Fidus Investment (FDUS) - 2024 Q2 - Quarterly Results

Financial Highlights and Management Commentary Fidus Investment Corporation reported strong Q2 2024 results, with total investment income of $35.7 million and adjusted NII of $0.57 per share - Management highlighted a 17.7% year-over-year increase in adjusted NII, driven by debt investments, and net realized gains of $9.2 million from monetizing two equity investments[1] - The company invested $62.4 million in debt and equity securities, including one new portfolio company, while receiving $43.1 million from repayments and realizations[1] - Adjusted net investment income is a non-GAAP measure that excludes capital gains incentive fees attributable to realized and unrealized gains and losses, which management believes is a useful indicator of core operations[2] Q2 2024 Financial Highlights | Metric | Value | | :--- | :--- | | Total Investment Income | $35.7 million | | Net Investment Income (NII) | $17.0 million, or $0.53 per share | | Adjusted NII | $18.4 million, or $0.57 per share | | Net Asset Value (NAV) per Share | $19.50 | | Spillover Income per Share | $1.25 | | Total Dividends Paid in Q2 | $0.59 per share | Detailed Financial Results (Q2 2024) Q2 2024 saw total investment income increase to $35.7 million, but higher expenses led to a slight NII increase to $17.0 million, with NII per share decreasing to $0.53 - The increase in total investment income was mainly driven by a $6.0 million rise in total interest income, resulting from higher average debt investment balances[3] - Total expenses rose by $4.9 million, primarily due to increases in interest and financing expenses (+$0.5 million), base management fees (+$0.6 million), income incentive fees (+$0.7 million), and capital gains incentive fees (+$2.6 million)[4] - The company recorded a net realized gain on investments of $9.2 million in Q2 2024, a significant turnaround from a net realized loss of $7.1 million in Q2 2023[5] Q2 2024 vs Q2 2023 Operating Results (in thousands, except per share) | Metric | Q2 2024 | Q2 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Total Investment Income | $35,664 | $30,558 | 16.7% | | Net Investment Income (NII) | $16,950 | $16,784 | 1.0% | | NII per Share | $0.53 | $0.67 | (20.9%) | | Adjusted NII | $18,380 | $15,610 | 17.7% | | Adjusted NII per Share | $0.57 | $0.62 | (8.1%) | | Net Increase in Net Assets | $24,099 | $10,915 | 120.8% | Portfolio and Investment Activities As of June 30, 2024, Fidus's investment portfolio was valued at $1,078.4 million across 86 companies, primarily debt with a 14.0% weighted average yield - The average active portfolio company investment at amortized cost was $12.3 million[6] - A new portfolio investment was made in Enterprise Asset Management FM Purchaser, Inc. (dba MCIM), consisting of $17.0 million in first lien debt and $0.8 million in common equity[7] Portfolio Statistics as of June 30, 2024 | Metric | Value | | :--- | :--- | | Total Portfolio Fair Value | $1,078.4 million | | Active Portfolio Companies | 86 | | Fair Value as % of Cost | 101.9% | | Weighted Average Yield on Debt | 14.0% | | Variable-Rate Debt (as % of debt portfolio) | 72.8% ($688.4M) | Liquidity, Capital Resources, and Dividends Fidus maintained strong liquidity with $48.3 million in cash and $67.5 million available credit, while declaring a Q3 2024 dividend of $0.57 per share - The Board of Directors declared a total dividend of $0.57 per share for Q3 2024, consisting of a $0.43 base dividend and a $0.14 supplemental dividend, payable on September 26, 2024[9] Liquidity and Capital as of June 30, 2024 | Item | Amount | | :--- | :--- | | Cash and Cash Equivalents | $48.3 million | | Unused Credit Facility | $67.5 million | | Net Proceeds from ATM Program (Q2) | $33.0 million | | SBA Debentures Outstanding | $175.0 million | | Notes Outstanding | $250.0 million | | Weighted Average Interest Rate on Debt | 4.6% | Subsequent Events Post-quarter, Fidus exited a debt investment for $23.1 million and expanded its senior secured revolving credit facility by $40.0 million to $140.0 million - On July 2, 2024, Fidus exited its debt investment in Aldinger Company, receiving a full payment of $23.1 million on its first lien debt, which included a prepayment fee[12] - On July 25, 2024, the company increased its credit facility commitments from $100.0 million to $140.0 million[12] Consolidated Financial Statements The consolidated financial statements detail Fidus's financial position, with total assets of $1.15 billion and net assets of $646.8 million as of June 30, 2024 Consolidated Statements of Assets and Liabilities As of June 30, 2024, total assets reached $1.15 billion, with net assets increasing to $646.8 million and NAV per share rising to $19.50 Balance Sheet Summary (in thousands, except per share) | Metric | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Investments, at fair value | $1,078,424 | $957,906 | | Cash and cash equivalents | $48,320 | $119,131 | | Total Assets | $1,145,939 | $1,090,898 | | Total Liabilities | $499,173 | $501,424 | | Total Net Assets | $646,766 | $589,474 | | NAV per Share | $19.50 | $19.37 | Consolidated Statements of Operations For Q2 2024, total investment income was $35.7 million, with net investment income at $17.0 million, leading to a net asset increase of $24.1 million Statement of Operations Summary - Three Months Ended June 30 (in thousands) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Total Investment Income | $35,664 | $30,558 | | Total Expenses, net | $18,580 | $13,753 | | Net Investment Income | $16,950 | $16,784 | | Net Gain (Loss) on Investments | $7,149 | $(5,869) | | Net Increase in Net Assets | $24,099 | $10,915 | Reconciliation of Net Investment Income to Adjusted Net Investment Income (Non-GAAP) This section reconciles GAAP NII to Adjusted NII, showing how the $1.4 million capital gains incentive fee expense adjusts GAAP NII of $17.0 million to an Adjusted NII of $18.4 million - Adjusted NII is a non-GAAP measure that excludes capital gains incentive fee expense or reversals, which management believes is a useful indicator of operations exclusive of gains and losses[19] Reconciliation to Adjusted NII - Three Months Ended June 30, 2024 | Metric | Amount (in thousands) | Per Share | | :--- | :--- | :--- | | Net Investment Income (GAAP) | $16,950 | $0.53 | | Capital Gains Incentive Fee Expense | $1,430 | $0.04 | | Adjusted Net Investment Income (Non-GAAP) | $18,380 | $0.57 |