Financial Data and Key Metrics Changes - The company reported net investment income (NII) of $0.46 per share for Q2 2025, an increase from $0.45 per share in Q1 2025. Excluding one-time accelerated amortization, NII was $0.48 per share [5][21] - NAV per share decreased by approximately 0.4% to $19.55, down from $19.62 at the end of Q1 2025, primarily due to a special dividend of $0.05 per share paid during the quarter [6][22] - The company maintained a 110% base dividend coverage for the quarter [6] Business Line Data and Key Metrics Changes - The investment portfolio totaled over $1.6 billion at fair value, consisting of 187 companies with an average investment size of approximately 0.6% of the total portfolio [9] - First lien loans represented 91% of the portfolio at fair value, indicating a strong focus on senior secured debt [11] Market Data and Key Metrics Changes - Deal activity remained constrained in Q2 2025 due to ongoing tariff discussions and regulatory uncertainty, impacting M&A volume [6] - The weighted average yield of income-producing securities remained stable at 10.4% [18] Company Strategy and Development Direction - The company focuses on disciplined credit underwriting, capital preservation, and strong free cash flow generation, particularly in the lower middle market [26] - A $20 million stock repurchase program was approved to opportunistically repurchase shares, reflecting confidence in the company's valuation [15] Management's Comments on Operating Environment and Future Outlook - Management expressed that the current discount to NAV is unwarranted and highlighted the company's long-term performance track record, which has outperformed public BDC averages [14][15] - The company remains optimistic about its ability to navigate market volatility and maintain a stable NAV profile [26] Other Important Information - The company declared a regular dividend of $0.42 per share for Q3 2025, payable on October 15, 2025 [12][24] - The company will not pay a Q3 supplemental dividend as the measurement test cap exceeded 50% of this quarter's excess available earnings [25] Q&A Session Summary Question: Credit quality concerns regarding the watch list - Management acknowledged a slight increase in the watch list to 14% but emphasized a proactive approach to monitoring investments and maintaining transparency about portfolio health [29][30][31] Question: Impact of tariffs on portfolio companies - Management indicated that the direct impact of tariffs on the portfolio remains low and that companies are proactively managing tariff exposure through pricing power and alternative sourcing strategies [36][38][40] Question: Future portfolio growth and repositioning - Management stated that while they do not expect significant net portfolio growth, they are focused on rotating acquired assets into Crescent-originated opportunities without sacrificing diversification [42][46][49] Question: Evaluation of unitranche investments - Management noted that unitranche investments remain a small part of the portfolio, and they are opportunistic in pursuing such opportunities, ensuring control over the capital structure [52][54] Question: Operating leverage from declining energy prices - Management clarified that fuel input costs are not a significant component of the cost structure for most borrowers, and while some benefits may arise, they do not expect it to materially impact portfolio performance [57][58] Question: Second lien loan strategy - Management confirmed that second lien loans will not become a large component of the portfolio, maintaining a focus on first lien investments due to risk considerations [61][62]

Financial Data and Key Metrics Changes - For the quarter ending March 31, 2025, the company reported net investment income before taxes of $700,000 or $0.05 per share, down from $0.06 per share in the prior quarter [4] - The net asset value per share increased by $0.02 to $5.42 compared to $5.39 as of September 30, 2024 [4] - The fair value of the portfolio was $192.4 million, an increase from $191.6 million on December 31 [14] - Net assets increased by $500,000 from the prior quarter to $78.1 million [14] - The weighted average yield of the debt portfolio increased to 10.8% from 10.4% in the previous quarter [14] Business Line Data and Key Metrics Changes - The company invested in one new portfolio company and two existing portfolio companies during the quarter, with total fundings for new investments amounting to $5.1 million [9] - The weighted average yield of debt investments made in the quarter was approximately 10.2% [9] - The five largest industry concentrations by fair market value were professional services (15.5%), containers and packaging (9.2%), trading companies and distributors (8.6%), commercial services and suppliers (8%), and IT services (7.9%) [12] Market Data and Key Metrics Changes - There was a noticeable slowdown in new deal activity, attributed to a decline in M&A volume and sponsor-less financing [6] - The company estimates that less than 20% of its portfolio may experience moderate direct effects from tariffs [7] Company Strategy and Development Direction - The company is focused on maintaining NAV stability and sustainable net investment income while selectively deploying capital in high-quality opportunities [18] - The management is optimistic about the second half of the year providing interesting investment opportunities due to current market volatility [18] Management's Comments on Operating Environment and Future Outlook - Management noted that the portfolio remains stable, with a significant reduction in non-accruals, now representing approximately 1.7% of the total portfolio at fair value [5] - There is cautious optimism that market fundamentals will improve, leading to a rebound in activity as macro uncertainty decreases [6] - Management indicated that they are currently in the process of raising another pool of capital, expected to benefit the company in the second half of 2025 [27] Other Important Information - The company declared a distribution of $0.12 per share payable in cash on June 14, 2025, to stockholders of record as of May 24, 2025 [16] - Gross leverage was 1.53x and net leverage was 1.37x as of March 31, compared to 1.57x and 1.42x in the previous quarter [17] Q&A Session Summary Question: How can the adviser scale or provide benefits to the BDC? - Management indicated that waiving fees is always a consideration and that they are working on scaling the private credit platform, which will help absorb overhead and expenses [21][23] Question: What is the timeline for capital raising? - Management confirmed that they are currently in the process of raising capital, which is expected to benefit shareholders in the second half of 2025 [27] Question: Why not consider share repurchases given the current stock price? - Management acknowledged that share repurchases are a tool they consider but have no immediate plans to implement [32] Question: Should there be an increase in net investment income in the second quarter? - Management suggested that there could be an increase in net investment income due to spread widening in new opportunities [34][35]

Financial Data and Key Metrics Changes - For the first quarter ended March 31, 2025, the company generated GAAP net investment income of $0.35 per share and core net investment income of $0.37 per share, which excludes estimated excise taxes [6] - Net asset value per share decreased by $0.21 during the quarter primarily due to company-specific write-downs in the loan portfolio and a reduction of spillover income [6] - The company issued 656,085 shares for $9.3 million at an average gross price of $14.11, all above net asset value [6] Business Line Data and Key Metrics Changes - The investment portfolio at fair value increased to $991.1 million across 110 portfolio companies, up from $953.5 million across 105 companies as of December 31, 2024 [7] - During the first quarter, the company invested $46.7 million in seven new portfolio companies and had $8.7 million in other investment activity at par [7] - 90% of the loans were secured, and 91% were priced at floating rates, with an average loan per company of $9.4 million [7][9] Market Data and Key Metrics Changes - The company noted that 52% of the portfolio is rated two or on or ahead of plan, while 21% is marked at an investment category of three or below, indicating some loans are not meeting expectations [9] - Currently, loans to five portfolio companies are on non-accrual status, comprising 6.7% of the total cost and 4% of the fair value of the total loan portfolio, representing a decrease from the prior quarter [9] Company Strategy and Development Direction - The company plans to draw new leverage under the SBIC III license to continue funding qualifying portfolio company investments [10] - The company aims to grow the portfolio to over $1 billion, with expectations for more than $10 million in equity gains by year-end [12] Management's Comments on Operating Environment and Future Outlook - Management indicated that the average portfolio in the first quarter was higher than in the fourth quarter, which is expected to continue into the second quarter, leading to a potential increase in yield [16] - The management expressed optimism about the return of M&A activity, which was temporarily disrupted due to tariff-related uncertainties [20][51] - The company expects to maintain the dividend at $0.40 per share for the second and third quarters, subject to Board approval [12][24] Other Important Information - The company has paid $295 million in dividends since its IPO, representing $17.9 per share to an investor in the IPO [6] - The company received a green light letter from the Small Business Administration for Stellus Capital SBIC III, which is a significant step in the licensing process [10] Q&A Session Summary Question: Impact of first quarter originations on interest income - Management noted that the average portfolio in the first quarter was higher than the fourth, which should lead to a pickup in yield in dollars [16] Question: Pipeline status and lending opportunities - Management indicated that the pipeline is slower compared to three months ago, but they expect interesting opportunities to close in the upcoming quarters [20] Question: Trajectory of net investment income (NII) to cover dividends - Management acknowledged that NII is currently less than the dividend but expects to be in a good position by the end of the year due to potential equity co-investments [24] Question: Trade education acquisition restructuring - Management confirmed that the business was restructured and recapitalized satisfactorily, expecting it to perform well going forward [29] Question: Logic behind issuing fixed-rate debt - Management explained that the issuance was necessary to retire maturing bonds and to have some unsecured debt in the capital stack [36] Question: Future issuance of common shares under the ATM program - Management stated that future issuances would depend on market conditions and stock price trading [40] Question: Second lien loans strategy - Management confirmed that they do not expect to issue new second lien loans, focusing instead on first lien unitranche secured lending [42] Question: Impact of SBA green light on earnings in a lower interest rate environment - Management confirmed that the potential for SBIC debentures would allow for borrowing at lower rates, positively impacting earnings [44]