Group 1 - The current market situation favors a value/income-based investing approach, which aligns with the company's core strategy of focusing on high-quality and durable income streams [1] Group 2 - Roberts Berzins has over a decade of experience in financial management, assisting top-tier corporates in shaping financial strategies and executing large-scale financings [2] - Berzins has contributed to institutionalizing the REIT framework in Latvia to enhance the liquidity of pan-Baltic capital markets [2] - His policy-level work includes developing national SOE financing guidelines and frameworks for channeling private capital into affordable housing [2] - Berzins holds a CFA Charter and an ESG investing certificate, and has participated in thought-leadership activities to support the development of pan-Baltic capital markets [2]

Group 1 - Fidus Investment (FDUS) reported its Q4 results, highlighting a total dividend yield of 10.1% [1] - The company maintains the same net investment income (NII) price yield and operates at a 10% premium [1] - The article suggests exploring various investment tools and portfolios designed for yield and risk management [1]

Core Viewpoint - Fidus Investment Corporation has announced a public offering of $100 million in 6.750% notes due 2030, aimed at refinancing existing debt and supporting investment strategies in lower middle-market companies [1][3]. Group 1: Offering Details - The notes will mature on March 19, 2030, and can be redeemed at the company's option before September 19, 2029, at par plus a "make-whole" premium, and at par thereafter [2]. - Interest on the notes will be paid semi-annually at a rate of 6.750%, starting from September 19, 2025 [2]. - The offering is expected to close on March 19, 2025, pending customary closing conditions [2]. Group 2: Use of Proceeds - The net proceeds from the offering will be used to repay a portion of the $125 million outstanding under the company's senior secured revolving credit facility [3]. - The company may re-borrow under the credit facility to invest in lower middle-market companies and for general corporate purposes [3]. Group 3: Company Overview - Fidus Investment Corporation specializes in providing customized debt and equity financing solutions to lower middle-market companies, defined as U.S.-based companies with revenues between $10 million and $150 million [7]. - The company's investment objective is to achieve attractive risk-adjusted returns through current income from debt investments and capital appreciation from equity investments [7]. - Fidus is structured as a closed-end, non-diversified management investment company and has elected to be treated as a business development company under the Investment Company Act of 1940 [8].

Financial Data and Key Metrics Changes - Adjusted net investment income (NII) increased by 49% to $18.8 million in Q4 compared to $12.6 million last year, driven by interest income growth from higher average debt balances and yields [55][66] - The weighted average interest rate on outstanding debt was 4.3% as of December 31, 2023 [50] - Net investment income per share for Q4 was $0.58, down from $0.63 in Q3, while adjusted NII per share was $0.65, down from $0.68 in Q3 [50][55] Business Line Data and Key Metrics Changes - Total investment income for Q4 was $36.3 million, a $2.1 million increase from Q3, primarily due to higher interest and fee income [65] - The portfolio's fair value at quarter end was $957.9 million, with first lien investments accounting for 69% of the debt portfolio [59][52] - Originations totaled $132.7 million, with $123.5 million in debt and $9.2 million in equity, indicating a focus on high-quality companies [58] Market Data and Key Metrics Changes - The company noted an increase in competition in the lower middle market, with spreads tightening by approximately 50 basis points compared to 12 months ago [44] - The company experienced a year-end push in deal activity, reflecting a more active environment despite subdued M&A activity throughout the year [69] Company Strategy and Development Direction - The company is focused on building a portfolio of income-producing assets and enhancing earnings power through strategic pruning of higher-risk investments [5][4] - The company plans to apply for a fourth SBIC license to access an additional $175 million in SBA debentures, aiming to utilize this in 2024 [32][53] - The strategy emphasizes investing in high-quality companies with resilient cash flow and maintaining conservative leverage ratios [35][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's overall quality, with only two companies on nonaccrual, representing about 1% of the total portfolio [60] - The outlook for M&A activity remains cautiously optimistic, with expectations for continued activity at reasonable levels above last year [21] - Management highlighted the importance of maintaining rigorous underwriting standards to ensure long-term growth and capital preservation [70] Other Important Information - The company paid total cash dividends of $2.88 per share in 2023, up from $2 in 2022, reflecting a commitment to returning value to shareholders [51][56] - The company ended Q4 with total liquidity of approximately $219.1 million, including cash and available credit [53] Q&A Session Summary Question: Can you provide more details on the strategic pruning of the portfolio? - Management indicated that the pruning involved exiting a successful equity investment and some debt investments due to higher risk levels [3][4] Question: How comfortable is the company with the credit situation in the portfolio? - Management noted that the majority of portfolio companies are performing well, with only a few experiencing idiosyncratic issues, and they are optimistic about managing these situations [6][9] Question: What is the timeline for the fourth SBIC license? - Management expects the application process to take about six months, with hopes to start utilizing the license in 2024 [16][32] Question: How has the increased allocation to first lien and unitranche impacted target debt to equity? - Management stated that they are maintaining a conservative one-to-one target leverage ratio, despite the ability to leverage more [35][36] Question: What is the sensitivity of earnings to interest rate changes? - Management estimated that a 25 basis point cut in rates would reduce NII by approximately $1 million per quarter [47][48]

Financial Metrics - The net asset value per share is determined quarterly, reflecting the total assets minus liabilities and preferred stock, divided by the total number of shares outstanding[75]. - The base management fee is set at an annual rate of 1.75% based on the average value of total assets, excluding cash equivalents, and is payable quarterly[81]. - The incentive fee includes a capital gains portion, calculated as 20.0% of net capital gains at the end of each fiscal year[85]. - The hurdle rate for pre-incentive fee net investment income is fixed at 2.0% per quarter, with potential for higher returns in a rising interest rate environment[84]. Investment Performance - In Year 1, Company A received a $4.0 million investment, Company B received $7.5 million, and Company C received $6.25 million[92]. - In Year 2, Investment A was sold for $12.5 million, while the fair market value (FMV) of Investment B and C was determined to be $6.25 million each[92]. - In Year 3, the FMV of Investment B increased to $6.75 million, and Investment C was sold for $7.5 million[92]. - The cumulative realized capital gains from Investment A and C amounted to $9.75 million, with a capital gains incentive fee of $1.8 million paid in Year 2 and Year 3[92][94]. Agreements and Compliance - The Investment Advisory Agreement was approved to continue until June 20, 2025, with automatic annual renewals unless terminated earlier[96][102]. - The Administration Agreement was also approved to continue until June 20, 2025, with similar renewal terms as the Investment Advisory Agreement[102]. - The company must distribute at least 90% of its investment company taxable income to maintain its RIC status and avoid U.S. federal income tax on distributed income[136]. - The company is subject to compliance with the Sarbanes-Oxley Act of 2002, which imposes various regulatory requirements on publicly held companies[134]. - The company is in compliance with NASDAQ Global Select Market corporate governance regulations applicable to BDCs[135]. Investment Strategy and Restrictions - The company may invest up to 100% of its assets in privately negotiated transactions, potentially being deemed an "underwriter" for public resale purposes[107]. - The company must ensure that qualifying assets represent at least 70% of its total assets to comply with the 1940 Act[108]. - The company may not invest more than 30% of its regulatory capital in any one portfolio company without prior SBA approval[127]. - The company must ensure that at least 50% of its assets consist of cash, U.S. Government securities, and other qualifying securities to meet diversification requirements[140]. Risk Management - The company faces competition from larger funds and financial institutions with greater resources and fewer regulatory restrictions[76]. - The company’s risk management systems are designed to monitor market risks, including interest rate volatility and economic instability[426]. - Changes in interest rates may materially affect the company's net investment income and overall financial performance[429]. - A hypothetical 200 basis point increase in interest rates could lead to a net decrease in net investment income of $10.1 million[431]. Financial Obligations - The company has $45.0 million of borrowings outstanding under its Credit Facility as of December 31, 2024[432]. - The Credit Facility bears interest at a rate of 2.675% on SOFR loans prior to satisfying certain conditions, reducing to 2.50% after[428]. - The company pays a commitment fee on the unused portion of the Credit Facility, ranging from 0.50% to 2.675% per annum[428]. - The company is subject to a 4% nondeductible U.S. federal excise tax on certain undistributed income unless it distributes at least 98% of its net ordinary income for each calendar year[138]. Portfolio Management - The investment advisor is responsible for portfolio composition and investment execution, ensuring alignment with the company's strategic goals[84]. - The investment advisor's expertise is leveraged to assess risks and determine pricing for portfolio investments[77]. - The investment advisor is responsible for providing managerial assistance to portfolio companies, with fees reimbursed for such services[109]. - As of December 31, 2024, 50 portfolio companies' debt investments bore interest at a variable rate, representing $704.0 million of the portfolio on a fair value basis[428]. - As of December 31, 2023, 46 portfolio companies' debt investments bore interest at a variable rate, representing $629.3 million of the portfolio[428]. Regulatory Considerations - The company has adopted written compliance policies and procedures to prevent violations of U.S. federal securities laws[118]. - The company may face challenges in meeting the Annual Distribution Requirement due to the illiquid nature of its portfolio[148]. - If the company fails to qualify as a RIC for more than two taxable years, it may be subject to corporate tax on net built-in gains upon requalification[158]. - The company may be required to recognize taxable income without receiving corresponding cash, impacting its ability to meet the Annual Distribution Requirement[143].

Investment Income - Total investment income for Q4 2024 was $37.5 million, a 3.2% increase from Q4 2023[5] - Net investment income for Q4 2024 was $18.6 million, or $0.55 per share, representing a 10.1% increase year-over-year[9] - Full year 2024 total investment income reached $146.1 million, a 12.3% increase compared to 2023[11] - Net investment income for the full year 2024 was $74.6 million, or $2.29 per share, a 14.6% increase from the previous year[13] Investment Activities - The company invested $120.3 million in debt and equity securities during Q4 2024, including five new portfolio companies[5] - As of December 31, 2024, the fair value of the investment portfolio totaled $1.1 billion, consisting of 87 active portfolio companies[15] - The weighted average yield on debt investments was 13.3% as of December 31, 2024[16] - Subsequent to the reporting period, the company invested $15.0 million in Customer Expressions Corp. and $19.0 million in Onsight Industries, LLC[18][19] - The company exited its preferred equity investment in Healthfuse, LLC, realizing a gain of approximately $3.2 million[20] - A net realized gain of approximately $8.2 million was achieved from equity investments in Medsurant Holdings, LLC[21] - The company invested a total of $14.0 million in Fraser Steel LLC, including $14.0 million in first lien debt and $0.5 million in common equity[21] - An additional $14.5 million in SBA debentures was issued, bearing a fixed interim interest rate of 5.217% until March 2025[22] Dividends - Total dividends paid in 2024 amounted to $2.42 per share, including regular and supplemental dividends[5] - The company declared a total dividend of $0.54 per share for the first quarter of 2025, consisting of a base dividend of $0.43 and a supplemental dividend of $0.11[25] - The company declared dividends of $0.61 per share in Q4 2024, down from $0.80 per share in Q4 2023[36] - The company has adopted a dividend reinvestment plan (DRIP) for stockholders to reinvest dividends into additional shares[27] Financial Position - The company had $57.2 million in cash and cash equivalents as of December 31, 2024[17] - Total assets increased to $1,164,112 thousand as of December 31, 2024, compared to $1,090,898 thousand in 2023[34] - Total net assets rose to $655,666 thousand as of December 31, 2024, up from $589,474 thousand in 2023[34] - The net asset value per common share was $19.33 as of December 31, 2024, slightly down from $19.37 in 2023[34] - The company repaid $12.5 million of SBA debentures with a weighted average interest rate of 5.755%[24] Performance Metrics - Total expenses for Q4 2024 were $17,051,000, a decrease of 2.0% from $18,408,000 in Q4 2023[36] - Net realized losses on investments for Q4 2024 were $576,000, compared to net realized gains of $19,804,000 in Q4 2023[36] - Net increase in net assets resulting from operations for the year ended December 31, 2024, was $78,292,000, compared to $77,133,000 for the year ended December 31, 2023[36] - The capital gains incentive fee expense for Q4 2024 was $(211,000), compared to $1,898,000 in Q4 2023[40] - The company reported a net change in unrealized appreciation (depreciation) on investments of $(522,000) for Q4 2024, compared to $(10,220,000) in Q4 2023[36]

Core Points - Fidus Investment Corporation declared a total dividend of $0.54 per share for the first quarter of 2025, consisting of a base dividend of $0.43 and a supplemental dividend of $0.11 [25] - The company reported a 13.8% increase in assets under management on a fair value basis for the year 2024, with a total investment income of $146.1 million, up 12.3% from the previous year [5][12] - Net investment income for the fourth quarter of 2024 was $18.6 million, or $0.55 per share, representing a 10.1% increase compared to the same period in 2023 [10][7] Financial Highlights - For the fourth quarter of 2024, total investment income was $37.5 million, with net investment income of $18.6 million, and adjusted net investment income of $18.4 million [7][8] - The full year 2024 saw total investment income of $146.1 million, net investment income of $74.6 million, and adjusted net investment income of $75.4 million [12][14] - The company paid total dividends of $2.42 per share for the year 2024, which included regular quarterly dividends totaling $1.72 and supplemental dividends of $0.70 [7][12] Portfolio and Investment Activities - As of December 31, 2024, the fair value of Fidus's investment portfolio was $1.1 billion, consisting of 87 active portfolio companies [16] - The company invested $120.3 million in debt and equity securities during the fourth quarter of 2024, including five new portfolio companies [7] - The weighted average yield on debt investments was 13.3% as of December 31, 2024 [17] Subsequent Events - On January 6, 2025, Fidus invested $15.0 million in first lien debt and $0.8 million in common equity of Customer Expressions Corp [19] - On January 7, 2025, the company invested $19.0 million in first lien debt and $0.4 million in common equity in Onsight Industries, LLC [20] - On January 14, 2025, Fidus exited its preferred equity investment in Healthfuse, LLC, realizing a gain of approximately $3.2 million [21]

Group 1 - Mr. Mavroudis is a professional portfolio manager specializing in institutional and private portfolios, focusing on risk management and in-depth financial market analysis [1] - He invests in various financial instruments globally, including stocks, bonds, foreign exchange, and commodities, while restructuring investment portfolios based on prevailing conditions and client needs [1] - Mr. Mavroudis has successfully navigated major crises, including the COVID-19 pandemic and the PSI, demonstrating his expertise in risk management [1] Group 2 - He is the CEO of FAST FINANCE Investment Services, a registered Greek company by the Hellenic Capital Market Commission [1] - Mr. Mavroudis holds multiple degrees, including an MSc in Financial and Banking Management, an LLM in Law, and a BSc in Economics, graduating as valedictorian [1] - He is certified in various financial disciplines, including portfolio management, financial instruments analysis, derivatives, and securities market-making [1] Group 3 - By writing on Seeking Alpha, the company aims to engage with a vibrant community of investors and market enthusiasts, contributing meaningful perspectives while fostering mutual growth and knowledge sharing [1]

Core Viewpoint - Fidus Investment Corporation will report its fourth quarter 2024 financial results on March 6, 2025, and will host a conference call to discuss these results on March 7, 2025 [1][2]. Company Overview - Fidus Investment Corporation provides customized debt and equity financing solutions to lower middle-market companies, defined as U.S. companies with revenues between $10 million and $150 million [4]. - The company's investment objective is to generate attractive risk-adjusted returns through current income from debt investments and capital appreciation from equity-related investments [4]. - Fidus seeks partnerships with business owners, management teams, and financial sponsors for financing related to ownership changes, recapitalizations, strategic acquisitions, and business expansions [4]. - Fidus is an externally managed, closed-end, non-diversified management investment company, treated as a business development company under the Investment Company Act of 1940 [5]. - The company was formed in February 2011 and is licensed by the U.S. Small Business Administration as a Small Business Investment Company (SBIC) [5].

Group 1 - Fidus Investment Corporation declared a base dividend of $0.43 per share and a supplemental dividend of $0.11 per share for Q1 2025, payable on March 27, 2025, to stockholders of record as of March 20, 2025 [1] - The Board of Directors reviews estimates of taxable income available for distribution, which may differ from consolidated income due to various factors including unrealized appreciation and depreciation [2] - Fidus has a dividend reinvestment plan (DRIP) allowing stockholders to reinvest dividends in additional shares unless they opt to receive cash [3] Group 2 - Fidus provides customized debt and equity financing solutions to lower middle-market companies, defined as U.S. companies with revenues between $10 million and $150 million [4] - The company's investment objective is to generate attractive risk-adjusted returns through current income from debt investments and capital appreciation from equity investments [4] - Fidus is an externally managed, closed-end, non-diversified management investment company, treated as a business development company under the Investment Company Act of 1940 [5]