions growth

- with companies that, inherent level in business staying have and caution we just from. are there's so that cyclicality in of enter more an new that away we're appropriate particular, I'm generally And in ones investments, as obviously their

In investment, had kind new out. one of we we deal, we of the qualify didn't deal diligence for only doing and We've the recently that - that push a couple had won we're away. backed have and terms we fact a

now, move prudent being being very I forward is are But good as price hit a obviously with be good trying flow think very capital do deal what tell I'll I being don't we're we or perspective. base we very as from we're to and quite And quality's deals, doing we So forward. miss. move even not and careful the chasing is deals, careful - but you We're prudent. right

think I so reflects. that's And what that

RobertDodd

little in low hard there anything last on that well. repayments. realized I it. that. the are Got the call to things a so mean as as quarter Or it refi getting quarter I is and always, mean they repayments normal just low The bit? people hey, a investments were impossible ex that is on right? I appreciate relatively for harder quite thematic the quarter-to-quarter? And question a - then gains, really debt stretching going to just were it's cycle's

Operator

Please moment, please. One stand by.

RobertDodd

you Can Hello? hear?

Edward Ross

Apologize Robert, we about thing dead a quickly; I'm sure change what but that. so went it didn't sure not happened.

RobertDodd

off asked before that… no did - cut Yes, you I

Edward Ross

I question I I asked about the heard the repayments. don't if know end though. of

you why again it recite So me? don't for

RobertDodd

they to around just Yes, the that and is well, it last repayments number quarter repayments? or there gains. randomness recent mean quarter were The relative there debt thematic that extra on the repayment was quarters. in quite were some going is I low as of just and anything

Edward Ross

both repayments. randomness related. end is of of tell repayments, and you for think the I the are it's originations large deals, front business our M&A I of What majority a the being the on they will

and cost of episodic that perspective. are to where not we our But from happens somewhat there's bunch the that when M&A debt time capital, they had a time. can actually - of out debt portfolio activity So just can it's to that case, debt at de-leveraged companies - have paid Yes, companies this in it much investments. lower we just lot a from a of where

don't say from I I would - So that that's what perspective.

RobertDodd

asset this fiber, - bit you. obviously a on it. quarter. for a you took green control of GreenFiber quarters. then And Thank Got I a been of mean you just few It's problem

timing that terms that well? precipitated the was there taking just was attractive made as that action - So quarter this anything the control in thing a or of

Edward Ross

you're worked The company through not think in a to some get know they're this that the did amount the, into while. has will, small It frankly, took it going go-forward it in in invested our quite for did did but have, reasons. cash longer a fluid this a out that a business we've than the it's fund its that's a group basis. had happened. interest quite should and on the we lot situation, why it equity it this; they for with of. presence dollar if impacted it capital was, the it's kept of if exogenous over quarter, pay that's right. of company. just take our have We - in we I'm did numerous the in a be not control and but what invest majority there if the did non-accrual and obvious said leader, where was of a it kept we on portion period the It and invested that, company's left performance. a capital They better thing. of involved And a And to But - it you niche situation And events, private hope don't works were power, I them, a non-accrual, But has timing are honest, real unfortunately, in Having we invest ahead. of that still obviously time. the marketplace. is times a in it. remains staying our we that on And

So see is our time. hope that here improvement good over we

RobertDodd

it. Got

no you. Thank appreciate. Okay, I There's more questions.

Edward Ross

Great. to Robert. Thank talking Good you. you,

Operator

Thank you.

Ryan with from next question Our KBW. comes Lynch

may You question. with your proceed

RyanLynch

questions. Hey, Thanks taking good for morning. my

your just last quarter. when it to a at level still had that meaningful one, you cash drove quarter, EBITDA ratio, of what about from while healthy Can drop First a talk X.Xx mentioned pretty you this X.X change?

Edward Ross

this good the by It's but probably into tell that one in has is And is if expense, Ryan. not of interest left biggest larger Pinergy no treating going right, is Pinergy, question, them, I'll multiple all company, so It portfolio a is a average nominal thing. will. you longer I'm to equation. of and change and you And that's the the It's a the what average, that biggest as EBITDA an go very very than like multiples things almost Sure. the equation of our part portfolio.

I obviously - more there's a myriad think that Pinergy. the have more think last over debt investing, I over cases, also but I those cash the those and things biggest we've unitranche not so there's taken and several of place, would done is senior pay. in investments, the and one last say year, There's pique in here

Shelby Sherard

debt because that's of Pinergy And in paid QX.

Edward Ross

right. That's

RyanLynch

I from portfolio, equity If equity able last accounting range that your longer-term the guys years, investments try to to in in XX%, equity there fair kind Okay. to of as just of One be relation The the those? grown to several time all would sense those changing that over look to about last down growth to positions XX%. the growth that over Pinergy. several that a your kind the every guys time some assume you it this the That makes over to - XX%, XXXX time change years debt deal ability take maybe has value the as in percentage philosophy equity positions? I actually at is taking of do. you exit dropped XX% portfolio for portfolio far in Or a question. investment and your of exit of just longer really way quarter, in the what's been that of no there's XX% as anything

Edward Ross

today are sponsors. exits. we performed obviously little hard it's Great largest equity will generalize. extraordinarily investments, I not XX And have financial And With tell call control companies they equity those XX a close where cases our there, obviously have different Sure. do it owned situation's both to question. every will by so say we you investments in not or well. two to I

turns those. of of a And or some cases, repayments. those well, equity our well. but then, bit but exit takes on over the companies middle And A of see stretch, as market a so into had debt take the conversation last. time, performing are but group it engineer of the and And the the we I debt kind through collective investments in the Robert time, leads little exits lot always, with those lower that long longer not we think in our very does a to maturity regarding lot the it of

today. broader think same So but in pleased is if or thing recently. investments our going as But I think - I months are tell the did at that in this early forward. so, here But might little happens We exits that transactions do this - are longer of which the strategic who four-for-four the we alternatives a outstanding, equity we're the evaluating will several great. do four too find only market markets. That's here last you had length in I is than take bit have we went companies We I X place. time, here of, the time where can those what it's said knows to

RyanLynch

it that Sure. of part the fair value. the And bucket of equity that growth yes, due in is that those certainly to success increased and recognized of investments

So it's for value only been a shareholders. good driver of

XXX. Just an one fourth $XXX - Do just in excess tax for do it in Shelby, excess expecting know fourth quarter believe you any last tax? the last of have around year; mentioned you quarter. the sort estimates you're for what you maybe I was one,

ShelbySherard

would I $XXX to XXX, or take. give it around called be expect

Operator

question Our Schleien Mickey Ladenburg. with from next comes

MickeySchleien

question. off I with start a want to top-down

you're in, in companies and much and look in margins. metrics - of of that the declines larger sort showing when up that investing in loans duration at leverage we're downgrades growth of larger companies So their and performance like we fundamentals consistent seeing revenue

pointed continues middle the you've along On fairly as hand, well. the out, I plug and other think to do market

what in interested understanding that divergence. I'm causing is So you think

Edward Ross

building I'd yes, certain Yes. nothing see say but that's company regions it a than bit tough nominal. a we - At the will, heading alarming Mickey. tariffs? crop to and I little some I on if end product the what anything. question, that's exposure pockets you margins see company Do mean that? seeing we that usually you we overly But - see side? of do it's has board, do the slowdown of little of a off I mean in the That's of we a really manufacturing are more bit - day, whether

what logistics continued So we pockets. have industrial the it's we logistics - all earlier of a seeing are side does investment, whereas in on little year, company - growth is of we're company bit part and also of down. think and that and continues grow, growth. continuing that I I as that up slowed our and slowed lot mean a backed as company, a large and was the third well do a year. seeing is industry things a LTL But us, slow think I good the obviously the we're there different do actually company that slowdown is overnight to earlier the in the for

from year just the to growth I think that a know to slowed I of but don't it's and sectors customers, add little clearly the market here I in do that to last go a high-quality though perform middle it stable trying - at businesses a seeing the we're little and with thrive ways finding bit, environment lot of is continuing slowdown I you, pretty can a bit what value through a has bit and definitely to in in But earlier think their moment. So this year. I'm their little to lower was there are

MickeySchleien

and for are you're middle impact BDCs business trickled exposure international. do large market In is example. U.S. the companies They it there and more companies. selling could could follow the Presumably international point, it that ultimately companies or experience, I business than the on of and market related where down larger see to generally doing larger is of to other If and your middle the lower companies many more be companies targeting we may focused you that a those are speaking, are better Ed. targeting, up, and than relatively have the an U.S. be

Edward Ross

good I we today. an international is that think but clearly, most think Mickey. very good on mean, I we think have extremely companies a focused I companies, really business I that's are U.S. do - point. point, XXX%

have one revenues investment of other cash talked companies the - as our of the than we about thing nature. in and investing recurring recurring that I think [indiscernible] flows in it strategies more

are also And subscription content Companies here more things think you names, of so, about focused either recently. lot if that, that I like that side or a you're it, we've the a which if aftermarket helps. lot manufacturing software is something think have names, on on

from is the think company of our I perspective companies investing types we're that in. part performance portfolio of a

the that's the other think piece I of puzzle.

MickeySchleien

Okay, helpful. that's

more to housekeeping rates a rate I was that depreciation debt for else it just you million. so about like of that a sort perhaps want couple your interest notice Just declining prepayment functional or questions. impacted accruals on that I reported $X.X that investment, confirm unrealized your And fixed investments on was something fees?

Edward Ross

that. did. had I back don't on think to we don't have think that you get I to I may we debt overall backed up.

those today it we - it. were and that the are information quarter. more think than I we looking they actually some debt last think is Shelby but on were about a where situations we is I more had leveled at up as don't of think had thing bit appreciation But and and couple type individual we backed little names had a clearly - just side

MickeySchleien

Right, question. - was that that's my

and a just functional just understand and appreciation to movements You were can talk wanted if that had - that's I something offline. interest about know we else. rates But

Lastly...

Edward Ross

- movement rates. not and think don't I interest it's

it's just think companies. performance those I of

MickeySchleien

target would X.X. to about leverage think I a you've X.X be This previously talked ratio. lastly, leverage of total And

you share regulatory now. target target that us? leverage So have you're of do sort that ratio can in your and with you still that Is range

Edward Ross

I specific we regulatory. have a don't target think of

we target far a there on to think for how GAAP purposes. equity leverage, have don't that the number the any the we piece are big of They regulatory away say from I we're we're so target really a a [indiscernible] about X.X. liked would thinking don't I is position - of our data if SPIC. we it X.X regulatory more perspective you will, to from is X.X concerns. X.X I given

And are the where we the target moment perspective. that's from so at

have run. of to room bit a we So little

Operator

comes Oppenheimer. from with Chris Our next question Kotowski

ChrisKotowski

and license the us paid You general SBA? mentioned update with where process was and can prerequisite licenses you on your getting your SPOC I that that your in - in a and finalized you first down stand wondering, new for was you the surrendered

Edward Ross

just a it be down. we and wasn't it - honest, No, to if you prerequisite what don't happens pay

period. the pay year. of is the and twice and other Once other the can at one debentures so end February You the is back August only of time at end a

that we So want until capital. in you of just interim, every because there repay cash We didn't that. to obviously advantage can the the - took sits payment

So the it's not third receive think. for a license third I prerequisite the good repaid. And was time the to license. get a it We in it QX

but that. we - have a up prerequisite, no. not and So it was running It's and

ChrisKotowski

haven't third to on license. more you there drawing been But Is the there? do

ShelbySherard

have No, third on drawn we license. the

debentures million have the of outstanding We license. on third $X.X SBA

ChrisKotowski

Okay.

Edward Ross

We're early building in out. that stages the of very

ChrisKotowski

then out is on from expect just the of equation? given line Should proceeds immediate and And quarters credit on should notes what expect debentures but of SBA we the to next draw or the and side pay the we the I incremental some down if use assume just funding the we I the to offering, most from guess down come modeling then the credit here? as it growth, of funding expect line to should assuming we're - Okay. of we're the and couple

Edward Ross

draw that a qualify of frankly, quite credit, think clearly, are a for obviously - qualify, majority line I we will that it process. But would looking line the being opportunities, thought guess. But of we of they end I for probably our a it be think of majority be assets program. would my will the of do will maybe up capital. X/X credit; so use kind and on SBA when And then down

ChrisKotowski

it me. from Thank you. that's right, All

Edward Ross

Thank you, Chris. talking you. to Good

Operator

Thank you.

comes B. FBR. Our Tim Riley next from Hayes question with

with proceed question. may You your

TimHayes

taking one, Good up there questions. my for compare Hey. question that facilities? and Thanks to the from blended of drawdowns on the today how guys. what's morning, across follow does to debentures, three cost cost these first My Chris's your just SBA on

Shelby Sherard

up existing then next cost data do keeping Our capital, [ph], - we And we definitely more in SBA debt also attractive on around the was in X.X to think versus I in might it just so Clearly, our X.X so around average mind is the about - SBIC another about tick X.X basis. weighted to cost overall the of did terms is of quarter. capital baby an it's X.X bond

TimHayes

Just had if whether question looking it And you your these new it and exits potentially just control to to equity actively not as interested to more third Steel if parties, companies working your now then some or equity? and new conversations might but about relates in progressed have of in and with any back or to the [ph]. on right have that. these positions, Okay. position Pinergy Understand ones specifically any circle Advanced had maybe I isn't be down wanted the be you've take necessarily wondering conversations investors exit towards are that time M&A

Edward Ross

tougher a well. The to know. are way the services the mean think it. obviously - is industry. performing it's answer different I in as of and I But a Yes, we are think that in field Pinergy in malaise, about two names the bit if you time I well sector's very mean you that oil

how that a having yes, up. is discussions no got fronts, of working variety to is patient think telling there's but Pan ends we about are be And and that it we would where that exactly I so are on steel, it. - on there

for overall medium portfolio hopeful monetize the done. easier sometimes it's actively at We portfolio it But term we we some to that it progress But equity can where on hard make you will. are on ways in working working the said possible. the are and if than looking and

TimHayes

what thinking looks activity that amount is earn in on the if on And impact it wondering internally smaller your but growth, well, NII from half quarter's then a came And know as last your quarter this the Okay. mentioned sense. wood a full quarter in the the and got be amount this of then first positions, to potential about as in But some Makes can fee NII adjusted confidence dividend still below a was good there's have income you to of income a timeframe. any you up like lumpy ability as just vein, of investment the chop of quarter's dividend, good interest I you and dividend a equity dividend and and just rotated I out amount the still well good level quarter. view understand you guess I adjusted of and eventually with there.

Edward Ross

Tim. question, Great Sure.

and think need deliberate get I and very we one if cautious manner, comfortably, doing you is to a will, we're to in need do little to two manner. that are covering there But that. a portfolio working are things we to back grow the to and bit do we

portfolio income second a investments in we're four happy And we're do rush. to but investments some a of into And producing or the assets. these be over think next of that five the opportunity rotating months the puzzle or is get to equity the debt we with. level there'll So piece not

And in in so one and that control harder a and of equation is it. many we're to is not it's that multi-faceted, solve cases,

several earlier, mentioned right companies are alternatives evaluating now. think we do I As strategic have I that

tougher is take then - going the focused as do place. can we We're at we of doing in investments and we're not all. to critical. I a try going to move one long-term an it's equity want what we're So because it's we to puzzle towards But manner. a some on solve in to manner. very performance, to and well and irrational piece the it something in control we're long-term think But to deliberate events hopeful that some good monetize And do different we're it's not situations

answer the in so can't And one doing one that a a to that's specific answer. we manner. tougher can; We're best I yes,

TimHayes

Understood.

Just that. good to your get thoughts around

Sorry, ahead. Shelby, go

Edward Ross

have amount a over meantime, of healthy in $X.XX the going share. of in do was say spill terms income I we per to

TimHayes

Right.

Edward Ross

have we is where think sit of the I are obviously And we comfort - here a bit of point fair we today. where

TimHayes

would comments what in Appreciate in second know And back economic lending to approach to lean first the you're past softening your And does But reflects that lean mentioned just of environment. guys guess middle of debt, I the more over opportunities around it. you conditions, expecting you type quarters steps focus your say the getting on strategy? turning that create going Got as about more and lean market several of that. then that going the other on first doing I lean many peers first other been for some hand, defensive? you've your more comments lower you maybe

Edward Ross

Sure. I'll take last one that first.

does. think I it

continuing to high-quality are investment number had new fair second very we pleased a of year situations see We lean that opportunities. Earlier the in with. were deployments; we

long are what the But us, for is is so episodic. - second see first been as quantity a has opportunities nice there, for quality we either over time dollar the finding last one And to of play in lean that's we we we're transaction. someone we lean - But bring we good success obviously and today, a mantra you'll having seeing. or in out lien a fair the that's the forward. a still first there think move it's clearly there. definitely and more what I then for investments. situation opportunities in originate those out, looking where we're marketplace of piece are and We're paper number the seeing you're first And and

more think both I what So looking we're deals come but in episodic that quarter. on it's for

Tim Hayes

internal say is one just in softening you're from this. big preparing been but M&A case, expecting your then When the you view be I what more for would that's for there me kind XXXX? of And mentioned be know inflection or that you a in also an and conditions, preparing for around that type this there for of if economic it. events Got you've environment? several exit now, years will outlook

Edward Ross

question. Great Sure.

I obviously has we're about occurred. think A a - concerned it's slowdown. slowdown

economy out a set it, helping in think that's more. that's along is down to a bit. the and U.S. I relative slowing little bit to chug little pretty And obviously of aggressive front being and the continues the global

a - anything didn't a landing thing. depending have that just been to you and the don't really really careful anything that's take And that landing is softer and we and soft that credit will. if that world, were it's aggressive that's hope want we're chances - we of type Our we've we on hurts

been we've long very a for time. careful So

more businesses, that Software, are So revenue businesses on the Think types recurring mentioned companies earlier, of aftermarket these I the side. manufacturing or

as it. We're problems been to just play overall how from we're we've in earlier, trying segments seeing performance. - I a not any mentioned or real industry seeing So that's not -

be what do I'm right if get and - think So we slow do will. now but I now is good? we flow or mentioned good it. M&A opportunities. How opportunity obviously earlier, a think miss slow quality's activity as spectrum, and high bit, deal I I now, is and I perspective, move about I where the a But period what M&A feel M&A vibrant that in pretty think we're time or hoping election, little from and things I much the quality you do end are As very the right could it's think we're we staying that. of hit an as economy on - participate the world the right been seeing the M&A closer election of of think we some seeing to those a down to is towards quality down could

Tim Hayes

it. comments the Appreciate there. for Thanks Okay.

Edward Ross

you. Tim. it, Thank Appreciate

Operator

you. Thank

Our with Securities. next National question comes Row from Bryce

your with proceed may question. You

Bryce Row

Great, thanks. morning. Good

just equity here to Obviously, was on curious topic. a I go a that guess exploring processes from write-ups and this strategic third you priority - the I quarter wanted past does that ongoing monetization's of the the quarter, quarter. investments terms at on some those second a mentioned options? reflect portfolio on to equity executed you the your strategic in handful the that Just companies little of maybe particular looking deeper of

Edward Ross

know, M&A have sure where happen answer a to our - as you that are are one But from to to reflected processes, valuation again, deals would tell certain to there's perspective, those relative in some positive the if really have it's some the numbers those going situations, knowledge we've - well of be or in not. In two situations hard we that yes where that that these a the a process. to And thrown for and couple are multiple extent. being out we investments entered or

happened, situation. there the wouldn't I a is but say that's that's are couple that. names of So where some there overall what's

Bryce Row

great. That's Okay.

were covered, appreciate time. cover wanted I to so all other topics the Thanks. I think the

Edward Ross

talking Bryce. to you, you. Thank Good

Operator

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

Edward Ross

this Have joining great Thank us everyone, quarter look late call you, Josh. day a our with to We you, a speaking February. in great morning. forward And for weekend. you and on thank fourth

Operator

concludes you. today's and conference participating. this for gentlemen, Thank Ladies Thank call. you

You now may disconnect.

Jody Burfening	IR
Edward Ross	Chairman & CEO
Shelby Sherard	CFO
Robert Dodd	Raymond James
Ryan Lynch	KBW
Mickey Schleien	Ladenburg
Chris Kotowski	Oppenheimer
Tim Hayes	B. Riley FBR
Bryce Row	National Securities

Fidus Investment (FDUS) 1 Nov 192019 Q3 Earnings call transcript