Q1 2020 Earnings Call
And then 20 <unk> earnings conference call.
Before we would before we begin I would like to take a moment to remind all listeners that remarks made during this call today may contain certain forward looking statements, including statements regarding our goals strategies beliefs future potential operating results all cash flows, particularly in light of cobot 90 pandemic.
Although we believe these statements are reasonable based on managements estimate assumptions and projections as of today May 11, 2020. These statements are not guarantees of future performance.
Further time sensitive information may longer no longer be accurate as all the time of any replay or listening.
Actual results may differ materially as a result leased uncertainties or other factors, including but not limited to the risk factors described from time to time in a company filings with the FCC.
Monroe capital takes no obligation to update or revise these forward looking statements [laughter] I'll now turn the conference over to take K, Nick Chief Executive Officer of Monroe Capital Corporation, Sir you may begin.
Good morning, and thanks to everyone, who has joined us on our call today.
Welcome to our first quarter 2020 earnings conference call.
I'm joined by Aaron PUC, Oh, CFO and Chief investment Officer.
Slide evening, we issued or first quarter 2020 earnings press release, you filed the 10-Q with the FCC.
First and foremost I hope you in your family's you're hoping shakes.
This is a very difficult time for country in the World, We at Monroe Capital Corporation, BDC and the broader mineral Keppel organization those that have been most affected by the cobot 19 pandemic at Earthwatch best wishes.
We also want to think the break men and women central workers, who put themselves personal risk everyday to help the rustowicz get through this pentelic.
Our employees Rubin shakes Mitchell from we have seen mr. seamlessly navigated the transition to a remote working environment.
Technology has allowed us to make trade close contact with all of our teams and we had been able to maintain highly collaborative approach, which we believe it's very important to navigating the challenging economic environment. We are facing as a result, it depends on mark.
We do not know for sure why do we will be able to return to our offices, but we look forward to the day that we can return to a more normal working environment.
As you all know the uncertainty associated with the Cobot 19 pandemic has created concerns related to the economy as well what specific on anticipated challenges for many companies due to business interruptions and slow down in business activity.
There's some certainty as Clos negative implications across the financial markets, what the S&P 500 down almost 20% in the first quarter of 2020 [noise].
Significant price declines were also seen in traded credit investments as the S&P Oh watch T., a leveraged slowed index was down over 20% at times and finished the first quarter down 14% in market failure.
Uncertainty. That's also caused many of our portfolio companies across our platform to be focused on their own liquidity as evidenced by the wave of revolver draw request that we saw during March.
The direct response to concerns over to cope with 19 pandemic.
I'm, a little funds, including your Mercy. She has met all borrower revolver draw requests we believed that we if appropriate liquidity to meet any future request across all of our French.
Well, we certainly couldn't have predicted the cold good 19 pandemic due to overall concerns the body overheated economy, we have been shifting or portfolios over the past several quarters and all of our microphones away from a higher risks cyclical industries.
That's a result MRC she has limited to no direct portfolio exposure in industries, most affected by the pandemic such as airlines automotive travel leisure oil and gas minerals in mining and energy.
However, the best thing about our portfolio is that we are typically control lender. We are the agents on approximately 88% to for loan investments, we have tight baskets regarding indebtedness restricted payments.
At least two and often several more financial covenant covenants on most all of our deals including maintenance and encourage truss debt leverage.
This allows us to be proactively engaged with our borrowers and their financial sponsors in terms of liquidity.
It also allows us to opportunistically and and reprice, our loans to constantly de risk.
And we risk our portfolio.
In past calls we have discussed the importance of tighter loan documentation in the lower middle market that we play in.
And the larger broad middle market foremost, 80% of all loans are covenant lite.
And our markets, we are dialoguing with our company's weekly and sometimes on a daily basis.
Sure the points, where in most cases, they have to come to watch to incur a P. P. P loan because they don't have the debt incurrence basket availability in their financial covenants.
This allows us to manage risk into many things to enhance a risk and return positions.
Our risk is also mitigated by the fact that we maintained conservative starting leverage and loan to values. When we underwrite our launch an average Monroe age into its loan is between four and four and a half times leverage and below 50% loan to value at the time investments is underwritten and closed.
And while with the benefit of French like I am sure. There were some things we would've done differently and managing our business, we believe that MRC C and the rest of the Monroe capital funds or in a strong position to navigate the current crisis vis-a-vis the markets and our competitors.
And we expect to emerge in a strong position to take advantage of the enhanced returns that will be available as a result of the market dislocation that has occurred.
Also as we discussed in prior calls our arbitration proceeding in the Rockdale Blackhawk matter is now completed.
The award has been issued its final form and will cover more than 100% of our Paramounts on this loan and is consistent with the current fair value on our balance sheet.
We anticipate payments in the coming quarter, which will be a materially positive result for our company.
Turning now to the first quarter results.
We are pleased to report that in this challenging environments. We generated adjusted net investment income of 33 cents per share.
From the adjusted net investment income of 37 cents per share in the fourth quarter.
Declines in our net investment income are primarily as result of also proactively placing three additional assets on non accrual.
In part due to challenges faced by these borrowers related to cope with my team.
As well as a decline in fee income during the period.
Aaron will go into more detail regarding the components of our net investment income and the non accrual as such later in the call.
We also reported a net decrease in assets, resulting from operations of $36.9 million or $1.81 cents per share during the quarter.
Which was primarily as a result of a decline in the fair value of our investment portfolio during the quarter.
As a result or any the on a per share basis fell from $12.20 per share at December 31st to $10.04 per share at the end of the first quarter or 18%.
As we've discussed on past calls, we maintained very disciplined valuation procedures at Monroe.
Which rely heavily on independent third party valuations.
Or observable market prices for 100% of our portfolio each quarter.
The process employed by our third party valuation firms is not just based on individual credit performance from a bottoms up basis, but also includes a top down analysis and heavily incorporates the impact of general markets spreads on a reference.
Yes. The result of this process, our average portfolio mark across the entire portfolio fell by approximately 6.8% during the quarter.
The decline in her remarks resulted in approximately $2.21 per share and net unrealized mark to market valuation losses during the quarter.
We estimate that approximately $1.25 cents.
Per share of these unrealized losses were 57%.
Was attributable solely to the widening of credit spreads during the period unrelated individual credit performance.
Since quarter end LCD first lien loan spreads have tightened by 100 need 108 basis points.
Already retracing around 28% of the Q1 spread widening.
Oh that $1.25 cents per share of and the v. decline attributable to spread widening.
Approximately 71 cents per share were 57% of that was attributable to assets held directly by US well 54 cents per share were 43% of that number was a result of markdowns on assets held in the M. RCC senior loan fund joint venture.
Sure.
The loans and the joint venture tend to be larger.
Upper middle market companies and those loans experience higher price volatility in times of market correction.
Assuming credit spreads continue to tighten as we have seen post quarter end, an absence future permanent credit losses associated with these loans, we would expect a significant portion of these unrealized mark to market losses in both our lower middle market portfolio and the MRC.
See senior loan fund joint venture to reverse resulting in positive NPV adjustments and positive earnings performance in future periods.
Approximately 96 cents per share of the $2.21 per share unrealized mark to market losses were 43%.
Was attributable to specific credits deterioration in certain portfolio companies a significant portion of which is as a result of the impact of covert 19 pandemic on these borrowers.
Recovery of these unrealized losses is dependent on both continued spread tightening as well as improved company performance for the specific borrowers.
Regarding these unrealized losses associated with specific credit performance, while we believe that this quarter's increase an unrealized mark to market declines associated with these select borrowers were exacerbated by the cobot 19 pandemic, our senior management team is continuing to spend a significant amount of time and.
Realizing these credits and focusing on our workouts and collection strategies.
We're very focused on realizing the highest possible recoveries on the assets that we have marked down and we are engaged in several processes to execute on that strategy.
One such process was undertaken with respect to Rockdale Blackhawk in 2019, and we're seeing the positive results that process today.
Please be aware that the Monroe capital organization, that's a 135 employees with many devoted to underwriting risk management and workout strategies.
Periods like this it allows us to bring the very resources to bear on the portfolio that are necessary as many of you know we have a long track record of significant success and managing through difficult economic environments, notably the great financial crisis in 2008 in 2009 include.
In select workout situations with borrowers.
If need be.
We can come in and take over and on a business.
Well that is not our preferred option or outcome, we know how to do it and have done it successfully in the past if necessary, we will roll up our sleeves with our 135 employees and get our companies through this period, we think achieve a good recovery.
The important thing is that we have the ability of experience to do that if needed to achieve the best recovery possible.
For our investors.
We also announced the earnings release last Friday that the mineral management team made a recommendation to our board of directors and the board authorized a reduction in our dividend 25 cents per share for the second quarter of 2020 payable in cash on June Thirtyth 2000.
And then 20.
The decision to make a reduction in our dividend was very difficult.
And is the direct result of the uncertainty due to the coal that 19 pandemic.
It reflects our desire to maintain a conservative approach regarding distributions and liquidity.
Well, we do not have any specific information regarding additional assets moving to non accrual in the future.
Given the uncertainties in the economy. We believe it is prudent to plan for various stress test scenarios that have made the difficult decision to reduce our dividend rate for the first time and our company's history.
We will continue to closely monitor the performance of all of our borrowers as well as overall economic trends activity and future prospects and if appropriate we will adjust the dividend amount in the future. If we see evidence of a sustained recovery, which causes a positive impact on or net investment income.
We believe that by making this dividend adjustments, we are acting decisively and responsibly in light of the uncertainties and challenges we're facing as a result of the current crisis as always we are focused on the long term interest of our shareholders and we'll continue to operate with caution.
As we look ahead, while there was a high bar today for investing in new capital. During these uncertain times and our focus in the near term will be and reducing our debt leverage as Aaron will discuss we have seen many attractive opportunities to invest.
Our focus will be to continue to make new investments in portfolio companies and very compelling risk return investments in new situations on an opportunistic basis, just as we have done as a firm in 2010 in 2011, following the great financial crisis.
Investment spreads have widened considerably in terms of leverage has improved as well.
Im RCC enjoys a very strong strategic advantage in being affiliated with a best in class middle market private credit asset management firm with over 9 billion.
Dollars and assets under management and over a 135 employees as of April 1st 2020.
Monroe capital will continue to devote whatever resources are necessary to generate acceptable levels of adjusted net investment income and improve and they'd be performance of MRC see going forward.
I'm now going to turn the call over to Aaron was going to walk you through our financial results.
Thank you Ted.
During the quarter, we funded a total of $71 million and investments consisting of $41 million in loans to new borrowers and $30 million in new fundings to existing borrowers.
Including 21 million in revolver draws and 9 million and add ons and delayed draw fundings.
As we discussed earlier in the call many of our borrowers drew on their revolvers in order to increased liquidity on their balance sheets due to the uncertainty related to cobot 19.
This portfolio growth was partially offset by sales and repayments on portfolio assets, which aggregated $53 million during the quarter, including four full pay offs, one asset sale and partial sales and paydowns.
All investments in new borrowers were made earlier in the corner prior to the market dislocation and spread widening that occurred late in the quarter related to the pandemic.
At March 31st we had total borrowings of $416 million, including $192 million outstanding under our revolving credit facility $109 million of our 2023 notes and SBH debentures payable of $115 million.
We are currently mostly focused on our portfolio and we're not excess we're not expecting material new investment growth in the immediate term any future portfolio growth revolver draws are advances to existing borrowers will predominantly be funded by the availability remaining under our revolving credit facility subject to borrowing based capacity and the Uninvested cash held in our SP I see subsidy.
Larry.
Turning to our results for the quarter ended March 30, Onest adjusted net investment income a non-GAAP measure was $6.8 million worth 33 cents per share a decrease from the prior quarters, adjusted Eni of $7.7 million or 37 cents per share.
These declines were partially offset by a reduction in incentive fees. As these fees were fully limited during the quarter as a result of the total return limitation in our shareholder friendly advisory agreement.
LIBOR rates were volatile during that period and three month LIBOR as an example fell from approximately 1.9% at the beginning of the year to 1.4 or 5% at March 31st during March. However, the three month LIBOR rate fell to a level as low as 75 basis points, 0.75% as even lower than that today.
We maintain LIBOR floors in nearly all of our deals which tend to be at least 1%, which insulates our portfolio from narrowing spreads in periods, where LIBOR falls below our floors.
As of March 31st our net asset value was $205.4 million, which was down approximately 18% from the $249.4 million in net asset value as of December 31st.
And maybe per share decreased from $12 in 20 cents per share at December 31st to $10.04 per share as of March 31st.
We believe all things being equal that a significant portion of these valuation adjustments could reverse over the next several quarters, if the general level of market spreads continues to tighten.
Looking to our statements of operations total investment income decreased during the quarter, primarily as a result of a decrease in interest income due to additional nonrecurring nonaccruals as well the decrease in fee income as last period included a success fee related to our investment in tempering gaming $854000 of which was not previously accrued and was realized upon the pay.
Of our investment during the fourth quarter.
And a slight reduction in dividend income from the SLF during the period.
During the quarter, we placed three additional positions on non accrual status, including the last half Transhipment Scipio our investments in Sai and Blue stem.
While total non accruals are now approximately 7% of the portfolio at fair value. Once the expected proceeds are received on Rockdale Blackhawk, assuming all things remain the same at no additional non accruals are added our non accruals would fall to approximately 4.3% based on fair value.
Moving over to the expense side total expenses for the quarter decreased primarily driven by the elimination of incentive fees in the quarter.
Base management fees also declined slightly primarily due to the lower level of assets at fair market value as a result, a fair value adjustments to the portfolio during the quarter.
Interest and other debt financing expenses also declined during the quarter, primarily as a result of lower average debt outstanding and reductions in LIBOR during the quarter.
At the ended the quarter, our regulatory leverage was approximately 1.47 debt to equity an increase from the regulatory leverage of nearly 1.2 at the end of the prior quarter.
While this is higher than we would prefer it has not unanticipated as a result of covert 19 related issues. The increase in regulatory leverage is as a result, a fair value failed fair market value adjustments in our portfolio as well as a significant amount of unanticipated revolver draws during the period.
The current level of regulatory leverage is higher than the targeted leverage range. We have guided you to on prior calls as such our near term focus will be on reducing leverage rather than portfolio growth as we discussed earlier in the call market loan prices have begun to recover which should reverse some of the fair value marks on our assets.
This coupled with normal course principal amortization and possible repayments on recent revolver draws could contribute to future de leveraging of the portfolio.
As of March 30, Onest, the SLF had investments and 63 different borrowers aggregating $217.2 million at fair value with a weighted average interest rate of approximately 6.5%.
The SLF had borrowings under its nonrecourse credit facility of $150.7 million and $19.3 million of available capacity under this credit facility subject to borrowing base availability, we do not expect to significantly grow the assets held in the SLF at this time.
And the SLF continues to be in compliance with all covenants in its credit facility as discussed earlier the loans held in the SLF saw significant unrealized mark to market write downs during the period as a result of market spread widening due to the pandemic.
Regarding rockdale Blackhawk as we have just discussed on prior calls.
There was a pending private arbitration of an accounts receivable claim with a national insurance carrier with a material amount in dispute that claim serves as collateral for in the MRC see loan to Rockdale Blackhawk.
The underlying arbitration proceedings were completed in mid August and final trial briefs were due and submitted to the arbitrator in late September an interim more award was issued in January 2020.
Just recently the arbitrator issued a final award, which updated the interim award to include certain attorney's fees interest and other amounts the final workers very positive and should result in a substantial recovery from our M. M RCC and the other lenders to rockdale far in excess of the cost basis of our outstanding loan balances due the Len due to the lenders right.
To receive excess proceeds pursuant to the terms of a sharing agreement between the lenders and the a state if there any updates that could have a material effect on the value of the position either positive or negative we will update the shareholders at the appropriate time.
Another portfolio company to Jays has been in the news recently as it recently filed for bankruptcy protection in Florida.
To Jason's a chain a fast casual gourmet deli restaurants down in Florida as a result of the cobot 19 pandemic their restaurants have been closed for dine in service and their revenues have been severely impacted as a result, and the bankruptcy filings, which are public. The company has indicated that they believe our loan is within the enterprise value of the company and we anticipate receiving adequate for.
Section payments on our two days mound, given our overcollateralization position in the bankruptcy proceedings.
I will now turn the call back to Ted for some closing remarks before we open the lines for questions.
Thank you very soon.
In closing, we find ourselves in an unprecedented economic environment, which is likely to cause rising default rates and the potential for an extended recession.
Despite these challenges we remain optimistic that we can weather the storm and emerged stronger as we did as a firm after the great recession of 2008 in 2009.
The cure optimism is our conservative underwriting.
Purposeful defensive portfolio and our access to a large and very experienced portfolio management team with experience managing through multiple economic cycles workouts.
We have a defensively positioned portfolio with solid loan documentation and a lot of control over our own destiny in terms of risk management.
As such we continue to believe that Monroe Capital Corporation provides a very attractive investment opportunity to our shareholders as evidenced by the substantial amounts of recent insider buying in March by members of our board.
Our extensive management team and the senior management team at Monroe capital.
We are committed to navigating successfully through this economic crisis that are confident that we have the skills and experience necessary to manage through on behalf of all of our lending partners bondholders JV partners and shareholders. We believe that I'm RCC is affiliated with a best in class external manager.
Sure, which has decades of experience 135, highly skilled employees and approximately $9.3 billion and assets under management, which provides us the stability to steer the ship toward culmer waters.
We would like to thank our shareholders for their loyalty and confidence in us through these difficult times.
I would also like to thank the entire team at the mineral capital organization for their hard work and dedication.
Thank you for all of your time today and this concludes our prepared remarks im going to ask the operator open the call now for questions. Thank you.
Thank you, ladies and gentlemen, as a reminder to ask the question you will need to press Star then one on your telephone.
Withdraw your question press the pound cake.
Again I want to ask the question. Please standby, while we compared to Q and a roster.
First question comes from the amount of Bob Napoli with William Blair.
Okay.
Thank you hi, good morning, Ted and Aaron.
Good to hear your voice and you are doing well.
Appreciate the moves you announced here this morning and.
They are appropriate I guess at the biggest question.
Artist question to tell is the marks that you've taken.
On the portfolio and the limited the economy, the economic trends have been how.
And are you.
And I know, it's impossible to forecast the next several quarters, but how confident are you in the current marks that you have excluding the spreads.
Changes in spread to credit quality of the portfolio, how many of those companies.
You have no are on a watch list and where it may be not there.
Three months ago, because the co bid.
I guess some commentary around.
Your comfort there would be helpful.
Yeah. Thanks for the the question Bob That's that's a great question, we like all.
Soon we hope like all Bdcs attempt to do with in depth internal analysis and review each of our marks.
Every quarter.
We look at 100% of our portfolio, we have outside third parties that come in and look at 100% of our marks not review management Merck's not review, 25% of our portfolio on a rolling basis, but 100% of the portfolio top to bottom.
So from a credibility standpoint, which which is all or an ROE one of our guiding principles, both not only for a publicly traded bdcs, but for also are privately managed funds.
We try to do the best we can and we bring in outside parties to do the best they can to provide us with.
The most accurate information we have at the time.
We took some significant marks this quarter.
Hopefully as time goes on.
Some of those marks will turn around.
Some of that was 15 that 57% of those marks were based on spread widening and.
In some sectors that were beyond our control as a company so from our perspective.
Management, we're hoping that this thing this crisis cools and within another quarter or two goes away and we get back to businesses as usual, but we feel that we've done the very best job, we could under the circumstances with the information we have taken these marks Aaron you have anything to Ted.
Yes, just quickly to the other part of your question, Bob Weve been pretty aggressive in rewriting our credits based on their impact of co bid and how that it implies on a credit rating basis.
Movements that need to make so we've definitely seen an increase in three rated credits as a result of the the pandemic because some of our borrowers are more directly affected than others and so you'll see when you look at the aggregation in the 10-Q that theres more three rated credits than they were last period.
And that's what you would expect and you know we're very carefully looking at all of the deals in the portfolio across the entire Monroe platform.
Credit teams are meeting.
Multiple times a day on every deal, particularly the ones that are impacted by coded and.
The one of the real benefits of having real scale in our investment teams is that when the new deal activity is left is is lighter which it is now.
Due to low M&A activity, we have so many people available to make sure. We're as on top of this portfolio is any from could be so we feel really good about where we stand with regard to being able to manage through the crisis.
Thank you and just one follow up question.
Congratulations on Rockdale, that's a great outcome, but.
Obviously this is a probably a graded environment to make.
Good loans.
At attractive terms and I know you talked about not growing the portfolio.
Hope to get I guess to recovery from Rockdale, but.
How many what do you feel like the the opportunity is to make new loans.
Yeah.
In this environment given your current leverage.
You know me, Bob as well as others, we're going to play offerings here, we did it after the crisis and we're going to do with now we see some great opportunities across the firm we have funds that we've raised.
For this very purpose, we've got plenty of room across the firm and we're going to do everything we can to create some availability at them RCC and as Aaron mentioned some of this is going to turnaround we're going to get our leverage.
You know, where we want it to be again, but for the the covert pandemic.
With the spread widening and everything else, we'd be in much better shape, but again.
Post quarter, that's already started to reverse.
So we will be playing offense in this environment and we will be taking the best opportunities, we can't in the market and generating return for our shareholders.
Thank you appreciate it.
Thank you.
Our next question comes from the line of Tim Hayes with B. Riley Your line is open.
Hey, good morning, everyone. Thanks for taking my questions have been doing well.
My first one here just a follow up on Bob's.
In the pipeline, what you're seeing today, what to leverage multiples and spreads and look like and are there any other characteristics that are a little bit different than what kind of normal pipeline looks like based on the circumstances.
Yeah.
Good question, if you look across the environment just on the publicly reported lifts to data.
There's been a couple of hundred basis points a spread widening.
Across the more broad syndicated and traded names.
No we're seeing an hour markets.
Deals that were getting done at five or 550 now at 800.
Ill 850 O 900.
No. We're quoting term sheets today, you know 800 to a 1000.
Deals in terms of rates.
We're seeing that.
We're seeing leverage that used to be in the fives down in the low fours, sometimes in the mid threes. So if you look at what we're seeing in a pipeline basis, we're seeing leverage.
Three to three and a half turns to four turns where we used to see five to six turns and the biggest opportunity I think that we have which is unique to the mineral platform. So we have a substantial opportunistic financing business, which is a different strategy that lending to PE firm.
Some leveraged buyouts.
Our opportunistic business is a combination of secondaries purchasing business, where we're acquiring good performing loans at less than par substantially less than power in the eighties very often.
We are doing asset based asset backed type financing where were lending against pools of performing assets. We're doing bridge type lending against bridge situations, sometimes real estate, sometimes other assets.
And we're doing portfolio and a b type loan purchases and portfolio acquisitions. So we've got substantial capital available for that and that is probably the lowest hanging fruit today in terms of generating double digit yields for our investors as the south.
Opportunistic strategy that we've been running for the last 10 years. So we've been looking forward to a time when the economy pools and we can start deploying some alternative strategies.
To generate returns for investors.
I was just hoping that didn't cool this much.
And this fast, but I think that you're going to see Monroe come out of this very much stronger as an organization both our private funds as well as MRC see in our high net worth retail funds just as we did after the financial crisis in 2008 in 2009.
Mhm.
Thanks that Ted.
It's a good point and can color.
Yes.
Update on kind of credit trends, so far in second quarter. I know you said that in one Q about over 97% of the portfolio was current but how is that trended scheduled payments in the second quarter.
How many companies would you say in your portfolio of requested some type of forbearance and how have you satisfy those requests.
A good question I will tell you that Ah I think we've done a really good job in Q1, you know over our companies and deal because of that.
We've had an exceptionally high rate of a performance.
I think it's too early to tell yet in Q2.
What happens.
Because.
So were we early in the quarter and the effects of this covert 19, I think are really going to play out in Q2.
For many companies as I mentioned in our prepared remarks, we've been extraordinarily lucky and I think some of that luck was just based on.
Good historical practice, and we pulled out our playbook that we ran and in the great financial crisis, and I'll wait till nine we've avoided industries.
Significant manner that are going to get decimated in the next quarter or two and those are autos airlines cruise.
Leisure.
Health club.
Type things oil and gas minerals mining energy and if you look across you know the the spectrum of private credit and other bdcs, you're going to see a drastically different type of portfolio winter RCC and in the Monroe organization.
In general because historically.
We haven't had the expertise to London's into somebody's specialized energy industries and.
We've stayed away from aviation, we stayed away from autos, because we didn't like what happened the last time when the economy got overheated.
So all things being equal.
We should come out of this and much better shape.
Then or.
And our peers.
And as I mentioned in our prepared remarks, we're not afraid to own companies I mean, we've got a number of companies that we've taken over.
Historically, and we've generated some pretty darn good results by replacing management teams, bringing some of our resources to bear some of our professional staff some of our outside professionals consultants.
Combining businesses.
You know we can do a fair amount, we've got 508 companies our portfolio across the firm. So that's 500 dates CEO CFO is boards of directors professionals context, so when we take over a company or we put the Monroe brands to bear in a situation just like we do with Rockdale Blackhawk and that was.
That was a hospital if you'll recall that was closed.
It was a closed hospital that basically went on a business we brought the resources to bear necessary to file a bankruptcy to purchase claims and that bankruptcy to acquire the entire rights to ER to manage the credit.
Out of that bankruptcy and then we proceeded against what we felt was a a party that wall and the company a one of the insurance carriers and we received a substantial.
Recovery on that Weve excess power of our of our low and we've got a number of other situations that are in the portfolio that we're proceeding now with similar type strategies and you know I would expect.
Once this crisis passes to once again to be the much better position vis-a-vis the markets and the portfolio.
You know versus other private credit managers.
That's helpful and Tad and Yag Congrats again on on a successful outcome there with Rockdale definitely.
Very very positive in demonstrates the resources you guys have there.
But you know just poking on the kind of the part B of that question there a little bit more was yeah. I'm. Just curious have you done anything like reducing covenants or deferring principal or interest payments or anything to satisfy.
Forbearance request at this point and just trying to maybe size the magnitude of that versus the company that haven't added request that at this point.
Yeah listen we're we're dialoguing as I mentioned in her prepared remarks with every company to date, we've been lucky and as I said since we're not in the high risk industries. This hasn't been something that you know across the portfolio has been a.
A significant undertaking like others were mostly in business services weren't software were 90 were in businesses that are in business, which is good.
We look at this that if we can be a solution provider right now that's our that's our number one goal is to stand up and protect our companies are or management teams are private equity sponsors. So we're there is more of a support system for them right now as Aaron mentioned in his remarks.
You know, we've we've been able to fund revolvers for companies and you know what's kind of insight I told a lot of the company's as kind of silly.
Companies were taking revolvers, where they did at Needham just because they were afraid that the lenders weren't going to be there to fund capital requirements in the future.
We funded everything once our borrowers saw that Monroe was it was a strong counterparty here, we're actually seeing a an interesting trend over the last two weeks, we're seeing a revolver usages start to come down again not go up.
They peaked and and we're heading down and I think that's going to be a continued trend in the future, which is going to help us in a number of fronts.
Well as Aaron mentioned with a.
As we get back on side with where we want to be with our target leverage sort of specifically answer your question.
We feel pretty good that we're dialoguing with our clients were supporting amount a revolver basis, but.
Across the portfolio, we're not seeing ramp and needs to to make drastic changes here and that's all function of where we are with the assets we have.
That's good color. Thanks Tad appreciate it.
Then just one more since you brought up the revolvers there.
Just a little bit more any context or an unfunded commitments right now how much of unfunded commitments is approved and kind of readily available for borrowers to drawn down on versus if any of that is.
Achieved banner milestone based or or need approval.
Well I will tell you I mean, I'm going to make a comment on the turn it over to error for further but I will tell you that we have reserved to 100% of all revolver capacity [noise].
Our clients.
And unlike others, we run our business on a much more conservative basis.
And we make sure that we have revolver commitments now that said.
We're probably.
We'll probably only gets a 50 or 60% in terms of.
In terms of our usage on the revolver isn't that right as I also said, we're coming down now because now that companies know that they've got the ability to to contact Monroe and Monroe's will fund what do we need to there's no reason for borrowers to borrowed on the revolver.
Money in bank accounts that we control, where we have liens on.
Yes, excess interest, but they don't need to pay to think about that's why I told you know a lot of accompanies it's silly, we're not going anywhere I've got $9.3 billion.
Role as an organization, we're not going anywhere were unlike the banks that that.
Folded in the less crisis were strong from a from liquidity standpoint, so to borrow money. It took down revolvers that you don't need and pay US interest is not a really good use of a thought process on the air and you have any other thoughts.
Yes, just to your question around.
Milestones and things like that for the delay draw most of the committed delayed draws are set up for a very specific uses a lot of them are things like acquisitions, and so as you might imagine M&A activities pretty light right now because most companies in the by someone in this market would need to put up substantial equity and it's a hard thing for sponsors to want to do right now until they saw.
Seeing things normalize so I think all of our total unfunded amount, it's something like $22 million delayed draw a lot of that we would not expect to fund at least in the near term and then the remaining I think it's around $18 million is remaining.
Unfunded revolver.
You know availability, which is subject to covenant compliance and things like that is available there. So that's that's how we look at it.
That's helpful. Great guys, well, thanks for taking my questions and stay well.
Thank you Sir.
Thank you. Our next question comes from the line of Chris York with JMP Securities. Your line is open.
At that pace.
A couple of questions to begin and senior loan fund.
And your prepared comments that you are in compliance with outlet credit facility.
But can you just update us on those financial covenants with cap one.
Yes, I mean, they're pretty standard things, Chris I think the thing that most people would be concerned about in a credit facility is the mark to market aspect of it that's the that would be in a market like now would be the the number one sort of triggering concern as if you had mark to market calls on a fund like that that's pretty highly leveraged that unfortunately that credit facility is now.
A pure mark to market fund there are certain things that have to occur in the underlying borrowers to allow the lender there to look at a revaluation something called revaluation events. After the SLF credit facility and that's what would a that's what would create.
The any issues and I find it would be if that were going to occur and so far we're pretty good shape and weve modeled out. Some you know obviously gone through all the needs and looked at what could happen and model that out and between all of that we feel like we should be in an animal situation there, but we continue to monitor it.
Okay. So just to be clear no minimum equity covenants are in that facility.
There are other covenants I'd have to get back to you on the specifics I don't have in front of me, but is that that facility just to be clear as non recourse to the parent. So there's nothing that that creates a scenario that would come back to the parent, but clearly we've got significant equity in the I saw that we want to preserving and we expect we'll be able to do that but I'd have to get back to you on specific.
Evidence at the SLF credit facility I don't have among some of it.
Okay, and then two follow ups home how much on funded commitments exist in the at the left.
And then secondly, do you expect to fund your remaining equity or do you expect it to be drawn.
And that's all.
Yes, so we don't have a lot of unfunded commitments in the I saw that I don't have the exact number in front of me, but be very small we don't do a lot of revolvers and do a lot of delayed trason, there's a handful and so there isn't a lot of unfunded risk in in SLF.
We do still have the ability to call some capital in order to.
In order to deal with any issues that might happen in that fund.
There's still unfunded commitments in terms of equity under the original commitment, but at this point Theres no current expectation at this moment that we would need to fund and who knows.
And right now we're not growing the assets in there so and we are believe it or not seeing from time to time natural payoffs in that fund even in this environment. So so far so good I think there's there's definitely less than a million in revolvers at the sell them I think it's about 800000 or revolvers and maybe something like.
Under 2 million a delay draw as I think and as I said those really jobs are very similar to the ones that we hold on on the balance sheet in terms of some of the specific uses of proceeds for delay draw most of which is pretty drawn and right now.
Very helpful. If <unk> is the details would be very small there, but just wanted to confirm.
And Ted I I heard your comments about wanting to play offense and now you have the desire to be opportunistic, but how can grow or MRC see participate in that from a funding perspective, given your leverage is above your target and then marginal capacity could be needed to support the portfolio.
The company.
A good question.
We're is we mentioned in her prepared remarks, Chris.
As a firm we're going to be playing offense, we've got lots of different pockets of capital to do that.
Im RCC, we're very focused on.
Making sure that to you know, we're taking a conservative approach to managing or liquidity to managing our leverage ratios.
We think that based upon the things that Aaron mentioned.
You know the spread widening changes the valuations of assets coming down we're going to seize unnatural progression of a reduction or leverage rates and then.
As we continue to get pay offs, you'll obviously, we're going to recycle capital.
Thats, a normal occurrence for us and.
We're going to do the best we can to generate.
The increase or we risks deals every time, we we talked to sponsors or companies about waving covenants and about.
Making modifications to covenants.
That's an opportunity for us as a firm to on a continual basis, you know, we risk and reprice the portfolio and you know, we're taking advantage of that opportunity to make sure that were a report portfolio was reflecting current market conditions across the board when companies and sponsor.
So we're asking us to to assist them.
Okay, and just to reiterate what I thought I heard so paydowns would be the principal funding mechanism to be opportunistic and then alternatively, no other capital planning or exaggerated.
Events would drive the funding.
Not today not today, our yield again, which were always looking at thoughts here and we're looking at taking advantage of as market conditions. When we can.
But you know right now it stay the course, it's what our business its be conservative you know you look and see what we've done here in terms of.
Kelly relations, probably I think we've taken a conservative view here.
The two one on liquidity on our plan going forward, we've taken a conservative view on.
What we're doing with our leverage number three on our dividend to action, we've taken a very conservative view again to make sure that we're acting decisively we're doing the right thing by our shareholders and we're preparing for the long term.
This opportunity is in a matter of days or weeks. This opportunity is going to last awhile and we want to make sure that RCC is positioned to be the.
The price maker.
And to be the affirmed that can take advantage of this the best in this lower into the middle markets. This is a very.
Fragmented markets and and when you look across the board Monroe MRC see has always been one of the strongest players in this part of the markets.
And we're making sure we're taking whatever direction, we can to ensure that immersed cc will continue to be one of the very strongest players in this segment of the merger.
Great and those are all good points.
Moving on I, just couple housekeeping items in regard to the new non accrual loans. When did you stop accruing interest and then how much interest with not recognizing the quarter from those new accruals.
Yes, so when we announced to you that loans are going on non accrual for the quarter. They go all the way back to the beginning the corridor. So it's not that.
As a part of the quarter. So the in other words the first quarter will not include any income from the new nonaccrual assets that we announced.
Got it very helpful. Okay.
Yeah, I don't have a specific number for each of the three in front of me in terms of the amount of interest that would have been recognized but there's there's nothing you need to back out of the first quarter because it wasn't recognizing the quarter for those.
Yes, my thought processes that he stopped accruing maybe a march right. Yeah, we don't market, we don't do it.
We don't do it that way, we we just take it out for the whole corridor.
Okay.
And then on two Jays you addressed it there but is that investment still accruing interest today.
It's still accruing and still paying.
Yes, that's never gone non pay just a Christmas of matter in the way that works in bankruptcy I don't know from those that may not be is familiar with bankruptcy is your loan is either.
Deemed to be.
Collateralized and bankruptcy or not if its collateralized bankruptcy or quote unquote over secured you're entitled to adequate protection payments would trigger interest payments if its deemed to be not adequately secured vendors and adjustments.
We expect a two jays to continue to pay us we feel where we're in a good leverage position and were within the enterprise value and the company has stated that when they're filings and in the court proceedings.
Just to be clear on that Chris a lot of times in the bankruptcy there is a bit of a fight between the a state and the senior lender over this issue and there has been no fight on this particular.
Situation. They the company Didnt, even ask us they absolutely said right out of the gates that they believe we were over collateralized, we intend to keep us correct.
Got it okay very.
Very helpful. I, just know some bdcs have different non accrual policy, so recognizing that to jason's opinions as helpful. Last one is just on Cpk. No you took a mark there I think to love to investment another peer put put it on non accrual as an abundance of caution.
No it's broadly syndicated loan.
You feel pretty good about your evaluation, there and I know, there's a lot uncertainty over the next.
Couple of quarters, but.
Relative to how others I'm thinking about it just curious on your update.
Yeah look I mean, I think we'll continue to look at it very carefully going into the the successive quarters and you know we determined that we think that there is high probability of us not receiving interest we will make the same determination I, we havent need that determination as of March 30, Onest, but.
We're watching it closely we halted across a few different funds and we're keeping very close watch on the situation and it's it's one that can be real careful that going forward in terms of across steps.
Got it on that little data point on having it other funds is helpful too from a haven't potential more interesting. So that's it for me. Thank you guys and be well.
Thanks, Chris.
Thank you.
Next question comes from the line of Chris Kotowski Oppenheimer. Your line is open.
Yeah, if you actually kind of got it my question a little bit on the last one.
I was just kind of when we see these.
Triangulating back and forth between where we see the marks you see right, California Pizza kitchen at 50 cents and form and mills at 60, and you know often you see the non accruals that similar kinds of marks and and if you said you put things on non accrual on a proactive basis I guess what what.
Philosophically makes you.
You know some of these other heavily mark names on accrual status is there just visibility to them.
Interest to interest payments there.
Yes. Good question, so like in a normal environment. There is definitely some correlation between something being marked down.
Considerable amount and it'd be on nonaccrual status and that's definitely a signaling effect that we also look at and we re examine every name and we do them independently. We look at individual credits and how they're performing and think about non accrual and then we also look at where the marks are coming in to think about non accruals. So it isn't it isn't lost enough that you might look at them.
Like form and they'll say marked in the sixties, you know it should that be on accrual status or not but would you have to look at as we're in an environment where assets that aren't performing you know as completely performing I quality performance. During cogan are taking pretty aggressive marks a right now even if there is some visibility that they will improve in the form and mills as.
Really good example, I mean.
Coming into Coburn 19, Corman Mills is seeing some significant improvement in same store sales is outperforming its budgets.
But you know it was forced to shut down all of it stores as a result of Covance and so that's the issue with that company, but given the nature of what they do it's a pretty counter cyclical business historically at that it's a company thats done really well in times of economic cycle. So when those stores reopened that company should do really well and so we do think and we believe that them.
So there.
Should not be permanently down in this level and should recover once the stores open up because of the nature of what that company does which is low price off price retail.
Right, Okay, and then unrelated issue.
Can you just remind us again, how the limitation on on.
On your incentive fee works, because we're reading the definition of the pre incentive fee income and were it.
Is the.
Definition of the incentive fee does it include the base management fee or does it.
Exclude that.
So the 12 quarter look back.
Right I will try my best with this description and then if you need to follow up we can do that because it is complicated so our part one okay. The calculation, which is based on Eni.
Is structured with this shareholder friendly, causing has a limitation in place to ensure that we don't pay a significant amount of incentive fees based on Eni during periods. When it has been a significant amount of realized or unrealized losses on the portfolio.
Right. So right the way it works is that the part one to 10 feet are limited to the extent that our incentive fees for the last 11 quarters exceed 20% of GAAP earnings excluding just incentive fees.
For the last 12 quarters.
So to the extent, we have an unrealized losses like we've had here, it's going to limit our incentive fees fully until we earned a lot of that back but it looks that 20% of GAAP earnings excluding the incentive fees. That's when it compares to okay.
Okay.
So when I got.
Alright, Thanks, that's it for me.
Thanks, Thank you.
Our next question comes on the line of Christopher Nolan with Ladenburg Thalmann.
No.
Hey, guys can you give us an indication as to where you think the leverage ratios were going down I mean, what's your where are you targeting the 1.25 or lower.
Yes. Good question, Chris I mean, I think right now, we're just targeting lower than where we are I.
I think we'd like to see ourselves below that kind of 1.31 point you to 1.3 level that we talked about fast I think so that's a reasonable level for us to get to and a you know we'll see how we get as we move along we'll see how the market deals everything we do is really based on our view of the market, where the opportunities lie and what the risks are in the portfolio. So.
You know getting the rockdale money and hopefully coming up here in the next couple of months will help you leverage us a little bit and then we'll take a hard look at where things stand in the marketing with our names and where we see risk and we'll make a final decision about kind of where leverage should be but as a general matter I think.
I mean, one two and one three still seems like a reasonable place to be particularly.
When a lot of are reasonably good quality answer mark low and we think will recover and that would argue that we don't need to be it even lower leverage because there's so much mark already in the names and so some of this is really artificial.
But we have to look at it because it's it's based on fair value today.
And earned on the credit facility, what sort of advance has the advance rate changed at all.
In terms of leaf value the fair market value of the assets up against the borrowings.
So the advances are based on fair market value. So the advances themselves don't change the only time that advances change is that in terms of how you categorize an asset so.
With certain performance an asset that was historically counted as a first lien asset might have a portion the leverage goes up in the underlying asset might have a portion thats considered secondly, and then you do a bifurcation of the asset into two buckets. When you look at advance rate, but the interest themselves are advance rates on fair market value.
So obviously, it's fair market value comes down the amount that is advanced comes down.
In terms of the borrowing base, but that doesn't mean that the advance rate moves.
Okay. That's it from me thank you.
Thanks, Chris.
Thank you.
Our next question comes from a lot of Robert Dodd Raymond James Your line is open.
Hi, guys and I got everybody's healthy.
First a housekeeping one then a couple of questions on on them.
Black hole coming Ted in your prepared remarks, you expect.
That settlement to be paid in I think the coming quarter does that mean to second quarter.
Just for clarity.
Yes. Good question, Robert first of all I'm glad you're safe and everything is good.
I think it'll get paid in the in Q2, because our plan right now we know our lawyers are telling us that will discuss money should be in in Q2. So that's what we've been planning for.
Got it thank you and then on.
The question.
Can you give us any color on what percentage of your portfolio is a tap monthly infest pay up as its quarterly and all those who how many of them made the payment in April.
Oh.
Good question I will tell you that most of most of our portfolio is quarterly pay I don't have the specifics you know in front me now, but we can certainly get that for you, but we set up our system.
Again across our entire firm.
Mostly quarterly pace and as Aaron mentioned in his prepared remarks, I mean, we've got a 97% or a higher number paid or our March.
Payments, so we anticipate.
We don't anticipate.
Hopefully much fall off but it's early yet this is a we're in may we've got another six weeks or so to go for the into the quarter.
I can tell you that were dialoguing with our companies on a regular basis, a weekly basis and because of the loan documentation that we have with companies in this spot or the market.
You know, we're able to get real time information.
Very often a weekly financial information from the companies and you know very high percentage of our companies also.
Applied for and were successful in getting the PPP loans. That's another thing that you over sometimes people overlook but.
And our segment of the market.
Because of our infrastructure you know we were very very active and.
In helping in assisting our companies with this whole PPP program and that's going to I think pay dividends.
To us in more ways going Wharton with Seo stability and liquidity as well as.
Performing or borrowers performance.
Got it got I appreciate that color. Thank you and one more if I can on on.
The the recovery process I mean, that's going to be recovery processes. As we go through this obviously I mean, how are you going to allocate or what's the approach to maybe allocating time it can be quite an intensive process and in some cases, obviously it knocked out very good recovery the pick two people. If we if we go back not so good.
Recovery you spend a lot of time on that one so how's the the allocation of resources going to be decided.
If it's somebody sleep set in the portfolio, so that bad, but we don't know how things are going to attend so how how is that allocation between.
Headcount your time on some except for being allocated across the more stressed portfolio right now.
Ah that's that's a very good question.
I will tell you that one given the size of our platform. We've got some inherent advantages and and not only that we've learned a few lessons over the years and sometimes the.
The best lessons you learn our from.
Less than positive outcomes.
Picture people transaction was not a Greek result for us we put forth. Some some efforts into that and we believe that we were making progress and we didnt have the right people in the right spots there and some lessons at the time this time it's different.
We have eight people that we brought on to the from over the last three four years that are solely focused on a workouts restructuring equity optimization, we have an equity group now.
The firm.
That's led by filling in bread Bernstein who's.
It was an old guy like like the rest of us and he's been in the business for over 30 years and.
He has a team of eight to people.
That are all 15, 20 year experienced people of buying companies management companies running companies and.
No. What we've done is we've basically take an hour or high risk companies and we're monitoring them two different ways. One on behalf of universal lender, but also to as an equity owner because these are businesses that we could end up owning.
We we looked at Rockdale. The same way, we went into we bought up the debt there with the intention of either operating or.
Filing and make the claim in that instance, we chose to make a claim.
No other instances.
We took over companies and I'll tell you one that we have in our portfolio. It's a maintenance repair operation, which is a you know one airline company that does maintenance and repair.
Took over that company years ago, with the broader Monroe capital platform.
And we are able to restructure that bring people in run that business and.
No it's not part of the RCC portfolio today, but what it is a situation where we brought the rate resources to bear and that company is going to get sold for a high multiple of earnings so.
With respect to immerse cc specifically.
Most bdcs are covered the lower part of the middle market don't have you know the resources Pete.
Equity a workout a dedicated work out people so.
The good news with them RCC, it's getting the benefit of being part of the literal platform all of the infrastructure all the resources to run those companies to pick them over.
If we need to and.
To manage those processes out now so that.
We can focus on our car or day jobs up running them RCC and doing the right thing when a conservative basis for shareholders.
So I appreciate that color thanks to take healthy.
You too but.
Thank you.
Our next question comes from the line of Troy Ward Management. Your line is open.
Thank you and good morning, Ted and Aaron and thanks for the call and hope you're a theme is staying safe and healthy.
First we'd just like to commend you on the detail you provided the breakout of the unrealized marks related to credit versus spread widening your where that's extremely helpful for us to understand the move and Avi and what we might expect in the in the future Nick coming months in quarters.
And as you as you correctly laid out you know the spreads tightening and some amortization in some portfolio cash flow sheet season natural occurrence I think Ted as you used to get back into a lower leverage perspective, but I know the follow up on but I feel like a lot of questions have been revolving around is really kind of the ability.
To put attractive capital out in the near term without pushing that leverage back up so Ted if you could speak to kind of the conversations you're having maybe directly with the company's but maybe the companies and their ability to access the got any potential government programs that could help because you're on the lower side, but also the private equity ability or willingness to put in addition.
On on capital and also the relaxation of some of the co investment rules is there an opportunity for other capital to come in and protect the investments that MRC see from the broader mineral platform. So any commentary around that would be really helpful.
Yes, good Troy, let's I'm glad you asked that question actually since it's a thoughtful one the.
The most most people don't really understand.
And our market in the lower part of the middle market.
There's opportunities to play off fence, while you're playing off fence for there's also opportunities to play office, while you're playing defense.
And.
No the neat thing about our market. This companies don't have the ability to go out and do bond offerings.
And do you know unsecured notes.
In our part of the market, what we try to look for his ways to assist companies.
Can be through a revolver draw.
It could be through a relaxation of a covenant.
It could be.
Introducing the company to a mezzanine debt provider to put additional capital Lynn and reprice our loan it can be leaving on the private equity sponsor.
Two or you know to do something if we do something then we ask them to do something very often.
When we make a a covenant waiver or we bake a accommodation for our borrower.
It's because we're doing that in concert with something else.
The private equity sponsors stepping up additional equity the sponsors guaranteeing a part of our loan to sponsor is committing to to put forth capital in the future into the company.
We're as I mentioned earlier in my remarks, we've taken a very active.
Program and assisting our companies with PPP money, we have 53 banks and our credit facilities across the Monroe platform. The first thing that we did as a firm as we've identified the banks that were most likely.
To assist each one of our portfolio companies and their we made the appropriate introductions to make sure that that process was set up appropriately and then we monitored.
The effectiveness of that's been this plus staging of the applications and the approvals and the the funds awarding under the pp Preprogram. There's a couple of other programs now that are.
That are.
Line and regulations are being formed the main street lending program other loan programs.
We're equally as active in those programs with our with our borrowers to make sure that they can access to liquidity. So from a company standpoint, no very often but things are happening behind the scenes that don't show up in our earnings calls are the things that are the most effective in creating value and playing off.
And as I mentioned earlier, we're taking a hard look at all of our companies and while we're being asked to make accommodations and to provide assistance. We're asking for the same benefit from our companies in terms of no repricing and re risking.
Our portfolio them very often de leveraging as well. So you know this was an interesting time and in the space that we play in we've got a number of different levers to pull that we can pull that in larger companies, they can't and very often to the middle.
Market companies to we've got control over their income statement very often in terms of.
Identifying areas, where they can cut expenses and encouraging them to to make certain expense cuts reductions and things to to preserve and protect cash as well.
So that's a long winded answer too I think your question, but it shows all the tools that we have available with our arsenal to to bring to bear.
No that's very insightful and very helpful. One last thing I think you mentioned the broader mineral platform as upwards of $9 billion of a U M. Can you speak to the the kind of the dry powder or if you're if you're willing to you have available to you know.
To step in and put capital to work where needed.
Sure sure I will tell you that are going into this crisis situation on March 1st we had about a billion for a neighborhood of dry powder available at our Monroe capital level and you always you know we've got.
As you see co investment.
Capability that we can do across of our funds a exemptive relief. So we were feeling you.
Pretty good.
We have been aggressively raising additional capital.
Well a level, we have a number of funds in the market we have private credit funds in the market. We have opportunistic funds we have retail.
Yes.
High net worth funds.
And we've been using this as a is it really is an opportunity to.
Continue to raise capital from both institutional investors sovereign wealth funds pensions.
Hi, endowments foundations.
Retail high net worth retail and others that are looking for yield when the S&P drops 20% when bonds get hit when LIBOR goes down when you US treasuries are 30 basis points.
For 10 years investors don't really haven't where the height and the best would place to hide isn't the private credit space generally and within the private credit space.
What investors are realizing is that you turn to the very best managers are the ones that have been around the longest that of.
Track record appropriately very long period of time.
We've been doing this business 20 years now we've gone through four down cycles. A two crisis is so that dot com crash in 2000, and the great financial crisis, and 2008, what will likely be the third crisis that people will look back to is the 2020 coated pandemic. So we've got a playbook for.
Dealing with this.
We've got the infrastructure.
We've got the capital and and each of the West Downturns and crisis is if you looked at our track record and done very well in that.
Vintage period.
During an right after that crisis, I think that 2000 2021.
Very much into 22 are going to be very strong periods.
Private credits and the firms that.
Or set up.
And have the capital and the infrastructure to manage and to to be active in these periods I think will do very well.
And the other side of the Corning is the firms that are more one dimensional.
That or you don't have one product are very.
Highly concentrated sort of investors or don't have the scale to.
You know to have the staying power over the next few quarters are not going to do as well and you know quality all was rises to the top and I'm confident that the infrastructure in the organization that we built at Monroe, we'll continue to deliver outsized returns.
During this crisis. After this crisis was selected as the last two crisis that we've experienced.
Great. Thanks, Great color Ted.
Thank you.
I'm not showing any further questions I'll now turn the call back over to take Caintic for closing remarks.
Over the thank everyone today for joining the call I know it ran a little bit longer than our prior calls.
I think through a lot of good questions again.
We don't take decisions and actions lately.
And we've put forth I think a a thoughtful and decisive.
Manner in which we're managing of RCC, we've made some hard decisions that I'm RCC, which are going to be in the long term best interests of our shareholders and we continue to see value, where we are today as evidenced by a lot of the insider purchases that at the made.
Company, we wish everyone a health.
Be safe and we will talk to you again next quarter sometime in early August so with that any follow up questions that anyone has as always we we endeavor to be as transparent as we can please contact Aaron well.
So I'm sure we can give a word more information as requested so thank you and everyone have a good day.
Ladies and gentlemen. This concludes today's conference. Thank you for your participation you may now disconnect.
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