In this article, we catch up on the latest quarterly results of the Golub Capital BDC (NASDAQ: GBDC ). The company delivered another solid quarter with a 2.4% total NAV return. It trades at a 10.55% dividend yield (with the same adjusted NII yield Check out Systematic Income and explore our Income Portfolios, engineered with both yield and risk management considerations. Use our powerful Interactive Investor Tools to navigate the BDC, CEF, OEF, preferred, and baby bond markets. Read our Investor Guides: to ...

Group 1 - The equity market serves as a significant mechanism for wealth creation or destruction over the long term through daily price fluctuations [1] - Pacifica Yield focuses on long-term wealth creation by targeting undervalued high-growth companies, high-dividend stocks, REITs, and green energy firms [1]

Group 1 - Fidus Investment (NASDAQ: FDUS) has consistently ranked among the top three Business Development Companies (BDCs) for several quarters [1] - The company is led by Roberts Berzins, who has over a decade of experience in financial management and has contributed to the development of financial strategies for top-tier corporates [1] - Berzins has played a significant role in institutionalizing the REIT framework in Latvia, aiming to enhance the liquidity of pan-Baltic capital markets [1] Group 2 - Berzins has been involved in policy-level initiatives, including the creation of national SOE financing guidelines and frameworks to channel private capital into affordable housing [1] - He holds a CFA Charter and an ESG investing certificate, and has experience from an internship at the Chicago Board of Trade [1] - Berzins is actively engaged in thought-leadership activities to support the development of capital markets in the Baltic region [1]

Group 1 - Morgan Stanley Direct Lending Fund (MSDL) is considered a high-quality Business Development Company (BDC) with strong fundamentals capable of withstanding potential market challenges [1] Group 2 - Roberts Berzins has over a decade of experience in financial management, assisting top-tier corporates in shaping financial strategies and executing large-scale financings [2] - Berzins has contributed to institutionalizing the REIT framework in Latvia to enhance liquidity in pan-Baltic capital markets [2] - His policy-level work includes developing national SOE financing guidelines and frameworks for channeling private capital into affordable housing [2]

Financial Data and Key Metrics Changes - Nonaccruals decreased to 3.7% of the portfolio's fair market value, down from 4.4% last quarter and 5.6% at the end of 2024 [6] - NAV declined during the quarter primarily due to markdowns on previously restructured portfolio companies [6] - Adjusted net investment income was $0.31 per share, down from $0.36 in the first quarter, while gross investment income was $0.61 per share compared to $0.66 in the prior quarter [23] Business Line Data and Key Metrics Changes - The portfolio had a fair market value of approximately $1.8 billion invested across 153 companies in over 20 industry sectors [21] - The average investment size was $11.7 million, with 89% of the portfolio invested in senior secured debt, all in floating rate instruments [21] - The weighted average annual effective yield of the portfolio was 12% in the second quarter, compared to 12.2% in the prior quarter [21] Market Data and Key Metrics Changes - New investments had a weighted average yield of 10.8%, while exited investments carried an average yield of 10.5% [21] - Total liquidity at quarter end was $566 million, including $455 million of available leverage and $107 million in cash [27] Company Strategy and Development Direction - The acquisition of HPS is expected to enhance TCPC's capabilities in private credit, creating a new platform called Private Financing Solutions (PFS) [31] - PFS aims to centralize private investment sourcing and origination teams to maximize collaboration and effectiveness [32] - TCPC will continue to directly source investments while leveraging PFS's extensive deal sourcing capabilities [32] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over additional markdowns but noted progress in reducing nonaccruals and sourcing attractive investments [34] - The company is focused on diligently working through portfolio challenges to deliver the best possible outcomes for shareholders [34] - Management acknowledged that the high rate environment and macroeconomic conditions could impact demand and performance of portfolio companies [56] Other Important Information - The Board declared a second quarter dividend of $0.25 and a special dividend of $0.04 per share, payable on September 30 [13] - The company repurchased 40,830 shares of TCPC stock during the quarter [13] Q&A Session Summary Question: Changes in the investment process with new committee members - Management indicated that the investment process will benefit from centralized origination and sourcing, leveraging resources from both BlackRock and HPS [36][38] Question: Ensuring TCPC receives proper access and resources during growth - Management assured that TCPC remains a strategic priority for the PFS platform and will continue to receive deep engagement across investment processes [42][44] Question: Markdown on Auto Alert and its performance - The markdown was primarily driven by market comps rather than performance issues, although the company has shown improvements since restructuring [45]

Capital Southwest Corporation Q1 2026 Earnings Presentation August 7, 2025 8333 Douglas Avenue, Suite 1100 | Dallas, Texas 75225 | 214.238.5700 | capitalsouthwest.com Important Notices Page 3 • This presentation contains forward-looking statements relating to, among other things, the business, market conditions, financial condition and results of operations of Capital Southwest, the anticipated investment strategies and investments of Capital Southwest, and future market demand. Any statements that are not ...

Financial Data and Key Metrics Changes - In Q2 2025, the company generated net investment income of $0.62 per share and adjusted net investment income of $0.60 per share, compared to public guidance of approximately $0.64 and $0.62 per share respectively [9] - The net asset value (NAV) per share declined by 6.2% from $23.37 to $21.93 during the quarter [9] - Total investment income was $398 million for the second quarter, a decrease of $2 million compared to the first quarter [25] - Total expenses increased to $225 million during the second quarter, up by $12 million compared to the first quarter [26] Business Line Data and Key Metrics Changes - The company originated $3.4 billion of investments in 2025, with $1.4 billion originated in Q2 [10] - Approximately 72% of new investments were focused on add-on financings to existing portfolio companies and long-term KKR relationships [21] - New investments consisted of approximately 83% in first lien loans, 5% in subordinated debt, and 12% in asset-based finance investments [21] Market Data and Key Metrics Changes - Global M&A volume is down close to 10% year over year, but the company evaluated more opportunities in Q2 than in any of the previous eight quarters [13] - The company estimates that direct tariff exposure has declined to the low to mid-single digit range [14] Company Strategy and Development Direction - The company continues to focus on upper middle market companies with EBITDA in the $50 million to $150 million range across diverse industries [21] - The distribution strategy for 2025 is designed to provide shareholders with additional distributions from accumulated spillover income, with a total expected distribution of $2.80 per share [11] - The company plans to provide additional details regarding its 2026 dividend strategy in the third quarter earnings call [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the significant work needed regarding four companies that were placed on non-accrual status [31] - There is cautious optimism for an increase in M&A activity later this year and into next year [13] - The company remains focused on maintaining strong liquidity to support funding needs, ending the quarter with $3.1 billion of availability [11] Other Important Information - Non-accruals represented 5.3% of the portfolio on a cost basis and 3% on a fair value basis as of the end of Q2 [22] - The weighted average yield on accruing debt investments was 10.6% as of June 30, a decrease of 20 basis points compared to the previous quarter [25] Q&A Session Summary Question: What are you seeing in terms of originations in the second half? - Management noted that there has been increased activity and deal count, with more deals evaluated in Q2 than in the prior eight quarters [34][35] Question: Are there any other companies on your watch list? - Management indicated that approximately 7% of the portfolio is in risk ratings that are concerning, with some names showing positive momentum [39] Question: Can you provide insight into the joint venture's earnings situation? - The anticipated dividend from the joint venture for Q3 is lower due to timing issues with certain dividends [44][45] Question: What is the company's view on buybacks? - Management stated that buybacks will be balanced with market opportunities and target leverage ratios [49] Question: How many troubled assets are currently being monitored? - Management confirmed that the workout team is actively engaged with companies on the watch list, with a focus on maximizing outcomes [56] Question: What is the outlook for the dividend policy? - Management indicated that the dividend policy will be tied to net investment income and will consider market conditions [76][95]

Financial Data and Key Metrics Changes - FSK generated net investment income of $0.62 per share and adjusted net investment income of $0.60 per share, compared to public guidance of approximately $0.64 and $0.62 per share respectively [8] - Net asset value per share declined 6.2% from $23.37 to $21.93 during the quarter [8] - Total investment income was $398 million for the second quarter, a decrease of $2 million compared to the first quarter [25] - Total expenses were $225 million during the second quarter, an increase of $12 million compared to the first quarter [26] Business Line Data and Key Metrics Changes - New investment activity remained strong with $3.4 billion of investments originated in 2025, of which $1.4 billion were originated during the second quarter [9] - Approximately 72% of new investments were focused on add-on financings to existing portfolio companies and long-term KKR relationships [21] - Non-accruals represented 5.3% of the portfolio on a cost basis and 3% on a fair value basis as of the end of the second quarter [22] Market Data and Key Metrics Changes - Global M&A volume is down close to 10% year over year, but the team evaluated more opportunities in Q2 than in any of the previous eight quarters [12] - Direct tariff exposure has declined and now falls within the low to mid single-digit range [13] Company Strategy and Development Direction - The company continues to focus on senior secured investments, with approximately 59% of the portfolio in first lien loans and 64% in senior secured debt as of June 30 [24] - The 2025 distribution strategy aims to provide shareholders with additional distributions from accumulated spillover income, with a total expected distribution of $2.80 per share [10] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for an increase in M&A activity later this year and into next year, despite current market volatility [12] - The company is focused on stabilizing operations and realizing meaningful cost efficiencies in response to headwinds from tariffs and softer consumer demand [19] Other Important Information - The weighted average yield on accruing debt investments was 10.6% as of June 30, a decrease of 20 basis points compared to the previous quarter [25] - The company plans to provide additional details regarding its 2026 dividend strategy on the third quarter earnings call [11] Q&A Session Summary Question: What are you seeing in terms of originations in the second half? - Management noted increased activity and deal count, with more deals evaluated in Q2 than in the previous eight quarters, indicating a busier environment [36] Question: Do you have any other companies on a watch list beyond the four mentioned? - Management indicated that approximately 7% of the portfolio is in risk ratings QAR bucket three and four, with some names showing positive momentum [39] Question: Can you explain the anticipated dividend from the joint venture for Q3? - The anticipated dividend for Q3 is lower due to the timing of certain ABF dividends, which tend to be lumpy [45] Question: What is the company's view on buybacks given the current portfolio conditions? - Management stated that they have historically been active in buybacks but will balance that with market opportunities and target leverage ratios [50] Question: Are there any themes leading to re-defaults in the portfolio? - Management clarified that each situation is unique, and while some companies are facing challenges, proactive restructuring efforts are ongoing [60] Question: How does the company plan to manage inflow and outflow of investments? - Management emphasized the correlation between new deal flow and repayments, indicating that they have levers to manage growth within their target leverage band [78] Question: What is the current status of spillover income? - Spillover income has been reduced to the mid-400 million range, with a target of aligning it to approximately two quarters' worth of dividends [100]

Financial Data and Key Metrics Changes - The company reported net investment income of $34.8 million, a 30% increase compared to Q2 of the previous year [4] - Total investment income reached $69.5 million, reflecting a 27% increase year-over-year [14] - Net asset value (NAV) grew 11% quarter-over-quarter to a record $924 million, with NAV per share increasing to $13.27 [5][15] - The effective yield on the portfolio for Q2 was 15.7% [14] - The company maintained a strong return on average equity of 15.9%, among the top in the BDC space [15] Business Line Data and Key Metrics Changes - The portfolio composition included approximately 76% secured loans, 17% equipment financings, 4% equity, and 2% warrants [20] - The equipment finance business saw a significant uptick in requests, with over 20% growth year-to-date [67] - The company funded $585 million in the first half of the year, exceeding last year's record by more than 20% [11] Market Data and Key Metrics Changes - The company has a strong investment pipeline with $849 million in unfunded commitments as of the end of Q2 [11] - Approximately 99.1% of the portfolio was performing on a fair value basis, indicating strong credit quality [21] - The average internal credit rating for the portfolio stood at 2.9 on a scale of 1 to 5, consistent with prior quarters [21] Company Strategy and Development Direction - The company aims to be the top-performing BDC, leveraging its differentiated structure and disciplined underwriting [7] - Plans to launch an SBIC fund with potential investable capital of $275 million, which will generate new management and incentive fees [5][39] - The company is focused on late-stage venture-backed companies in the lower middle market, positioning itself well in the private credit market [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future rate cuts benefiting the company, as most deals are at full rates [13] - The company is experiencing strong momentum heading into 2025, with expectations for continued portfolio growth [11] - Management emphasized the importance of credit quality and disciplined portfolio management as top priorities [23] Other Important Information - The company raised $82 million of equity through the ATM program at an average premium to NAV of 11% [10] - The net leverage ratio decreased to 1.12 times, indicating improved financial stability [19] - The company has no debt maturities until August 2026, enhancing its liquidity position [18] Q&A Session Summary Question: Equipment finance interest due to tariffs - Management indicated that the increase in equipment finance is more of a timing issue and expects continued growth in that area [25][26] Question: Increase in watch list at fair value - Management noted that the watch list includes companies needing additional capital and those underperforming, with ongoing negotiations for support [28][30] Question: Expected pacing of raising third-party capital - Management discussed the groundwork laid for managed accounts and the anticipated growth of that capital pool [33][35] Question: Characteristics of SBIC fund assets - The SBIC fund will have a low cost of capital and will co-invest alongside the BDC, enhancing returns for shareholders [42][47] Question: Impact of interest rates on prepayments - Management stated that lower rates could lead to refinancing opportunities, generating additional fee income [49][51] Question: Seasonality in originations or repayments - Management expects strong deployment in Q3, driven by signed term sheets and manufacturing lines needing additional capital [53][54] Question: NexCAR and space perspective - Management confirmed ongoing discussions regarding loan modifications for NexCAR and expects to finalize transactions in Q3 [59][60] Question: Tax changes and equipment financing - Management noted a significant uptick in equipment financing requests, attributed partly to tax changes allowing accelerated depreciation [67][68]

Core Viewpoint - Ares Capital (ARCC) is highlighted as a compelling investment opportunity due to its high dividend yield, strong market position, and attractive valuation, especially while trading below $25 [1]. Group 1: Dividend Performance - Ares Capital offers a substantial dividend yield of 8.36%, with an average yield of 9.32% over the past decade [3][4]. - The company has maintained or increased its dividend for over 15 consecutive years, with a 20% increase in the dividend payout over the last five years [3][4]. Group 2: Market Growth - The business development company (BDC) sector, where Ares Capital operates, is experiencing rapid growth, particularly in direct lending to middle-market businesses with annual revenues between $10 million and $1 billion [5][6]. - The private credit market has nearly tripled to around $2 trillion over the last decade, with projections suggesting it could grow to $2.8 trillion by 2028 [6]. Group 3: Industry Leadership - Ares Capital is the largest publicly traded BDC in the U.S., with a market capitalization close to $16 billion [8]. - The company has delivered an average annual total return of 13% since its IPO in 2004, significantly outperforming the S&P 500 [8]. - Ares Capital's portfolio consists of 566 companies valued at $27.1 billion, with a focus on senior secured loans, which make up approximately 68% of the portfolio [9]. Group 4: Valuation - Ares Capital's forward price-to-earnings ratio is 11.3, about half that of the S&P 500, indicating a compelling valuation relative to its growth potential and dividend yield [12].