Q1 2024 Bain Capital Specialty Finance Inc Earnings Call
Operator: Good morning, ladies and gentlemen, and welcome to the Bain Capital Specialty Finance first quarter ended March 31st, 2024 earnings conference call. At this time, all lines are in listen-only mode.
Good morning, ladies and gentlemen, and welcome to the Bain capital Specialty Finance first quarter ended March 31st 'twenty 'twenty four earnings conference call.
At this time all lines are in listen only mode. Following the presentation. We will conduct a question and answer session. If at any time. During this call do you require immediate assistance. Please press star zero for operator.
Operator: Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, May 7th, 2024. I would now like to turn the conference over to Katherine Schneider. Please do so.
This call is being recorded and Tuesday may 7th 'twenty 'twenty four I would now like to turn the conference over to Katherine Schneider. Please go ahead.
Katherine Schneider: Thanks, Constantine. Good morning, and welcome everyone to the Bain Capital Specialty Finance first quarter ended March 31st, 2024. Yesterday after market close, we issued our earnings press release and investor presentation of our quarterly results, a copy of which is available on Bain Capital Specialty Finance's investor relations website. Following our remarks today, we will hold a question and answer session for analysts and investors. This call is being webcast, and a replay will be available on our website.
Katherine Schneider: Thanks, Constantine good morning, and welcome everyone to the Bain capital Specialty Finance first quarter ended March 31, 2024 conference call.
Katherine Schneider: Yesterday after market close we issued our earnings press release and Investor presentation of our quarterly results a copy of which is available on Bain capital specialty finance its investor Relations website.
Katherine Schneider: Following our remarks today, we will hold a question answer session for analysts and investors.
Katherine Schneider: This call is being webcast and a replay will be available on our website.
Katherine Schneider: This call and the webcast are property of Bain Capital Specialty Finance, and any unauthorized broadcast in any form is strictly prohibited. Any forward-looking statements made today do not guarantee future performance, and actual results may differ materially. These statements are based on current management expectations, which include risks and uncertainties, which are identified in the risk factor section of our Form 10-Q, that could cause actual results to differ materially from those indicated. Bain Capital Specialty Finance assumes no obligation to update any forward-looking statements at this time, unless required to do so by law. Lastly, past performance does not guarantee future results. So, with that, I'd like to turn the call over to our Chief Executive Officer, Michael Ewald.
Katherine Schneider: This call and the webcast are property of Bain capital specialty finance and any unauthorized broadcast in any form is strictly prohibited.
Katherine Schneider: Any forward looking statements made today do not guarantee future performance and actual results may differ materially.
Katherine Schneider: These statements are based on current management expectations, which includes risks and uncertainties, which are identified in the risk factors section of our Form 10-Q that could cause actual results to differ materially from those indicated.
Katherine Schneider: Being capital, especially finance assumes no obligation to update any forward looking statements at this time unless required to do so by law.
Katherine Schneider: Lastly, Pat Plas Department does not guarantee future results.
Katherine Schneider: That I'd like to turn the call over to our Chief Executive Officer, Michael Ewald.
Michael Alexander Ewald: Thanks, Katherine, and good morning to all of you, and thank you for joining us here today on our earnings call. I'm also joined by Mike Boyle, our President, and our Chief Financial Officer, Amit Joshi.
Michael Alexander Ewald: Thanks, Kathryn and good morning to all of you and thank you for joining US here today on our earnings call.
Michael Alexander Ewald: I'm also joined by Mike Boyle, our President and our Chief Financial Officer, Michelle Qi.
Michael Alexander Ewald: In terms of the agenda for the call, I'll start with an overview of our first quarter ended March 31st, 2024 results and then provide some thoughts on our performance, the overall market environment, and our position. Thereafter, Mike and Amit will discuss our investment portfolio and financial results in greater detail. And, as usual, we'll also leave some time for questions at the end.
In terms of the agenda for the call I'll start with an overview of our first quarter ended March 31, 2024 results and then provide some thoughts on our performance the overall market environment and our positioning.
Michael John Boyle: After Mike and Nick will discuss our investment portfolio and financial results in greater detail.
Michael John Boyle: Usual also leave some time for questions at the end.
Michael Alexander Ewald: So yesterday after the market closed, we delivered strong first quarter results. Q1 net investment income per share was $0.53, as we continue to benefit from high base interest rates as well as high spreads across our portfolio. Our net investment income return represented an annualized yield of 12% on book value and covered our regular dividend by 126%. Q1 earnings per share were $0.55, driven by improved credit quality across our portfolio investments during the quarter.
Michael John Boyle: So yesterday after market close we delivered strong first quarter results.
Michael John Boyle: Q1, net investment income per share was 53 sets as we continued to benefit from high base interest rates as well as high spreads across our portfolio.
Michael John Boyle: Our net investment income return, representing an annualized yield of 12% on book value and cover our regular dividend by 126%.
Michael John Boyle: Q1 earnings per share were <unk> 55 cents, driven by improved credit quality across our portfolio of investments during the quarter.
Michael Alexander Ewald: Our net income produced an annualized return on book value of 12.5%. These results then led to another consecutive quarter of growth in our net asset value to $17.77. Reflecting a 0.6% increase from our $17.60 NAV as of December 31st. Subsequent to quarter end, our board declared a second quarter dividend equal to $0.42 per share payable to record date holders as of June 28, 2020. The board also declared an additional dividend of three cents per share for shareholders as of June 28th, as we previously announced back in February. So this brings total dividends for the second quarter to $0.45 per share.
Michael John Boyle: Our net income produced an annualized return on book value of 12, 5%.
Michael John Boyle: These results then led to another consecutive quarter of growth in our net asset value to $17.70, reflecting a 0.6% increase from $17 60 per cent now sorry, $17.60 NAV as of December 31.
Michael John Boyle: Subsequent to quarter end, our board declared a second quarter dividend equaled 42 cents per share payable to record date holders as of June 28 2024.
Michael John Boyle: The board also declared an additional dividend of <unk> per share for shareholders as of June 28, as we previously announced back in February.
Michael John Boyle: So this brings total dividends for the second quarter to 45 per sugar, which we believe represents an attractive yield for our shareholders at a 10, 2% annualized rate.
Michael Alexander Ewald: Which we believe represents an attractive yield for our shareholders at a 10.2% annualized rate on ending book value as of March 31st. Turning now to the market environment, we saw an increase in new loan volumes across both private and public credit markets, largely driven by refinancing activity. As the Fed has tapered its expectations for future rate hikes and has broached the subject of rate cuts later in 2024, we have seen market sentiment gain confidence against a positive economic outlook.
Michael John Boyle: Ending book value as of March 31.
Michael John Boyle: Okay.
Michael John Boyle: Turning now to the market environment, we saw an increase in new loan volumes across both private and public credit markets largely driven by refinancing activity.
Michael John Boyle: As the fed has tapered as expectations for future rate hikes and is broached the subject of rate cuts later on in 2024.
Michael John Boyle: We have seen market sentiment gain confidence against the positive economic outlook.
Michael Alexander Ewald: This drove a recent reawakening within the broadly syndicated loan market during the first quarter, and we saw a reversal of the growth in private credit takeouts from the BSL market that we had witnessed over the course of 2022 and 2023 when large direct lending players filled a temporary void in the credit market. In our view, this recent strengthening of the BSL market will cause increased and continued competition for large upper middle market private credit players, but notably, this refinancing activity was very much limited to the upper middle market segment during the first quarter and not observed at all in the core middle market segment or BCSF place.
Michael John Boyle: This drove our recent reawakening within the broadly syndicated loan market during the first quarter and we saw a reversal of the growth in private credit Takeouts from the BSL market that we had witnessed over the course of 2022 and 2023 when large direct lending players spilled a temporary void in the credit markets.
Michael John Boyle: In our view this recent strengthening of the BSL market will cause increased and continued competition to large upper middle market private credit players, but notably this refinancing activity was there.
Michael John Boyle: Very much limited to the upper middle market.
Michael John Boyle: Segment during the first quarter and not observed at all in the core middle market segment or BCS that place.
Michael Alexander Ewald: However, Bain Capital Credit's private credit group platform also benefited from the increased activity levels witnessed during the first quarter as, with the risk of an impending recession seemingly receding with a more constructive economic and rate environment outlook prevailing, our private equity sponsored partners picked up their investment activity. Our gross originations during Q1 were $403 million, up 31% year-over-year from Q1 2023 volumes and up 95% sequentially from Q4 2023 As mentioned, we continue to favor core middle market companies with EBITDA of between $25 and $75 million.
Michael John Boyle: However, at Bain capital Credit's private credit group platform also benefited from the increased activity levels witnessed during the first quarter as with the risk of an impending recession seemingly receding with a more constructive economic and rate environment outlook prevailing.
Michael John Boyle: Private equity sponsor partners picked up their investment activity.
Michael John Boyle: Our gross originations during Q1 were $403 million up 31% year over year from Q1, 2023 volumes and up 95% sequentially from Q4 2023 volumes.
Michael John Boyle: As mentioned, we continue to favor core middle market sized companies with EBITDA of between 25 and $75 million.
Michael Alexander Ewald: The median portfolio company EBITDA of our new direct originations in Q1 was $37 million. Not only is this segment of the market less susceptible to the refinancing risk taking place in the large cap upper middle market, but many of the core tenants that we value for direct lending activity are much more attainable in this segment of the market, in our view. For example, we favor attributes such as higher spread premiums and strong lender controls through credit agreement documentation containing a financial covenant.
The median portfolio company EBITDA of our new direct originations in Q1 was $37 million.
Michael John Boyle: Not only is this segment of the market less susceptible to the refinancing risk taking place in the large cap upper middle market.
Michael John Boyle: Many of the core tenants that we value for direct lending activity or much more attainable in this in this segment of the market in our view.
Michael John Boyle: For example, we favorite attributes such as higher spread premiums and strong lender controls through credit agreement documentation containing our financial covenants and we also seek out investments, where we can we can and have control positions by being the majority holder within a small lender group.
Michael Alexander Ewald: And we also seek out investments where we can and have control positions by being the majority holder within a small lender group. Turning to credit quality, our portfolio companies continue to perform well and have proven to be resilient thus far in light of the higher interest rate environment, as demonstrated by improving credit quality trends across our portfolio. We saw a modest decline in our non-accrual rates across the portfolio quarter over quarter.
Michael John Boyle: Turning to credit quality, our portfolio of companies continue to perform.
Michael John Boyle: Perform well and have proven to be resilient, thus far in light of the higher interest rate environment as demonstrated by improving credit quality trends across our portfolio.
Michael John Boyle: We saw a modest decline in our non accrual rates across the portfolio quarter over quarter.
Michael Alexander Ewald: Investments on nonaccrual represent 1.7% and 1.0% of the total portfolio amortized cost and fair value, respectively, as of March 31st. Portfolio company fundamentals exhibited positive trends with the median net leverage across our portfolio declining to 4.7 times at quarter end, down from 4.8 times as of the prior quarter and 4.9 times year-over-year. Lastly, credit risk rating trends also showed positive momentum, with 97% of our investment portfolio's fair value performing in line or better than expectations relative to our initial underwriting, up modestly from 95% as of the prior quarter end.
Michael John Boyle: Investments on non accrual represent one 7% and 1.0% of the total portfolio at amortized cost and fair value respectively as of March 31.
Michael John Boyle: Portfolio company fundamentals exhibited positive trends with the median net leverage across our portfolio declining to four seven times at quarter end.
Michael John Boyle: Four eight times as of the prior quarter and four nine times year over year.
Michael John Boyle: Lastly, credit risk rating trends also showed positive momentum with 97% of our investment portfolio at fair value performing in line or better than expectations relative to our initial underwriting.
Michael John Boyle: Up modestly from 95% as of the prior quarter end.
Michael Alexander Ewald: Notwithstanding these solid portfolio metrics, our team remains vigilant and monitors our portfolio companies very closely. Finally, we ended the first quarter at a net leverage ratio of 1.09 times, near the middle of our target net leverage ratio of between 1.0 and 1.25 times. Providing us with ample dry powder to capitalize on new investments in the current environment. Thus far in 2024, we've been pleased with the higher activity levels compared to the lower overall transaction volume seen in 2023.
Michael John Boyle: Notwithstanding these be solid portfolio metrics, our team remains vigilant and monitors our portfolio of companies very closely.
Michael John Boyle: Finally, we ended the first quarter and a net leverage ratio of 1.09 times near the middle of our target net leverage ratio of between 1.0 and 1.25 times.
Michael John Boyle: Providing us with ample dry powder to capitalize on new investments in the current environment.
Thus far in 2024, and we've been pleased with the higher activity levels compared to the lower overall transaction volumes seen in 2023.
Michael John Boyle: Bain Capital's global and longstanding presence in the middle market positions us well to source new investment opportunities from our broad and deep set of relationships, while still remaining highly selective as we conduct our in-depth diligence work. Furthermore, our platform incumbency advantage provides us with a sourcing, underwriting, and execution advantage, as supporting existing portfolio companies can be a fertile source of new investment activity to provide add-on capital to existing portfolio companies, allowing them to grow and execute their longer-term business plans. I will now turn the call over to Mike Boyle, our president, to walk through our investment portfolio in greater detail. Thanks, Mike, and good morning, everyone.
Michael John Boyle: Bain Capital's global and long standing presence in the middle market positions us well to source new investment opportunities from a broad and deep set of relationships, while still remaining highly selective as we conduct our in depth diligence work.
Michael John Boyle: Furthermore, our platform incumbency advantage provides us with a sourcing underwriting and execution advantage.
Michael John Boyle: <unk> existing portfolio of companies can be a fertile source of new investment activity to provide add on capital to existing portfolio companies, allowing them to grow and execute their longer term business plans.
Michael John Boyle: I will now turn the call over to Mike Boyle, our president to walk through our investment portfolio in greater detail Mike.
Michael John Boyle: Thanks, Mike and good morning, everyone.
Michael John Boyle: We'll start with our investment activity for the first quarter and then provide an update on our portfolio. Investments made during the first quarter totaled $403 million into 83 companies, including $238 million into seven new companies. Sales and repayment activity totaled approximately $296 million, resulting in net investment funding of $107 million quarter over quarter. Investment funding to new portfolio companies represented nearly 60% of our gross originations in the quarter as new transaction volumes were healthy.
Michael John Boyle: I'll start with our investment activity for the first quarter and then provide an update on our portfolio.
Michael John Boyle: Investments made during the first quarter totaled $403 million into 83 companies, including $238 million into seven new companies.
Michael John Boyle: Sales and repayment activity totaled approximately $296 million, resulting in net investment fundings of $107 million quarter over quarter.
Michael John Boyle: Investment fundings to new portfolio companies represented nearly 60% of our gross originations in the quarter as new transaction volumes were healthy.
Michael John Boyle: We also continue to remain active supporting our existing portfolio companies with new funding into existing companies totaling $127 million in Q1. For the new investments made during the first quarter, we were the majority or lead lender driving terms and structure as we leveraged our sourcing relationships and Bain Capital's in-house industry expertise. As Mike highlighted earlier in the call, we remain focused on investing in the core middle market, a segment of the market that we have been investing in for the past 25 years, and one where we can drive favorable terms, structures, and prices.
Michael John Boyle: We also continue to remain active supporting our existing portfolio of companies with new fundings into existing companies totaling $127 million in Q1.
Michael John Boyle: For the new investments made during the first quarter, we were the majority or lead lender driving terms and structure as we leveraged our sourcing relationships and being capital in house industry expertise.
Michael John Boyle: As Mike highlighted earlier in the call we remain focused on investing in the core middle market segment of the market that we have been investing in for the past 25 years, and one where we can drive favorable terms structures and pricing.
Michael John Boyle: The weighted average spread on our new directly originated portfolio companies this quarter was approximately 695 basis points over SOFR across our first lean debt investments. And the weighted average net debt-to-EBITDA leverage ratio on these new loans was approximately 4.75 times, reflecting conservative capital structures in the current market environment. The first quarter was also an active quarter of sales and repayment activity across our portfolio. Our largest repayment in Q1 was driven by an exit on our first lien in equity investment in direct travel as the company conducted a successful sales process.
Michael John Boyle: A weighted average spread on her new directly originated portfolio companies. This quarter was approximately 695 basis points over sofa across our first lien debt investments and a weighted average net debt to EBITDA leverage ratio on these new loans was approximately 475 times.
Michael John Boyle: And conservative capital structures and the current market environment.
Michael John Boyle: The first quarter was also an active quarter of sales and repayment activity across our portfolio.
Michael John Boyle: Our largest repayment in Q1 was driven by an exit on our first lien and equity investment in direct travel as the company conducted a successful sales process. This was a 2017 vintage investments that was restructure back in 2020 during COVID-19.
Michael John Boyle: This was a 2017 vintage investment that was restructured back in 2020 during COVID. Bain Capital Credit was heavily involved in the restructuring as one of the large lenders, and we were pleased to drive a positive outcome for our shareholders given our deep restructuring capabilities and expertise. See you next time.
Michael John Boyle: Capital credit was heavily involved in the restructuring is one of the large lenders and we were pleased to drive a positive outcome for our shareholders, given our deep restructuring capabilities and expertise.
Michael John Boyle: The growth IRR and multiple of money for our investment in direct travel since inception were 13% and 1.8 times money on money. Turning to the investment portfolio, at the end of the first quarter, the size of our investment portfolio at fair value was approximately $2.4 billion across a highly diversified set of 153 companies operating across 32 different industries. Our portfolio primarily consists of investments in first lien senior secured loans, given our focus on downside protection and investing in the top of the capital structure.
Michael John Boyle: The gross IRR and multiple of money for our investment in direct travel since inception, with 13% and one eight times somebody out of the body.
Michael John Boyle: Turning to the investment portfolio.
The end of the first quarter the size of our investment portfolio at fair value was approximately $2 $4 billion across a highly diversified set of 153 companies operating across 32 different industry.
Michael John Boyle: Our portfolio of primarily consists of investments in first lien senior secured loans, given our focus on downside protection and investing in the top of capital structures.
Michael John Boyle: As of March 31st, 67% of the investment portfolio at fair value was invested in first lien debt, 2% in second lien debt, 2% in subordinated debt, 4% in preferred equity, 9% in equity and other interests, as well as 16% across our joint ventures, including 11% in the International Senior Loan Program and 5% in the Senior Loan Program. The underlying investments within both of our joint venture structures are first lane loans.
Michael John Boyle: As of March 31, 67% of the investment portfolio at fair value was invested in first lien debt, 2% in second lien debt, 2% in subordinated debt, 4% in preferred equity, 9% in equity and other interests as well as 16% across our joint ventures, including 11% in the.
Michael John Boyle: National's senior loan program and 5% in the senior loan program.
Michael John Boyle: The underlying investments within both of our joint venture structures are first lien loans.
Michael John Boyle: As of March 31st, 2024, the weighted average yields of the portfolio at amortized cost and fair value were 12.9% and 13.0%, respectively, as compared to 13.0% and 13.1%, respectively, as of December 31st, 2023. Ninety-four percent of our debt investments bear interest at a floating rate, positioning the company favorably in today's higher interest rate environment. Moving over to portfolio credit quality trends, fundamentals remain healthy, and we have observed positive credit migration across our portfolio. As Mike Ewald highlighted earlier, the median leverage attachment point declined to 4.7 times as of March 31st, as compared to 4.8 times as of December 31st.
Michael John Boyle: As of March 31, 2024, the weighted average yield of the portfolio at amortized cost and fair value were 12, 9% and 13.0% respectively.
Michael John Boyle: As compared to 13.0% and 13, 1% respectively as of December 31, 2023.
Michael John Boyle: 94% of our debt investments bear interest at a floating rate positioning the company favorably in today's higher interest rate environment.
Michael John Boyle: Okay.
Michael John Boyle: Moving over to portfolio credit quality trends fundamentals remain healthy and we have observed positive credit migration across our portfolio.
Michael John Boyle: As Mike Ewald highlighted earlier, the median leverage attachment point declined to $4 seven times as of March 31, as compared to four eight times as of December 31.
Michael John Boyle: Within our internal risk rating scale, we continue to see improvements within our risk rating one and two investments, which indicate companies are performing in line or better than expectations relative to our initial underwrite. As of March 31st, these risk rating one and two investments comprised 97% of our portfolio fair value, up from 95% as of year end. Risk rating three and four investments comprise 3% of our portfolio at fair value, and contributing to this decline from quarter over quarter was an upgrade of one of our riskier rated portfolio companies that had migrated to a higher tier based on improving underlying business fundamentals.
Michael John Boyle: Within our internal risk rating scale, we continue to see increased improvement within our risk rating, one and two investments, which indicate companies are performing in line or better than expectation relative to our initial underwriting.
Michael John Boyle: As of March 31, these risk rating, one and two investments comprise 97% of our portfolio at fair value up from 95% as of year end.
Michael John Boyle: Risk rating three and four investments comprised 3% of our portfolio at fair value.
Michael John Boyle: And contributing to this decline.
Quarter over quarter was an upgrade of one of our riskier rated portfolio companies that had migrated to a higher tier based upon improving underlying business fundamentals.
Michael John Boyle: Investments on non-accrual remain low across our portfolio and represented 1.7% and 1.0% of the total investment portfolio at amortized cost and fair value as of March 31st, down from 1.9% and 1.2% respectively as of December 31st. Amit will now provide a more detailed financial report.
Michael John Boyle: Investments on non accrual remained low across our portfolio and represented one 7% from 1.0% of the total investment portfolio at amortized cost and fair value as of March 31 down from one 9% and one 2% respectively as of December 31.
Michael John Boyle: Amit will now provide a more detailed financial review.
Amit Joshi: Thank you, Mike, and good morning, everyone. I'll start the review of our first quarter 2024 results with our income statement. Total investment income was $74.5 million for the 3-month-ended March 31st, 2024, as compared to $74.9 million for the 3-month-ended December 31st, 2024. The decrease in investment income was primarily driven by a decrease in interest and dividend income, partially offset by an increase in other income.
Amit: Thank you, Mike and good morning, everyone I'll start by review of our first quarter 2024.
Amit: Our income statement.
Amit: Total investment income was $74 5 million for the team months ended March 31 2024.
Amit: Compared with $74 9 million for the three months ended December 31st 2022.
Amit: The decrease in investment income was primarily driven by a decrease in interest and dividend income.
Amit: Partially offset by increase in other income.
Amit Joshi: The decrease in interest and dividend income was primarily driven by a one-time dividend income from ISLP during the prior quarter and modestly lower investment income across our portfolio as our average net leverage was slightly lower in Q1, as many of our new originations funded later during the quarter. Our investment income continues to benefit from high-quality sources of investment income, largely driven by contractual cash income across its investments. Interest income and dividend income represented 93% of our total investment income in Q1.
Amit: The decrease in interest and dividend income.
Amit: Primarily driven by a one time dividend income from ICL P. During the prior quarter and modestly lower investment income across that portfolio has that average net leverage was slightly lower in Q1 as many of our new origination funded later during the quarter.
Amit: Our investment income continues to benefit from high quality sources of investment income largely driven by contractual cash income across this investment.
Amit: Interest income and dividend income represented 93% of our total investment income in Q1.
Amit Joshi: In a recent PIC income represented approximately 7% of our total investment income this quarter, slightly down from 8% during the fourth quarter. Total expenses for the first quarter were $39.5 million as compared to $39 million in the fourth quarter.
Amit: And it's been Pik income represented approximately 7% of our total investment income this quarter.
Amit: Taking it down from 8% during the fourth quarter.
Amit: Total expenses for the first quarter, we had $39 5 million as compared with $39 million in the fourth quarter.
Amit Joshi: Net investment income for the fourth quarter was $34 million, or $0.53 per share, as compared to $34.9 million, or $0.54 per share for the prior quarter. During the three-month-ended March 31st, 2024, the company had a net realized and unrealized gain of $1.1 million. Net income for the three-month-ended March 31, 2024 was $35.1 million, or $0.55 per share. Moving over to our ballot.
Amit: Net investment income for the fourth quarter was 34 million or 53 cents per share as compared with $34 9 million or 54 cents per share for the prior quarter.
Amit: During the three months ended March 31st 2024, the company had net realized and unrealized gain of $1 1 million.
Amit: Net income for the three months ended March 31st 2024 was $35 1 million or <unk> 55 per share.
Amit: Moving over to our balance sheet.
Amit Joshi: As of March 30, 2020, our investment portfolio had a fair value of $2.4 billion and total assets of $2.6 billion. Total net assets were $1.1 billion as of March 30. NAF per share was $17.70, up from $17.70, at the end of the fourth quarter, representing a 0.6% increase quarter over quarter. The increase in our NAF was primarily driven by an increase in our debt, coupled with net gain across us. At the end of Q1, our debt-to-equity ratio was 1.19 times as compared to 1.11 times at the end of Q2.
Amit: March 31st our investment portfolio at fair value totaled $2 4 billion and total assets of $2 6 billion.
Amit: Total net assets were $1 1 billion as of March 31st.
Amit: Next question I had was $17 70, you said up from $17 60 at the end of fourth quarter, representing a 0.6% increase quarter over quarter.
Amit: The increase in our NAV was primarily driven by over earning our dividend.
Amit: Coupled with net gain across our portfolio.
Amit: At the end of Q1, our debt to equity ratio was 119 times as compared to one point to one one times from the end of Q4.
Amit Joshi: Our net leverage ratio, which represents principal debt outstanding, less cash and unsettled trades, was 1.09 times at the end of Q1, compared to 1.02 times at the end of Q4. As of March 31st, approximately 56% of our outstanding debt was in floating rate debt and 44% in fixed rate debt. On balance, our debt funding continues to benefit from low fixed rate debt.
Amit: Our net leverage ratio, which represents principal debt outstanding less cash and unsettled shapes was 1.09 times at the end of Q1 compared to 1.02 times at the end of Q4.
Amit: As of March 31st approximately 56% of our outstanding debt was in floating rate debt and 44% and fixed rate debt.
Amit: Our net our debt funding continues to benefit from low fixed rate debt structure.
Amit Joshi: For the three months ended March 31st, 2024, the weighted average interest rate on our debt outstanding was 5.2% as compared to 5.3% as of the prior quarter. The weighted average maturity across our total debt commitment was approximately four years at March 31st, 2020. This year, we have been focused on extending our liability, particularly on our Senior Secure Revolving Credit Facility, which currently matures in December 2026. We look forward to providing an update in the near future.
Amit: The three months ended March 31, 'twenty 'twenty four the weighted average interest rate on our debt outstanding was five 2% as compared to five 3% as of the prior quarter at it.
Amit: The weighted average maturity across our total debt commitments was approximately 40 years at March 31st 2024.
Amit: This year, we have been focused on extending out our liability structures, particularly on our senior secured revolving credit facility, which currently mature than December 26, we look forward to providing an update in the near future.
Amit Joshi: Liquidity at quarter end totaled $358 million, including $242 million of undrawn capacity on a revolving credit facility, $122 million of cash and cash equivalents, including $74 million of restricted cash, and a negative $6 million of unsettled trades, net of receivables and payables of investments.
Amit: Liquidity at quarter end totaled 358 million, including 242 million of Undrawn capacity on our revolving credit facility $1 2 million of cash and cash equivalents, including 74 million of restricted cash and a negative $6 million of unsettled achieved net of receivables.
Amit: Payables up investments.
Amit Joshi: As Mike highlighted earlier, our board declared a second quarter 2024 dividend equal to $0.42 per share and a special dividend, as previously announced, of $0.03 per share, bringing the total Q2 dividend to $0.45 per share. Both dividends are payable on July 29, 2024 to stockholders of record on June 28, 2024. As a reminder, our board declares a total of $0.12 per share in additional dividends driven by our strong over-earnings in 2018. We intend to pay these special dividends in installments of three cents per share each quarter throughout this year.
Amit: As Mike highlighted.
Amit: Our board declared a second quarter 2024 dividend equal to 42 cents per share and a special dividend as previously announced.
Amit: <unk> per share, bringing total Q2 dividend to <unk> 45 per ship.
Amit: Both dividends are payable on July 29, 2024 to stockholders of record on June 28, 2024.
Amit: As a reminder, although.
Amit: <unk> declared a total of 12 cents per share additional dividend driven by our strong or whatever inning in 'twenty two 'twenty three.
Amit: Intend to pay the special dividend installments of <unk> <unk> per share each quarter throughout this year.
Amit Joshi: We currently estimate that our spillover income totaled approximately $0.93 per share, representing over two times our quarterly regular dividend. We will continue to monitor our undistributed earnings against student capital management considerations. With that, I'll turn the call back over to Mike Ewald for closing.
Amit: We currently estimate that our spillover income totaled approximately <unk> 93 per share representing over two times, our quarterly regular dividend.
Amit: We will continue to monitor our undistributed earnings against prudent capital management considerations.
Amit: With that I'll turn the call back over to Mike <unk> for closing remarks.
Michael Alexander Ewald: Thanks, Amit. Again, in closing, we are pleased to start off the year with another strong quarter of earnings. We produced attractive levels of investment income across our portfolio and demonstrated strong credit performance across our middle market borrowers. We believe we are well positioned in the middle market to capitalize on attractive growth opportunities going forward. We remain committed to delivering value for our shareholders, and thank you for the privilege of managing our shareholders' capital. By Constantine, please open the line for questions.
Mike: Thanks, Amit.
Mike: Again in closing we were pleased to start off the year with another strong quarter of earnings we produce attractive levels of investment income across our portfolio and demonstrated strong credit performance across our middle market borrowers.
Mike: We believe we are well positioned in the middle market to capitalize on attractive growth opportunities going forward.
Mike: We remain committed to delivering value for our shareholders and thank you for the privilege of managing our shareholders' capital.
Mike: Constantine Please open the line for questions.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the number one on your Touchtone phone, you'll hear a prompt that your hand is being raised should you wish the decline from the quoting process. Please press star followed by the numbers too.
Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press start followed by the number. If you are using a speakerphone, please lift the handset before pressing it.
Speaker Change: We're using a speaker phone please lift the handset before pressing any keys.
Operator: All right, your first question comes from the line of Finian O'Shea from Wells Fargo. Please go ahead.
Speaker Change: Your first question comes from the line of Finian O'shea from Wells Fargo. Please go ahead.
Finian O'shea: Hey, everyone, sorry, it was on mute. We wanted to ask about Sensory Tower, a new name that came with a pretty sizable spread and hold size according to what you've normally done in the past and kind of just seeing if you could give some more color there and how we should, you know, think about the why in those two elements.
Finian O'shea: Hey, everyone sorry was on mute.
Finian O'shea: We wanted to ask about.
Finian O'shea: Sensory tower new name that.
Finian O'shea: Came with a pretty sizable spread and hold size.
Finian O'shea: According to what you've normally done in the past.
Finian O'shea: Just seeing if you could give some more color there.
Finian O'shea: How we should think about the why and and those two elements.
Michael John Boyle: Sure. Thanks for the question, Finn. So, Sensor Tower was a new deal. We originated in the first quarter in the software space. Software is something that we have gone to episodically in the past and a place that we often find interesting relative value.
Speaker Change: Sure. Thanks for the question fin.
Speaker Change: The center tower was a new deal we originated in the first quarter in the software space.
Speaker Change: Software is something that we have learned to episodically in the past and a place that we often find interesting relative value. This was a situation where we were financing the acquisition.
Speaker Change: The new company from an existing company.
Michael John Boyle: This was a situation where we were financing the acquisition of a new company from an existing company, and it was backed by a sponsor that we know quite well. And so, as we did our in-depth diligence, we decided that a first lien loan made sense, priced at a spread of $750 over SOFR, which we think was a particularly attractive risk return in today's market environment. And this is a deal that we led and were able to structure and get the documents and terms that we wanted.
Speaker Change: It's backed by a sponsor that we know quite well and so as we did our in depth diligence, we decided that our first lien loan made sense priced at a spread of $7 50 over over sofa, which we think was a particularly attractive risk return in today's market environment.
Speaker Change: This is a deal that we lead and we're able to structure and get the documents that in terms that we bought it.
Michael John Boyle: I will note this is a larger position size for us, but this is also part of a strategy that we have to often originate and lead an entire tranche of debt and then syndicate it down to other partners over time, generating some skim income for our investors. And so, the hold size you see at the end of the quarter is something that's likely to come down over time as we syndicate that risk on to other players and collect some skim for our investors.
Speaker Change: I will note. This is a larger position size for us but this is also part of our strategy that we have to often originate and lead an entire tranche of debt and then syndicate down to other partners over time generating some skim income for our investors.
Speaker Change: And so the hold size you see at the end of the quarter.
Speaker Change: Something that's likely to come down over time, as we syndicate that risk onto other players and collect some skin for our investors.
Speaker Change: Yeah.
Michael John Boyle: It's a very helpful thing. Can you remind us how often you do that with syndication or sell-down? And just why not bring in other lenders in the beginning and not take that sort of risk if it's going to lead to risk of at least a concentrated position or whatnot?
Speaker Change: Very helpful. So can you remind us how how often you're doing that.
Speaker Change: The syndication or sell down.
Speaker Change: And just why not.
Speaker Change: Bring in other lenders in the beginning.
Speaker Change: Not take that sort of risk if it's going to lead to.
Speaker Change: Risk of at least the concentrated position or whatnot.
Speaker Change: Yeah.
Michael John Boyle: Sure. So, you'll see in our other income over time that we do quite often generate this type of income based on origination fees, both for risk we hold and also risk that we'll sometimes pass on to other investors. The reason why sometimes we will take a larger risk position is really to deliver certainty to the sponsor to close the transaction, recognizing that we are being mindful of not taking too large of a position when we're underwriting any name.
Speaker Change: Sure. So youll see in our other income over time that we do quite often generate this type of income based on origination fees. Both for risk, we hold and also risk that will sometimes pass onto other investors.
Speaker Change: The reason why sometimes we will take a larger risk position as it relates to deliver certainty to the sponsor to.
Speaker Change: To close the transaction recognizing that we are being mindful of not taking too large of a position.
Speaker Change: When we're when we're underwriting any man and.
Michael John Boyle: And so, it is something that is a key part of the value we do drive for our shareholders, sometimes taking that risk on and then syndicating it. The other point I would add there, Finn, is that we do, within the private credit group, have a handful of dedicated capital markets professionals. So it is their job to ensure that we do have some back-end interest for situations where we do take a skim, which, again, goes directly to the shareholders.
Speaker Change: So it is something that is a key part of the value we do drive for our shareholders at some time.
Speaker Change: That risk on them and then syndicating it sounds good.
Speaker Change: The other point I would add there is that we do within the private credit group have them.
Speaker Change: A handful of dedicated capital markets professionals. So it is their job to ensure that we do have some some backend interest for situations, where we do take skim.
Speaker Change: Which again goes directly to the shareholders.
Michael John Boyle: This is not a situation where we kind of go in blind and figure out a couple months later that we may want to sell it down. This is something where we go into it with a pretty high level of confidence that we know there's going to be somebody on the other side of that trade.
Speaker Change: This is not a situation, where we kind of go in blind and figure out a couple of months later that we may want to sell down is this something where we go into it with a pretty high level of confidence that we know there's going to be somebody on the other side of that trade.
Finian O'shea: Sure. Helpful. Thank you. And just one more. Direct travel.
Speaker Change: Sure helpful. Thank you and just one more.
Speaker Change: Direct travel that's looks like a.
Speaker Change: Pretty good outcome.
Speaker Change: I appreciate that.
Speaker Change: Can you.
Speaker Change: Just touch on any.
Speaker Change: I think you said your restructuring group worked on it.
Speaker Change: Ooh look like.
Speaker Change: I guess.
Michael John Boyle: That looks like a pretty good outcome. I appreciate that. Can you just touch on any, I think you said your restructuring group worked on it. I guess, you know, milestones you achieved or kind of what you were finally able to implement to make this saleable. And if you could remind us how long ago that was taken, I think you took the keys to that one in the past. Just like a brief recap of the timeline and what you were able to do to recover value there. And that's all for me. Thanks. Sure, so direct travel.
Speaker Change: Milestones, you've achieved or kind of what you were finally able to implement to make this scalable and if you could remind us how long ago that was taken.
Speaker Change: Look the keys are about what in the past just like a brief recap of the timeline and what what you were able to do to recover value there and that's all for me. Thanks.
Michael John Boyle: Sure. So, Direct Travel was the 2017 investment we made. It is an outsourced travel agency for small and mid-sized businesses. So, as COVID shut down travel around the world, this was a business that went to negative revenue.
Speaker Change: Sure. So the direct travel was the 2017 investment we made it as that.
Speaker Change: Outsource travel agency for small and mid sized businesses. So as COVID-19 shutdown travel around the world. This was a business that went to negative revenue. So we ended up taking the keys in 2020, but recognizing the fact that we did think that this company has the potential to recover at or above the original value and original revenues we did not.
Michael John Boyle: So, we ended up taking the keys in 2020, but recognizing the fact that we did think that this company had the potential to recover at or above its original value and original revenues. We did not write off any debt, but instead took the keys, maintained our first lien debt position, and now we're also the owner of the business. As we thought forward to an exit and sale process and recovery, we wanted to make sure we had an incentivized management team.
Speaker Change: Write off any debt, but instead took the keys maintained our first lien debt position.
Speaker Change: But now also where the owner of the business as we thought.
Speaker Change: Forward to an exit and sale process and recovery, we wanted to make sure we had and incentivize management team. We wanted to make sure. We had the right independent board of directors and so our operating group alongside some some of the other lenders in the tranche.
Michael John Boyle: We wanted to make sure we had the right independent board of directors. And so, our operating group, alongside some of the other lenders in the tranche, ensured that we did have a motivated management team to keep that business on track for a turnaround as the world reopened. And in recent history, we were able to go and have a successful sale process based on the strong recovery of that business. And so, I think that is a credit to the lender consensus across the handful of lenders that were in that debt tranche to drive the outcome, but also the strength of our restructuring expertise here at Bain Capital and the operating network that we do have to turn around businesses that may not go according to their original budget.
Speaker Change: Sure that we didn't have a motivated management team to keep that business on track for a turnaround as the world Reopens.
Speaker Change: And in recent history, we were able to go and have a successful sales process base.
Speaker Change: Based on the strong recovery of that business and so I think that is a credit to the.
Speaker Change: The lender consensus across the handful of lenders that were in that that debt tranche to drive the outcomes, but also the strength of our restructuring expertise or at Bain capital and the operating network that we do have to turnaround businesses that may not go according to original budget.
Speaker Change: Thanks, so much.
Speaker Change: Thank you.
Speaker Change: Yeah.
Operator: Just a reminder, if you have any questions, please press star, then the number one on your telephone keypad. Your next question comes from the line of Paul Johnson from KBW. Please go ahead.
Speaker Change: Alright, just a reminder, if you have any questions. Please press star then the number one on your telephone keypad your.
Your next question comes from the line of Paul Johnson from <unk>. Please go ahead.
Paul Conrad Johnson: Good morning. Thanks for taking my question. How are you guys feeling about the pipeline, you know, and how has the strong, rich nation activity this quarter carried through? How do you feel about activity for the year?
Paul Conrad Johnson: Hey, good morning, Thanks for taking my questions.
Paul Conrad Johnson: So just how are you.
Paul Conrad Johnson: Are you guys feeling about the pipeline.
Paul Conrad Johnson: And how has.
Paul Conrad Johnson: Strong origination activity this quarter that carry through.
Paul Conrad Johnson: The second quarter.
Speaker Change: Uh huh.
Speaker Change: How do you feel the activity from here.
Michael Alexander Ewald: Yeah, thanks, Paul. You know, what I would say is that we really started seeing a kind of turnaround after Powell's comments back in December that we're likely at a peak for rates and that there are some cuts to be expected in 2024. Clearly, inflation has still been pretty consistent here, so we haven't seen any rate cuts yet, and there's some debate over how many, especially over the rest of the year.
Speaker Change: Yeah. Thanks, Paul you know what I'd say is we really started seeing a turnaround kind of post.
Speaker Change: Powells comments back in December that we're likely at a peak for rates and that there is some some cuts to be expected in 2024.
Speaker Change: Clearly inflation has.
Speaker Change: Still pin.
Speaker Change: Pretty consistent here, so we haven't seen any rate cuts you Adam.
Speaker Change: Some debate over how many especially over the rest of the year, but regardless. The fact that we have reached a peak I think it's starting to give private equity sponsors for example.
Michael Alexander Ewald: But regardless, the fact that we have reached a peak, I think, started to give private equity sponsors, for example, a little bit more confidence that they weren't writing into a base case that had a recession associated with it. So that really started manifesting itself in the first quarter in terms of increased deal volume, more certainty around modeling cases, and such. And so buyers, private equity sponsors, got more excited about transacting in the market.
Speaker Change: A little more confidence that they werent writing.
Speaker Change: Into our base case that had a recession associated with it so that really started.
Speaker Change: Manifesting itself in the first quarter.
Speaker Change: A increased deal volume more certainty around.
Speaker Change: Modeling cases, and such and so buyers private equity sponsors got more excited about transacting.
Speaker Change: In the market, we certainly saw that in Q1, as we mentioned in our prepared remarks.
Michael Alexander Ewald: We certainly saw that in Q1, as we mentioned in our prepared remarks. That has continued here into Q2. And certainly, anecdotally, Mike and I have been spending a lot of time with the rest of the team evaluating new investment opportunities, more so certainly than we would have been doing in Q4. And again, that's continuing.
Speaker Change: Has continued here into into Q2.
Speaker Change: Certainly anecdotally, Mike and I have been spending a lot of time with the rest of the team evaluating new investment opportunities more so certainly than we would have been doing in Q4 and again that that's continuing today.
Michael Alexander Ewald: Have you found that more of the interest and activity has been in that sort of core market where you guys have been in the exact sort of upper middle market?
Speaker Change: Have you found more of that interest and activity has been in that sort of core middle market, where you go.
Mike: Yes. It is.
Mike: Exactly sort of Bruce upper middle market.
Michael Alexander Ewald: Yeah, it looks certainly easier for us to comment on that core middle market since that's where we are, but having a, or being affiliated with, a large broadly syndicated loan business also gives us some insights into that upper slash, upper middle market slash large cap corporate market. And we are seeing that there, it seems to be true, the activity seems to be driven mostly by refinancings. And again, as we mentioned, there are a lot of BSL takeouts of formerly private credit deals.
Mike: Yeah look certainly easier for us to comment on that core middle markets, and that's where we are but.
Mike: Having a.
Mike: We're being affiliated with a large broadly syndicated loan business also gives us an insight into that that upper slash upper middle market slash large cap corporate market and we are seeing that there it seems to be the activity seems to be driven mostly by refinancings.
Mike: As we mentioned there's a lot of your BSL takeouts of formerly private credit deals I'd say from a new platform perspective, there's been some change there, but we just think about the the number of companies that are that big is just not that big of a universe.
Michael Alexander Ewald: I'd say from a new platform perspective, there's been some change there. But if you just think about the number of companies that are that big, it's just not that big of a universe. And so, yeah, I think that the volume there is always gonna be somewhat spotty. I haven't seen a wholesale return to fresh LBO activity there, similar to what we've been seeing in the core middle. I think that's helpful.
Mike: So I think the.
Mike: The.
Mike: Volumes, there is always going to be somewhat spotty I haven't seen a wholesale return to fresh LBO activity there.
Mike: Similar to what we've been seeing in the core middle market.
Paul Conrad Johnson: I think that's helpful and on the facility, it sounds like you're possibly in discussions and working on that. How's that going? We expect that to be... Pricing on that, maintained or any changes there.
Speaker Change: Thanks, that's helpful and.
Speaker Change: On the facility.
Speaker Change: Ability it sounds like that year.
Speaker Change: Possibly in discussions and working on that.
Speaker Change: L. A we expect that to be the pricing on that.
Speaker Change: Maintained or any changes there.
Michael Alexander Ewald: Sorry, Paul, you were saying on the on our finances.
Speaker Change: Sorry, you were saying on the on our financing.
Paul Conrad Johnson: Yeah, the credit facility.
Speaker Change: Yeah, the credit facility.
Michael Alexander Ewald: Sure. So, conversations are ongoing. We're not expecting any material change from existing structures as we look at that extension.
Speaker Change: Sure.
Speaker Change: So conversations are ongoing we're not expecting any material change from from existing structures as we've looked at that extension.
Paul Conrad Johnson: Got it. Thanks. That's all for me.
Speaker Change: Got it thanks, that's all for me.
Speaker Change: Yeah.
Operator: Your next question comes from the line of Derek Hewett from Bank of America. Please go ahead.
Dairy Cow: Your next question comes from the line of dairy cow. It from Bank of America. Please go ahead.
Derek Russell Hewett: Good morning, everyone. Given elevated base rates, could you please provide some color on the overall portfolio interest coverage for the first quarter versus, say, the end of the year? And then also, what percentage of the portfolio has interest coverage below one times as of the first quarter?
Speaker Change: Good morning, everyone.
Dairy Cow: So given the elevated base rates could you provide some color on the overall portfolio interest coverage for the first quarter versus.
Dairy Cow: Say the ended the year and then also what percentage of the portfolio has interest coverage below one times.
Michael John Boyle: Sure. So, I'll start with the last part of your question, around what percent has interest coverage below one time. That really is aligned with our risk ratings of threes and fours, so companies that are performing less below budget. So, that's about 3 percent of the portfolio that has interest coverage below one time. In terms of interest coverage trends, we are-it has-with base rates remaining high, interest coverage has come down slightly, although we still view it to be at a healthy level.
Speaker Change: As of the first quarter.
Speaker Change: Sure So I'll start with the <unk>.
Speaker Change: Sure. The last part of your question around what percent has interest coverage below one times that really is aligned with our risk rating three and four so companies that are performing less below budget. So.
Speaker Change: That's about 3% of the portfolio of that.
Speaker Change: That has interest coverage below one time.
Speaker Change: Interest coverage trends.
Speaker Change: It has.
Speaker Change: With base rates remaining high interest coverage has come down slightly although we still view it to be at healthy level. So we were around two times interest coverage. If I rewind about six months, we are now closer to between 1.819 times interest coverage across the overall portfolio.
Michael John Boyle: So, we were around two times interest coverage if I rewind about six months. We're now closer to between 1.8 and 1.9 times interest coverage across the overall portfolio, and we run stress tests running forward our current base rates for the next 12 months, and we do not see a material further degradation in interest coverage from here. So, we are feeling quite good about the fact that our capital structures are appropriately levered for today's interest rate environment, and that does dovetail with the 4.7 times debt-to-EBITDA average across our portfolio, which we think is quite defensible in today's interest rate environment.
Speaker Change: And we do run stress test running forward, our current base rates for the next 12 months and we do not see a material further degradation in interest coverage from here. So we are feeling quite good about the fact that our capital structures are appropriately levered for today's interest rate environment and that does dovetail to the.
Speaker Change: Four seven times debt to EBITDA average across our portfolio, which we think is.
Speaker Change: Is it quite defensible in today's interest rate environment.
Derek Russell Hewett: Okay, thank you. And then, in terms of just looking at the credit trends, a lot of them seem to be positive, whether it's the net leverage or the improvement in non-accruals or the positive movement in the risk rating. But when we look at the median EBITDA, it is down meaningfully if you look at it on a quarter-over-quarter basis or on a year-over-year basis. Could you – are there lumpy types of underlying borrowers in that number, and so the numbers are skewed a little bit? And would we expect this to kind of stabilize going forward? Sure. So that really...
Speaker Change: Okay. Thank you and then in terms of just looking at a lot of the credit trends seem to be.
Speaker Change: Positive whether it's the.
Speaker Change: But the net leverage or the improvement non accruals or the other.
Speaker Change: Positive movement in.
Speaker Change: The risk rating, but when we look at the median EBITDA is down meaningfully if you look at it on a quarter over quarter basis.
Speaker Change: On a year over year basis.
Speaker Change: Could you.
Speaker Change: Or are there some lumpy types of of underlying borrowers in that number and so the number is skewed a little bit and we would expect this kind of stabilize going forward.
Speaker Change: Okay.
Michael John Boyle: Sure. So the reduction in EBITDA is really a function of many of the companies that we harvested in the first quarter were companies where EBITDA had grown meaningfully since inception. So think of EBITDA between $90 and $100 million for what we exited versus new loans, where the entry EBITDA was about $37 million on average. And so, as is often the case in our segment of the market, we'll buy a company at, say, $30 million EBITDA, watch it grow to $90 or $100 million EBITDA, and exit.
Speaker Change: Sure so that really the reduction in EBITDA is really a function of many of the companies that we harvested in the first quarter, where companies were EBITDA had grown meaningfully since inception, so think of EBITDA between.
Speaker Change: <unk> 90, and $100 million of what we exited versus new loans, where we the entry EBITDA was about $37 million on average and so as is often.
Speaker Change: The case in our segment of the market well buy a company yet you know call. It 30 million of EBITDA watch it grow to 90 or 100 million of EBITDA and exit and so that's a trend that we saw in in the first quarter and that's the reason why our EBITDA trended down you shouldn't view that as a as an indication of a negative negative trends in the underlying portfolio companies.
Michael John Boyle: And so that's a trend that we saw in the first quarter, and that's the reason why our EBITDA trended down. But you shouldn't view that as an indication of a negative trend in the underlying portfolio companies but more as a trend in the overall portfolio.
Speaker Change: But more of a trend in the overall portfolio composition.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you Derek.
Michael Alexander Ewald: There are no further questions at this time. I would like to hand the call back to Michael Ewald for closing remarks.
Speaker Change: There are no further questions at this time I would like to hand, the call back to Michael you want for closing remarks.
Michael Alexander Ewald: Great. Thanks, Konstanthin. And thanks, everyone, for your time and attention today. Again, we really appreciate the support and the interest, and we look forward to bringing you more results in the future. Thanks very much. Cheers.
Michael Alexander Ewald: Great. Thanks, Constantine and thanks, everyone for your time and attention today, and we really appreciate the support and the interest and we look forward to bringing you more and more results in the future. Thanks very much cheers.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Michael Alexander Ewald: Yes.
Michael Alexander Ewald: Okay.