Q1 2024 Goldman Sachs BDC Inc Earnings Call
Austin Neri: Good morning. This is Austin Neri, a member of the investor relations team for Goldman Sachs BDC, Inc., and I would like to welcome everyone to the Goldman Sachs BDC first quarter 2024 earnings conference call. Please note that all participants will be in listen-only mode until the end of the call, when we will open up the line for questions. Before we begin today's call, I would like to remind our listeners that today's remarks may include forward-looking statements.
Good morning. This is Austin here and remember the Investor Relations team for Goldman Sachs BDC, Inc, and I would like to welcome everyone to the Goldman Sachs BDC, Inc. First quarter 2024 earnings Conference call. Please note that all participants will be in.
Austin Neri: Listen only mode until the end of the call. When we will open up the line for questions before we begin today's call I'd like.
Austin Neri: To remind our listeners that today's remarks may include forward looking statements. These statements represent the company's belief regarding future events that by their nature are uncertain and outside of the company's control the.
Austin Neri: These statements represent the company's belief regarding future events that, by their nature, are uncertain and outside of the company's control. The company's actual results and financial condition may differ, possibly materially, from what is indicated in those forward-looking statements as a result of a number of factors, including those described from time to time in the company's SEC filings.
Austin Neri: The company's actual results and financial condition may differ possibly materially from what is indicated in those forward looking statements as a result of a number of factors.
Austin Neri: Putting those described from time to time in the company's SEC filings.
Austin Neri: This audiocast is copyrighted material of Goldman Sachs BDC, Inc, and may not.
Austin Neri: Yesterday, after the market closed, the company issued an earnings press release and posted a supplemental earnings presentation, which can be found on the homepage of our website at www.goldmansachsbdc.com under the investor resources section and includes reconciliations of non-GAAP measures to the most directly comparable GAAP measures. These documents should be reviewed in conjunction with the company's quarterly report on Form 10-Q filed yesterday with the SEC. This conference call is being recorded today, Wednesday, May 8th, 2024, for replay purposes. I'll now turn the call over to Alex Chi, Co-Chief Executive Officer of Goldman Sachs BDC, Inc.
Austin Neri: Not be duplicated reproduced or rebroadcast without our consent.
Austin Neri: Yesterday after the market close the company issued an earnings press release and posted a supplemental earnings presentation, both of which can be found on the homepage of our website at www Dot common Sachs BDC Dot com under the Investor resources section of which include reconciliations of non-GAAP measures to the most directly comparable GAAP measure.
Austin Neri: Yes.
Alex Chi: These documents should be reviewed in conjunction with the company's quarterly report on Form 10-Q filed yesterday with the SEC.
Alex Chi: This conference call is being recorded today Wednesday may eight 2024 for replay purposes.
Austin Neri: Now I'll turn the call over to Alex Chi Co Chief Executive Officer of Goldman Sachs BDC, Inc.
Alex Chi: Thank you, Austin. Good morning, everyone. And thank you for joining us for our first quarter 2024 earnings conference call. I'm here today with David Miller, our Co-Chief Executive Officer, Tucker Greene, our Chief Operating Officer, and Stan Matuszewski, our Chief Financial Officer. I'll begin the call by providing a brief overview of our first quarter results and then discuss the current market environment in more detail. I'll then turn the call over to David and Tucker to describe our portfolio activity and performance before handing it off to Stan to take us through our financial results. And then, finally, we'll open the line for Q&A.
Alex Chi: Thank you Austin good morning.
Alex Chi: Everyone and thank you for joining us for our first quarter 2024 earnings conference call.
Alex Chi: I'm here today with David Miller, our co Chief Executive Officer, Tucker Green, our Chief operating Officer, and Stan Olszewski, Our Chief Financial Officer.
Alex Chi: I'll begin the call by providing a brief overview of our first quarter results and then discuss the current market environment in more detail I'll, then turn the call over to David and Tucker to describe our portfolio activity and performance before handing it off to Stan to take us through our financial results and then finally, we'll open the line for Q&A.
Alex Chi: With that, let's get to our first quarter results. Our net investment income per share for the quarter was $0.55, and our Net Asset Value Per Share was $14.55, a decrease of approximately 0.5% or 7 cents from the end of the fourth quarter. Our net investment income again exceeded our quarterly dividend, but the excess was offset by net realized and unrealized losses during the quarter, which led to a slight decrease in NAF. On a fair value basis, first lien loans represent 96.5% of our assets as of March 31st, which reflects our bias towards maintaining exposure to credits that are higher up in the capital structure.
Alex Chi: With that let's get to our first quarter results, our net investment income per share for the quarter with 55 cents.
Alex Chi: And net asset value per share was $14 55 a.
Alex Chi: A decrease of approximately <unk>, 5% or seven from the end of the fourth quarter.
Alex Chi: Net investment income again exceeded our quarterly dividend, but the excess was offset by net realized and unrealized losses during the quarter, which led to a slight decrease in nap.
Alex Chi: But at a fair value basis first lien loans represent 96, 5% of our assets as of March 31st would you flex our bias towards maintaining exposure to credits theyre higher up in the capital structure.
Alex Chi: Consistent with prior quarters, all new investment commitments this quarter were to first in credit. As we announced after the market closed yesterday, our board declared a second quarter dividend of $0.45 per share payable to shareholders of record as of June 28, 2024. This marks the company's 37th consecutive quarter of a $0.45 per share dividend, totaling $16.65 per share since our IPO, excluding the special dividends we paid in 2021 following the merger with MMLC.
Alex Chi: Consistent with prior quarters on new investment commitments this quarter with the first lien credits.
Alex Chi: As we announced after the market closed yesterday, our board declared a second quarter dividend of 45 per share payable to shareholders of record as of June 28, 2020 for.
Alex Chi: This marks the companys 37th consecutive quarter of a 45 per share dividend totaling $16 65 per share since our IPO, excluding the special dividends, we paid in 2021 following the merger with LLC.
Alex Chi: Now with respect to broader market conditions, the syndicated loan market rebounded significantly in the first quarter, taking back share from direct lenders, namely in companies with larger enterprise values. We saw this trend on the large cap side of our private credit platform. However, we believe direct lenders will continue to find attractive opportunities to deploy capital where borrowers and their private equity sponsors value the certainty and flexibility that private credit provides. As an example of that dynamic, we served as the largest lead lender and administrative agent in a loan to EQT in connection with their acquisition of Zeus, a manufacturer of critical components in the medical and industrial end market.
Alex Chi: Now with respect to broader market conditions, the syndicated loan market rebounded significantly in the first quarter, taking back share from direct lenders, namely in companies with larger enterprise values.
Alex Chi: We saw this trend on the large cap side of our private credit platform.
Alex Chi: However, we believe direct lenders will continue to find attractive opportunities to deploy capital with borrowers and their private equity sponsors value certainty and flexibility that private credit provides.
Alex Chi: As an example of that dynamic we served as the largest lead lender and administrative agent.
Alex Chi: I went to EQT in connection with their acquisition of juice and manufacturer of critical components in the medical and industrial end markets.
Alex Chi: USA Debusque is another example of a private credit platform being the lead lender and the administrative agent. USA Debusque provides industrial cleaning and specialty services supporting routine maintenance and refurbishments at chemical plants, refining and renewable facilities, and other industrial infrastructure.
Alex Chi: USA at the bus is another example, where our private credit platform was the lead lender and administrative agent U.
Alex Chi: USAID the bus provides industrial cleaning and specialty services supporting routine maintenance and refurbishment at chemical plants refining and renewable facilities and other industrial infrastructure.
Alex Chi: Given our ability to draw on the broader Goldman Sachs platform, including our investment bank, GSBD and the private credit platform are poised to benefit from the significant backlog of sponsor activity that's channeled through our M&A franchise, in addition to add-on or refinancing activity from existing portfolio companies. We remain confident that the $1.2 trillion of private equity dry powder and the pressure to return capital to LP investors will serve as a catalyst to restart what has been a relatively muted sponsor MNA market, and we're starting to see a significant pickup and activity in our pipeline.
Alex Chi: Given our ability to draw on the broader Goldman Sachs platform, including our investment Bank G. S. P D and the private credit platform are poised to benefit from the significant backlog of sponsor activity, that's channeling through our M&A franchise.
Alex Chi: To add on or refinancing activity from existing portfolio companies.
Alex Chi: We remain confident that the $1 two trillion dollars of private equity dry powder and the pressure to return capital to L. P. Investors will serve as a catalyst to restart what has been a relatively muted sponsor M&A market and we're starting to see a significant pickup in activity in our pipeline.
Alex Chi: Despite a lower-than-normal deal environment a year ago, first-quarter M&A volumes were up 34% year-over-year off a 15-year low of sponsor activity in 2023, and we saw a good mix of public-to-private, sponsor-to-sponsor, and strategic acquisitions of portfolio companies, which also led to some nice harvests. The pressure on sponsors to monetize portfolio companies from legacy vintages It's worth noting that while we're seeing continued spread compression from supply-demand dynamics, credit fundamentals have remained in line with our expectations, and recent originations are still exhibiting sensible overall leverage levels and low LTVs. Again, we remain committed to leveraging the broader private credit and Goldman Sachs platform for the benefit of GSBD shareholders in the quarters and years ahead. With that, let me turn it over to my co-CEO, David.
Alex Chi: Despite a lower than normal deal environment, a year ago first quarter M&A volumes are up 34% year over year off of a 15 year low of sponsor activity in 2023, and we saw a good mix of public to private sponsor to sponsor and strategic acquisitions of portfolio companies, which also led to some nice harvests.
David: Pressure on sponsors to monetize portfolio companies the legacy vintages will only continue to benefit private credit.
David: It's worth noting that while we're seeing continued spread compression from supply demand dynamics and credit fundamentals have remained in line with our expectations and recent originations are still exhibiting sensible overall leverage levels and low ltvs.
David: Again, we remain committed to leveraging the broader private credit and Goldman Sachs platform for the benefit of G. S. P D shareholders in the quarters and years ahead.
Alex Chi: That let me turn it over to my co CEO David Maher.
David Nathan Miller: Thanks, Alex. During the quarter, we originated $359.6 million in new investment commitments to seven new and 13 existing portfolio companies. Sales and repayment activity totaled $115.7 million, primarily driven by the full repayment of investments in four portfolio companies. In particular, as we continue to upgrade the quality of the portfolio, we are pleased with a full repayment of one junior lien and an exit of an equity position. Turning to portfolio composition,
David: Thanks, Alex during the quarter, we originated $359.6 million.
David Nathan Miller: New investment commitments to seven new and 13 existing portfolio of companies.
David Nathan Miller: Sales and repayment activity totaled $115 7 million.
David Nathan Miller: Primarily driven by the full repayment of investments in four portfolio companies.
David Nathan Miller: In particular as we continue to upgrade the quality of the portfolio. We are pleased with a full repayment of one junior lien and an exit of an equity position.
David Nathan Miller: As of March 31st, 2024, total investments in our portfolio were $3.4 billion at fair value, comprised of 97.5% in senior secured loans, including 91.9% first lien. 4.6% in the first lien last out unit tranche and 1% in the second lien, as well as a negligible amount in unsecured debt and 1.9% in a combination of preferred and common stock and warrants. As of March 31, 2024, the company held investments in 149 portfolio companies operating across 39 different industries.
David Nathan Miller: Turning to portfolio composition.
David Nathan Miller: 31, 2024 total investments in our portfolio or 3.4 billion at fair value.
David Nathan Miller: Comprised of 97, 5% in senior secured loans, including 91, 9% first lien.
David Nathan Miller: Four 6% in first lien last out Unitranche and 1% in <unk>.
David Nathan Miller: Second lien.
David Nathan Miller: As well as a negligible amount of unsecured debt and one 9% and a combination of preferred and common stock and warrants.
David Nathan Miller: As of March 31, 2024, the company held investments in 149 portfolio companies operating across 39 different industries.
Tucker Greene: The weighted average yield of our investment portfolio at amortized cost at the end of the first quarter was 11.9% as compared to 11.8% from the prior quarter. The average yield of our total debt and income producing investments at an amortized cost for the first quarter was 12.7% as compared to 12.6% at the end of Q4. I will now turn the call over to Tucker Greene to discuss overall credit quality. Thank you, David.
David Nathan Miller: The weighted average yield of our investment portfolio at amortized cost at the end of the first quarter was 11, 9% as compared to 11, 8% from the prior quarter.
Tucker Greene: Weighted average yield of our total debt and income producing investments at amortized cost at the first quarter was 12.7% as compared to 12, 6% at the end of Q4.
Tucker Greene: I will now turn the call over to Tucker Green to discuss overall credit quality.
Tucker Greene: Thank you David the weighted average net debt to EBITDA of the companies in our investment portfolio remained flat at six one times during their first quarter as compared to the fourth quarter importantly, our portfolio companies have both topline growth and EBITDA growth year over year on a weighted average basis.
Stanley Matuszewski: The weighted average net debt to EBITDA of the companies in our investment portfolio remained flat at 6.1 times during the first quarter as compared to the fourth quarter. Importantly, our portfolio companies have both top line growth and EBITDA growth year over year on a weighted average basis. The weighted average interest coverage of the companies in our investment portfolio at quarter end remained flat at 1.5 times in the first quarter as compared to the fourth quarter.
Stanley Matuszewski: The weighted average interest coverage of the companies in our investment portfolio at quarter end remained flat at 1.5 times in the first quarter as compared to the fourth quarter and finally, turning to asset quality.
Stanley Matuszewski: And finally, turning to asset quality, during the quarter, specialty dental brands, also known as LCG Vardaman Black, a first lien debt position that was restructured, and MPI, a second lien position, were both restored to accrual status. As of March 31, 2024, investments on non-accrual status decreased to 1.6% of the total investment portfolio at fair value from 2.3% as of December 31, 2023, and 3.3% of the total investment portfolio at amortized cost from 3.8% as of December 31, 2023. I will now turn the call over to Stan Matuszewski to walk through our financial results.
Stanley Matuszewski: During the quarter, especially dental brands also known as L. C. G vitamin Black our first lien debt position that was restructured and M. P. I a second lien position for both restored to accrual status as of March 31, 'twenty 'twenty four investments on nonaccrual status decreased to 1.6% the total them back.
Stanley Matuszewski: And our portfolio at fair value from two 3% as of December 31st 2023.
Stanley Matuszewski: And three 3% of the total investment portfolio at amortized cost from three 8% as of December 31 2023.
Stanley Matuszewski: I'll now turn the call over to Stan Maddy chefs getting to walk through our financial results. Thank.
Stanley Matuszewski: Thank you, Tucker. We ended the first quarter of 2024 with total portfolio investments at a fair value of $3.4 billion, outstanding debt of $1.8 billion, and net assets of $1.6 billion. Our ending net debt-to-equity ratio as of the end of the first quarter was 1.10 times, which continues to be below our target leverage of 1.25 times. During the quarter, we closed a public offering of $400 million aggregate principal amount of unsecured notes due in 2027.
Stanley Matuszewski: Thank you Tucker we ended the first quarter of 2024 with total portfolio investments at fair value of 3.4 billion outstanding debt of $1 8 billion and net assets of 1.6 billion, our ending net debt to equity ratio as of the end of the first quarter was 1.10 times, which continues to be below our target leverage of one five times.
Stanley Matuszewski: <unk>.
Stanley Matuszewski: The 2027 notes bear interest at a fixed rate of 6.375%. The net proceeds from the sale of the 2027 notes were used to pay down a portion of our secured revolving credit facility. At quarter end, approximately 68% of the company's total principal amount of debt outstanding was in unsecured debt, and we had $1,111,000,000 of capacity available under our secured revolving credit facility. In addition to our newly issued 2027 notes, we have two separate unsecured notes due in February 2025 and January 2026, respectively. We plan to address these maturities at the necessary time.
Stanley Matuszewski: During the quarter, we closed a public offering of 400 million aggregate principal amount of unsecured notes due in 2027 to 2027 notes bear interest at a fixed rate of six 375%. The net proceeds from the sale of the 2027 notes were used to pay down a portion of our secured revolving credit facility at.
Stanley Matuszewski: At quarter end, approximately 68% of the company's total principal amount of debt outstanding was in unsecured debt and we had $1.111 billion of capacity available under our secured revolving credit facility.
Stanley Matuszewski: In addition to our newly issued 2027 notes we have two separate unsecured notes due in February 2025, and January 2026, respectively. We plan to address these maturities at the necessary time.
Stanley Matuszewski: Before continuing to the income statement, as a reminder, in addition to GAAP financial measures, we will also reference certain non-GAAP or adjusted measures. This is intended to make the company's financial results easier to compare to results prior to our October 2020 merger with Goldman Sachs Middle Market Lending Corp. or MMLC. These non-GAAP measures remove the purchase discount amortization impact from our financial results.
Stanley Matuszewski: Before continuing to the income statement as a reminder, in addition to GAAP financial measures. We will also reference certain non-GAAP or adjusted measures. This is intended to make the companys financial results easier to compare to results prior to our October 'twenty 'twenty merger with Goldman Sachs Middle market lending Corp, or MLC. These.
Stanley Matuszewski: non-GAAP measures remove the purchase discount amortization impact from our financial results.
Alex Chi: For the first quarter, GAAP, an adjusted after-tax net investment income, was $60.8 million and $59.5 million, respectively, as compared to $61.8 million and $60.7 million, respectively, in the prior quarter. On a per share basis, GAAP net investment income was $0.55. Excluding the impact of asset acquisition accounting in connection with the merger with MMLC, adjusted net investment income for the quarter was $0.54 per share, equating to an annualized net investment income yield on book value of 14.8%.
Stanley Matuszewski: For the first quarter GAAP and adjusted after tax net investment income was $60 8 million and $59 5 million, respectively, as compared to $61 8 million and $60 7 million respectively in the prior quarter.
Alex Chi: On a per share basis GAAP net investment income was 55, excluding the impact of asset acquisition accounting in connection with the merger with them and they'll see adjusted net investment income for the quarter was 54 cents per share equating to an annualized net investment income yield on book value of 14, 8%.
Alex Chi: Total investment income for the three months ended March 31, 2024, and December 31, 2023 was $111.5 million and $115.4 million, respectively. The decrease in total investment income was primarily driven by a decrease in accelerated accretion of upfront loan origination fees and unamortized discounts. We would note, however, that we did see an increase in PIC income as a percentage of total investment income, primarily driven by the restructuring of certain investments. Distributions during the quarter remain consistent at $0.45 per share, and our spillover taxable income is approximately $128.9 million, or $1.15 on a per share basis, which we believe provides continued stability on our consistent dividends since inception. With that, I'll turn it back to Alex for his closing remarks. Thanks, Stan.
Alex Chi: Total investment income for the three months ended March 31, 2024, and December 31, 2023 was $111 5 million and $115 4 million respectively.
Alex Chi: The decrease in total investment income was primarily driven by a decrease in accelerated accretion of upfront loan origination fees and unamortized discounts. We would note. However that we did see an increase in pick income as a percentage of total investment income primarily driven by the restructuring of certain investments.
Alex Chi: Distributions during the quarter remained consistent at 45 per share our spillover taxable income is approximately $128 9 million or $1.15 on a per share basis, which we believe provides continues to stability on our consistent dividend since inception.
Alex Chi: With that I'll turn it back to Alex for closing remarks, Thanks, Dan and thanks to everyone for joining our earnings call.
Unknown Executive: Thanks, Stan. And thanks, everyone, for joining our earnings call. We remain optimistic about the performance of our portfolio, the current environment, and the outlook for deployment into attractive opportunities. With that, let's open the line for Q&A.
Alex Chi: We remain optimistic about the performance of our portfolio the current environment and the outlook for deployment into attractive opportunities with that let's open the line for Q&A.
Unknown Executive: Thank you. If you'd like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star 1 to ask a question. I'll pause for just a moment to allow everyone an opportunity to signal for questions, and we'll take our first question from Mark Hughes with Truett.
Speaker Change: Thank you if you'd like to ask a question. Please signal by pressing star one on your telephone keypad. If you are using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment again press star one to ask a question I'll pause for just a moment to allow everyone an opportunity to signal for questions.
Unknown Executive: And we'll take our first question from Mark Hughes with students.
Unknown Executive: Yes, Hello. This is Mark Hughes can you hear me.
Mark Douglas Hughes: Yes, hello. This is Mark Hughes.
Unknown Executive: Can you hear me? Yeah, good morning. Good morning.
Mark Douglas Hughes: Yes, good morning.
Mark Douglas Hughes: Alex, you referred to picking up an activity in the pipeline. I didn't quite get your full, your full meaning there. I just didn't hear it. Could you, please, repeat that? What were you alluding to by just a pipeline of new deal opportunities?
Unknown Executive: Good morning.
Unknown Executive: Alex you referred to pick up in activity in the pipeline I didn't quite get.
Speaker Change: Oh yeah.
Mark Douglas Hughes: Your board meeting.
Mark Douglas Hughes: Just couldn't hear could you.
Mark Douglas Hughes: Ah repeat that what were you alluding to that.
Mark Douglas Hughes: The pipeline of new deal opportunities.
Alex Chi: Yeah, just the pipeline of new opportunities has really picked up materially, and I think it just points to the themes that we've been talking about, which is the significant amount of dry powder that private equity firms have that they will need to deploy, but also the record amount of portfolio companies that need to be sold due to the DPI pressure that firms have, especially if they want to raise their next vintage of funds. And so that's leading to a pickup in activity.
Alex Chi: Yeah, just the pipeline of new journeys has really picked up materially and I think it just points to the themes that we've been talking about which is the significant amount of dry powder at private equity firms have that they will need to deploy but also the record amount of portfolio companies that need to get sold.
Alex Chi: The DPI pressure that firms have especially if they want to raise their next vintage of funds and so that's leading to a pickup in activity in the first quarter. As you can see we had a very strong quarter of originations is actually more than the previous two quarters combined.
Alex Chi: In the first quarter, as you can see, we had a very strong quarter of originations, actually more than the previous two quarters combined. And then if you saw our pipeline activity for the second quarter, it remains at significantly higher levels. And so we remain quite optimistic about deployment activity. Also, I think sponsors are just trying to get ahead of the election and some of the volatility that can come. So we are, again, just expecting quite a busy quarter.
Alex Chi: And then if you saw our pipeline activity for the second quarter.
Alex Chi: It remains at significantly higher levels and so we remain quite optimistic about deployment activity also just I think sponsors are just trying to get ahead of the election and some of the volatility that can come. So we are again, just expecting a quite a busy quarter.
Mark Douglas Hughes: Yeah, you talked about what you were saying, you talked about a strong rebound in the broadly syndicated market. Any prognostications about where equilibrium will end up in that between direct lenders and broadly syndicated, and And are we there yet? When will we get to kind of, again, more of an equilibrium in share?
Alex Chi: Yeah, you're talking about.
Mark Douglas Hughes: What you're seeing you talked about a strong rebound in the broadly syndicated.
Mark Douglas Hughes: <unk> barcode.
Mark Douglas Hughes: Any prognostications about where equilibrium.
Mark Douglas Hughes: And.
Mark Douglas Hughes: Between direct lenders in broadly syndicated.
Mark Douglas Hughes: Are we there yet.
Mark Douglas Hughes: When will we get.
Speaker Change: Got it.
Mark Douglas Hughes: Again more of an equilibrium.
Mark Douglas Hughes: Sure.
Alex Chi: Yeah, it's a good question. It's hard to sit here and call the bottom right now. It's certainly, to your point, really determined by the supply-demand imbalance, which, again, just based upon the earlier comments about the pipeline activity really picking up, and I think most direct lenders are seeing that across the board, and so that should really help even out the supply-demand imbalance. And also, you know, remember that for GSBD, it continues to be focused more on the middle market, and that's not really an ecosystem where the banks play and where the BSO market plays, and so I think you're going to see more of that in the large-cap sector, and so we're clearly seeing that on the large-cap side of our platform, but for the middle market, it continues to stay steadier.
Mark Douglas Hughes: Yeah. It's a good question, it's it's hard to sit here and call the bottom right now.
Alex Chi: It's certainly to your point.
Alex Chi: Really it's determined by the supply demand imbalance, which again just based upon the earlier comments about the pipeline activity really picking up and I think it's I think most direct lenders are seeing that across the board and so that should really help even out the supply demand imbalance.
Alex Chi: And also.
Alex Chi: Remember that for E. S. P D, which continues to be focused more on the middle market and that's not really an ecosystem, where the banks play in with the DSO market place and so I think youre going to see more of that in the large cap sector and so where we're at.
Alex Chi: Clearly seeing that on the watch side of our platform, but for the middle market and it's continued to stay steady or.
Alex Chi: And then any commentary.
Mark Douglas Hughes: And then any commentary on sounds like interest coverage is reasonably stable, down at the tails, you know, the number of companies that are at one or below. I don't know if you shared that, but would be curious what you're seeing any kind of stress in the portfolio. Yeah, we again, we haven't reported the percentage.
Mark Douglas Hughes: Interest coverage was reasonably stable.
Mark Douglas Hughes: Don will detail the number of companies that are one or below I don't know if you've shared that but.
Mark Douglas Hughes: Would be curious what you are seeing any kind of stress in the portfolio.
Alex Chi: Yeah, we again, we haven't reported the percentage before, but it remains very stable. It has not picked up.
Mark Douglas Hughes: And again, it's a very small percentage, single-digit percentage of our portfolio. Understandable. Thank you.
Speaker Change: Yeah, we again, we haven't reported the percentage.
Mark Douglas Hughes: But it remains very stable it has not ticked up and again, it's a very small percentage single digit percentage of epic saga.
Speaker Change: Understood. Thank you.
Speaker Change: Thank you.
Speaker Change: And well go next.
Sean Paul Adams: Sean Paul Adams for Merriman James.
Speaker Change: This is Sean Paul Adams from Raymond James.
Speaker Change: Hey, guys can you hear it.
Speaker Change: Yes can hear you.
Sean Paul Adams: Perfect. On the portfolio risk side, the categories, it looks like you had a downtick in category four, but in aggregate, the share of total category three and four of the portfolio went up. Can you talk a little bit more about the general health of the portfolio? It looks like, in aggregate, the portfolio is just shifting up the ladder a little bit. I mean, I would say overall it's relatively stable.
Sean Paul Adams: Perfect on the portfolio risk.
Sean Paul Adams: Syed the categories. It looks like you had a downtick in category four but in aggregate the share of total category three and four.
Sean Paul Adams: Of the portfolio went up can you talk a little bit more about the general health of the portfolio. It looks like in aggregate the portfolio shifting up the ladder it a little bit.
Unknown Executive: As you heard, we saw a couple of names come up.
Unknown Executive: I mean, I would say overall it's relatively stable. As you heard, we saw a couple of names come off non-approval, which we're pleased with this quarter. You know, names will kind of flow between two and three, depending on performance. You know, from a mid-point, we kind of look at it from how many material amendments we have this quarter. I would say that was actually down quarter over quarter. So we feel relatively good about the stability.
Sean Paul Adams: I mean, I would say overall, it's relatively stable.
Unknown Executive: We saw a couple of things come off nonaccrual with we're pleased with this quarter.
Unknown Executive: You know names, what kind of blow between two and three depending on performance.
Unknown Executive: You know, we kind of look at that from how many material amendments. We had this quarter I would say that was actually down.
Unknown Executive: Over a quarter. So we feel relatively good about the stability of the portfolio as we look forward to the rest of the year.
Speaker Change: Got it thank you.
Unknown Executive: And as a reminder, it is Star One if you'd like to ask a question. And there are no other questions in the queue at this time.
Unknown Executive: And as a reminder, it is star one if you'd like to ask a question.
Unknown Executive: And there are no other questions in the queue at this time.
Alex Chi: Great. Well, thank you very much for listening to our earnings call. And we look forward to continuing to invest in this very attractive environment. Thank you.
Speaker Change: Great well. Thank you very much realism in their earnings call and we look forward to speaking with you.
Alex Chi: Its way into this a very attractive environment. Thank you.
Unknown Executive: And that does conclude today's call. Thank you for your participation. You may now disconnect.
Speaker Change: And that does conclude today's call. Thank you for your participation you may now disconnect.
Unknown Executive: [music].
Unknown Executive: Yeah.