Financial Data and Key Metrics Changes - The company reported an adjusted net investment income (NII) of $0.21 per share, with total assets increasing to approximately $1.2 billion, up about $92 million from the previous quarter [6][15] - Total investment income for the quarter was $25.1 million, slightly down from $25.3 million in the prior quarter, primarily due to a decrease in dividend and success fee income [15][18] - The net investment loss for the quarter was $6.5 million compared to net investment income of $4.3 million in the prior quarter [18] Business Line Data and Key Metrics Changes - The company has invested approximately $163 million in four new portfolio companies for fiscal 2026, compared to $221 million for all of fiscal year 2025 [7] - The portfolio's weighted average yield decreased from 13.2% to 12.9%, in line with a decrease in SOFR [15][16] - The net asset value (NAV) increased to $14.95 per share from $13.53 per share at the end of the prior quarter, driven by net unrealized appreciation and net realized gains [20] Market Data and Key Metrics Changes - The company noted good liquidity in the M&A market, creating a competitive environment for new acquisitions [9][47] - The company has expanded its credit facility to include City National Bank, increasing the total commitment level to $300 million [22] Company Strategy and Development Direction - The company continues to focus on a buyout strategy, acquiring operating companies at attractive valuations and generally being the majority economic owner [7] - The management emphasized the importance of maintaining a strong and liquid balance sheet to support portfolio growth [13][21] - The company aims to provide both debt and equity in acquisitions, differentiating itself from traditional credit BDCs [8] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the portfolio's performance despite challenges such as supply chain disruptions and tariff costs [12] - The outlook for the remaining fiscal year is positive, with expectations of continued good earnings and distributions [13][26] Other Important Information - The company maintained its monthly distribution to shareholders at $0.08 per share, with a total distributable income of $108.7 million as of December 31 [24] - The company has three portfolio companies on non-accrual status, representing 3.8% of the total portfolio at cost [20] Q&A Session Summary Question: Can you discuss the operational or valuation changes that drove appreciation for Schylling, Old World, and SFE? - Management indicated that the appreciation was primarily due to EBITDA increases rather than multiple changes [28][29] Question: What differentiates Schylling and Old World in the current consumer sector? - Management attributed their performance to unique products and strong management, allowing them to maintain demand despite economic headwinds [32][33] Question: How did you underwrite the Rowan Energy investment? - Management highlighted the importance of having a quality and experienced team to evaluate energy-related investments [34][36] Question: Are you seeing any pressure on terms or structure in underwriting conditions? - Management stated that they have not experienced significant pressure and continue to adhere to their investment model [57][58] Question: What is the current outlook for asset quality and non-accrual investments? - Management expressed a positive outlook for the three non-accrual companies, noting improvements in their performance [66][68]

Financial Data and Key Metrics Changes - The company reported an adjusted net investment income (NII) of $0.21 per share, with total assets increasing to approximately $1.2 billion, up about $92 million from the previous quarter [6][20] - Total investment income for the third quarter was $25.1 million, slightly down from $25.3 million in the prior quarter, primarily due to a decrease in dividend and success fee income [15][18] - The net investment loss for the quarter was $6.5 million compared to a net investment income of $4.3 million in the prior quarter [18] Business Line Data and Key Metrics Changes - The company has invested approximately $163 million in four new portfolio companies for fiscal 2026, compared to $221 million for all of fiscal year 2025 [7] - The portfolio currently consists of 29 operating companies, with a healthy pipeline for new acquisitions [6][7] - The weighted average yield of the portfolio decreased from 13.2% to 12.9%, in line with a decrease in SOFR [15][16] Market Data and Key Metrics Changes - The company noted good liquidity in the M&A market, creating a competitive environment for new acquisitions [8][9] - The company has been actively looking for add-on acquisitions to existing portfolio companies, which could lead to new buyout investments [10] Company Strategy and Development Direction - The company differentiates itself from traditional credit BDCs by providing both debt and equity in acquisitions, which supports its monthly distributions to shareholders [8][9] - The management emphasized the importance of maintaining a strong and liquid balance sheet to support portfolio growth [21][22] - The company is focused on managing supply chain disruptions and cost efficiencies to navigate the current economic environment [12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the portfolio's performance despite challenges such as supply chain disruptions and tariff costs [12][13] - The outlook for the current portfolio is positive, with expectations of continued good earnings and distributions over the next year [13][24] - The company is actively working with three portfolio companies currently on non-accrual status, with a more positive outlook for their recovery [70][71] Other Important Information - The company maintained its monthly distribution to shareholders at $0.08 per share, with a total distributable income of $108.7 million as of the end of the quarter [24] - The company redeemed $74.8 million of its 8% notes and issued $60 million in 6.875% notes, reducing its interest burden [22][23] Q&A Session Summary Question: Can you discuss the operational or valuation changes that drove the appreciation for Schylling, Old World, and SFE-SFEG? - Management indicated that the appreciation was primarily due to EBITDA increases rather than multiple changes [30] Question: What differentiates Schylling and Old World in the current consumer sector? - Management attributed their success to unique products and strong management, allowing them to maintain demand despite economic headwinds [34] Question: How are current underwriting conditions affecting deal terms? - Management stated that they are maintaining their investment model and discipline despite competitive pressures [60] Question: What is the outlook for asset quality and non-accrual investments? - Management expressed a positive outlook for the three companies on non-accrual status, indicating improvements and potential exits [70][71]