Q2 2024 Nuveen Churchill Direct Lending Corp Earnings Call

Speaker Change: Welcome to Naveen Churchill Direct Lending Corp's second quarter 2024 earnings call.

Operator: Welcome to Naveen Churchill Direct Lending Corp's second quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the management team's prepared remarks. As a reminder, this conference call is being recorded for replay purposes. I'd like to turn the call over to Alona Gornick, Senior Investment Strategist at Churchill Asset Management. Alona, please go ahead.

Operator: Welcome to the Veen Churchill Direct Lending Corp.

Operator: 2nd quarter, 2024 earnings call. At this time, all participants are in a listen-only mode.

Speaker Change: At this time, all participants are in a listen-only mode. A question-and-answer session will follow the management team's prepared remarks. As a reminder, this conference call is being recorded for replay purposes.

Operator: A question and answer session will follow the formal. Will follow the management team's prepared remarks. As a reminder, this conference call is being recorded for replay purposes.

Alona Gornick: I'd like to turn the call over to Alona Gornick, Senior Investment Strategist at Churchill Asset Management. Alona, please go ahead.

Alona Gornick: I'd like to turn the call over to Alona Gornick, Senior Investment Strategist at Churchill Asset Management. Alona, please go ahead. Good morning and welcome to the Veen Churchill Direct Lending Corp. 2nd quarter, 2024 earnings call. Today, I'm joined by NCBL's Chairman, President and CEO, Ken Kencel, and Chief Financial Officer and Treasurer, Dye Vignis, as well as Robert Pond, head of West Relations for Retail and Well here at Churchill.

Naveen Churchill: Good morning and welcome to Naveen Churchill Direct Lending Corp. second quarter 2024 earnings call.

Alona Gornick: Good morning, and welcome to the Naveen Churchill Direct Lending Corps second quarter 2024 earnings call. Today, I'm joined by NCBL's Chairman, President, and CEO, Ken Kinsell, and Chief Financial Officer and Treasurer, Skye Vickness, as well as Robert Pahn, Head of Investor Relations for Retail and Wealth here at Churchill.

Speaker Change: Today, I'm joined by NCBL's Chairman, President, and CEO , Ken Kinsell, and Chief Financial Officer and Treasurer, Skye Vickness, as well as Robert Pahn, Head of Investor Relations for Retail and Wealth here at Churchill. Following our prepared remarks, we will be available to take your questions.

Alona Gornick: Following our prepared remarks, we will be available to take your questions. Today's call may include forward-looking statements. Such statements involve known and unknown risks, uncertainties, and other factors, and undue reliance should not be placed thereon. Such forward-looking statements are not historical facts but rather are based on current expectations, estimates, and projections about the company, our current and prospective portfolio investments, our industry, our beliefs and opinions, and our assumptions. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict.

Alona Gornick: Following our prepared remarks, we will be available to take your questions. Today's call may include forward-looking statements. Such statements involve known and unknown risks, uncertainties, and other factors, and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather based on current expectations, estimates, and projections about the company. Our current and prospective portfolio investments, our industries, our beliefs and opinions, and our assumptions. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict. Actual results may differ materially from those expressed or forecasted in the forward-looking statement.

Speaker Change: Today's call may include forward-looking statements.

Alona Gornick: Actual results may differ materially from those expressed or forecasted in the forward-looking statement. We ask that you refer to the company's most recent filings with the SEC for important risk factors. Any forward-looking statements made today do not guarantee future performance, and undue reliance should not be placed on them. The company has no obligation to update any forward-looking statements at any time. Our earnings release, 10-Q, and supplemental earnings presentation are available on the investor and news sections of our website at ncbl.com. Now, I'd like to turn the call over to

Speaker Change: Such statements involve known and unknown risks, uncertainties, and other factors and undue reliance should not be placed thereon.

Speaker Change: These forward-looking statements are not historical facts, but rather are based on current expectations, estimates, and projections about the company, our current and prospective portfolio investments, our industry, our beliefs and opinions, and our assumptions.

Speaker Change: These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict.

Speaker Change: Actual results may differ materially from those expressed or forecasted in the forward-looking statement. We ask that you refer to the company's most recent filings with the SEC for important risk factors.

Alona Gornick: We ask that you refer to the company's most recent filings with the SEC for important risk factors. Any forward-looking statements made today do not guarantee future performance, and undue reliance should not be placed on them. The company sends no obligations to update any forward-looking statements at any time.

Speaker Change: Any forward-looking statements made today do not guarantee future performance, and undue reliance should not be placed on them. The company assumes no obligation to update any forward-looking statements at any time.

Speaker Change: Our earnings release, 10-Q, and supplemental earnings presentation are available on the investor and news sections of our website at ncbl.com. Now I'd like to turn the call over to Ken.

Alona Gornick: Our earnings release, 10-Q, and supplemental earnings presentations are available on the investor and news sections of our website at mcdl.com.

Ken Kencel: Now, I'd like to turn the call over to Ken. Thank you, Alona, and thank you, everyone, for joining us on the call today. I'd like to start by taking a few minutes to discuss NCDL's results for the second quarter, and then I'll provide some thoughts on the current market and economic environment and our outlook for the coming months. After that, I'll hand the call over to Shy for more detailed discussion of our performance. Overall, I'm very pleased with the momentum we've maintained since our last call. Our performance continues to be strong as we delivered net investment income that exceeded both our regular quarterly distribution of 45 cents per share and our 10 cents per share of special distribution.

Ken: Thank you, Alona, and thank you, everyone, for joining us on the call today.

Ken Kinsell: Thank you, Alona, and thank you everyone for joining us on the call today. I'd like to start by taking a few minutes to discuss NCDL's results for the second quarter, and then I'll provide some thoughts on the current market and economic environment and our outlook for the coming months. After that, I'll hand the call over to Shai for a more detailed discussion of our performance. Overall, I'm very pleased with the momentum we've maintained since our last call.

Ken: I'd like to start by taking a few minutes to discuss NCDL's results for the second quarter, and then I'll provide some thoughts on the current market and economic environment and our outlook for the coming months.

Ken: After that, I'll hand the call over to Shai for a more detailed discussion of our performance.

Shai: Overall, I'm very pleased with the momentum we've maintained since our last call.

Shai: Our performance continues to be strong as we delivered net investment income that exceeded both our regular quarterly distribution of $0.45 per share and our $0.10 per share special distribution.

Ken Kinsell: Our performance continues to be strong, as we delivered net investment income that exceeded both our regular quarterly distribution of $0.45 per share and our $0.10 per share special distribution. Investment activity picked up significantly during the second quarter, with $360 million of new origination, over 95 percent of which were first lien senior secured loans.

Shai: Investment activity picked up significantly during the second quarter with $360 million of new originations, over 95%

Ken Kencel: Investment activity picked up significantly during the second quarter with 360 million of new originations, over 95 percent of which were first-leaning senior-secured loans. And we delivered an attractive 12.3 percent annualized dividend yield to shareholders. Our investment portfolio performed well this quarter, largely due to the continued strength of our senior loaned bet.

Shai: which were first lien senior secured loans.

Shai: And we delivered an attractive 12.3% annualized dividend yield to shareholders.

Ken Kinsell: And we delivered an attractive 12.3% annualized dividend yield to shareholders. Our investment portfolio performed well this quarter, largely due to the continued strength of our senior loan investors. Net asset value per share declined modestly quarter over quarter, primarily driven by unrealized losses on two investments that we placed on nonaccrual, which we will speak about later in the call.

Shai: Our investment portfolio performed well this quarter largely due to the continued strength of our senior loan investments.

Shai: Net asset value per share declined modestly quarter over quarter, primarily driven by unrealized losses on two investments that we placed on nonaccrual, which we will speak about later on in the call.

Ken Kencel: Smith. Net asset value per share declined modestly quarter over quarter, primarily driven by unrealized losses on two investments that we placed on non-accrual, which we will speak about later on in the call. Looking ahead, we are optimistic about NCDL's positioning as a leader in the core middle market, given our long-standing track record, deep network of sponsor relationships, and extensive, strong LP commitments across the broader church home platform. Looking at the overall market, credit quality remains strong despite the higher-for-longer rate environment and inflationary pressures on borrowers. While we are seeing modest spread compression during the first half of the year, we believe that our focus on the core middle market enables us to remain largely insulated from the pricing pressure, increase volatility, and generally weaker terms we see in the broadly syndicated loan market.

Shai: Looking ahead, we are optimistic about NCBL's positioning as a leader in the core middle market, given our long-standing track record, deep network of sponsor relationships, and extensive, strong LP commitments across the broader Churchill platform.

Ken Kinsell: Looking ahead, we are optimistic about NCDL's positioning as a leader in the core middle market, given our longstanding track record, deep network of sponsor relationships, and extensive, strong LP commitments across the broader Churchill platform. Looking at the overall market, credit quality remains strong despite the higher-for-longer rate environment and inflationary pressures on borrowers. While we are seeing modest spread compression during the first half of the year, we believe that our focus on the core middle market enables us to remain largely insulated from the pricing pressure, increased volatility, and generally weaker terms we see in the broadly syndicated loan market.

Shai: Looking at the overall market, credit quality remains strong despite the higher-for-longer rate environment and inflationary pressures on borrowers.

Shai: While we are seeing modest spread compression during the first half of the year,

Shai: We believe that our focus on the core middle market enables us to remain largely insulated from the pricing pressure, increased volatility, and generally weaker terms we see in the broadly syndicated loan market.

Shai: As a result, we believe that the risk-adjusted returns available to scaled, highly-selected managers like Churchill with deep, long-standing private equity relationships in the core middle market are among the most attractive in the private credit market today.

Ken Kencel: As a result, we believe that the risk-adjusted returns available to scale highly selective managers like Churchill with deep, long-standing private equity relationships and the core middle market are among the most attractive in the private credit market today. The US economic environment remains healthy and resilient, and we believe that will continue in the near term. We have yet to see evidence in our core middle market portfolio of an imminent recession or pullback in spending and cat-backs investment. And our CFO confidence appears to remain high, given the significant add-on M&A activity that we are seeing on a daily basis.

Ken Kinsell: As a result, we believe that the risk-adjusted returns available to scaled, highly selective managers like Churchill with deep, long-standing private equity relationships in the core middle market are among the most attractive in the private credit market today. The U.S. economic environment remains healthy and resilient.

Shai: The U.S. economic environment remains healthy and resilient, and we believe that will continue in the near term.

Ken Kinsell: And we believe that will continue in the near term. We have yet to see evidence in our core middle market portfolio of an imminent recession or pullback in spending and CapEx investment, and our CFO confidence appears to remain high given the significant add-on M&A activity that we are seeing on a daily basis. We also monitor on a daily basis the liquidity of borrowers in our portfolio and have been pleased to see how companies have generally navigated this higher-rate environment quite well. Moreover, we believe interest coverage is going to be a tailwind going into the back half of the year as we start to see the Fed move to reduce interest rates as inflation pressures subside.

Shai: We have yet to see evidence in our core middle market portfolio of an imminent recession or pullback in spending and CapEx investment.

Shai: And our CFO confidence appears to remain high given the significant add-on M&A activity that we are seeing on a daily basis.

Shai: We also monitor on a daily basis the liquidity of borrowers in our portfolio.

Ken Kencel: We also monitor on a daily basis the liquidity of borrowers in our portfolio and have been pleased to see how companies have generally navigated this higher rate environment quite well. Moreover, we believe interest coverage is going to be a tailwind going into the back half of the year as we start to see the Fed move to reduce interest rates as inflation pressures subside. Our deep relationships in the middle market private equity community provide us with strong insights on potential headwinds. And while underwriting selectivity will always be at the forefront, we feel quite positive heading into the second half of the year with respect to both field flow generation and the health of our underlying borrowers.

Shai: and have been pleased to see how companies have generally navigated this higher rate environment quite well.

Shai: Moreover, we believe interest coverage is going to be a tailwind going into the back half of the year as we start to see the Fed move to reduce interest rates as inflation pressures subside.

Shai: Our deep relationships in the middle market private equity community provide us with strong insights on potential headwinds.

Ken Kinsell: Our deep relationships in the middle market private equity community provide us with strong insights on potential headwinds. And while underwriting selectivity will always be at the forefront, we feel quite positive heading into the second half of the year with respect to both deal flow generation and the health of our underlying borrower. When looking at the second quarter results, there are two factors that help bolster our performance. One was the level of deployment we experienced in the quarter.

Shai: And while underwriting selectivity will always be at the forefront, we feel quite positive heading into the second half of the year with respect to both deal flow generation and the health of our underlying borrowers.

Shai: When looking at the second quarter results, there are two factors that help bolster our performance.

Ken Kencel: When looking at the second quarter results, there are two factors that help bolster our performance. One was the level of deployment we experienced in the quarter. The other was our discipline in managing NCDL's leverage profile, which I will discuss in more detail. NCDL's deployment of capital during the second quarter was very strong. This was a meaningful uplift compared to Q1. In fact, Q2 represented one of the strongest quarters in the history of our firm in terms of loan origination. And that resurgence of activity, particularly in the senior lending area, which represented over 95 percent of our origination activity, was responsible for much of our success.

Shai: One was the level of deployment we experienced in the quarter. The other was our discipline in managing NCDL's leverage profile, which Shai will discuss in more detail.

Ken Kinsell: The other was our discipline in managing NCDL's leverage profile, which Shai will discuss in more detail. NCDL's deployment of capital during the second quarter was very strong. This was a meaningful uplift compared to Q1. In fact, Q2 represented one of the strongest quarters in the history of our firm in terms of loan origination. And that resurgence of activity, particularly in the senior lending area, which represented over 95% of our origination activity, was responsible for much of our success. In fact, as a result of the strong level of senior lending activity, first lien senior loans increased to nearly 91% of the fair value of the overall portfolio, the highest level spent in the past year.

Shai: NCDL's deployment of capital during the second quarter was very strong.

Shai: This was a meaningful uplift compared to Q1. In fact, Q2 represented one of the strongest quarters in the history of our firm in terms of loan origination.

Shai: And that resurgence of activity, particularly in the senior lending area, which represented over 95% of our origination activity, was responsible for much of our success.

Shai: In fact, as a result of the strong level of senior lending activity, first lien senior loans increased to nearly 91% of the fair value of the overall portfolio, the highest level it's been in the past year.

Ken Kencel: In fact, as a result of the strong level of senior lending activity, first lean senior loans increased to nearly 91 percent of the fair value of the overall portfolio, the highest levels in the past year. We will continue to prioritize opportunities to deploy capital in core middle market senior loan investments as we pursue portfolio growth and diversification as a public company. We feel this asset class provides strong long-term risk mitigation characteristics, including flooding rates, generally lower leverage, and traditional financial covenants. Like I mentioned earlier, our credit quality remains strong and healthy. The shy will cover later on in the call. Our weighted average internal risk rating remains at 4.1 versus an original rating of 4.0 for all of our investments, and our watch list remains a very manageable level of 3.8% of fair value.

Shai: We will continue to prioritize opportunities to deploy capital in core middle market senior loan investments as we pursue portfolio growth and diversification as a public company.

Ken Kinsell: We will continue to prioritize opportunities to deploy capital in core middle market senior loan investments as we pursue portfolio growth and diversification as a public company. We feel this asset class provides strong long-term risk mitigation characteristics, including floating rates, generally lower leverage, and traditional financial covenants. As I mentioned earlier, our credit quality remains strong and healthy, which I will cover later on in the call.

Shai: We feel this asset class provides strong long-term risk mitigation characteristics, including floating rates,

Shai: generally lower leverage, and traditional financial covenants.

Shai: Like I mentioned earlier, our credit quality remains strong and healthy.

Shai: As Shai will cover later on in the call, our weighted average internal risk rating remains at 4.1 versus an original rating of 4.0 for all of our investments, and our watch list remains a very manageable level of 3.8% of fair value.

Ken Kinsell: Our weighted average internal risk rating remains at 4.1, versus an original rating of 4.0 for all of our investors. And our watch list remains at a very manageable level of 3.8% of fair value. Overall, we are pleased with the fundamentals across the portfolio, with portfolio company net leverage of 4.8 times, interest coverage of 2.2 times on first lien loans, and a weighted average asset yield of 11.4%. These metrics are a direct result of conservative structuring and relatively low attachment points that we target when underwriting new transactions.

Shai: Overall, we are pleased with the fundamentals across the portfolio.

Ken Kencel: Overall, we are pleased with the fundamentals across the portfolio, with portfolio company net leverage of 4.8 times, interest coverage of 2.2 times on first lien loans, and a weighted average asset yield of 11.4%. These metrics are direct results of conservative structuring and relatively low attachment points that we target when underwriting new transactions. This conservative approach has served us well in the elevated rate environment. That said, we did add two new non-accruals this quarter. However, within our highly diversified portfolio of nearly 200 investments, non-accruals represented just 0.49% of the fair value of the portfolio as of quarter end.

Shai: with portfolio company net leverage of 4.8 times.

Shai: interest coverage of 2.2 times on first lien loans and a weighted average asset yield of 11.4 percent.

Shai: These metrics are a direct result of conservative structuring and relatively low attachment points that we target when underwriting new transactions.

Shai: This conservative approach has served us well in the elevated rate environment.

Ken Kinsell: This conservative approach has served us well in the elevated rate environment. That said, we did add two new non-accruals this quarter. However, within our highly diversified portfolio of nearly 200 investors, Non-accruals represented just 0.49% of the fair value of the portfolio as of quarter end. We view these two new non-acryls as idiosyncratic in nature.

Shai: That said, we did add two new non-accruals this quarter.

Shai: However, within our highly diversified portfolio of nearly 200 investments,

Shai: Non-accruals represented just 0.49% of the fair value of the portfolio as of quarter end.

Shai: We view these two new nonicrols as idiosyncratic in nature.

Ken Kencel: We view these two new non-accruals as idiosyncratic in nature, and we are in conversations with both companies and their private equity owners as we work toward a favorable outcome for our shareholders. As you heard at the top of the call, we generated record deployments in the quarter, which has resulted in continued improvement in the diversification of our portfolio. This has been achieved with continued selectivity, facilitated by the significant proprietary deal flow our sourcing engine is able to generate from the breadth and depth of our PE relationships. We now have 198 companies in our portfolio, and our top 10 investments represent only 14.4% of the total portfolio.

Shai: and we are in conversations with both companies and their private equity owners as we work toward a favorable outcome for our shareholders.

Ken Kinsell: And we are in conversations with both companies and their private equity owners as we work toward a favorable outcome for our shareholders. As you heard at the start of the call, we generated record deployments in the quarter, which has resulted in continued improvement in the diversification of our portfolio. This has been achieved with continued selectivity facilitated by the significant proprietary deal flow our sourcing engine is able to generate from the breadth and depth of our PE relationships. We now have 198 companies in our portfolio, and our top 10 investments represent only 14.4% of the total portfolio.

Shai: As you heard at the top of the call, we generated record deployments in the quarter, which has resulted in continued improvement in the diversification of our portfolio.

Shai: This has been achieved with continued selectivity, facilitated by the significant proprietary deal flow our sourcing engine is able to generate from the breadth and depth of our PE relationships.

Shai: We now have 198 companies in our portfolio and our top 10 investments represent only 14.4% of the total portfolio.

Shai: This diversification is critical as we seek to maintain exceptional credit quality and originate additional attractive investment opportunities.

Ken Kencel: This diversification is critical as we seek to maintain exceptional credit quality and originate additional attractive investment opportunities. From a forward-looking perspective, we believe NCDL is well positioned for strong performance in the second half of 2024, particularly given our standing as one of the largest and most active BDCs focused on the core market. Our outlook is underpinned and enabled by NCDL's approach to portfolio construction and management.

Ken Kinsell: This diversification is critical as we seek to maintain exceptional credit quality and originate additional attractive investment opportunities. From a forward-looking perspective, we believe NCBL is well-positioned for strong performance in the second half of 2024, particularly given our standing as one of the largest and most active BDCs focused on the core middle market. Our outlook is underpinned and enabled by NCDL's approach to portfolio construction and management. Three key factors are worth highlighting.

Shai: From a forward-looking perspective, we believe NCDL is well-positioned for strong performance in the second half of 2024, particularly given our standing as one of the largest and most active BDCs focused on the core middle market.

Shai: Our outlook is underpinned and enabled by NCDL's approach to portfolio construction and management.

Shai: Three key factors are worth highlighting.

Ken Kencel: Three key factors are worth highlighting. First, NCDL has a strong focus on a high level of portfolio diversification across a number of key metrics. We are not simply looking to diversify at the sector level. We have constructed a defensive portfolio that is balanced across multiple measures, whether you're looking at sponsor, position size, or industry. We've achieved this level of diversification across all our different vehicles across our investment platform, and it represents a consistent commitment embedded in Churchill's DNA. It has been essential to our success throughout our history, and it is a key reason why I'm optimistic about NCDL's longer term prospects.

Shai: First, NCDL has a strong focus on a high level of portfolio diversification across a number of key metrics. It is a strong focus on a high level of portfolio diversification across a number of key metrics.

Ken Kinsell: First, NCDL has a strong focus on a high level of portfolio diversification across a number of key metrics. We are not simply looking to diversify at the sector level. We have constructed a defensive portfolio that is balanced across multiple measures, whether you're looking at sponsor, position size, or industry. We've achieved this level of governance across all our different vehicles across our investment platform, and it represents a consistent commitment embedded in Churchill's DNA.

Ken Kinsell: It has been essential to our success throughout our history, and it is a key reason why I'm optimistic about NCDL's longer-term prospects. Second, we have a rigorous investment process that puts credit quality above all else.

Ken Kencel: Second, we have a rigorous investment process that puts credit quality above all else. As we look for opportunities to underwrite, we focus on high quality market leading businesses that operate in recession-resistant industries with leading market positions and high barriers to entry backed by top-tier private equity sponsors. Our strong deal flow and unique sourcing model enables us to maintain a rigorous investment process and maintain strong credit discipline. As an example, we do not invest in ARR loans, which we believe rely heavily on more volatile enterprise value multiples, as well as business transition execution, and less on underlying true cash flow, which is needed to ultimately service the debt.

Ken Kinsell: As we look for opportunities to underwrite, we focus on high-quality, market-leading businesses that operate in recession-resistant industries with leading market positions and high barriers to entry backed by top-tier private equity sponsors. Our strong deal flow and unique sourcing model enables us to maintain a rigorous investment process and maintain strong credit distance. As an example, we do not invest in ARR loans, which we believe rely heavily on more volatile enterprise value multiples as well as business transition execution and less on underlying true cash flow, which is needed to ultimately service the debt. We're also carefully attuned to the interest burden facing both our existing portfolio companies as well as new borrowers. This consideration influences our conservative approach to structuring new transactions with lower overall leverage. Titor Covenant Pact.

Shai: which we believe rely heavily on more volatile enterprise value multiples as well as business transition execution and less on underlying true cash flow, which is needed to ultimately service the debt.

Shai: We're also carefully attuned to the interest burden facing both our existing portfolio companies as well as new borrowers.

Ken Kencel: We're also carefully attuned to the interest burden facing both our existing portfolio companies as well as new borrowers. This consideration influences our conservative approach to structuring new transactions with lower overall leverage and tighter covenant packages. This discipline is crucial, particularly in an environment where spreads are tighter in terms of more aggressive. That is why we're willing and able to walk away from certain deals that we assess as too risky.

Shai: This consideration influences our conservative approach to structuring new transactions with lower overall leverage and tighter covenant packages.

Shai: This disability is crucial, particularly in an environment where spreads are tighter in terms of more aggressive.

Ken Kinsell: This disadvantage is crucial, particularly in an environment where spreads are tighter in terms of more aggressive. That is why we're willing and able to walk away from certain deals that we assess as too risky. And this brings us to a very important third factor that is especially important: highly differentiated origination and sourcing models. We enjoy strong private equity LP relationships for nearly two decades. Churchill has worked with more than 280 middle-market private equity firms.

Ken Kencel: And this brings us to a very important third factor that is especially important. Our highly differentiated origination and sourcing model. We enjoy strong private equity LP relationships. Over nearly two decades, Churchill has worked with more than 280 middle-market private equity firms. In fact, today, Churchill has commitments to over 300 leading US middle-market private equity funds and sits on over 240 advisory boards. We have been and continue to be a trusted and established investor in the core middle market with deep long-term relationships, which provides NCDL with a strong information and sourcing advantage. This advantage was very much evident during the past quarter that saw us generate record investment activity across our platform.

Shai: We enjoy strong private equity LP relationships.

Shai: Over nearly two decades, Churchill has worked with more than 280 middle market private equity firms.

Shai: In fact, today, Churchill has commitments to over 300 leading U.S. middle market private equity funds and sits on over 240 advisory boards.

Ken Kinsell: In fact, today, Churchill has commitments to over 300 leading U.S. middle market private equity funds and sits on over 240 advisory boards. We have been and continue to be a trusted and established investor in the core middle market with deep, long-term relationships, which provides NCDL with a strong information and sourcing advantage. This advantage was very much evident during the past quarter, which saw us generate record investment activity across our platform. We believe we'll continue to see similar dynamics as we move through the balance of the year.

Shai: This advantage was very much evident during the past quarter that saw us generate record investment activity across our platform.

Ken Kencel: We believe we'll continue to see similar dynamics as we move through the balance of the year. Overall, we remain highly optimistic about NCDL's longer-term outlook. As we believe, we are well positioned to take advantage of a growing private credit market opportunity.

Ken Kinsell: Overall, we remain highly optimistic about NCDL's longer-term outlook, as we believe we are well positioned to take advantage of a growing private credit market opportunity. Now, I'll hand it over to Shai to discuss our financial results in more detail.

Shai: And now, I'll hand it over to Shai to discuss our financial results in more detail.

Shaul Vichness: and now I'll hand it over to Shai to discuss our financial results in more detail. Thank you, Ken, and thank you all for joining us to review our second quarter results. For the quarter, we earned 57 cents of net investment income per share, and in July, we paid regular and special dividends of 45 and 10 cents per share, respectively. In aggregate, this 55 cent dividend equates to an annualized dividend yield of approximately 12.3 percent based on our quarter-end NAV. As a reminder, the 10 cent special dividend that we paid in July is the first of four special dividends that we declared at the time of our IPO.

Shai: Thank you, Ken, and thank you all for joining us to review our second quarter results.

Shai: Thank you, Ken, and thank you all for joining us to review our second quarter results. For the quarter, we earned $0.57 of net investment income per share, and in July, we paid regular and special dividends of $0.45 and $0.10 per share, respectively. In aggregate, this $0.55 dividend equates to an annualized dividend yield of approximately 12.3% based on our quarter-end NAV. As a reminder, the $0.10 special dividend that we paid in July is the first of four special dividends that we declared at the time of our IPO. The three remaining special dividends will be paid through the second quarter of 2025 to shareholders of record as of August 12th and November 11th of this year and February 12th, 2025.

Shai: In aggregate, this $0.55 dividend equates to an annualized dividend yield of approximately 12.3% based on our quarter-end NAV.

Shai: As a reminder, the $0.10 special dividend that we paid in July is the first of four special dividends that we declared at the time of our IPO.

Shai: The three remaining Special Dividends will be paid through the second quarter of 2025 to the shareholders of record as of August 12th and November 11th of this year and February 12th, 2025.

Shaul Vichness: The three remaining special dividends will be paid through the second quarter of 2025 to Cheryl Blizzard, Record as of August 12th and November 11th of this year, and February 12th, 2025. As discussed previously, we intend to operate with a supplemental dividend program that sees us paying out a portion of the excess earnings over and above our regular dividend, allowing us to deliver the benefits of higher returns in the current environment to shareholders, as well as grow our NAV. Our total minimum income for the quarter was 37 cents per share, driven by 20 cents per share of net realized and unrealized losses.

Shai: As discussed previously, we intend to operate with a supplemental dividend program that sees us paying out a portion of the excess earnings over and above our regular dividend, allowing us to deliver the benefits of higher returns in the current environment to shareholders as well as grow our NAV. Our total net income for the quarter was $0.37 per share, driven by $0.20 per share of net realized and unrealized losses. We generated approximately $0.02 per share of realized gains on repayments, which were offset by approximately $0.22 per share of unrealized losses, primarily on two underperforming investments that were placed on nonaccrual during the quarter.

Shai: Our total net income for the quarter was $0.37 per share, driven by $0.20 per share of net realized and unrealized losses.

Shai: We generated approximately $0.02 per share of realized gains on repayments, which were offset by approximately $0.22 per share of unrealized losses, primarily on two underperforming investments that were placed on nonaccrual during the quarter.

Shaul Vichness: We generated approximately 2 cents per share of realized gains on repayments, which were underperforming investments that were placed on not a cruel during the quarter. Our debt to equity ratio at the end of the quarter was 1.04 times, which is consistent with the guidance we provided at the time of our IPO. We were pleased with our ability to deploy capital and utilize leverage during the quarter, and we remain on track to optimize leverage to the bounce of the year with the goal of maintaining leverage within our target range of 1.0 to 1.25 times. Our net asset value per share decreased by approximately 1% to $18.03 per share.

Shai: Our debt-to-equity ratio at the end of the quarter was 1.04 times, which is consistent with the guidance we provided at the time of our IPO.

Shai: Our debt-to-equity ratio at the end of the quarter was 1.04 times, which is consistent with the guidance we provided at the time of our IPO. We were pleased with our ability to deploy capital and utilize leverage during the quarter, and we remain on track to optimize leverage for the balance of the year with the goal of maintaining leverage within our target range of 1.0 to 1.25 times. Our net asset value per share decreased by approximately 1% to $18.03 per share.

Shai: Our net asset value per share decreased by approximately 1% to $18.03 per share. The decrease was attributable to the unrealized losses on two new non-accruals during the quarter, offset by the excess earnings we generated in the quarter over and above the regular and special dividend that we paid.

Shaul Vichness: The decrease was attributable to the unrealized losses on two new non-cruel during the quarter, offset by the excess earnings we generated in the quarter over and above the regular and special dividend that we paid. As Ken mentioned, the second quarter was a very strong one for us in terms of new origination. The fair value of our assets grew by approximately $196 million quarter over quarter. This increase was largely attributable to record high new originations, which accounted for 11 of the transactions done during the quarter, totaling approximately 150 million. We continue to mine our portfolio for add-on financing opportunities, which allowed us to generate 25 deals in the form of incremental transactions for existing portfolio companies, totaling approximately $130 million dollars.

Shai: The decrease was attributable to the unrealized losses on two new nonaccruals during the quarter, offset by the excess earnings we generated in the quarter over and above the regular and special dividends that we paid. As Ken mentioned, the second quarter was a very strong one for us in terms of new origination. The fair value of our assets grew by approximately $196 million quarter over quarter. This increase was largely attributable to record high new originations, which accounted for 11 of the transactions done during the quarter, totaling approximately $150 million.

Shai: The fair value of our assets grew by approximately $196 million quarter over quarter.

Shai: This increase was largely attributable to record-high new originations, which accounted for 11 of the transactions done during the quarter, totaling approximately $150 million.

Shai: We continue to mine our portfolio for add-on financing opportunities, which allowed us to generate 25 deals in the form of incremental transactions for existing portfolio companies, totaling approximately $130 million.

Shai: We continue to mine our portfolio for add-on financing opportunities, which allowed us to generate 25 deals in the form of incremental transactions for existing portfolio companies, totaling approximately $130 million. In addition, we saw drawdowns of roughly $26 million on our delayed draw term loans as our portfolio companies continue to be active in growing their acquisitions. Repayment activity significantly increased during the quarter, in line with the increase in volume that we saw, both on new transactions, as well as repricing and refinancing activity. We had full repayments on eight deals totaling $80 million and partial prepayments for another $11 million.

Shai: In addition, we saw drawdowns of roughly $26 million on our delayed draw term loans as our portfolio companies continue to be active in growing the acquisitions.

Shaul Vichness: In addition, we saw drawdowns of roughly $26 million on our delayed draw term loans as our portfolio companies continue to be active in growing the acquisitions. Repayment activity significantly increased during the quarter, in line with the increase in volume that we saw, both on new transactions, as well as repricing and refinancing activity. We had full repayments on 8 deals, totaling $80 million dollars, and partial prepayments for another $11 million. As the incumbent lender, we took advantage of our position, reinvesting in 4 of the 8 deals that fully repaid during the quarter. Repayments in the second quarter told us 4.9%, a meaningful increase from the 2.2% we saw in the first quarter, and in line with our long range assumption of 5% per quarter.

Shai: Repayment activity significantly increased during the quarter, in line with the increase in volume that we saw, both on new transactions, as well as repricing and refinancing activity.

Shai: We had full repayments on 8 deals totaling $80 million and partial prepayments for another $11 million.

Shai: As the incumbent lender, we took advantage of our position, reinvesting in four of the eight deals that fully repaid during the quarter.

Shai: As the incumbent lender, we took advantage of our position, reinvesting in four of the eight deals that fully repaid during the quarter. Repayments in the second quarter totaled 4.9 percent, a meaningful increase from the 2.2 percent we saw in the first quarter and in line with our long-range assumption of 5 percent per quarter. Despite this uptick in repayment activity, our portfolio grew to 198 names as of quarter-end, and it remains highly diversified, with the top 10 positions representing only 14.4% of the fair value of the portfolio, and our largest exposure at only 1.6%. Our average position size is one half of one percent, which we see as a key risk mitigation tool.

Shai: Repayments in the second quarter totaled 4.9 percent, a meaningful increase from the 2.2 percent we saw in the first quarter and in line with our long-range assumption of 5 percent per quarter.

Shai: Despite this uptick in repayment activity, our portfolio grew to 198 names as of quarter end, and it remains highly diversified, with the top 10 positions representing only 14.4% of the fair value of the portfolio, and our largest exposure at only 1.6%.

Shaul Vichness: Despite this uptick in repayment activity, our portfolio grew to 198 names as a quarter end, and it remains highly diversified with the top 10 positions representing only 14.4% of the fair value of the portfolio, and our largest exposure at only 1.6%. Our average position size is 1.5% of 1%, which we see as a key risk mitigation tool. In terms of new originations, the second quarter was our strongest quarter ever, which highlights the strength and durability of our platform. As Ken mentioned, we saw volume grow year over year to 360 million in power amount of new originations across 36 investments from the 110 million we committed in the second quarter of 2023, and up sequentially from the 207 million gross commitments in Q1.

Shai: Our average position size is one half of one percent, which we see as a key risk mitigation tool.

Shai: In terms of new originations, the second quarter was our strongest quarter ever, which highlights the strength and durability of our platform.

Shai: In terms of new originations, the second quarter was our strongest quarter ever, which highlights the strength and durability of our platform. As Ken mentioned, we saw volume grow year over year to $360 million in par amount of new originations across 36 investments from the $110 million we committed in the second quarter of 2023 and up sequentially from the $207 million of gross commitments in Q1. Looking at asset selection during the quarter, our new originations were heavily weighted towards traditional middle market senior loans, with only 16% of the investments made during the quarter going into the upper middle market.

Shai: As Ken mentioned, we saw volume grow year over year to $360 million in par amount of new originations across 36 investments from the $110 million we committed in the second quarter of 2023 and up sequentially from the $207 million of gross commitments in Q1.

Speaker Change: Looking at asset selection during the quarter, our new originations were heavily weighted towards the traditional middle market senior loans, with only 16% of the investments made during the quarter going into the upper middle market.

Shaul Vichness: Looking at asset selection during the quarter, our new originations were heavily weighted towards the traditional middle market senior loans, with only 16% of the investments made during the quarter going into the upper middle market. This is consistent with the guidance that we ate last quarter and at the same time of our IPO, when we communicated our expectation that we would allocate more readily initially to the upper middle market, and then rotate that portion of the portfolio into the traditional middle market segment, where spreads are meaningfully higher, and documentation terms are tighter. This strategy is evident when looking at the weighted average interest rate on new debt investments made during the quarter, which was up 20 basis points from the prior quarter.

Speaker Change: This is consistent with the guidance that we gave last quarter and at the time of our IPO when we communicated our expectation that we would allocate more readily initially to the upper middle market and then rotate that portion of the portfolio into the traditional middle market segment where spreads are meaningfully higher and documentation terms are tighter.

Shai: This is consistent with the guidance that we gave last quarter and at the time of our IPO when we communicated our expectation that we would allocate more readily initially to the upper middle market and then rotate that portion of the portfolio into the traditional middle market segment, where spreads are meaningfully higher and documentation terms are tighter. This strategy is evident when looking at the weighted average interest rate on new debt investments made during the quarter, which was up 20 basis points from the prior quarter.

Speaker Change: This strategy is evident when looking at the weighted average interest rate on new debt investments made during the quarter, which was up 20 basis points from the prior quarter.

Speaker Change: As Ken mentioned, spreads tightened further in Q2, but our continued focus on the traditional middle market segment allowed us to deliver an increase in this metric quarter over quarter.

Shaul Vichness: As Ken mentioned, spreads tighten further in Q2, but our continued focus on the traditional middle market segment allowed us to deliver an increase in this metric quarter over quarter. We would expect that to continue as we execute on our rotation strategy and invest in our robust pipeline of traditional middle market deals. The portfolio remains anchored in senior loans, which were presented close to 91% of the portfolio at quarter end. The modest increase from the 89 percent senior loan allocation at the end of Q1 is consistent with the strategy that we laid out at the time of our IPO.

Shai: As Ken mentioned, spreads tightened further in Q2, but our continued focus on the traditional middle market segment allowed us to deliver an increase in this metric quarter over quarter. We would expect that to continue as we execute on our rotation strategy and invest in our robust pipeline of traditional middle market deals. The portfolio remains anchored in senior loans, which represented close to 91% of the portfolio at quarter end.

Ken: We would expect that to continue as we execute on our rotation strategy and invest in our robust pipeline of traditional middle market deals.

Speaker Change: The portfolio remains anchored in senior loans, which represented close to 91% of the portfolio at quarter end.

Speaker Change: The modest increase from the 89% senior loan allocation at the end of Q1 is consistent with the strategy that we laid out at the time of our IPO.

Shai: The modest increase from the 89% senior loan allocation at the end of Q1 is consistent with the strategy that we laid out at the time of our IPO. We continue to opportunistically invest in junior debt and equity, which made up 4% and 1% of the investments made during the quarter and comprise 7.8% and 1.6% of the portfolio overall as of quarter end. We remain committed to the target allocations that we communicated at the time of our IPO, with a target of 85% to 90% senior loans and the balance in junior debt and equity co-investments, with equity staying in the low single-digit percentage range.

Speaker Change: We continue to opportunistically invest in junior debt and equity, which made up 4% and 1% of the investments made during the quarter, and comprise 7.8% and 1.6% of the portfolio overall as of quarter end.

Shaul Vichness: We continue to opportunistically invest in junior debt and equity, which made up 4% and 1% of the investments made during the quarter, and comprise 7.8% and 1.6% of the portfolio overall as a quarter end. We remain committed to the target allocations that we communicated at the time of our IPO, with the target of 85% to 90% senior loans and the balance in junior debt and equity co-investments, with equity staying in the low single-digit percentage range. In terms of the credit quality of the portfolio, our weighted average internal risk rating remains steady quarter over quarter at 4.1, despite the two new non-accruals that I referenced earlier.

Speaker Change: We remain committed to the target allocations that we communicated at the time of our IPO with a target of 85% to 90% senior loans and the balance in junior debt and equity co-investments with equity staying in the low single-digit percentage range.

Speaker Change: In terms of the credit quality of the portfolio, our weighted average internal risk rating remains steady quarter over quarter at 4.1 despite the two new non-accruals that I referenced earlier.

Shai: In terms of the credit quality of the portfolio, our weighted average internal risk rating remains steady quarter over quarter at 4.1 despite the two new non-accruals that I referenced earlier. This brought the total number of non-accrual assets at quarter end to three, representing just 0.49% of the fair value of the portfolio. The number of names on our watch list increased by two as well, as a result of four downgrades and two upgrades.

Speaker Change: This brought the total number of non-accrual assets at quarter end to 3, representing just 0.49% of the fair value of the portfolio.

Shaul Vichness: This brought the total number of non-accrual assets of quarter end to three, representing just 0.49% of the fair value of the portfolio. The number remains on our watchlist increased by two, as well as a result of four downgrades and two upgrades. However, our watchlist remains at a historically low level at only 3.8% of the portfolio fair value. Turning to our leverage strategy, we continue to keep a close eye on the unsecured debt market as we evaluate our long-term capital structure and are encouraged by the trends that we see in that market, with healthy levels of issue and activity over the first half of the year.

Speaker Change: The number of names on our watch list increased by two as well, as a result of four downgrades and two upgrades. However, our watch list remains at a historically low level at only 3.8% of the portfolio fair value.

Shai: However, our watch list remains at a historically low level at only 3.8% of the portfolio fair value. Turning to our leverage strategy, we continue to keep a close eye on the unsecured debt market as we evaluate our long-term capital structure and are encouraged by the trends that we see in that market, with healthy levels of issuance activity over the first half of the year. We remain incredibly well-positioned to take advantage of attractive investment opportunities and to fund our unfunded commitments and share repurchase program, with over $360 million of liquidity available to us as of quarter end.

Speaker Change: Turning to our leverage strategy, we continue to keep a close eye on the unsecured debt market as we evaluate our long-term capital structure and are encouraged by the trends that we see in that market.

Speaker Change: with healthy levels of issuance activity over the first half of the year.

Speaker Change: We remain incredibly well positioned to take advantage of attractive investment opportunities and to fund our unfunded commitments and share repurchase program with over $360 million of liquidity available to us as of quarter end.

Shaul Vichness: We remain incredibly well positioned to take advantage of attractive investment opportunities and to fund our unfunded commitments and sharey purchase program with over 360 million of liquidity available to us as of quarter-end. Further, we have no near-term maturities as we have constructed a diversified capital structure to date that is match-funded to our flowing rate assets. We have been using a modest amount of liquidity to fund our sharey purchase program, which commenced 60 days after our IPO. Through July 31st, we have utilized approximately $6.5 million, leaving approximately $92.8 million remaining under the program. We have now traded through our second lock-up release, which saw 35% of the non-affiliated pre-IPO shares released from lock-up.

Speaker Change: Further, we have no near-term maturities as we have constructed a diversified capital structure to date that is match funded to our floating rate assets.

Shai: Further, we have no near-term maturities as we have constructed a diversified capital structure to date that is match-funded to our floating rate assets. We have been using a modest amount of liquidity to fund our share repurchase program, which commenced 60 days after our IPO. Through July 31st, we've utilized approximately $6.5 million, leaving approximately $92.8 million remaining under the program.

Speaker Change: Through July 31st, we've utilized approximately $6.5 million, leaving approximately $92.8 million remaining under the program.

Speaker Change: We have now traded through our second lockup release, which saw 35% of the non-affiliated pre-IPO shares released from lockup.

Shai: We have now traded through our second lockup release, which saw 35% of the non-affiliated pre-IPO shares released from lockup. As a reminder, at the time of our IPO, we put in place a thoughtful, staggered lock-up release schedule for our pre-IPO shareholders, coupled with the special dividends payable over four quarters that I mentioned earlier. Affiliated shareholders were locked up for a full year, and non-affiliated pre-IPO shareholders were locked up for 90, 180, and 270 days. With the second lockup released on July 23rd, we have now nearly quadrupled our public float since the IPO. I'll now turn it back to Ken for his closing remarks.

Speaker Change: As a reminder, at the time of our IPO, we put in place a thoughtful, staggered lockup release schedule for our pre-IPO shareholders, coupled with the special dividends payable over four quarters that I mentioned earlier.

Shaul Vichness: As a reminder, at the time of our IPO, we put in place a thoughtful, staggered lock-up release schedule for our pre-IPO shareholders, coupled with the special dividends payable over four quarters that I mentioned earlier. Affiliated shareholders were locked up for a full year, and non-affiliated pre-IPO shareholders were locked up for 90, 180, and 270 days. With the second lock-up release on July 23rd, we have now nearly quadrupled our public float since the IPO.

Speaker Change: Affiliated shareholders were locked up for a full year, and non-affiliated pre-IPO shareholders were locked up for 90, 180, and 270 days.

Speaker Change: With the second lockup released on July 23rd, we have now nearly quadrupled our public float since the IPO.

Speaker Change: I'll now turn it back to Ken for closing remarks.

Ken Kencel: I'll now turn it back to Ken for closing remarks.

Ken: Thank you, Shai. I want to conclude our prepared remarks today by acknowledging the efforts of our team here at Churchill.

Ken Kencel: Thank you, Shy. I want to conclude our prepared remarks today by acknowledging the efforts of our team here at Churchill. I am pleased with our results for the quarter and the momentum we have achieved since our IPO.

Ken Kinsell: I want to conclude our prepared remarks today by acknowledging the efforts of our team here at Churchill. I am pleased with our results for the quarter and the momentum we have achieved since our IPO. We're excited about the quarter ahead and our ability to deliver an attractive distribution yield to our NCDL shareholders. I will now turn the call over to the operator for Q&A. Thank you. We will now be conducting a question and answer session.

Ken: I am pleased with our results for the quarter and the momentum we have achieved since our IPO.

Speaker Change: We're excited about the quarter ahead and our ability to deliver an attractive distribution yield to our NCDL shareholders.

Ken Kencel: We're excited about the quarter head and our ability to deliver an attractive distribution yield to our NCDL shareholders.

Speaker Change: I will now turn the call over to the operator for Q&A.

Operator: I will now turn the call over to the operator for Q&A. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question q. You may press star two if you would like to remove your question from the Q. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star keys. One moment, please, while we pull for questions.

Speaker Change: Thank you. We will now be conducting a question and answer session.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Our first question comes from Brian McKenna with JMP Securities. Please state your question.

Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue.

Speaker Change: You may press star 2 if you would like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Speaker Change: Our first question comes from Brian McKenna with JMP Securities. Please state your question.

Brian McKenna: Our first question comes from Brian McKenna with JMP Securities. Please state your question.

Brian McKenna: Thanks. Good morning, everyone. It was great to see the strong pickup and origination activity in the quarter.

Brian McKenna: Thanks. Good morning, everyone.

Brian McKenna: One other thing, good morning everyone. It was great to see the strong pickup and origination activity in the quarter. But there's significantly more add-on deals versus new investments.

Brian McKenna: but there are significantly more add-on deals versus new investments. So what's the outlook for new investments specifically into the back half of the year?

Brian McKenna: So what's the outlook for new investments specifically into the back half of the year. And then we're more than one month into the third quarter here. So any early read on the quarter in terms of origination activity, or even how the pipeline is reselling for activity post-Labor Day. Great.

Ken Kinsell: It was great to see the strong pickup in origination activity in the quarter, but there were significantly more add-on deals versus new investments. So what's the outlook for new investments specifically into the back half of the year? And then we're more than one month into the third quarter here. So any early read on the quarter in terms of origination activity or even how the pipeline is filling for activity post-Labor Day?

Speaker Change: And then we're more than one month into the third quarter here, so any early read on the quarter in terms of origination activity, or even how the pipeline is reselling for activity post-Labor Day?

Speaker Change: Great. Thanks, Brian . It's a great question.

Ken Kinsell: Great. Thanks, Brian.

Ken Kencel: Thanks, Brian. It's a great question. I guess it would make a couple of comments overall. One is that we continue to be extremely busy on the origination side. I can tell you that you know, normally you get a bit of a slowdown in the summer, once particularly in August. That is not in the case this year. We continue to have a very, very deep backlog, and our pipeline is very robust. And that continues as we look through through August. And based upon what we're hearing in terms of sale processes and companies being put up for sale, that pipeline looks quite robust as well.

Speaker Change: I guess I would make a couple of comments overall. One is that we continue to be extremely busy.

Ken Kinsell: It's a great question. I guess I would make a couple of comments overall. One is that we continue to be extremely busy on the origination side. I can tell you that normally you get a bit of a slowdown in the summer months, particularly in August. That is not the case this year.

Speaker Change: On the origination side, I can tell you that normally you get a bit of a slowdown in the summer months, particularly in August . That is not the case this year. We continue to have a very, very deep backlog and our pipeline is very robust.

Ken Kinsell: We continue to have a very, very deep backlog, and our pipeline is very robust, and that continues as we look through August. Based upon what we are hearing in terms of sale processes and companies being put up for sale, that pipeline looks quite robust as well. We are quite optimistic about the balance of Q3 and then into Q4. I would say that we did see a lot of add-on activity. Obviously, we have a very large portfolio across the firm.

Speaker Change: And, you know, that continues, you know, as we look through through August .

Speaker Change: And based upon what we're hearing in terms of sale processes and

Speaker Change: Our company is being put up for sale.

Speaker Change: that pipeline looks quite robust as well. So we are quite optimistic about the balance of Q3 and then into Q4. I would say that.

Ken Kencel: So we are quite optimistic about the balance of Q3 and then into Q4.

Ken Kencel: I would say that. We did see a lot of add-on activity. Obviously, we have a very large portfolio across the firm. If you look at both our senior lending, junior capital, equity, co-invest, you know, over 400 companies, you know, across the platform. So we are seeing a significant amount of add-on activity, which, you know, is obviously, from our perspective, a good thing since we know the companies, we know their performance, and obviously the sponsors as well. But I would expect that new deal activity, which was quite robust in the second quarter, will continue to grow as a percentage of our overall investment activity as we balance out the third quarter and into the fourth quarter.

Speaker Change: We did see...

Speaker Change: a lot of add-on activity. Obviously, we have a very large portfolio across the firm. If you look at both our senior lending, junior capital equity co-invest in over 400 companies across the platform. So we are seeing.

Ken Kinsell: If you look at both our senior lending, junior capital, and equity co-invest in over 400 companies across the platform, we are seeing a significant amount of add-on activity, which is obviously from our perspective is a good thing since we know the companies, we know their performance, and, obviously, the sponsors as well. But I would expect that new deal activity, which was quite robust in the second quarter, will continue to grow as a percentage of our overall investment activity as we balance out the third quarter and into the fourth quarter.

Speaker Change: a significant amount of add-on activity, which, you know, is obviously, from our perspective, is a good thing, since we know the companies, we know their performance.

Speaker Change: and obviously the sponsors as well.

Speaker Change: But I would expect that new deal activity, which was quite robust in the second quarter, will continue to grow as a percentage of our overall investment activity as we balance out the third quarter and into the fourth quarter. So good new deal activity, pipeline obviously kicking off a lot as well.

Ken Kinsell: So good new deal activity and pipeline obviously kicking off a lot as well. As I mentioned earlier, we had a record quarter in Q2 in terms of investment activity, and that has not stopped. You know, we're busy, and we're seeing good quality and, obviously, remaining very selective.

Ken Kencel: So good new deal activity, pipeline, obviously kicking off a lot as well. As I mentioned earlier, you know, we had a record quarter in Q2 in terms of investment activity, and that has not stopped. You know, we're busy and we're seeing good quality, and obviously we're making very selective. Okay, that's great.

Speaker Change: As I mentioned earlier, we had a record quarter in Q2 in terms of investment activity, and that has not stopped. We're busy, and we're seeing good quality and obviously remaining very selective.

Speaker Change: Okay, that's great. Thanks, Ken. And then just a bigger picture question, there's clearly a lot of focus in the market today on the economic outlook into the back half of the year, specifically over the past several days. So it would be great just to get a little bit more detail on what you are seeing across all your portfolios at Churchill today, not just at NCVL. And really, what kind of revenue and EBITDA growth are you seeing across portfolio companies? And then are there any new or interesting trends going on?

Ken Kinsell: Okay, that's great. Thanks, Ken.

Brian McKenna: Thanks, Ken.

Brian McKenna: And then just a bigger picture question: you know, there's clearly a lot of focus in the market today on the economic outlook into the back half of the year, specifically over the past several days. So it will be great just to get a little bit more detail on what you're seeing across all your portfolios at Churchill today, not just at NCDL, and really what kind of revenue and even a growth are you seeing across portfolio companies? And then, are there any new or interesting trends going on? It's early, but anything just to know, even over the past week or so.

Ken Kinsell: And then just a bigger picture question, you know; there's clearly a lot of focus in the market today on the economic outlook for the back half of the year, specifically over the past several days. So it would be great just to get a little bit more detail on what you're seeing across all your portfolios at Churchill today, not just at NCVL and, you know, really what kind of revenue and EBITDA growth are you seeing across your portfolio companies? And then, are there any new or interesting trends going on? And it's early, but, you know, anything just to know, even over the past week or so.

Speaker Change: and it's early, but anything just to know even over the past week or so.

Speaker Change: Yeah, obviously it's a bit early to to handicap, you know, the last few days in terms of assessing, you know, what that what that will really mean longer term, but I can tell you that that on a broader portfolio basis, we track.

Ken Kencel: Yeah, obviously it's a bit early to handicap, you know, the last few days in terms of assessing, you know, what that, what that will really mean longer term. But I can tell you that on a broader portfolio basis, we track, you know, the percentage of our portfolio companies showing revenue growth and EBITDA growth. In those metrics, they remain quite positive. In fact, EBITDA growth across our portfolio, the percentage of company portfolio companies, again, this is across all of our investments, ticked up during the quarter. So, you know, we're seeing that the majority of those companies reporting growth in EBITDA and revenue.

Ken Kinsell: Yeah, obviously, it's a bit early to handicap the last few days in terms of assessing what this will really mean longer term. But I can tell you that on a broader portfolio basis, we track, you know, the percentage of our portfolio companies showing revenue growth and EBITDA growth, and those metrics remain quite positive. In fact, EBITDA growth across our portfolio, the percentage of portfolio companies, again, this is across all of our investments, ticked off during the quarter.

Speaker Change: You know the percentage of our portfolio companies showing revenue growth and EBITDA growth and those metrics remain quite consistent.

Speaker Change: positive in fact

Speaker Change: EBITDA growth across our portfolio, the percentage of portfolio companies, again, this is across all of our investments.

Speaker Change: Tick-tock

Speaker Change: during the quarter. So, you know, we're seeing that the majority of those companies reporting growth in EBITDA.

Ken Kinsell: So, you know, we're seeing the majority of those companies reporting growth in EBITDA and revenue. So, from our perspective, we view that as a very, very positive sign. The health of the portfolio, as I mentioned during our call, remains very good. All of our loans start out with a risk rating of 4.0, and the overall portfolio right now at DLC is 4.1. So we continue to see good quality in the portfolio, good underlying growth, and obviously, an emphasis and focus on strategic M&A and add-on acquisitions as a way to enhance that. So we feel very good about those metrics, not just at the DLC level but more broadly across our overall investment portfolio. All right.

Speaker Change: uh, and revenue. So, um, from our perspective.

Ken Kencel: So, from our perspective, we view it as a very, very positive sign: health of other portfolios. I mentioned during our call remains very good. All of our loans start out with a risk rating 4.0, and the overall portfolio right now at DLC is 4.1. So, we continue to see good quality in the portfolio, good underlying growth, obviously an emphasis and focus on, you know, strategic M&A add-on acquisitions as a way to enhance that. So, we feel very good about those metrics, not just at the DLC level, but more broadly across our overall investment portfolio.

Speaker Change: we view it as a very, very positive sign.

Speaker Change: Health of the portfolio, as I mentioned.

Speaker Change: during our call remains very good.

Speaker Change: All of our loans start out with a risk rating 4.0.

Speaker Change: And the overall portfolio right now at DLC is 4.1.

Speaker Change: We continue to see good quality in the portfolio.

Speaker Change: Good underlying growth.

Speaker Change: Obviously, an emphasis and focus on strategic M&A, add-on acquisitions as a way to enhance that. So, we feel very good about those metrics, not just at the DLC level, but more broadly across our overall investment portfolio.

Speaker Change: All right, I'll leave it there. Thanks for taking my questions.

Brian McKenna: All right. I'll leave it there. Thanks for taking my question. Thanks. Thanks, Frank.

Ken Kinsell: All right, I'll leave it there. Thanks for taking my question. Thanks. Thanks, Brian.

Brian McKenna: Thanks. Thanks, Brian .

Brian McKenna: And our next question comes from Douglas

Douglas Harter: And our next question comes from Douglas Harder with UBS. Please stay.

Douglas Harder: And our next question comes from Douglas Harder with UBS. Please state your question.

Douglas: Hi, so I had two quick questions for you. So one, you talked about non-accruals to non-accruals. Do you have any possible insight into resolutions for those or any of the non-accruals that you happen to have on your book?

Douglas Harter: Hi, so I said two quick questions for you. So one, you talked about non-acrolls to non-acrolls. Do you have any possible insight into resolutions for those or any of the non-acrolls that you happen to have on your book?

Douglas Harder: Hi, so I have two quick questions for you. One, you talked about non-accruals to non-accruals. Do you have any possible insight into resolutions for those or any of the non-accruals that you happen to have in your book?

Douglas: Hey Doug, it's Shai. Thanks for watching.

Shaul Vichness: Hey, Doug, it's Shy. Thanks for your question. Yeah, it's a more large, and I meant in regards to a possible timeline for resolutions. Yeah, look, I would say thanks for the questions that we're joining. It's obviously early in those processes, as we often do. So we get into the situations we work very closely with the sponsor and the borrowers to get to an attractive resolution for our shareholders. We've spoken in the past about kind of our workout resources, which are robust and are obviously involved here and active in trying to get to resolutions. So I know specific comments on timeline, but as we always do, we're working hard to try to maximize value on the two non-acrolls and obviously anything else in the portfolio that's on that list.

Shai: Hey, Doug. It's Shai. Thanks. Thanks so much.

Speaker Change: Is there more? I'm sorry. I meant in regards to like, you know, a possible timeline for a resolution.

Douglas Harder: Go ahead; is there more?

Doug: Yeah, look, I would say, thanks for the questions and for joining. It's obviously, you know, early in those processes, and as we often do, you know, when we get into these situations, we work very closely with the sponsor and the borrowers to get to an attractive resolution for our shareholders. You know, we've spoken in the past about kind of our workout resources, which are robust.

Shai: Yeah. Look, I would say thanks for the questions and for joining us. It's obviously, you know, early in those processes, and as we often do, you know, when we get into these situations, we work very closely with the sponsor and the borrowers to get to an attractive resolution for our shareholders. You know, we've spoken in the past about our workout resources, which are robust and are obviously involved here and active in trying to get to a resolution.

Doug: and are obviously involved here and active in trying to get through resolution. So, no specific comments on timeline, but, you know, as we always do, you know, we're working hard to try to maximize value on the two new non-accruals and obviously anything else in the portfolio that's on that list.

Shai: So, no specific comments on the timeline, but, as we always do, we're working hard to try to maximize value on the two new non-accruals and, obviously, anything else in the portfolio that's on that list.

Speaker Change: Great, thanks. And just in regards to, do you have any insight in regards to the timeline or the pace of possibly rotating out of the upper middle market loans into the more traditional middle market loans?

Shaul Vichness: Great, thanks. And just in regards to the insight in regards to the timeline or the pace of possibly rotating out of the other middle market loans and into more traditional middle market loans. Yeah, I mean, I think, as you heard from Ken, both on the call and just in the last question, we continue to enjoy a very robust pipeline of traditional middle market opportunities that we're seeing. Obviously, we are rotating from the upper middle market deals that we invested in immediately post IPO into the pipeline; it is market dependent. But you know, based on how we've ramped in the most recent quarter and the pipeline that we're seeing, we're sort of well on our way with respect to that strategy, and you can see it in the numbers in terms of the new the yield on the new investments that we made during the quarter.

Shai: Great, thanks. Do you have any insight in regards to the timeline or the pace of possibly rotating out of the higher middle market loans and into the more traditional middle market loans?

Ken: Yeah, I mean, I think as you heard from Ken, both on the call and just in the last question, you know, we continue to enjoy a very robust pipeline of traditional middle market opportunities that we're seeing, obviously are, you know, rotating from the upper middle market deals that we invested in immediately post IPO into the pipeline is market dependent. But, you know, based on, you know, how we've ramped.

Shai: Yeah. I mean, as you heard from Ken, both on the call and just in the last question, we continue to enjoy a very robust pipeline of traditional middle market opportunities that we're seeing. Obviously, our, you know, rotating from the upper middle market deals that we invested in immediately post IPO into the pipeline is market dependent. But, based on how we've ramped up in the most recent quarter and the pipeline that we're seeing, we're sort of well on our way with respect to that strategy.

Ken: in the most recent quarter, and the pipeline that we're seeing, we're sort of well on our way with respect to that strategy, and you can see it in the numbers in terms of the new, the yield on the new investments that we made during the quarter.

Shai: And you can see it in the numbers in terms of the yield on the new investments that we made during the quarter. Those were much more heavily weighted towards the traditional low market, and we would expect that to continue in the coming quarters. Yeah, and I would just add to that.

Speaker Change: Those were much more heavily weighted towards the traditional oil market, and we would expect that to continue in the coming quarters.

Shaul Vichness: Those were much more heavily weighted towards the traditional market, and we would expect that to continue in the coming quarters.

Speaker Change: Yeah, and I would just add to that, and I agree with all of that, I would add to that that, you know, as we look at the market environment today,

Ken Kinsell: Yeah, and I would just add to that, and I agree with all of that, I would add that, you know, as we look at the market environment today, we think that the fact that we are largely focused on the core middle market has enabled us to drive what we believe are the most attractive risk-adjusted returns. You know, we're talking about businesses where, you know, we get underlying financial covenants, generally lower leverage, a pricing premium to be, you know, in that core middle market, and obviously directly originate those deals.

Ken Kencel: Yeah, I would just add to that and agree with all of that. I would add to that that, you know, as we look at the market environment today. You know, we think that the fact that we are largely focused, you know, on the core middle market is enabled us to drive what we believe are the most attractive risk-adjusted returns. You know, we're talking about businesses where, you know, we get underlying financial covenants generally lower leverage. A pricing premium to be, you know, in that core middle market and obviously directly originating those deals. I think that, you know, what we've continued to see in the second quarter and on an ongoing basis is that our model of being a very large and significant LP.

Speaker Change: We think that the fact that we are largely focused on the core middle market

Speaker Change: has enabled us to drive what we believe are the most attractive risk-adjusted returns.

Speaker Change: You know, we're talking about businesses where we get underlying financial covenants, generally lower leverage.

Speaker Change: Um,

Speaker Change: pricing premium to be, you know, in that core middle market and obviously directly originating those deals.

Speaker Change: I think that, you know, what we've continued to see in the second quarter and on an ongoing basis

Ken Kinsell: I think that, you know, what we've continued to see in the second quarter and on an ongoing basis is that our model of being a very large and significant LP, and as I mentioned during the call, and over 300 private equity funds, 240-plus advisory board seats, it's a tremendous dynamic that continues to show itself as we drive attractive deal flow. And it's this continuity that enables us to get a first look at transactions and, in many cases, a last look. So it's – I think the power of that very differentiated origination model continues to drive very attractive opportunities in the core middle market where we are directly originating, and we're seeing very good value.

Speaker Change: is that our model.

Speaker Change: of being a very large and significant LP in, as I mentioned during the call, in over 300 private equity funds, 240 plus advisory board seats.

Ken Kencel: In, as I mentioned during the call on over 300 private equity funds, 240 plus advisory board seats. It's a tremendous dynamic that continues to show itself as we drive attracting deal flow. And it's a continuity that enables us to get a first look at transactions. And in many cases, the last look, so it's, I think the power of that very differentiated origination model continues to drive very attractive opportunities in the core middle market where we are directly originating, and we're seeing very good value.

Speaker Change: It's a tremendous.

Speaker Change: dynamic that continues to show itself as we drive.

Speaker Change: Attractive deal flow and it's a continuity that enables us to to get a first look at transactions and in many cases the last look

Speaker Change: So, I think the power of that very differentiated origination model continues to drive very attractive opportunities in the core middle market where we are directly originating and we're seeing very good value.

Speaker Change: Great. Thanks for answering my questions.

Douglas Harter: Thank you. Thanks for answering my question.

Douglas Harder: Thanks for answering my question.

Speaker Change: Thank you. And just a reminder to the audience, if you'd like to ask a question, press star one on your phone.

Mark Hughes: Thank you, and just a reminder to the audience: if you'd like to ask a question, press star one on your phone. Our next question comes from Mark Hughes, with True with Securities. Please state your question.

Operator: Thank you. Just a reminder to the audience if you'd like to ask a question.

Speaker Change: Our next question comes from Mark Hughes with Truist Securities. Please state your question.

Mark Hughes: Yeah, thanks. Good morning.

Mark Hughes: Yeah, thanks.

Unnamed Analyst: Yeah. Thanks. Good morning. You had pointed out that the overall portfolio you're looking at...

Ken Kencel: Good morning. You had pointed out that the overall portfolio you're benefiting in terms of spread from that migration of the core middle market, but within the middle market, what are you seeing in terms of spreads, say on kind of a same, paint store basis? Yeah, and I would say if you look back over the last, you know, six to nine months, we've seen spread come in a bit in the core middle market, nowhere near as much as we saw in the broadly syndicated market. You saw much more significant spread compression in the BSL world, and that obviously was a direct result of funds flows into that BSL market, and the re-emergence, really, of the CLO market and the loan funds that, you know, caused spreads to tighten quite dramatically in the BSL world.

Mark Hughes: You had pointed out that the overall portfolio you're benefiting in terms of spread from that migration of the core middle market, but within the middle market, what are you seeing in terms of spread, say, on kind of a same-store basis?

Ken Kinsell: Yeah, you know, I would say if you look back over the last, you know, six to nine months, we've seen spread come in a bit in the core metal market, nowhere near as much as we saw in the broadly syndicated market; you saw much more significant spread compression in the BSL world, and that obviously was a direct result of funds flows into that BSL market. And the reemergence of the CLO market and the loan funds that, you know, caused spreads to tighten quite dramatically in the BSL world.

Speaker Change: We've seen spread come in.

Speaker Change: in the BSL world and that obviously was a direct result of

Speaker Change: funds flows into that BSL market.

Speaker Change: And the re-emergence really of the CLO market and the loan funds that cause spreads to tighten quite dramatically in the BSL world.

Speaker Change: You know, we've seen some more modest impact in our world, roughly 25 basis points quarter over quarter. And if you went back six months, I would say that's probably more like 50 basis points.

Ken Kencel: You know, we've seen some more modest impact in our world, roughly 25 basis points core over quarter, and if you went back six months, I would say that's probably more like 50 basis points. But you know, that compares to a much more significant compression in the BSL world, you know, of call it 150 or even 200 basis points. So modest compression, nowhere near what we saw in the BSL world, and I would say that quality in terms of new deal activity, and certainly when you think through that relative to our level of selectivity, we're very happy with the quality of what we're seeing.

Ken Kinsell: You know, we've seen some more modest impact in our world, roughly 25 basis points quarter over quarter. And if you went back six months, I would say that's probably more like 50 basis points. But you know, that compares to a much more significant compression in the BSL world, call it 150 or even 200 basis points. So, modest compression, nowhere near what we saw in the BSL world. And I would say that quality in terms of New Deal activity, and certainly when you think through that relative to our level of selectivity, we're very happy with the quality of what we're seeing.

Speaker Change: compression nowhere near what we saw in the BSL world.

Speaker Change: And I would say that quality in terms of New Deal activity.

Speaker Change: And certainly, when you think through that relative to our level of selectivity, we're very happy with the quality of what we're seeing. And on a relative basis, I think that the...

Ken Kencel: And on a relative basis, I think the value of core middle market opportunities compared to BSL has become even more pronounced more recently. So we feel good about what we're seeing, and good about the overall underlying spread dynamics in the core middle market. And understood that maybe a little pressure from the top down from the BSL market on the spreads, but obviously you're insulated as you describe.

Ken Kinsell: And on a relative basis, I think the value of core middle market opportunities compared to BSL has become even more pronounced recently. So we feel good about what we're seeing and good about the overall underlying spread dynamics in, you know, the core middle market.

Speaker Change: the value of core middle market opportunities compared to BSL.

Speaker Change: has become even more pronounced more recently. So, we feel good about what we're seeing.

Ken Kinsell: and understood that maybe a little pressure from the top down from the BSL market on the spreads, but obviously you're insulated, as you described. How about competition from other direct lenders within the middle market? Is there more? Capacity out there more, more dollars chasing those deals. So, you know, it's an interesting dynamic.

Ken Kencel: How about competition from other direct lenders within the middle market? Is there more capacity out there, more dollars chasing those deals?

Speaker Change: more dollars chasing those deals.

Speaker Change: So, you know, it's an interesting dynamic and these are comments that I know have been echoed by a number of our peers.

Ken Kencel: So, you know, it's an interesting dynamic, and these are comments that I know have been echoed by a number of our peers. I think what we're seeing is a dynamic where the largest scale players in the core middle market, and there are obviously five to eight of us or so that really are playing and investing in this world, performs that can underwrite and hold upwards of four, five, six hundred million per deal. We see the market right now as consolidating in that those firms, you know, those handful of firms, of which Churchill is one, are benefiting from that consolidation.

Ken Kinsell: So, you know, it's an interesting dynamic, and these are comments that I know have been echoed by a number of our peers. I think what we're seeing is a dynamic where the largest scale players, you know, in the core middle market, and there are obviously five to eight of us or so that really are playing and investing in this world, for firms that can underwrite and hold upwards of four, five, six hundred million per deal.

Speaker Change: I think what we're seeing is a dynamic where the largest...

Speaker Change: scaled players.

Speaker Change: you know, in the core middle market, and there are obviously five to eight of us or so that really are, you know, playing and investing in this world, for firms that can underwrite and hold upwards of four, five, 600 million per deal.

Speaker Change: We see the market right now is consolidating and that those firms, you know, those handful of firms of which Churchill is one,

Ken Kinsell: We see the market right now as consolidating and that those firms, you know, those handful of firms of which Churchill is one, are benefiting from that consolidation. You know, the new players, firms that are raising $500 million, a billion-dollar fund, they're not going to be able to issue commitment letters and fund three, four, five hundred million dollars per deal. So I think this is an environment that favors established players with relationships.

Speaker Change: are benefiting from that consolidation. You know, the new players, firms that are raising $500 million, a billion dollar fund, they're not going to be able to issue commitment letters and to fund three, four, $500 million per deal.

Ken Kencel: You know, the new players firms that are raising $500 million or billion dollar fund, they're not going to be able to issue commitment letters into fund three, four, five hundred million dollars per deal. So, I think this is an environment that favors the established players with relationships. Obviously, you know, we, along with that handful of firms, you know, compete for opportunities, but we have deep and long-standing relationships in the sponsor community, and that really has enabled us to, you know, be on the front line of that kind of, I would say, in the lower end of the middle market, that's where you might see that impact where, you know, you have a new entrance, they really can't do the larger core middle market deals, they're really limited to more smaller middle market, smaller companies, let maybe less established sponsors.

Speaker Change: Obviously, we, along with that handful of firms, compete for opportunities.

Ken Kinsell: Obviously, you know, we, along with that handful of firms, compete for opportunities, but we have deep and longstanding relationships in the sponsor community, and that really has enabled us to, you know, be on the front line of that kind of, you know, quality deal flow. But new entrants are really not impacting in our world. I would say in the lower end of the middle market, that's where you might see that impact where, you know, you have a new entrant, and they really can't do the larger, bad middle market deals.

Speaker Change: But new entrants are really not impacting in our world. I would say in the lower end of the middle market, that's where you might see that impact, where you have a new entrant.

Ken Kinsell: They're really limited to the smaller middle market, smaller companies, maybe less established sponsors. So in the world we play in, it's, you know, a handful of firms that continue to raise significant capital. You know, we obviously continue to raise substantial capital on our platform, feel very good about that, and had a very good first half of the year in terms of capital raising that enables us to stay in the mix with the larger core middle market deals.

Ken Kencel: So, in the world we plan, it's, you know, it's a handful of firms that continue to raise significant capital. You know, we obviously continue to raise substantial capital at our platform, feel very good about that, at a very good first half of the year in terms of capital raising. That enables us to stay in the mix with the larger core middle market deals, and we think that's where things will play out through the balance of this year.

Speaker Change: continue to raise significant capital. You know, we obviously continue to raise substantial capital at our platform, feel very good about that. Had a very good first half of the year in terms of capital raising that enables us to stay in the mix with the larger.

Speaker Change: core middle market deals, and we think that's where things will play out through the balance of this year.

Ken Kinsell: And we think that's where things will play out through the balance of this year. So a smaller number of large-scale players getting access to quality deals, newer entrants playing at the kind of smaller end of the market. And then, you know, you've got the larger end of the market where we generally see terms and structures less attractive to us.

Speaker Change: smaller number of large-scale players, getting access to the quality deals.

Ken Kencel: So, smaller number of large-scale players, getting access to the quality deals, newer entrance playing at the kind of smaller end of the market, and then, you know, you've got the larger end of the market where we generally see terms and structures less attractive to us. So, we feel we're in the right place in the market and driving what we believe are the best risk-adjusted returns.

Speaker Change: Newer entrants playing at the kind of smaller end of the market and then you know You've got the larger end of the market where we generally see terms and structures less attractive to us, so we feel we're in the right place in the market and In driving what we believe are the best risk-adjusted returns

Unnamed Analyst: So we feel we're in the right place in the market and driving what we believe are the best risk-adjusted returns. Very good. Thank you.

Operator: Very good, thank you, thank you, and once again, to ask a question, press star one on your phones now. We'll pause to see if there are any remaining questions. Thank you. At this time, we have reached the end of a question-and-answer session. I would now like to turn the floor back over to Ken Kencel for closing comments. Thank you, everyone, for joining us on the call today. If you have any additional questions, please reach out to our investor relations team. I hope everyone enjoys the rest of the summer, and we look forward to speaking with you on our next earnings call. Thanks very much. Thank you, and with that, we conclude today's conference. While part of me disconnect, having-

Speaker Change: Thank you. And once again, to ask a question, press star 1 on your phones now. We'll pause to see if there are any remaining questions.

Operator: Thank you. And once again, to ask a question, press star 1 on your phones now. We'll pause to see if there are any remaining questions. Thank you. At this time, we have reached the end of our question and answer session. I would now like to turn the floor back over to Ken Kensal for closing comments.

Speaker Change: Thank you.

Speaker Change: At this time, we have reached the end of our question and answer session. I would now like to turn the floor back over to Ken Kensal for closing comments.

Ken Kensal: Thank you everyone for joining us on the call today. If you have any additional questions, please reach out to our investor relations team. I hope everyone enjoys the rest of the summer and we look forward to speaking with you on our next earnings call. Thanks very much.

Ken Kinsell: Thank you everyone for joining us on the call today. If you have any additional questions, please reach out to our investor relations team. I hope everyone enjoys the rest of the summer, and we look forward to speaking with you on our next earnings call.

Speaker Change: Thank you and with that we conclude today's conference. All parties may disconnect. Have a good day.

Operator: Thank you. And with that, we conclude today's conference.