Fidus Investment (US:FDUS)2025-05-09 14:00Financial Data and Key Metrics Changes - Adjusted net investment income for Q1 2025 was $18,500,000, an increase from $18,100,000 in Q1 2024, while adjusted NII per share decreased to $0.54 from $0.59 due to incremental shares issued [7][12] - Net asset value at the end of Q1 2025 was $677,900,000 or $19.39 per share, compared to $655,700,000 or $19.33 per share as of December 31, 2024 [7] - Total investment income for Q1 2025 was $36,500,000, a decrease of $1,000,000 from Q4 2024, primarily due to a decline in interest income [12] Business Line Data and Key Metrics Changes - Originations totaled $115,600,000 in Q1 2025, with $111,600,000 invested in debt and $4,000,000 in equity across seven new portfolio companies [9] - Debt investments accounted for approximately 94% of the total, with first lien securities making up the majority [9] - The debt portfolio was valued at approximately $1,000,000,000, with 79% consisting of first lien investments [10] Market Data and Key Metrics Changes - Deal activity in the lower middle market remained modest, continuing the trend of lackluster M&A activity [6] - The company expects continued activity in the lower middle market, albeit at lower levels than before [30] Company Strategy and Development Direction - The company focuses on investing in high-quality companies with resilient business models and strong cash flow generation [6] - Management believes the current economic environment may present interesting investment opportunities, particularly in periods of high volatility [11] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's resilience against macroeconomic challenges, noting that most portfolio companies are domestic with limited tariff exposure [10] - The outlook for originations in Q2 2025 is positive, supported by a strong investment pipeline [11] Other Important Information - The company declared a total dividend of $0.54 per share for Q2 2025, consistent with the previous quarter [8] - The company ended Q1 2025 with $545,600,000 of debt outstanding and a net debt to equity ratio of 0.7 times [15] Q&A Session Summary Question: Impact of tariffs on portfolio companies - Management indicated that direct exposure to tariffs is limited to just over 5% of the portfolio, and plans are in place to manage risks effectively [24][25] Question: Factors needed for M&A market rebound - Management believes that stability, rather than the elimination of tariffs, is necessary for the M&A market to recover [29] Question: Spread stability in private credit - Management noted that while spreads are stable for high-quality credits, there may be opportunities for spread widening in more complex situations [42] Question: Prepayment risk among top-performing companies - Management acknowledged prepayment risk but indicated that it is a manageable aspect of the business [46] Question: Update on distressed investments - Management provided updates on specific investments, indicating ongoing monitoring and management of portfolio companies facing challenges [58]