Fidus Investment (US:FDUS)2025-05-09 14:02Financial Data and Key Metrics Changes - Total investment income for Q1 2025 was $36.5 million, a decrease of $1 million from Q4 2024, primarily due to a $1.1 million decrease in interest income [13][14] - Adjusted net investment income (NII) for Q1 2025 was $18.5 million, compared to $18.1 million in Q1 2024, with adjusted NII per share at $0.54, down from $0.59 year-over-year [9][15] - Net asset value at quarter end was $677.9 million, or $19.39 per share, compared to $655.7 million, or $19.33 per share as of 12/31/2024 [9] Business Line Data and Key Metrics Changes - Originations totaled $115.6 million for Q1 2025, with $102.1 million invested in seven new portfolio companies [10] - Debt investments amounted to $111.6 million, with first lien securities accounting for approximately 94% of the total [10][11] - The debt portfolio was valued at approximately $1 billion, with 79% consisting of first lien investments [11] Market Data and Key Metrics Changes - The lower middle market experienced modest deal activity, continuing the trend of lackluster M&A activity [7][12] - The portfolio remains healthy, with nonaccrual companies under 1% of the total portfolio on a fair value basis [11] Company Strategy and Development Direction - The company focuses on investing in high-quality companies with resilient business models and strong cash flow generation [7] - The outlook for originations in Q2 2025 is positive, based on a new investment pipeline [12] - The company is well-positioned for potential economic downturns due to the resilient cash flow of its portfolio companies [12] Management's Comments on Operating Environment and Future Outlook - Management noted that the current macroeconomic environment is characterized by uncertainty, impacting M&A activity [12] - The company believes that stability, rather than the elimination of tariffs, is necessary for a rebound in the M&A market [30] - Management expressed confidence in the long-term outlook of the portfolio despite current challenges [52] Other Important Information - The company declared a total dividend of $0.54 per share for Q2 2025, consistent with the previous quarter [9] - The weighted average interest rate on outstanding debt was 4.8% as of March 31 [16] 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 [24][25] Question: Conditions for M&A market rebound - Management stated that uncertainty is the primary factor affecting the M&A market, and stability is needed for recovery [30] Question: Prepayment risk among top-performing companies - Management acknowledged prepayment risk but noted that it is a typical aspect of the business [48][50] Question: Update on Quantum IR investment - Management reported no material updates on Quantum IR, emphasizing ongoing efforts to manage the situation [61][63] Question: Challenges with Quest software investment - Management expressed confidence in the long-term outlook for Quest, despite current over-leverage and market concerns [51][52]