Investcorp Credit Management BDC(US:ICMB)2020-02-11 23:13Financial Data and Key Metrics Changes - For the quarter ended December 31, 2019, the net investment income was $3.8 million or $0.27 per share, with a fair value of the portfolio at $305 million compared to $302 million at September 30 [23][24] - The portfolio's net increase in operations for the quarter was approximately $3 million, with new investments yielding an average of 10.33% [23] - The weighted average yield of the portfolio was 10.41%, a decrease of 3 basis points from September 30 [24] Business Line Data and Key Metrics Changes - The company invested in six portfolio companies during the quarter, including four new investments, with all investors being first lien [11] - The average portfolio investment was approximately $8.7 million, with the largest investment being $60.3 million in 1888 Industrial Services [24] Market Data and Key Metrics Changes - As of December 31, the largest industry concentration was in professional services at 11.7%, followed by energy, equipment and services at 11.6% [21] - The portfolio companies spanned 22 GICS industries, with a total of 35 portfolio companies as of quarter end [22][24] Company Strategy and Development Direction - The company is focused on repositioning and diversifying the portfolio, aiming for a better balance across industries and increasing the number of new portfolio companies [7][8] - The company plans to maintain a leverage target in the range of 1.0 to 1.5 times, currently at 1.23 times as of December 31 [35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the restructuring of Fusion Connect and the potential for future returns, emphasizing the importance of the company's strategic decisions [28][29] - The company is cautious about stretching its attachment point too deep into the capital structure, focusing on first lien loans to target higher returns [33] Other Important Information - The company declared a distribution of $0.25 per share for the quarter ended March 31, 2020, maintaining the dividend level since March 2017 [37] - The company has been actively purchasing its shares, with 90,459 shares bought through December 31 under a 10b5 program [38] Q&A Session Summary Question: About the new investment in Horus - Management highlighted the opportunity in the Permian Basin, noting its prolific drilling activity and the support from Instar's equity investment [41] Question: Context on deal sourcing for investments - Management confirmed increased activity from club members and improved relationships with smaller banks, leading to more deal flow [42][43] Question: Credit facility and debt capacity - Management is actively discussing options for the credit facility maturing in December and expects to announce new financing soon [48][49] Question: Industry concentrations and management - Management is comfortable with current industry exposure, emphasizing the defensible niche of their investments [56][58] Question: Outlook for PIK income - Management expects PIK income to remain stable in the near term, driven by specific portfolio companies [60][61] Question: Incremental leverage plans - Management anticipates gradual increases in leverage, aiming to maintain a range of 1.0 to 1.5 times [62] Question: Fusion Connect's business plan post-bankruptcy - Management indicated that it would take 6 to 12 months to see momentum from Fusion's restructuring, with a longer timeframe for ultimate value realization [72]