
Financial Data and Key Metrics Changes - The company declared and paid a $0.25 per share dividend in Q1 2025, representing an annualized dividend yield of 14.3% based on the closing share price on 05/06/2025 [4] - Adjusted net investment income was $4.2 million or $0.19 per share, down from $6.2 million or $0.29 per share in the previous quarter [16] - NAV decreased to $186.9 million or $8.63 per share from $191.8 million or $8.85 per share at the end of Q4 2024 [18] - The weighted average effective yield on the portfolio's debt and equity investments was 9.2%, down from 10.2% in the previous quarter [18] Business Line Data and Key Metrics Changes - The investment portfolio totaled $430.6 million, a decrease of $26.4 million from $457 million at the end of Q4 2024 [12] - The company invested $7.6 million in one new portfolio company and $8.8 million in delayed draw fundings and add-ons to existing portfolio companies during the quarter [14] - The company rotated out of seven legacy assets amounting to $37.6 million in payoffs during the quarter [14] Market Data and Key Metrics Changes - Middle market direct lending volume in Q1 2025 was down 22% from Q4 2024 but up 16% year-over-year [12] - The average mark on the portfolio decreased from 92.2% of costs at 12/31/2024 to 91.1% of costs at 03/31/2025 [24] - The average mark on the SLF portfolio decreased from 86.8% of amortized costs to 82.8% of amortized costs during the same period [25] Company Strategy and Development Direction - The company focuses on maintaining asset quality and positioning the portfolio for long-term performance amid market volatility [4] - The strategy includes utilizing proceeds from portfolio exits to redeploy into attractive investment opportunities as credit conditions tighten [6] - The company aims to support existing portfolio companies, particularly in recession-resistant industries, to navigate a slower M&A environment [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the portfolio and the ability to navigate near-term income volatility [26] - The company anticipates that net investment income will fall short of current dividend levels in the short run, relying on accumulated spillover income to support dividends [28] - Management noted that credit quality remains stable, with no new investments placed on nonaccrual status [21] Other Important Information - The company completed a partnership with Wendell Group, enhancing its strategic position while maintaining operational independence [10] - The company has approximately $11.5 million or $0.53 per share of undistributed spillover income available for future distributions [18] Q&A Session Summary Question: Sustainability of the dividend - Management is evaluating the dividend in light of current earnings and anticipates that net investment income will be shy of current dividend levels, using spillover income to support the dividend [28][29] Question: Stock buybacks - Management has historically not supported stock buybacks, focusing instead on maintaining leverage and supporting portfolio companies, but is aware of strategic options [30][31] Question: Fee waivers - Management clarified that while they have waived fees in the past, they are currently using spillover income to support dividends, but will continue to support MRCC [34][35] Question: SLF portfolio status - Management indicated that the SLF portfolio has been declining and they are evaluating whether to continue allowing it to run off or to deleverage it [36][37] Question: Future strategy post-partnership - Management stated that the company will continue to evolve strategically to create value for shareholders, including MRCC [41][42]