Financial Data and Key Metrics Changes - For the quarter ended September 30, core net investment income was $0.15 per share compared to total distributions of $0.24 per share [5] - As of September 30, the NAV was $7.11 per share, down 3.4% from $7.36 per share in the prior quarter [13] - The debt to equity ratio was 1.6 times as of September 30 [13] Business Line Data and Key Metrics Changes - The portfolio totaled $1.3 billion, with $186 million invested in nine new and 54 existing portfolio companies during the quarter [11] - The weighted average yield on debt investments was 11% [14] - The median leverage ratio on debt securities was 4.5 times, and the median interest coverage ratio was 2 times [7][14] Market Data and Key Metrics Changes - The company noted a steady increase in transaction activity in the private middle market lending sector, which is expected to lead to higher loan origination volumes [6] - In the core middle market, pricing on high-quality first lien loans was several plus $475-$525 [7] Company Strategy and Development Direction - The company is focused on rotating out of equity positions and redeploying capital into interest-bearing debt investments to increase core net investment income [5] - The strategy includes maintaining the current dividend level in the near term due to a significant balance of undistributed spillover income [6] - The company aims to find investment opportunities in growing middle market companies with high free cash flow conversion [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the increase in transaction activity leading to opportunities for equity rotation and new income-producing investments [7] - The company remains committed to capital preservation and a disciplined investment approach, aiming for compelling risk-adjusted returns [12] - Management noted that the M&A market is starting to pick up, which could facilitate equity rotation [50] Other Important Information - The company has a significant balance of undistributed spillover income amounting to $48 million or $0.73 per share, which will be used to cover shortfalls in net investment income versus the dividend [6] - The PSLF joint venture portfolio totaled $1.3 billion, contributing significantly to core net investment income [11] Q&A Session Summary Question: Why not right-size the dividend today? - Management is constantly evaluating the dividend and has substantial spillover income that needs to be paid out, balancing equity rotation and dividend policy [19] Question: Any updates on realization events for equity positions? - Management noted increased activity and is hopeful for rotation opportunities, but nothing specific was announced [21] Question: What types of deals are being seen? - The company is seeing a mix of add-on delayed draw term loans and new platform deals, with a focus on existing companies performing well [42] Question: How does the company view dividend recaps? - Dividend recaps are approached cautiously, with a focus on alignment of interests and substantial equity beneath the company [47] Question: What are the trends in the private equity space? - Management indicated that the M&A market is starting to stabilize, which could lead to more equity rotation opportunities [50]

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]