Financial Data and Key Metrics Changes - The operating profit for the second quarter was JPY 438.1 billion, a decrease of JPY 304.4 billion compared to the same period last year [4][6] - Investment earnings due to the equity method were JPY 10.8 billion, an increase of JPY 31.6 billion [6] - The half-year profit attributable to the owner of the parent was JPY 311.8 billion, down by JPY 182.8 billion [6] - The forecast for consolidated results for the fiscal year ending in March 2026 is an operating profit of JPY 550 billion, down by JPY 150 billion from the previous forecast [5][6] Business Line Data and Key Metrics Changes - Motorcycle operations achieved record high unit sales of 10.763 million units, despite a decline in Vietnam, with strong growth in Brazil and the Philippines [8] - Automobile business unit sales were 1.68 million units, primarily affected by declines in China [8] - Power products unit sales totaled 1.699 million units, with growth led by Europe despite declines in Asia [8] Market Data and Key Metrics Changes - The forecast for motorcycle unit sales is maintained at 21.3 million units, while automobile unit sales are revised down from 3.62 million to 3.34 million units due to semiconductor shortages [5][14] - The exchange rate against the U.S. Dollar is assumed at 145 yen for the full year [7] Company Strategy and Development Direction - The company aims to enhance profitability in internal combustion engine (ICE) and hybrid electric vehicles (HEV) while reviewing its product lineup to focus on profitable models [23][24] - There is a need to rationalize fixed expenses and improve overall profitability, particularly in the automobile sector [25][39] - The company plans to shift towards battery electric vehicles (BEV) while managing costs and minimizing losses [25][86] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by tariffs and semiconductor shortages, which are expected to continue impacting operations [21][40] - The company is optimistic about maintaining good results in North America but recognizes the need for fundamental changes in Asia due to declining profitability [22][23] - Future actions include revising investment plans and enhancing competitiveness in the market [24][25] Other Important Information - The company reported a free cash flow of JPY 760.6 billion, with a net cash balance of JPY 3.0539 trillion at the end of the first half [14] - The forecast for the full-year dividend remains unchanged at 70 yen per share [7] Q&A Session Summary Question: Future prospects for motorcycles and automobiles - Management expressed confidence in motorcycle operations, expecting to recover declines in Vietnam through strong performance in Brazil and Thailand [20] - For automobiles, management noted the need to invest in intelligence and hybrid electric vehicles, while acknowledging challenges from tariffs and environmental regulations [21][22] Question: Impact of semiconductor shortages - Management confirmed that semiconductor shortages have impacted production, with an estimated loss of 110,000 units in North America [42] - They are working closely with suppliers to minimize production disruptions and expect to resume normal operations soon [43][44] Question: Reasons for downward revision of forecasts - Management clarified that the downward revision was due to external factors, including tariffs and semiconductor shortages, which were more severe than initially anticipated [31][32] - They emphasized the importance of transparency in their forecasting approach [91] Question: Challenges in the Chinese market - Management acknowledged struggles in the Chinese market due to high price competition and the absence of advanced features in their vehicles compared to competitors [62][63] - They are reviewing their product strategy and planning to enhance local procurement to improve competitiveness [74][75] Question: Profitability of electric vehicles - Management indicated that while losses from BEVs are expected this year, they are focused on reducing manufacturing costs and improving profitability in the future [86]

Financial Data and Key Metrics Changes - Operating revenue increased by 7.1% year-over-year, reaching KRW 7.1267 trillion, driven by sustained growth from core businesses including telecom, real estate, cloud, and data center [27] - Operating profit rose by 16% year-over-year, amounting to KRW 538.2 billion [27] - Net income increased by 16.2% year-over-year, recording KRW 445.3 billion, supported by the rise in operating profit [28] - EBITDA grew by 5.2% year-over-year, reaching KRW 1,503.9 billion [28] - Operating expenses rose by 6.4% year-over-year to KRW 6 trillion 588.6 billion, attributed to increased cost of goods sold, cost of services, and selling expenses [32] Business Line Data and Key Metrics Changes - Wireless revenue grew by 4% year-over-year, reaching KRW 1,809.6 billion, driven by subscriber base expansion around 5G, with 5G penetration at 80.7% [35][36] - Broadband internet revenue increased by 2.3% year-over-year to KRW 636.7 billion, supported by GiGA Internet subscriber growth and value-added services [38] - Media business revenue grew by 3.1% year-over-year, backed by higher IPTV subscriber net additions and premium plan sales [40] - Home telephony revenue fell by 6.6% year-over-year to KRW 160.9 billion [42] - B2B service revenue reported a 0.7% year-over-year growth, driven by enterprise messaging and corporate broadband despite low-margin business streamlining [44] - AI and IT business revenue decreased by 5.7% year-over-year due to structural enhancements, despite ongoing monetization efforts [46] - KT Cloud revenue surged by 20.3% year-over-year, driven by increased data center usage and AI cloud demand [49] - KT Estate revenue rose by 23.9% year-over-year to KRW 186.9 billion, supported by strong hotel business performance and new development projects [50] Market Data and Key Metrics Changes - The net to equity ratio as of September 2025 was 123.3%, while the net debt ratio increased by 4.2 percentage points year-over-year to 34.5% [33] Company Strategy and Development Direction - KT is focusing on transforming into an AICT company, collaborating with global tech firms to launch specific services and establishing the KT Innovation Hub [14][16] - The corporate value enhancement plan is ongoing, with efforts to streamline assets and enhance profitability through rationalizing low-margin businesses and liquidating non-core assets [21] - A share buyback of KRW 250 billion was completed on August 13 as part of the value enhancement plan [23] Management's Comments on Operating Environment and Future Outlook - Management expressed a conservative outlook for Q4 due to seasonality and uncertainties related to customer compensation measures following the unauthorized micropayment incident [62] - Despite challenges, management is optimistic about achieving year-over-year growth for the full year 2025, supported by solid performance in core businesses and one-off gains [64] - The company is committed to investing over KRW 1 trillion in information security over the next five years to enhance customer protection and prevent future incidents [79] Other Important Information - The process for CEO nomination began on November 4, with a committee of independent directors responsible for selecting candidates [9] - The third quarter dividend was set at KRW 601 per share, maintaining a 20% higher payout year-over-year [19] Q&A Session Summary Question: Outlook for Q4 and dividend payment - Management acknowledged the usual seasonality impacts in Q4 and uncertainties from customer compensation measures, taking a conservative stance on forecasts while striving to minimize impacts [62][65] - Regarding dividends, management indicated that the board will consider annual financial performance and shareholder expectations before making decisions [65][66] Question: Financial impact of the hacking incident and prevention measures - Management confirmed that compensation plans are in place for affected customers, with costs related to USIM replacement expected to be recognized in Q4 [75][77] - A significant investment in information security exceeding KRW 1 trillion over five years was announced, with annual investments of KRW 120 billion-130 billion expected [79] Question: CEO appointment process and impact on value-up program - The CEO appointment process involves a director candidate recommendation committee and will conclude with a candidate presented to the board for final confirmation [86][90] - Management assured that the value-up plan will remain consistent regardless of the new CEO, as it is a commitment to the market [92]

Financial Data and Key Metrics Changes - Operating revenue increased by 7.1% year over year, reaching KRW 7.1267 trillion, driven by sustained growth from core businesses including telecom, real estate, cloud, and data center [31] - Operating profit rose by 16% year over year to KRW 538.2 billion, with net income up 16.2% year over year at KRW 445.3 billion [33][31] - EBITDA increased by 5.2% year over year, reaching KRW 1.5039 trillion [33] Business Line Data and Key Metrics Changes - Wireless revenue grew by 4% year over year to KRW 1,809.6 billion, supported by the expansion of the 5G subscriber base, which reached a penetration rate of 80.7% [44][46] - Broadband internet revenue increased by 2.3% year over year to KRW 636.7 billion, driven by GiGA Internet subscriber growth [48] - Media business revenue grew by 3.1% year over year, attributed to higher IPTV subscriber net additions and premium plan sales [50] - B2B service revenue reported a slight growth of 0.7% year over year, despite streamlining low-margin businesses [54] - AI and IT business revenue decreased by 5.7% year over year due to structural enhancements, although there were project wins from large customers [56] - KT cloud revenue surged by 20.3% year over year, driven by increased data center utilization and demand for AI cloud services [60] - KT Estate revenue rose by 23.9% year over year, supported by strong hotel business performance and new development projects [62] Market Data and Key Metrics Changes - The net debt ratio increased by 4.2 percentage points year over year to 34.5% [40] - Total capital expenditures (CapEx) for KT and its main subsidiaries reached KRW 1,963.7 billion, with KT's separate basis CapEx at KRW 1,329.5 billion [42] Company Strategy and Development Direction - KT is focusing on transforming into an AICT (AI, Cloud, and Telecom) company, collaborating with global tech firms to launch specific services and enhance its core portfolio [15][17] - The company is implementing a corporate value enhancement plan, which includes streamlining low-margin businesses and liquidating non-core assets [25] - KT has initiated a comprehensive plan to compensate customers affected by unauthorized micropayments and data breaches, including free USIM replacements [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed a conservative outlook for Q4 due to seasonality and uncertainties related to customer compensation measures following the hacking incident [75] - Despite challenges, management believes that the company can achieve year-over-year growth for the full year 2025, supported by solid performance in Q3 and ongoing efforts to drive top-line growth [78][79] Other Important Information - The third quarter dividend was set at KRW 601 per share, maintaining a 20% higher payout year over year [23] - A share buyback plan amounting to KRW 1 trillion was announced, with KRW 250 billion already executed [27][82] Q&A Session Summary Question: Outlook for Q4 and dividend payment - Management acknowledged the usual seasonality in Q4 and uncertainties due to customer compensation, taking a conservative stance on forecasts while aiming to minimize impacts [75][80] Question: Financial impact of the hacking incident and compensation measures - Management confirmed that compensation costs related to the unauthorized micropayment incident will be recognized in Q4, including USIM replacements and other expenses [91][93] Question: CEO appointment process and its impact on the value-up program - The CEO appointment process involves a director candidate recommendation committee and will not affect the ongoing value-up plan, which is a commitment to the market [100][106]

Financial Data and Key Metrics Changes - The company reported a 10% year-over-year revenue growth, achieving a record quarterly revenue of $333 million and an EPS of $0.99 [2][11] - Net income reached $37 million, representing 11.2% of revenue, with a sequential expansion of 50 basis points [15] - Gross margin for the quarter was 23.2%, reflecting a 70 basis point sequential decline [14] Business Line Data and Key Metrics Changes - Service revenues declined by 2% year-over-year, primarily due to reduced U.S. ocean shipping and drayage revenues [11] - Product revenue grew by 16% year-over-year, driven by a 69% growth in Europe, although U.S. product revenue declined by 5% [12][13] - The marketplace GMV rose approximately 21% year-over-year, reaching nearly $1.5 billion [6] Market Data and Key Metrics Changes - European revenues increased by 70% year-over-year to a record $100 million, marking a significant milestone in global expansion [7] - The active 3P seller base expanded by 17% year-over-year to 1,232, with GMV for this cohort climbing more than 24% [6] Company Strategy and Development Direction - The company views M&A as a cornerstone of its long-term growth strategy, with the recent acquisition of Noble House serving as a validation of this approach [3] - The upcoming acquisition of New Classic Home Furnishings is aimed at diversifying the business and enhancing brick-and-mortar wholesale capabilities [4][9] - The company is focused on creating a channel-agnostic ecosystem that bridges digital and physical sales [4] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic challenges, emphasizing a disciplined execution of their long-term strategy [2][5] - The company is optimistic about future growth opportunities despite current market pressures, focusing on operational efficiency and diversification [5][21] Other Important Information - The company remains debt-free and has a total liquidity of $367 million, allowing for strategic acquisitions and shareholder returns through buybacks [15] - The fourth-quarter revenue guidance is expected to be between $328 million and $344 million [16] Q&A Session Summary Question: Thoughts on additional M&A acquisitions - Management is currently focused on closing the New Classic acquisition but is looking for new opportunities concurrently [19] Question: Impact of recent rate cuts on the housing market - Management remains hopeful about a housing market rebound but emphasizes a focus on execution and diversification to drive growth regardless of macroeconomic conditions [21] Question: Drivers of growth in Q3 - The growth in Q3 was primarily driven by Noble House's strong performance in both the U.S. and Europe [25] Question: Confidence in Q4 growth - Management indicated that Q4 is progressing as expected, with strong performance anticipated from both Noble House and organic business segments [27]

Financial Data and Key Metrics Changes - The company reported a robust 10% year-over-year growth, achieving a quarterly revenue of $333 million and an EPS of $0.99, marking a new record [2][11] - Net income reached $37 million, representing 11.2% of revenue, with a sequential expansion of 50 basis points [15] - Gross margin for the quarter was 23.2%, reflecting a 70 basis point sequential decline from the previous quarter [14] Business Line Data and Key Metrics Changes - Service revenues declined by 2% year-over-year, primarily due to reduced U.S. ocean shipping and drayage revenues [11] - Product revenue grew by 16% year-over-year, driven by a 69% growth in Europe, although U.S. product revenue declined by 5% [12][13] - The marketplace GMV rose approximately 21% year-over-year, reaching nearly $1.5 billion, with active 3P seller base increasing by 17% [6][7] Market Data and Key Metrics Changes - European revenues surged by 70% year-over-year to a record $100 million, highlighting the region as a significant growth engine [7] - The company’s international markets acted as a hedge against domestic softness, contributing to overall revenue growth [6] Company Strategy and Development Direction - The company views M&A as a cornerstone of its long-term growth strategy, with the recent acquisition of Noble House serving as a validation of this approach [3][9] - The upcoming acquisition of New Classic Home Furniture is aimed at diversifying the business and enhancing brick-and-mortar wholesale capabilities [4][10] - The strategy focuses on creating a channel-agnostic ecosystem that bridges digital and physical sales [4] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic challenges through disciplined execution and diversification strategies [5][21] - The company anticipates that the acquisition of New Classic will enhance distribution and channel reach, with expected financial performance improvements over the next four to six quarters [10][15] Other Important Information - The company remains debt-free and has executed approximately $16 million in share buybacks as part of its capital allocation strategy [15][16] - The fourth-quarter revenue guidance is projected to be between $328 million and $344 million [16] Q&A Session Summary Question: Thoughts on additional M&A acquisitions - Management is currently focused on closing the New Classic acquisition but is open to exploring new opportunities thereafter [18][19] Question: Impact of recent rate cuts on home merchandise sales - Management remains hopeful about a housing market rebound but emphasizes a focus on execution and diversification to drive growth regardless of macroeconomic conditions [20][21] Question: Drivers of growth in Q3 - The growth in Q3 was primarily driven by Noble House's strong performance in both the U.S. and Europe [25] Question: Confidence in Q4 performance - Management indicated that Q4 is progressing as expected, with strong performance anticipated from both organic growth and acquired businesses [27]

Financial Data and Key Metrics Changes - Total investment income for Q3 2025 was $36.7 million, up from $35.1 million in Q2 2025, while net investment income increased to $15.7 million from $13.9 million [15][16] - The weighted average portfolio risk rating rose to 2.42 in Q3 2025 from 2.33 in Q2 2025 [15] - The dollar-weighted loan-to-value ratio increased from 29.6% to 31.4% [15] - The total investment portfolio's fair value decreased by 7.7% to $946 million from $1.02 billion [16] - NAV per share decreased by 1.9% to $13.55 from $13.66 [18] Business Line Data and Key Metrics Changes - The company completed 11 investments totaling $128.3 million in Q3 2025, focusing on technology, healthcare, and select consumer sectors [7][10] - The acquisition of SWK Holdings is expected to scale the portfolio by approximately $242 million, increasing exposure in healthcare and life sciences from 14% to 31% [9][11] Market Data and Key Metrics Changes - The company noted a competitive environment in private markets, with increased competition affecting pricing and origination activity [9][34] - The venture debt space is experiencing spread compression, although not as severe as in broader markets [34] Company Strategy and Development Direction - The company aims to enhance its portfolio through both organic and inorganic growth, with a focus on diversification and risk mitigation [8][9] - The acquisition of SWK Holdings is seen as a strategic move to enhance earnings power and diversify the asset base [9][20] - The company is committed to maintaining a disciplined approach to growth while leveraging the BC Partners credit platform for sourcing opportunities [8][10] Management's Comments on Operating Environment and Future Outlook - Management expects a muted repayment activity in Q4 2025 compared to Q3, with origination opportunities being actively pursued [25] - The integration of SWK is anticipated to enhance the company's financial profile and shareholder value, with expected accretion in earnings [20][55] - The ongoing government shutdown may delay SEC regulatory approval for the merger, with a projected close in early 2026 [22][55] Other Important Information - The company repurchased 397,983 shares during the third quarter under a $25 million stock repurchase program [22] - A regular distribution of $0.33 per share was declared for Q4 2025 [23] Q&A Session Summary Question: Expected closing date of the SWK merger and origination activity in Q4 - Management indicated that repayments would be muted in Q4, with origination activity utilizing the existing pipeline and BC Partners credit platform [25] Question: Integration of SWK portfolio and yield profile - The SWK portfolio is expected to have a slightly higher yield than Runway's existing portfolio, with plans to explore upsizing the best loans post-merger [27][29] Question: Drivers of realized loss and unrealized portfolio depreciation - Losses were primarily in the equity portfolio, with no specific sector theme identified [30] Question: Prepayment activity and expectations for next year - Prepayment activity is driven by M&A and refinancing options, with expectations for normal prepayment rates moving forward [31] Question: Competitive dynamics in venture debt space - Management noted spread compression in the venture debt space, but not as severe as in other markets [34] Question: Integration of SWK team post-merger - The SWK team will assist with the transition and new originations during the integration period [35] Question: Dividend declaration and earnings power - The board's decision on the dividend was based on anticipated prepayment activity and the need to cover the base dividend with Q4 earnings [38][40] Question: Characteristics of loans added to the Kadma JV - Loans added to the Kadma JV are growth loans, suited for that vehicle due to specific characteristics [46] Question: Accretion from the SWK merger - The merger is expected to be accretive in the first full quarter after closing, with potential for OID accretion [55][56]

Financial Data and Key Metrics Changes - Total investment income for Q3 2025 was $36.7 million, an increase from $35.1 million in Q2 2025, while net investment income rose to $15.7 million from $13.9 million in the previous quarter [15][16] - The weighted average portfolio risk rating increased to 2.42 in Q3 2025 from 2.33 in Q2 2025, indicating a slight deterioration in credit quality [15] - The dollar-weighted loan-to-value ratio increased from 29.6% to 31.4% [15] - The total investment portfolio's fair value decreased by 7.7% to $946 million from $1.02 billion in Q2 2025 [16] - NAV per share decreased by 1.9% to $13.55 from $13.66 at the end of Q2 2025 [18] Business Line Data and Key Metrics Changes - The company completed 11 investments totaling $128.3 million in Q3 2025, focusing on technology, healthcare, and select consumer sectors [7][10] - The acquisition of SWK Holdings is expected to scale the portfolio by approximately $242 million, increasing exposure in healthcare and life sciences from 14% to 31% of the overall portfolio [9][11] Market Data and Key Metrics Changes - The debt portfolio generated a dollar-weighted average annualized yield of 16.8% in Q3 2025, up from 15.4% in Q2 2025 [16] - Total available liquidity was $371.9 million, including unrestricted cash and cash equivalents, with a borrowing capacity of $364 million [18] Company Strategy and Development Direction - The company aims to enhance its portfolio through both organic and inorganic growth, with a focus on diversification and risk mitigation [8][9] - The merger with SWK Holdings is seen as a strategic move to enhance earnings power and diversify the asset base [9][21] - The company is committed to maintaining a disciplined approach to growth while leveraging the BC Partners credit platform for sourcing opportunities [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the integration of SWK Holdings and its potential to enhance the company's market position [14][21] - The company anticipates a muted repayment activity in Q4 2025, with origination activity expected to remain strong [26] - Management acknowledged competitive pressures in the venture debt space but noted that spread compression has not been as severe as in broader markets [36] Other Important Information - The company declared a regular distribution of $0.33 per share for Q4 2025, with net investment income of $0.43 per share [24][40] - The merger with SWK is structured as a tax-free reorganization with an estimated purchase price of approximately $220 million [22] Q&A Session Summary Question: What is the expected closing date of the SWK merger and its impact on origination and repayment activity? - Management expects repayments to be muted in Q4 2025, with origination activity utilizing the existing pipeline and BC Partners credit platform [26] Question: What is the yield profile of the SWK portfolio compared to the existing portfolio? - The SWK portfolio has a slightly higher yield than the existing portfolio, with complete pro formas to be provided in the N-14 filing [27][29] Question: What were the main drivers of realized losses in the portfolio? - Losses were mainly in the equity portfolio, driven by idiosyncratic factors such as expirations of warrants and liquidations of IPO shares [31] Question: How does the company plan to integrate the SWK team? - The SWK team will assist with the transition and new originations during the integration period [37] Question: Will the merger be accretive in 2026? - Management expects the merger to be accretive in the first full quarter after closing [57]

Financial Data and Key Metrics Changes - GigaCloud reported a robust 10% year-over-year revenue growth, achieving a quarterly revenue of $333 million and an EPS of $0.99, marking a new record [2][12] - Net income reached $37 million, representing 11.2% of revenue, with a sequential expansion of 50 basis points [16] - Operating cash flows for the quarter were $78 million, with total liquidity of $367 million, maintaining a debt-free status [16] Business Line Data and Key Metrics Changes - Service revenues declined by 2% year-over-year, primarily due to reduced U.S. ocean shipping and drayage revenues, while product revenue grew by 16% year-over-year [12][13] - The service margin was reported at 9.1%, down 2.3% sequentially, influenced by higher last-mile delivery costs [12][13] - The product margin expanded by 70 basis points to 29.9%, benefiting from lower ocean shipping costs [14] Market Data and Key Metrics Changes - The marketplace GMV rose approximately 21% year-over-year, reaching nearly $1.5 billion, with active 3P sellers increasing by 17% to 1,232 [6][8] - European revenues surged by 70% year-over-year to a record $100 million, highlighting the region as a significant growth engine [8] Company Strategy and Development Direction - GigaCloud's strategy includes M&A as a cornerstone for long-term growth, with the recent acquisition of Noble House serving as a validation of this approach [3][10] - The upcoming acquisition of New Classic Home Furnishings is aimed at diversifying the business and enhancing brick-and-mortar wholesale capabilities [4][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic challenges, emphasizing a focus on execution and diversification to mitigate risks [5][21] - The company anticipates that strategic initiatives from the New Classic acquisition will reflect in financial performance over the next four to six quarters [11][16] Other Important Information - GigaCloud has executed approximately $16 million in share buybacks to date, part of a $111 million buyback plan announced in August [16] - The fourth-quarter revenue outlook is projected to be between $328 million and $344 million [17] Q&A Session Summary Question: Thoughts on additional M&A acquisitions - Management is currently focused on closing the New Classic acquisition but is looking for new opportunities concurrently, though unlikely in the immediate future [20] Question: Impact of recent rate cuts on the housing market - Management remains hopeful for a housing market rebound but emphasizes a focus on execution and diversification to drive growth regardless of macroeconomic conditions [21] Question: Drivers of growth in Noble House - Noble House has been outperforming in both the U.S. and Europe, contributing significantly to growth in Q3 [24] Question: Confidence in Q4 growth - Management is optimistic about Q4 performance, expecting strong contributions from Europe and the original non-acquired parts of the business [26]

Financial Data and Key Metrics Changes - Total investment income for Q3 2025 was $36.7 million, an increase from $35.1 million in Q2 2025, while net investment income rose to $15.7 million from $13.9 million [15][16] - The weighted average portfolio risk rating increased to 2.42 from 2.33 in the previous quarter [15] - The dollar-weighted loan-to-value ratio increased from 29.6% to 31.4% [15] - The total investment portfolio's fair value decreased by 7.7% to $946 million from $1.02 billion [16] - NAV per share decreased by 1.9% to $13.55 from $13.66 [18] Business Line Data and Key Metrics Changes - The company completed 11 investments totaling $128.3 million in Q3 2025, including new investments in Federal Hearings and Appeals Services and DigiCert Inc. [10][11] - The acquisition of SWK Holdings is expected to scale the portfolio by approximately $242 million, increasing exposure in healthcare and life sciences from 14% to 31% [9][11] Market Data and Key Metrics Changes - The debt portfolio generated a dollar-weighted average annualized yield of 16.8%, up from 15.4% in the previous quarter [16] - Total available liquidity was $371.9 million, including unrestricted cash and cash equivalents [18] Company Strategy and Development Direction - The company is focused on both organic and inorganic growth, with a definitive merger agreement to acquire SWK Holdings to enhance its portfolio and earnings power [5][9] - The strategy includes diversifying the portfolio through smaller position sizes and expanding financing solutions [7][11] - The company aims to maintain a disciplined approach to growth while leveraging the BC Partners credit platform for sourcing opportunities [6][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the merger with SWK Holdings, anticipating it will enhance earnings power and financial profile [20][21] - The company expects to see a normal course of prepayments and is optimistic about origination activity in Q4 2025 [26][33] - Management acknowledged competitive dynamics in the venture debt space, noting some spread compression but not as severe as in broader markets [37] Other Important Information - The company declared a regular distribution for Q4 2025 of $0.33 per share, with net investment income of $0.43 per share [24][42] - The merger is structured as a NAB-for-NAB transaction with an estimated purchase price of approximately $220 million [21] Q&A Session Summary Question: What should be expected regarding origination and repayment activity in Q4? - Management indicated that repayments would likely be muted compared to Q3, with ongoing origination opportunities available [26] Question: What is the yield profile expected after integrating the SWK portfolio? - The SWK portfolio is expected to have a slightly higher yield than the current portfolio, with pro formas to be provided in future filings [27][28] Question: What drove the realized loss and unrealized portfolio depreciation? - Losses were primarily in the equity portfolio, attributed to idiosyncratic factors rather than sector-wide issues [31][32] Question: What is driving prepayment activity, and is it expected to continue? - Prepayment activity is driven by M&A activity and companies finding cheaper refinancing options, with expectations for normal prepayment rates moving forward [33] Question: How will the SWK team be integrated into the company? - The SWK team will assist with the transition and new originations during the integration period [38] Question: Will the merger be accretive in 2026? - Management expects the merger to be accretive in the first full quarter after closing [59] Question: What stage of development do typical SWK investments target? - SWK targets growth-stage companies that are generating revenue but are generally pre-profit [62]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $567 million, down $34 million year-over-year, primarily due to increased accounts receivable cleanup of approximately $20 million [11] - Adjusted EBITDA was $243 million for the quarter, reflecting a margin of 42.9%, which was up 60 basis points sequentially from Q2 [12] - Adjusted free cash flow in the quarter was $122 million, representing a 22% margin or $0.67 per share [15] Business Line Data and Key Metrics Changes - Leasing revenues were $434 million in Q3, a 5% year-over-year decline, but only down 1.3% when excluding write-offs related to accounts receivable cleanup [12][13] - Sales in new and rental units increased by 10% year-over-year [11] - VAPS revenues were flat year-over-year despite volume headwinds, while storage portfolio saw a 10% improvement in rate and mix, partially offsetting a 14% volume decline [13] Market Data and Key Metrics Changes - The Canadian market experienced a slowdown, contributing to a revenue decline of approximately $130 million [35] - The company noted that traditional storage business remains weak, while climate-controlled storage units on rent were up 44% year-over-year [50] Company Strategy and Development Direction - The company aims to shift revenue towards more differentiated, higher-value offerings to create consistent results and reduce variability from commoditized lines of business [6][8] - A multi-year network optimization plan is underway to enhance operational efficiency and reduce structural costs, with an estimated net book value of rental fleet units for disposal between $250 million and $350 million [19][18] - The focus is on reestablishing organic growth through local market initiatives and enterprise accounts, with expectations for enterprise accounts revenue to grow approximately 5% year-over-year in the second half [22][23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the need for a more conservative approach to guidance to minimize the risk of negative surprises, emphasizing accountability and credibility [8][9] - The company expects Q4 2025 revenue of approximately $545 million and adjusted EBITDA of approximately $250 million, with a full-year 2025 revenue outlook of around $2.26 billion [20] - Management expressed optimism about the potential for growth in the enterprise portfolio and value-added products, despite challenges in the traditional storage market [23][26] Other Important Information - The company has paid down $84 million in borrowings and returned $21 million to shareholders through repurchases and dividends [16] - A review of real estate positions is ongoing to reduce the real estate footprint while maintaining market coverage, with real estate costs having increased by over 10% per year [17] Q&A Session Summary Question: Inquiry about revenue outlook and underperformance - Management identified seasonal storage components and write-off activities as significant contributors to lower revenue outlook, with the Canadian market also underperforming [34][35] Question: Impact of federal government shutdowns - Management reported negligible disruption from government shutdowns, maintaining enthusiasm for future opportunities in government sectors [39] Question: Clarification on fleet review and potential disposals - Management clarified that the fleet being reviewed for disposal represents about 10% of total fleet, primarily excess units not needed for future growth [44][45] Question: Trends in order book and activations - Management noted that the modular order book is down about 1% year-over-year, with activations showing low single-digit growth recently, while traditional storage remains weak [50] Question: Changes in guidance philosophy - Management emphasized a shift towards conservative guidance to avoid negative surprises, focusing on controllable outcomes [86][87]