Financial Data and Key Metrics Changes - For Q1 2025, the company generated net investment income of $0.67 per share and adjusted net investment income of $0.65 per share, slightly above public guidance of $0.66 and $0.64 per share respectively [11] - The total investment income decreased by $7 million quarter over quarter to $400 million, primarily due to two fewer days in the first quarter compared to the fourth quarter and the paydown of higher yielding investments [29] - The net asset value per share decreased from $23.64 at the end of Q4 2024 to $23.37 at the end of Q1 2025 [31] Business Line Data and Key Metrics Changes - The company originated approximately $2 billion in new investments during Q1 2025, with 45% focused on add-on financings to existing portfolio companies [19] - New investments included approximately 63% in first lien loans, 1% in other senior secured debt, 19% in asset-based finance, 15% in capital calls to the joint venture, and 2% in equity and other investments [20] - Non-accruals represented 3.5% of the portfolio on a cost basis and 2.1% on a fair value basis, showing slight improvement from 3.7% and 2.2% respectively at the end of Q4 2024 [22] Market Data and Key Metrics Changes - Approximately 8% of the portfolio could have direct exposure to tariff policies, with low to mid single-digit exposure to DOGE [14] - The weighted average yield on accruing debt investments decreased to 10.8% as of March 31, down from 11% at the end of Q4 2024 [29] - The portfolio companies reported a weighted average year-over-year EBITDA growth rate of approximately 10% [21] Company Strategy and Development Direction - The company aims to maintain a stable income for investors by keeping a healthy balance of spillover income during periods of higher interest rates [8] - The focus remains on investing in high-quality companies with strong defensive positions, particularly in the upper middle market [21] - The company is actively managing exposure to tariffs and has exited two portfolio companies deemed to have higher risks related to tariffs [16] Management's Comments on Operating Environment and Future Outlook - Management noted that the economic outlook has worsened, with increased volatility in debt and equity markets and major geopolitical risks [7] - The expectation is that the macroeconomic environment will stabilize by early next year, providing clearer insights into interest rates and other economic drivers [9] - The company anticipates that the second quarter of 2025 GAAP net investment income will approximate $0.64 per share, with adjusted net investment income expected to be around $0.62 per share [32] Other Important Information - The company closed on its second middle market CLO, raising $380 million of low-cost secured debt [33] - As of March 31, 2025, the company had approximately $3.2 billion in available liquidity [34] Q&A Session Summary Question: Timing of deployments and rate changes impact - Management indicated that the origination number was satisfactory and that the declining rates have mostly flowed through as of the end of Q1 [38][39] Question: Pipeline activity and market share - Management noted that while the M&A market has slowed, they continue to benefit from a large existing book and diversified origination sources [41][42] Question: Macro group insights on recession odds - Management acknowledged that the chances of a recession are more likely than not, but it could be muted [46][48] Question: Yield compression expectations - Management confirmed that additional yield compression is expected as the portfolio churns, with new money yields lower than previous repayments [49][51] Question: Preferred leverage ranges - Management stated that the target leverage range remains unchanged, with a focus on diversified funding sources [60] Question: Asset-based financing risks - Management highlighted that consumer risk in the asset-based finance portfolio is small, with a focus on secured, higher FICO score risks [62] Question: Continued strength in ABF group - Management indicated that while ABF dividends may vary, there is continued strength in the joint venture's dividends [70] Question: Trends in portfolio leverage and interest coverage - Management explained that the divergence in trends is likely due to a lag effect in interest coverage calculations [82][84] Question: Deal activity in different market segments - Management suggested that larger company activity may be more muted due to reliance on a more active M&A market [87]

Financial Data and Key Metrics Changes - The company achieved record quarterly revenue of $359 million, which is $13 million higher than the previous year [12][23] - Adjusted EBITDA reached $49 million, representing a 14% margin, which is 6.5% better compared to the same quarter last year [11][12] - Adjusted free cash flow for the quarter was $19 million, a decrease of $35 million year-over-year primarily due to a tax carryforward benefit in 2024 [14][23] - The company ended the quarter with $131 million in cash and reduced debt by approximately $5 million over the last year [29] Business Line Data and Key Metrics Changes - The company sold 2,295 buses in Q2, with EV sales reaching a record of 265 units, which is 26% higher than last year [12][25] - Parts sales totaled $26 million in Q2, flat compared to Q1 but a small reduction of $2 million compared to the prior year [25] - The average selling price for buses increased by approximately 3%, from $141,000 to $145,000 per unit [15][25] Market Data and Key Metrics Changes - The company ended the quarter with a backlog of nearly 5,000 units, representing over six months of production [8][14] - The mix of alternative power vehicles represented 57% of unit sales in Q2, significantly higher than the typical 10% to 15% mix for major competitors [15] Company Strategy and Development Direction - The company is focused on improving operational efficiency and investing in new product development, including a new commercial chassis scheduled to launch in 2026 [20][41] - The company aims to maintain its leadership position in the alternative power segment while also strengthening its core internal combustion engine (ICE) business [10][13] - The company is navigating tariff impacts by implementing price increases and prioritizing ICE buses over EVs until the tariff situation stabilizes [33][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining full-year guidance despite tariff challenges, highlighting strong market demand for school buses [6][19] - The company anticipates continued strong demand for EVs, with a forecast of 800 to 1,000 EV unit sales for the full year [16][36] - Management noted that the Clean School Bus program remains a bipartisan initiative, which is expected to continue benefiting the company [48] Other Important Information - The company has executed $40 million in share repurchases over the last nine months, with an additional $20 million remaining in the current program [29] - The company is optimistic about the future of the Clean School Bus program, with funding for rounds two and three flowing to customers [17][39] Q&A Session Summary Question: Margin improvements and long-term targets - Management indicated it is early in the new CEO's tenure to speculate on margin improvements, but operational expertise may contribute positively [53][54] Question: EV pricing expectations - Current tariffs are hindering the company's ability to reduce EV prices as planned, but there is optimism for future price reductions once the tariff situation clarifies [58][59] Question: Dealer network response to pricing - The company has not faced significant pushback from dealers regarding price increases, and competitors are also implementing similar pricing actions [69][73] Question: Clean School Bus program funding - Management confirmed that rounds two and three of funding are flowing, and there is optimism for round four, although it is still in the early stages [75][106]