- Earnings call transcript Q3 2022

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Operator

Good morning. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fidus Quarter Three 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator may conference. you begin Burfening, your Jody

Jody Burfening

morning of release financial Thank the you Corporation a will the of Investment for included your quarterly and information and harbor with press good forward-looking Chief me contain Corporation's Corporation's strategies, like afternoon fdus.com. is and the press safe Fidus and Investor Financial thank morning, available statements everyone, details forward-looking Officer. today this A potential With future beliefs, company's call Relations release the joining I'd on call. and statements, Corporation. Sherard, including quarter Executive earnings on today's Investment page operating yesterday attention to you, Ed Chairman issued goals, at of XXXX customary Fidus Ross, Investment Abby, results. third results regarding the conference to call. the company's regarding of copy are Shelby cash us Chief The website Officer; disclosure call also for flows the Fidus Investment Fidus conference

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

Edward Ross

lower performance an XXXX update results Shelby of a third we in call. our cover Good of will views our happy and the everyone. questions. call, to earnings third we'll quarter have financial with position. start completed and offer third review at remarks, on the and you quarter conditions quarter your take morning, good liquidity end, to .After morning, I'll our Welcome then our middle today's our market. portfolio in our conference Jody prepared be market quarter On

quarter even with For results quarter, on a the NII a share portfolio portion overall meaningful increase a with a million and of adjusted per $X.XX face supply third potential remains a chain delivered higher recession. $XX position challenges, interest larger of debt our that rates, the net in our net ended and persistent originations portfolio equity strong inflationary from generating yields gains portfolio monetizing in of or a We healthy portfolio. in realized for the XX% higher

activity down high market meet deal Although last criteria we experienced us. in is to our year, velocity the relative ample lower opportunities continue middle that to be slowing available to investment the

was debt both as investing $XXX.X basis generate income end. well, income, at debt the debt year. and adjusted possess Growth debt positive any reflects outlooks. adhering fee, was Adjusted term and $XX.X we per share, capital in an our result, quarter flow incentive industries cash know proven in high realized redeploy continue management points. from higher our producing $XX.XX per to we and under end we or quarter business net XXX resilient yields to or support and models growth to or last which share $X.XX and gains $X.XX long NAV define $X.X increase increase excluding yields of million investments investment service investment and losses share unrealized NII income, net in into a of per compared building quarter to million, companies assets gain equity while in realizations compared attributable As strategy portfolio proceeds operate to that quality further at increased an million, second to

For and dividend per a the for the was also of share a $X.XX and a per the share August, quarter dividend minimum skewed This dividend $X.XX declared fourth of third In for purposes NAV the $X.XX fourth quarter, dividend end as declaration Board in dividend base per share at a share. of supplemental quarter third quarter. of supplemental Fidus $X.XX recognized paid base per quarter. the GAAP

income. declaration the was to quarter the increase early NAV for $XX.XX a of fourth early share $X.XX of the of $XX.XX share fourth was investment dividend, dividend compared of distribution declaration satisfy at to the at end Adjusting taxable quarter reminder, a second per per of a quarter. intended the the As for end XXXX company modest requirement our quarter

look debt redeploying M&A NAV levels basis today, grow assessed recent XXXX, $XXX.X our incremental and/or we period XX, dividends, As of special have of into long to portfolio $XXX.X increasing payout per a of cash XX, income mentioned activity, our to successfully investment our as spillover portfolio as continue producing the on September dividend, with to light I and carefully looking we call, base excess retaining over income, term. On deemed the the spillover December of September in is from XX, options equity income by distribution our to XXXX that ability XXXX, to evaluating we built shareholders, be stable at while liquidity estimated to of from supplemental delivering these part million quarter's value last $X.XX dividends evaluating high a including our growing variety of of a In to options share. realizations assets. of we've in distribution. proceeds respect the ahead fair a and of to million were If

we to record adjusted XXXX accumulated extending we cumulative Based of cumulative totaling we position, realizations growing of and realized believe liquidity our and generated in have well million In performance track adjusted our dividends. strong of excess addition, positioned since on generating gains NII from $XXX.X beginning NII, proceeds the $XXX.X base of net are equity million. this continue

and supplemental to for on dividend $X.XX $X.XX of X, payable dividend Directors total dividend per For XXXX share. per XXXX. will the special as a cash share increased $X.XX the has The fourth share, to declared of per XX, December quarter, December dividends of fourth be of Board a the cash quarter of stockholders record

For the prior have total shareholders dividends $X cash the increase year, over share, a we will XX% paid per period. of

policy base dividend. and For that approved Board a XXXX, special dividend a dividend cash a a dividend, our supplemental encompasses has

Board announce $X.XX increase respect to with restoring dividend, pre-COVID the First, has that the base share, dividend. to I am our pleased dividend to to decided the per base base

will calculating to supplemental NII for over we formula quarter's our dividend. dividend adjusted the addition, In excess retain base prior equal a XXX% of the

a out of dividend quarter. We special cash will $X.XX also per pay

Finally, distribution RIC in satisfy will to for requirements, be we order deemed making the a XXXX. distribution

approach, deemed final stability consistently our a XXXX amount to plan in ensure XXXX. the dividend. we of planned distribution as the information is will While the stated, more of to maintain our business in January base the XXXX deemed to the distribution results, We depend on of have certain level spillover regarding communicate

was equity securities million million to of focus care in a second-lean million provider the suite for in repayments in as our invested to including IT remaining OpCo Inc., and $X of on proven consisting add-on total of debt consisting of company, in merchandise Bayer $XX.X MBS $XX first new as originations in for of million provider lien aftermarket Marketron, $XXX.X with a debt The $XX.X in of securities health equity. first lien full to $XXX.X million debt investment six and and in million portfolio managed in debt solutions of debt $X.X operator a doing network $XX.X provider that of incremental income debt keeping of access a million subordinated in cybersecurity LLC debt, secondhand parts in leading our in common second-lien in margin Holdings, in and a AmeriWater, generate million, a in of and in of in $X investing U.S. million a with services, LLC, specializing companies million sale million consumables business global and generate equity. strategy We comprised Magenta software companies, million $XX purification systems Systems first-lien Buyer and in subordinated profits, BP $XX invested provider a drift recurring solutions. the security. $XX.X Thrift $XX interest million for of quarter. and doing $X the in million leading SonicWall invested first-lien million $XX.X and consisting Van $X.X consistent LLC, Of of in of security million a was debt $XX Trelix, and safety first-lien million $X.X million business debt, OnePath X store in $X.X common applications, common leading and LLC and portfolio debt million comprised radio of of water industrial equity was existing television broadcasters. of global enterprise LLC, investments in steel. Moving

little realizations we $XX investments or received the which accounted monetization XX% more equity repayments of In totaling for of the a proceeds in terms and third million $XX.X total. of quarter, million, than of

some recall, discussions XXXX. strategic our of initiated the had portfolio may you of As toward end companies alternative

quarter sale of sale related a a Fitness, our common in Investors, $X equity equity million of million payment debt Company, realized SES Palisade common in distribution received of realized and exceeding the Bandon at investment approximately approximately With business received the sale investment our of companies. on a gain on lien third full the gain this XXX.X% investment million fair that We the in and We portfolio LLC. in our portfolio common debt payment million subordinated have a received In Parts, distribution conjunction repayments, companies million portfolio the our Transonic related $X.X $XXX.X the of exits, received and realized gain the demonstrating Fuse our of received in debt and of $X.X million, In equal and penalty the of realized as to operations. a and with the sales a record we value a their our received doing We terms equity a on first-lien investments active SES gain a with $XX.X approximately LLC. Foam. reached and of $XXX.X to building million a Health underlying the saw a We and Steel million quarter in to of we equity investment in companies investment distribution to full portion of level $X.X including on invested reached gain transaction, XX million, equity our approximately and of prepayment realized Inc. success our Debt ended related we originations continued year. XX to first of $X.X cost. LLC, $X.X million. distribution end of sale $XX Fan We debt on investment on sold we of related Precision investment

XX, larger fair than continued million In a a as basis. fact, -- is equity it was investments, XXXX, the as value favor December shift portfolio portfolio our of the XX, a fair monetization. $XXX.X quarter, of XXXX, on of debt debt second on result largely to has Similar in value of basis now to total September mix as

debt XX% of March compared and XX, XX% XX. of to of the as of June investments about September total comprised As XX XX% as

percentage XX% as a the basis X.X%, a a portfolio lien only uncertainties, our percentage in to allocation majority equity cost conditions weather the within geopolitical quarter face reasonably to account portfolio even also held investments our but healthy First rotation at around solid our boundary resilient to of the with inflationary changes debt vast investments the on of as cost originations the debt business chain safety. target and models has credit economic a steady was ongoing from reasonable of of net and not debt remains us to of equity this With Overall, portfolio portfolio XX%. to investments. and incremental quality into our margin with Taking and recurring of performing well-structured supply of and of total the well through adverse income the designed disruptions. pressures produce provide profits, are equity companies

companies. less We heavily risk value and weighing conditions quarter, any to elevated to calibration experienced and a basis. is the as we beginning in non-accrual, various financial of September fair place performance conditional on bit our not In than economic our modest non-accruals more third of companies. depreciation a portfolio due of total select of as XX, debt tougher accounted year the compared did X% on However, portfolio companies for are the these on the

especially headwinds. of We a which companies $X light will to invested new continue to current in of million end, proactively monitor equity holding Holdings of debt we under was investment to Evolent we EPL $X.X portfolio controlled [indiscernible] investment. with common company, amended LLC, quarter Subsequent market in equity. acquired operations and LLC, incremental of terms as In the doing second a lien conjunction became the affiliate and in our business million our up common committed transaction,

exited In full Company UPG investment prepayment addition, on lien in of LLC. which debt received our $XX a debt in first we million includes We our fee. payment

$X.X for OMC fee. million gain our as debt payment second on our realized our received We Ohio million. of Investors a received exited debt, also in approximately business in LLC, Medical We distribution a equity doing of equity investment $X.X and investment includes on a prepayment lien full Corporation,

$X debt recovery, leading alternative Academies, on high LLC, of education focused Education invested academies million lien the of United doing businesses school dropout second provider Acceleration Inside we Finally, States. in a throughout

last of underwriting we our environment remain rigorous sponsors, we the credit industry due relationships knowledge. without strong of As the sacrificing standards, enter strength current to quality positioned and the building the deal portfolio with to well economic in quarter our year, continue

the this for grow adjusted to growth. lower deal reason, even debt in opportunities activity our For with portfolio about optimistic market, remain continued down we slowing our middle NII

our growth, While equity companies, and investments our we to on of quality percentage will, deliberate are high always, a of focused we with in be investments will high patient continue cushion. selection structure and in we as debt

goals risk-adjusted managing the on attractive the serve business preserving supporting focus and long continues generating our our to us term for of for well, capital Our returns shareholders.

value delivering past growing cash dividends over increased shareholder over Our long the performance the two while positions continue years to us term. through NAV

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

Shelby Sherard

increase in in driven will three and increase third commentary good ended on well was prepayment income. and tax interest as morning, comparative prior The fee. in million note, everyone. a income investment a quarter, million position. for results variable the versus PIK, increase Total you, investment and expenses, fee $X.X income fees, detail months quarter $X.X the September to increase in be in our liquidity balances $X.X rates close and rate second $XX than million on Please review a the comments debt average increase a Thank I increase Total higher our Ed, with QX, I'll of million interest the activity more on XXXX. in QX as levels by increase income $XX.X an from million million driven outstanding dividend primarily income our $X.X due in providing increase given to $X.X were in increase XX, interest $X.X income, by for including the was primarily an investment in incentive QX, provision quarter, loans including yield debt investments, a due higher million income million

will which $XXX the be of an per As will tax higher annual to estimate million to $X.XX of debentures, be million outstanding I quarter $XX with $XXX would fourth borrowings. comprised we and as expense, notes quarter SBA excise of $X.XX in incur unsecured expense $XXX a secured of of million We million share. the ended reminder, debt roughly

and accruals per months statutory or leverage, our Our losses $X.XX excluding of on three The as XX per incentive was X.X share QX investments or in for average unrealized debt excludes on debt capital September QX. debentures. interest share was rate weighted was income September NII investment any of fee SBA realized in QX. versus attributable and times ratio ended XX. $X.XX times $X.XX to X.X% X.X reversals equity in or Net which per as exempt gains the to versus per share was gains, $X.XX September share NII, XX Adjusted outstanding

investment and For equity of our the Fitness, realized Steel Foam, XX, Bandon of gains sale recognized in we the approximately Fan sale our three ended partial investments million months the equity Transonic. and September of SES $XX from PALISADE primarily net in

Turning statistics. portfolio now to

value million, September $XX XX down. average of portfolio investments in As $XXX.X sold portfolio investment their basis excludes a company total operations portfolio fair and in are million, investment our on was XX, that which winding process the had of cost of companies our

value a XX.X% XX% our debt with ownership on of equity computing XX.X% portfolio fair investments yield equity discount diluted origination investments was on non-accrual, have rates fully companies average of effective June fees, floors. We issue the XX.X% accretion excluding and if September of has yield rate interest an for in Weighted of debt average portfolio of cost, interest using approximately as variable original Approximately average effective debt XX. investments at but The at rate basis investments including with the versus any. our loan X.X%. on weighted is

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

cash and million of liquidity subsequent available and million of As our approximately of approximately liquidity million have Taking our $XXX.X in September credit, total account our XX, of $XX included on of SBA resulting line capital we $XXX resources of availability liquidity. $XXX.X million. of debentures $XX.X events, into million,

I turn the call will back for comments. to Now Ed concluding

Edward Ross

Thanks, Shelby.

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

Operator

question first line from Bryce Rowe from comes B. [Operator Instructions] Your Financing. the of Riley

open. is line Your

Bryce Rowe

Good morning. Thanks.

Edward Ross

morning, Good Bryce.

Bryce Rowe

Yeah.

maybe here, we'll start spillover about us trying level about optimized think dividend that like terms and what I the there. what and think here on look think in an be, taking and just deemed, might try help I the maybe appreciate to the I'll to might you you're of can approach start of kind

spillover? optimization that think like look you from do perspective what the an might on Just

Edward Ross

question, Sure. Bryce. Great

the is a if at of in been to think dividends. it doing really couple years, you three what call spillover we've over that. close higher what look -- at place a think similar has level, And keep been quarters it I thinking to but last our I as

close quarters depending, we'd worth somewhere that like a possible, two, goal. three position if obviously, to performance a kind dividend that's spillover of So of long-term is maintain, the

Shelby Sherard

And base Bryce, add quarters would of I three of that's dividend. worth kind

Bryce Rowe

Okay. That's helpful.

help there that what taxes, out maybe impact dollar of think of be kind the of kind the to level capital. is, on the with leave of that whatever Shelby, amount some retained deemed so assume depending about you And will I level be can will come us you

Shelby Sherard

Fidus XX% is related on paying that distribution to to amount the declared deemed But correct. a C-corp be of NAV QX be in will then up the distribution. That's through will the will tax tax shareholders. there end deemed impact a XX% that the ultimately to passed

Bryce Rowe

helpful. just maybe That's around Okay. And your shifting Ed, comments, of then some performance. prepared to company

companies You some to the have what's little you specific within Can talked about bit debt depreciation? to of level what depreciation some unrealized maybe about metrics led a portfolio within kind talk or portfolio. of happening

Edward Ross

a another good topic. Obviously and question very Sure. good

world I of spend is, or very good to say necessary. good will, and I okay, and cushion, I'd well our think today provides as XX% companies with think over the which to deal portfolio charges news very performing are about the portfolio the for fixed if you as

today. very whether issues are very interest well positions. those And labor chain it's labor, issues, cost, comfortable All today's availability real increases in rate it. of So issues inflation, of name supply world, you then documented

we to And that. not we're immune so -- do

obviously, good contact or have real underperformance some we're with today. companies, experiencing of but issues. in do we those so And that's types of the because And stress world companies those

very of more still that been so time I environment think abnormally in is good almost credit this months thankfully, an XX last a but go to So What back credit or manageable, credit has environment this, be abnormally we've for we're situations my the well. would been quality quite normal like are do over tougher as to a of and finding as or in little there's quality level, I would very -- obviously, with and good. -- quality it word, over and And -- about expect those are companies that to expectation. managing a easy are -- for, is are today wrong but companies few Most so all It's and probably issues the we easy to working the real, are with just it. today's dealing can. improve then a things are

Bryce Rowe

queue, Great. I’ll back a somebody else Thanks. get That’s helpful. jump chance. in

Edward Ross

Good Bryce. you. to Thank talking Okay. you,

Operator

The next Robert James. of the from question line comes Dodd from Raymond

Your line is open.

Robert Dodd

I incremental at on on obviously, still you that, sound quarter, and grow the going same Ed, Congratulations more debt the and capital obviously, like is on outlook. tougher. time, forward, quite Hi, environment mean, the the I and book everyone. mean, the the ability bullish, to deploy

So color -- probably hasn't your give the changed. any us has how -- you on underwriting process can

of capital But You're a for deal order on -- coupon imminent. much always or underwrite you if there asking what changed one to you're have at more in a your asks recession to structure on for how you're what even commit changes a opportunities. anyway, looking go have new or in basis how is your in when terms forward

Edward Ross

with but guess opportunities do that? there is, think how today, you I'll about so invest very we're Robert, doing obviously way. issues okay, to the I despite of question we of going in are an your deliberate plenty Sure. then start, that are And today, good

market are up, to up but as is you We up, opportunity, is LIBOR SOFR just things the about like are excited pricing, spreads well. spreads, quite frankly. obviously, think But about if

So leverage down. that's have then And levels perspective. from a good come thing our

articulated, have we're obviously Hopefully, this be we invest. helpful. come great and time just impacted same to So the very not we cautious of opportunities continue risk we'll that's to companies think move uncover the today approach, being think of as deliberate like same issues being but looking that our forward so time. And we we're with the meaningfully environment. a that I able At at for to are We levels types it's the down. by time,

Robert Dodd

just helpful. and very follow-up a deemed is Bryce's question to That question. then on a Yeah. the And

the is optimize which this On basis do dates like next whatever that spillover at dividend said, of the that mean, basically obviously obviously which of declaring without quarters you the and kind is I that, declaration like looks plus -- did for plus effectively XX. MAX close you're quarter. it worth to It's this quarters, earnings year You earn things by three plan on basically moving distributing of you the another -- dividend, all $X.XX. three base plus

to plan actually quarters So in to overdistribute, the you distribution down take Is overdistribute level is and to take three down acquisitive next not deemed it a then spillover if the near the brings somewhat or the to that term? medium plan year. actually lower

Edward Ross

down, take To what I'm sorry. the

Robert Dodd

if deemed $X.XX The distribution, each three quarters decline there spillover down incremental because the $X.XX hypothetically from special brings it the make well. year. down incremental quarter actually as it The dividend to would next

Edward Ross

What quarters say think two go a there's obviously, of Yeah. we don't lot I would -- here. still there's is -- to I

so have right. how above the we share. day, is -- currently to don't largely that. trying that would stay say But we think will need details, time. And be that's giving I information those going each mentioned drop will I be to the for but clearly, with mean NAV of per you get I distribution $X.XX rig purposes point view to planning where our just much is the deal are $X.XX to we're line or the us from is quarter, in in away too don't at at what that likely And most we with because end dean by

as matters, But be well unclear you in very it's know. be when where is we'll the quarter, we'll So it close. which really third

little fluid, of but trying thinking direction a of a where you how we're little bit we're hopefully, it. to give I'm about it's So -- bit

Robert Dodd

That's incredibly helpful.

Sorry, ahead. go

Shelby Sherard

just of desired I rate. Robert, think I quarter base three of add, about normalized run dividend the an spillover level is would would kind

XXXX in your do gains of in in position. of if a also bit that also would XXXX, net realized special, would how had $X.XX the XXXX to there's highlight, solve the for little So I light spillover increase magic point, you incremental but we and

taking So account for of kind the spillover suggested XXXX. see of there into into of a right amount end factors, that closes, what go what's we've for are variety year already how Ed once XXXX, the we declared as

Robert Dodd

want yeah, because And this a is Understood. couple thing of to bad just a shareholders for none points. of clarify I

appreciate it. you. I So Thank

Edward Ross

to Yeah. Robert. you Good talking

Operator

from the question Ryan next Your KBW. comes from line Lynch of

open. line is Your

Ryan Lynch

morning, and Good taking questions. for thanks Hey. my

Edward Ross

Good morning, Ryan.

Ryan Lynch

I interest guys color are? interest guys' one, coverage as portfolio had overall was continue your compare to just levels your it portfolio on how rates on go you monitoring and just And as could you months are six where your far up, did First today little -- borrowers? as ago was for provide that as to your where a maybe

Edward Ross

little Sure. a It's great which go I'll answer through. The is question. a confused,

went situations. times. of and it's quarter use portfolio an at there, last levered done we've To that X.X interest to in from actually what because at calculation coverage average is average XX, fingertips, we In we be honest, So EBITDA and to quarter the historically. were it I June under my if do this have additions the up been in QX QX have

actually so large little bit are obviously, why at investments they a And I aren't very X times. it's call, and has for as excluded the well us. to as EBITDA gone skewed that debt that's that's down. And excluding would levered leverage Our ARR it. meaning EBITDA, three, analysis, about Leverage those businesses norm we've higher the what our

for core actually obviously, interest the have So portfolio added, we've leverage And here two last high. are that is reduced. coverage quarters that eight then pretty over companies the

I say additional plus there's What cushion the, it we're XX% it, And coverage skews still good with I portfolio think levels increases. overall. the would for of the call plenty rate of in And interest is so analysis. pretty

inflation. increase, cushion interest companies an So and company, have rate plenty got one-off causing of issue situations, supply to A comes It issue for then we've or the really down there. an whether chain lot dealing certain of a it's, been to for some But usually, to portfolio there's than that. all that. got accomplish And of you others, And to it's large, has almost degrees. And tougher been large, inflation. so thankfully, able prices been a right? raise do with again, our varying

we're And spending the end cover to day. portfolio plus. rest, that. core ability more time about that's and obviously, interest good very the there's where our manageable coverage. the the of to the But to and It's do that's general well. think more We lot at as there's day, a one-offs it's the end right we feel The -- about of again, we so ways I that XX% work just we've really part really at we have of risk. feel good of a of to overall now it's do work feel lot -- the But through, and got the

Ryan Lynch

lot of That's and sense. a Okay. definitely helpful makes

color. main The have other over just love success realizations of question I the over lending of for had environment equity equity would that choppiness core significantly of come a time. would some in I the guys some I holders. benefits the you the lenders, just to get the improved is obviously, would think so had the but one from much little years that pain in at know Obviously, environment, was, we that, has the given your

are hear six exit love transact as so? so changed ability the thoughts would months well to over And your the has just I environment how on for or last those and how as multiples changed to positions companies' market

Edward Ross

Sure. Great question, Ryan.

because news growth it's very that activity it's that The There market for place. and on, one level that's you is about here was or opportunity. it's There's material I And there's have investment ago, M&A processes a and environment today number much place transaction, a are it's good things think sit reduced you. creating think extremely offers it's of reason whether of The and add-on being or greatly That's the taking are as XX or lot activity of processes velocity the is, interesting lower. market fragmented. the we high today. liquidity, activity, the right. investment taking impacted, our when usually months M&A are few companies those just what are of so not usually still a that meaningfully going the

So the news to good to be there opportunity is continues invest.

other repayments which than lower very The puzzle, of levels. much also are the at last piece year's different is

-- see incremental near was been for in the year, and extremely the us And grow but ton continue that at ability we lower, repayments make debt and it's don't And anytime the last to to So portfolio. expect year, investments time, taking much place same high. that we a of just term. repayments see we this

market, very So are is to in and very, lot for just our opportunity. And financings reasons very different. of lower different a market different but the and it creating is there larger middle a relative market, the it's fragmented, opinion,

So XX helpful. But sure. different for very it's hopefully, a that's market than that's months ago,

Ryan Lynch

Yeah. the time That today. appreciate makes a from I of That’s all me. ton sense.

Edward Ross

Yeah. Ryan. Absolutely. Good to talking you,

Operator

Mickey Your comes next from from the of Ladenburg. line Schleien question

open. line is Your

Mickey Schleien

there were and think second quarters? whether the more economic disappointed a the more dislocation I that that little in Ed, curious I'm coming of liens, quarter, liens. already last has Ed just Yes. lot current asked. you, of a the notwithstanding market an I for wanted you in actually made in away questions I investing But one moved up question. Shelby. company you Good know with to in segment in and opportunities morning, the those. follow A expertise weren't second have your lot from been good have outlook interesting has that slowdown purposefully to

Edward Ross

Sure. question, Mickey. Great

forward, look liquid technical businesses revenue in couple, very remarks, recurring and quite a as and high we reasons, approach, caliber we'll primarily to opportunities. our lien of investments more and always is very market and borrowers. frankly more lien for junior And first take we our our been move do. overall providing positive. we hope second sub and is very have, I did to same. frankly, we've think referenced done, traded we'll down I to solutions Having prepared advantage is that continue said those small see for debt returns be much were continue debt those mean, something my a to the They I some it opportunities while, the that, quite are

that So QX. in we did do

We down. right looking thriving the that right for those we're overall, It the I companies And to sub-debt right are There are investments. as level. levels in and companies are actually a invest have at the thriving. in lien think of are discussed situations of different are continue types I now, for. those to situations But is and an second outlook market with looking activity Ryan,

marketplace first haven't it's it our we're we'll also, interest, if enhances providing a make of ton will. the piques investments, sense, in that types ability continue quite And seen we to recently anything today. those those investments. and is frankly, so And -- resonating of very that lien our to makes manage you securities But solution

core to so, the be expect the invest will years asset to has that in it last four or continue as classes and we for been So really different but the all we've that discussed.

Mickey Schleien

out Ed, unit pieces sell any? me are tranche if lien, I model? in that first doing, And business remind typically you do how appreciate first you much can you that. within

Edward Ross

XXX% our that lien investments solution. out some question, our bank whether tell out a of Great of first is, first The typically yes. or we bring of form majority partners. are style are last in structures, I we lien first unitranche doing we're in you, partner answer or with where of to for that capital Mickey. Most bringing would on a investments

a is large, first majority. it's a the large that of So but lien, majority not

Mickey Schleien

lien on the And take in so the on you do gets -- the typically deals, those when of company out situation. breach Okay. piece have covenant unitranche trouble in can of control you a call first first in event that a a the

Edward Ross

most And of in In -- if yes. primary client, you of the the borrower. are the the we mouthpiece Yes. speaking, will kind to cases, generally

to yes. but -- the is so And answer that

ability issues, if We manage are we of those a -- have call and do necessary. to kinds

you hope in We and haven't not never thankfully, encountered world. it, but say I'm never we to, this sure

Mickey Schleien

I time. appreciate understand. your this you. morning. I me That’s it Right. from Thank

Edward Ross

Mickey. talking you. you, Thank to Good

Operator

Officer, turn time. this There call at back the to further Chief no I are Mr. Ross, Edward questions over Executive you.

Edward Ross

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

Operator

call. today's concludes This

may You disconnect. now

Fidus Investment (FDUS) 4 Nov 222022 Q3 Earnings call transcript