Financial Data and Key Metrics Changes - For the quarter ended June 30, core net investment income was $0.18 per share, compared to total distributions of $0.24 per share [5][17] - As of June 30, net asset value (NAV) was $7.36 per share, down 1.6% from $7.48 per share in the prior quarter [18] - The debt to equity ratio was 1.3 times as of June 30 [18] Business Line Data and Key Metrics Changes - The portfolio consisted of 158 companies across 37 different industries, with a weighted average yield on debt investments of 11.5% [19] - The portfolio's weighted average leverage ratio was 4.7 times, and the interest coverage ratio was 2.5 times [19] - The company invested $88 million in four new and 28 existing portfolio companies at a weighted average yield of 10% during the quarter [14] Market Data and Key Metrics Changes - In the core middle market, pricing for first lien term loans was between $4.75 to $5.25 for high-quality assets [7] - The weighted average debt to EBITDA for new investments was 3.8 times, with an interest coverage of 2.6 times [7][33] - The company continues to see attractive investments in the core middle market, characterized by lower leverage and higher spreads compared to the upper middle market [8][10] Company Strategy and Development Direction - The company plans to rotate out of equity positions and redeploy that capital into interest-paying debt investments to increase core net investment income [6] - The focus remains on providing strategic capital to middle market companies in five key sectors: business services, consumer, government services and defense, healthcare, and software and technology [10] - The company aims to deliver compelling risk-adjusted returns through stable income generation and long-term capital preservation [16] Management's Comments on Operating Environment and Future Outlook - Management is encouraged by a resurgence in deal activity, anticipating increased loan originations and potential exits from equity positions [5] - The company expects significant progress in equity rotation over the next twelve to eighteen months, depending on market conditions [22][29] - Management remains optimistic about the credit quality of the portfolio, with a strong track record of generating value from investments [12][13] Other Important Information - The company has a significant balance of spillover income of $55 million, or $0.84 per share, which can cover shortfalls in core net investment income [6] - The joint venture (JV) portfolio totaled $1.3 billion as of June 30, contributing significantly to core net investment income [14] - The JV has the capacity to increase its portfolio to $1.6 billion, which is expected to enhance earnings momentum in future quarters [15] Q&A Session Summary Question: What is the timeline for selling a portion of the equity portfolio and reinvesting that capital? - Management anticipates significant progress in rotating out of equity positions over the next twelve to eighteen months, aiming to reinvest capital into yields to generate healthy net investment income for shareholders [22][24] Question: What is the expectation for leverage once a meaningful portion of the equity portfolio is rotated into first lien loans? - Management indicated that a heavier first lien portfolio could judiciously handle a bit more leverage, suggesting that leverage targets may move higher [25][26] Question: At what point would the company evaluate the dividend concerning spillover income? - Management stated that once the portfolio normalizes, they would assess the sustainability of the dividend based on the remaining spillover income [29][30] Question: How is the competitive environment in the middle market affecting pricing and covenants? - Management noted that competition remains rational in the core middle market, with continued access to covenants and monthly financial statements, which helps in maintaining a strong underwriting process [49][51] Question: What is the outlook for the joint venture and its optimization? - Management believes that the JV can be fully optimized in the next six to nine months, with potential for further growth [44][45]

Financial Data and Key Metrics Changes - For the quarter ended March 31, GAAP and core net investment income was 18¢ per share, with total distributions of 24¢ per share [16][20] - As of March 31, GAAP and adjusted NAV were $7.48 per share, down 1.2% from $7.57 per share in the prior quarter [20] - The debt to equity ratio was 1.28 times, indicating a diversified capital structure across multiple funding sources [21] Business Line Data and Key Metrics Changes - The portfolio totaled $1,200,000,000, with $177,000,000 invested in three new and 52 existing portfolio companies at a weighted average yield of 10.7% [17] - The joint venture (JV) portfolio grew to $1,400,000,000, with the JV investing $170,000,000 at a weighted average yield of 10.1% [18] - The weighted average yield on debt investments was 12%, with 91% of the debt portfolio being floating rate [21] Market Data and Key Metrics Changes - Approximately 80% of originations came from existing borrowers, while 20% were new platform investments [7] - The weighted average debt to EBITDA for new portfolio company investments was 3.9 times, with an interest coverage of 2.3 times [10] - The portfolio's weighted average leverage ratio was 4.7 times, and the interest coverage ratio was 2.1 times [11][22] Company Strategy and Development Direction - The company aims to generate attractive risk-adjusted returns through income while preserving capital, focusing on growing middle market companies with high free cash flow conversion [19] - The strategy includes rotating out of larger equity positions and redeploying that capital into interest-paying debt investments [16] - The company remains selective in pursuing new investments, emphasizing rigorous underwriting and maintaining strong relationships with existing portfolio companies [9][12] Management's Comments on Operating Environment and Future Outlook - Management noted that despite market volatility, the company had a solid quarter and expects originations to remain concentrated among existing portfolio companies [7][9] - The management expressed optimism about the upcoming vintage of loans, which is expected to be particularly attractive [10] - There is a cautious outlook regarding M&A activity, with management indicating that uncertainty in the market has delayed some deals [28][31] Other Important Information - The company has $58,000,000 or 88¢ per share of undistributed spillover income, which will be used to cover any shortfall in core net investment income versus dividends [17] - The company has a long-term track record of generating value by financing growing middle market companies in five key sectors: business services, consumer, government services and defense, health care, and software technology [12] Q&A Session Summary Question: How would you characterize the current pipeline for new investments? - Management indicated that M&A deals were delayed due to tariffs and uncertainty, but there has been modest activity recently, with a growing pipeline for the rest of the year [26][27] Question: How much of the lower level of new deals was due to stricter underwriting? - Management noted that tariff-impacted deals were avoided, while the majority of their focus remains on sectors not significantly affected by tariffs [30][31] Question: What is the outlook for government reimbursement exposure? - Management highlighted a substantial increase in defense spending and indicated that their portfolio is well-aligned with government priorities, particularly in technology-related investments [41][43] Question: How is the healthcare portfolio performing? - Management stated that their healthcare investments have performed well due to lower leverage compared to peers, which mitigates risk [46][48] Question: Is there a shift in the mix of the current pipeline since April? - Management confirmed that the majority of their activity remains focused on existing borrowers in sectors not impacted by tariffs, while also preparing for potential recession scenarios in their underwriting [52][54]

Financial Data and Key Metrics Changes - For the quarter ended March 31, GAAP and core net investment income was 18¢ per share, with total distributions of 24¢ per share [14][18] - As of March 31, the adjusted NAV was $7.48 per share, down 1.2% from $7.57 per share in the prior quarter [18] - The debt to equity ratio was 1.28 times, indicating a diversified capital structure across multiple funding sources [19] Business Line Data and Key Metrics Changes - During the quarter, the company invested $177 million in three new and 52 existing portfolio companies at a weighted average yield of 10.7% [15] - The joint venture (JV) portfolio grew to $1.4 billion, with the JV investing $170 million at a weighted average yield of 10.1% [15][16] - The portfolio consisted of 46% first lien secured debt, 2% second lien secured debt, 13% subordinated notes, 7% other subordinated debt, 7% equity in PSLF, and 25% in other preferred and common equity [20] Market Data and Key Metrics Changes - Approximately 80% of originations came from existing borrowers, with 20% from new platform investments [6] - The weighted average debt to EBITDA for new portfolio company investments was 3.9 times, with a weighted average interest coverage of 2.3 times [8] - The market yield on first lien term loans stabilized in the range of plus 500 to 550 basis points for high-quality assets [8] Company Strategy and Development Direction - The company aims to generate attractive risk-adjusted returns through income while preserving capital, focusing on growing middle market companies with high free cash flow conversion [17] - The strategy includes rotating out of larger equity positions and redeploying that capital into interest-paying debt investments to increase core net investment income [14] - The company remains selective in pursuing new investments, emphasizing rigorous underwriting and maintaining a conservative orientation [10][11] Management's Comments on Operating Environment and Future Outlook - Management noted that despite market volatility, the company had a solid quarter and expects originations to remain concentrated among existing portfolio companies [6][7] - The management expressed optimism about the upcoming vintage of loans, indicating that market volatility creates opportunities [8] - The company is closely monitoring the potential impact of tariffs across the portfolio, reporting limited exposure [9] Other Important Information - The company has a significant balance of spillover income, amounting to $58 million or 88¢ per share, which will be used to cover any shortfall in core net investment income versus dividends [15] - The credit quality of the portfolio remains strong, with three nonaccruals representing 1.6% of the portfolio at cost and 0.4% at market value as of March 31 [19] Q&A Session Summary Question: How would you characterize the current pipeline for new investments? - Management indicated that M&A deals impacted by tariffs were delayed, but there has been modest activity since April, with a growing pipeline expected for the rest of the year [24][25] Question: How much of the lower level of new deals was due to stricter underwriting? - Management stated that tariff-impacted deals are not being pursued, while the majority of their focus remains on existing borrowers in sectors not significantly affected by tariffs [28][50] Question: Can you discuss the exposure to government reimbursement and health care? - Management highlighted that the defense budget is expected to increase significantly, aligning well with their portfolio, and noted that their health care investments are performing well due to lower leverage compared to peers [39][44]