Investcorp Credit Management BDC(US:ICMB)2020-09-15 21:47Financial Data and Key Metrics Changes - For the quarter ending June 30, 2020, the net investment income was $3.4 million or $0.25 per share, with a fair value of the portfolio at $270.6 million compared to $274.9 million at March 31, indicating a decrease in portfolio value [21][22] - The portfolio net decrease from operations this quarter was approximately $2.5 million, and the weighted average yield of the debt portfolio decreased by 61 basis points to 9.58% [23] Business Line Data and Key Metrics Changes - The company made six investments this quarter across three existing portfolio companies and had one draw on an existing revolving commitment, with no realizations during the quarter [14] - The average portfolio company investment was approximately $7.1 million, with the largest investment being $15 million in Endemol [24] Market Data and Key Metrics Changes - As of June 30, the largest industry concentration was in professional services at 11.5%, followed by construction and engineering at 11.2%, and energy, equipment, and services at 10.9% [19] - The portfolio consisted of 38 companies, with 83.7% of investments in first lien, 10.2% in second lien, and 4% in unitranche investments [23] Company Strategy and Development Direction - The company aims to maintain its focus on investing at the top of the capital structure while adhering to credit standards and disciplined portfolio construction [29] - The company is committed to evolving BDCs by investing in U.S. companies and addressing the capital needs of good companies affected by the COVID-19 pandemic [29] Management's Comments on Operating Environment and Future Outlook - Management noted that the COVID-19 pandemic has had a prolonged economic impact, affecting various sectors, but emphasized that their diversified portfolio has helped mitigate risks [9][10] - The company believes that at least half of the unrealized depreciation in the portfolio could be recoverable over the next 12 to 36 months [36] Other Important Information - The Board declared a distribution of $0.15 per share and a supplemental distribution of $0.03 per share for the quarter ending September 30, 2020 [28] - As of June 30, the company had $14.9 million in cash and $5.4 million in restricted cash, with a fully drawn $30 million revolving credit facility [24] Q&A Session Summary Question: Concentration of Marks - The $6 million in unrealized depreciation was concentrated around four credits, including Techniplas and Clover, which were undergoing restructuring [34] Question: Permanent vs. Transitory Markdowns - Management indicated that at least half of the unrealized depreciation could be recoverable, with a recovery timeline of 12 to 36 months [36] Question: Nonaccrual Investments - There were no nonaccrual investments as of June 30 [45] Question: NII Reversal Impact - A reversal of upfront financing costs contributed approximately $0.03 to net investment income [46] Question: Unfunded Commitments - Unfunded commitments at June 30 were a little shy of $9 million, concentrated around Limbach Holdings and Golden Hippo [58] Question: Dividend Expectations - The expected overall debt investment coupon yields over the next six months are projected to be between 8% to 12% [59] Question: Spillover Income - Spillover income for dividends was estimated to be around $500,000 [67]