Q2 2025 Gladstone Investment Corp Earnings Call

Greetings welcome to Gladstone investment Corporation's second quarter earnings call. At this time, all participants are in a listen only mode.

Speaker Change: Anyone should require operator assistance. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce David Gladstone Chief Executive Officer. Thank you. Mr. Gladstone you may begin.

Speaker Change: Okay. Jerry. Thank you very much this is David Gladstone Chairman of Gladstone investment and this is the second quarter of fiscal year, ending 2025 ends on September 32024.

Speaker Change: Earnings Conference calls for shareholders and analysts are our chance to talk with you and tell you about what we're doing in hardwood going.

Speaker Change: Before we get started and I'll turn it over to.

Speaker Change: Uh huh.

Speaker Change: Chief Counsel.

Michael: What else do you do much yes enough [laughter], okay, let's hear from Michael.

Michael: Good morning, everybody today's call May include forward looking statements under the Securities Act 1933, and the Securities Exchange Act of 1934, including those regarding our future performance. These forward looking statements involve certain risks and uncertainties and other factors than the other based on our current plans, which we believe to be reasonable and many factors may cause there.

Michael: Actual results to be materially different from any future results expressed or implied by these forward looking statements, including all the risk factors listed on our forms 10-Q, 10-K and various other documents we filed with the SEC.

Michael: Find all these documents on the investors page of our website that Gladstone investment dot com or the Sec's website, which is www dot FCC that G. O V and we undertake no obligation to publicly update or revise any of these forward looking statements whether as a result of new information future events or otherwise except as required by law.

Michael: Please also note the past performance or market information not a guarantee of future results. We have seen you visit our website Gladstone investment's dotcom.

Michael: For our email notification service you can also find us on Facebook keyword, the Gladstone companies on Twitter, which is now ex the handle there is gladstone comps at Gladstone comps on X. Today's call is simply an overview of our results through September 32024. So we ask that you review our press release and Form 10-Q.

Speaker Change: Both issued yesterday for more detailed information with that I'll turn it over to Dave Dawn President of Gladstone investment and Mike. Thank you very much and good morning, welcome to all of our shareholders and analysts for.

Dave Dawn: For the second quarter of fiscal year 'twenty five I'm pleased to report that in the gain team has continued to produce consistent and positive quarter over quarter results. We ended the second quarter of this fiscal 'twenty five on 930 24 with adjusted NII of 24 cents per share and total assets of 806.

Dave Dawn: $9 million, which is a bit down from prior quarter, but it looks will explain that in a minute.

Dave Dawn: We are in an extremely active investing period and I believe this will continue for a while we have been and continue to review and conduct due diligence on a significant number of new investment opportunities.

Dave Dawn: At the same time, we've been managing various activities within our 22 existing portfolio companies, we invested about $18 5 million in the form of a secured first lien debt, which was to help fund an add on acquisition for one of our existing portfolio of companies Nocturne luxury failures.

Dave Dawn: As I've mentioned in prior calls this follows some of our other significant add on activities at a few of our other portfolio companies over the past year. What are these add on opportunities will allow us to increase our investment build value in companies, where we have confidence in the management team have a strong belief in its future and enhancing that.

Dave Dawn: The opportunity for future equity gains.

This quarter. We also had a very successful exit of our portfolio of company, Hence degree, where we generated a meaningful realized capital gains of around $42 $3 million.

Dave Dawn: We maintained our monthly distributions shareholders at eight cents per share or 96% 96 cents per share on an annual basis. We also declared a supplemental distribution of 70 cents per share during the quarter that was paid in October now. This large supplemental distribution is a direct result of our buyout strategy and our ability.

<unk> to reward our shareholders with meaningful supplemental distributions from the realized capital gains generated on the equity portion of our exit of our exits further reinforcing our model of a buyout focus fund it.

Dave Dawn: It remains our intent to continue rewarding our shareholders with meaningful supplemental distributions from the realized capital gains on exits.

And as our portfolio continues to mature and equity values increase we will constructively harvests. These gains for the benefit of shareholders. It is important here, though to emphasize that we will always be investing in new portfolio companies and strive to balance the timing of exits without sacrificing the law.

Dave Dawn: Level of debt assets that produce the income to support and grow our monthly dividends, which is extremely important to all of our shareholders.

Dave Dawn: Our balance sheet continues to be strong with low leverage a positive liquidity position with additional availability on our credit facility. We continue providing support for our portfolio companies for add on acquisitions as I mentioned, an interim financing if the need arises while actively growing our assets to new buyouts.

Speaker Change: Now looking forward and obviously you know there are many uncertainties as we look over the next number of years, but we feel very good about where we are and as Ed mentioned, we are seeing an increase in opportunities for new acquisitions, and there seems to be growing momentum in new deals coming to market. There is significant liquidity, the M&A market, which may.

Speaker Change: Sure a very competitive environment with upward pressure on valuations, we will have to aggressively compete and acquired new companies that we believe fit our financial model by investing a combination of debt and equity maintaining our principles of being a value investor.

Speaker Change: And generating income on a current basis.

Speaker Change: With upside through capital appreciation with a current level of analysis and due diligence we're doing on a number of new buyouts I'm encouraged that we'll be adding to our assets with new portfolio companies in the very near term.

Speaker Change: In summing up the quarter and looking forward, we believe the state of our portfolio is very good we have a strong liquid balance sheet, a positive level of buyer activity and the prospect of continued very good earnings and distributions over the next year, so with that I'd like to turn it over to Rachel Eaton, our CFO and have her elaborate on more detail on the financial results.

Speaker Change: Cool.

Rachel Eaton: Thank you, Dave and good morning, looking at our operating performance in the second quarter of fiscal year 'twenty five we generated total investment income of $22 6 million up from 22.2 million in the prior quarter net expenses for the quarter were $15 3 million up from $9 8 million in the prior quarter. This increase was primarily due to a $5 four.

Rachel Eaton: The increase in accrued capital gains based incentive fees.

Rachel Eaton: The impact of realized and unrealized gains and losses during the quarter as required under U S. GAAP.

Rachel Eaton: This resulted in net investment income for the quarter of $7 3 million compared to $12 4 million in the prior quarter.

Rachel Eaton: Adjusted net investment income, which is net investment income or loss exclusive of any accrued capital gains based incentive fees for the quarter was $8 9 million or 24 cents per share up slightly but remained consistent on a per share basis from $8 6 million or 24 cents per share in the prior quarter. We continue to believe that adjusted net investment income is a useful and reps.

Rachel Eaton: Another indicator of our ongoing operations.

Rachel Eaton: Consistent with the prior quarter at September 30 as of 'twenty 'twenty four we continue to have parked four portfolio companies that are on non accrual status. Overall, there are no portfolio wide credit concerns. We continue working closely with these companies to get back on accrual status when possible. We continue to see improvement at one of the companies in particular that has been on non accrual.

Rachel Eaton: For some time as they are back to generating a profit and we continue to work closely with them.

Rachel Eaton: Valuations in the aggregate were up $3 9 million across the portfolio, excluding the reversal of unrealized appreciation related to the exit of amps degree.

Rachel Eaton: This unrealized depreciation was driven by higher valuation multiples across the portfolio and increased performance at a number of our portfolio companies, which was partially offset by decreased performance at other portfolio companies.

Rachel Eaton: Our NAV decreased to $12.49 per share compared to $13 one per share at the end of the prior quarter. The decrease was primarily driven by 94 cents per share of distributions declared to common shareholders. During the quarter of which 70 cents per share. It was a supplemental distributions paid in October.

Rachel Eaton: Our NAV was also impacted by 93 cents per share of net unrealized depreciation on investments, which was comprised of 11 cents per share of unrealized appreciation experienced across the portfolio and $1.04 per share of unrealized depreciation due to that reversal of unrealized depreciation on the exit as previously mentioned he.

Rachel Eaton: These amounts were partially offset by increases in NAV of $1.15 per share of realized an investment and 20 cents per share of net investment income.

Rachel Eaton: Do you believe that maintaining liquidity and flexibility to support and grow our portfolio are key elements of our success with our three public notice Sean says, we have long term fixed rate capital in place and as of Yesterdays release, we had approximately 160 million available on our 200 million credit facility.

Rachel Eaton: Overall, our leverage remains relatively low with an asset coverage ratio at September 30th.

Rachel Eaton: 229, 3%, providing us plenty of cushion to the required 150% coverage.

Rachel Eaton: Yeah.

Consistent with prior quarters distributable earnings to shareholders remain strong we started the fiscal year of 20 million or 55 cents per share in spillover and our monthly distribution remains consistent at eight cents per share for an annual run rate of 96 cents per share.

Rachel Eaton: In September as mentioned, we declared our 75 per share supplemental distribution, which was paid in October and we will look to continue funding future supplemental distributions as we recognized realized capital gains on the equity portion of future access.

Rachel Eaton: Using the monthly distribution run rate of 96 cents per share per year, and 70 cents per share in supplemental distributions paid so far in fiscal year 2025, our aggregate estimated fiscal year distributions, what do you all about 12% using yesterday's closing price of $13 85.

Speaker Change: This covers my part of today's call before turning the call back over to David to wrap it up I would like to take a moment to match them, but that was announced last month today will be my last earnings call and my last day with Gladstone investment I'm proud of the work I've done for the past three years with Dave David and the team as they pursue a personal change I'd also like to introduce everyone on the call today.

Speaker Change: Hillary Ritchie, who has been with Gladstone investment for the past six years in a row with controller and director of financial reporting. We are all very excited to have him step into the CFO role and what we believe will be a seamless transition I'll now hand, it over to David to wrap it up.

Alright, Thank you Rachel.

Speaker Change: I like to see you go but.

Speaker Change: And you replace by really strong and counting.

Speaker Change: And the information that you've given us over the years has just been wonderful August calls the 10-Q.

Speaker Change: This call.

Speaker Change: 10-Q, we filed the S E C yesterday should bring everybody up to date.

Speaker Change: The team has reported solid results for the.

Speaker Change: September 32024.

Speaker Change: And we believe the team is in a great position to continue these successes through the rest of the fiscal year that ends in March 30.

Speaker Change: Yeah.

Glad sound investment is if you think about it are attractive investments with people.

Speaker Change: And once you read an interview Uh huh.

Speaker Change: Berkshire Hathaway and I ask them would you like to have something that pays a dividend just.

Every quarter forever in a day or would you rather have more income that habit to come in at variable times.

Speaker Change: As we do in our company you selected that one you always likes to get the most money out of it.

Speaker Change: He has invested in so.

Speaker Change: We believe Gladstone investment is a very attractive investment.

Speaker Change: Seeking continuous monthly distributions would meet that one because we've been doing it forever.

Speaker Change: Supplemental distributions that come from capital gains in one of our portfolio companies go public or sold.

Speaker Change: Team hopes to continue to show you strong returns on your investments in this fund.

Speaker Change: And I'll stop here and ask for questions.

Speaker Change: Sure if you'll come on that would be good.

Speaker Change: Thank you.

Speaker Change: I would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from Nikhil for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

and Vladimir Gaulein, please proceed.

Speaker Change: Yes, good morning everyone. Dave, a couple of questions today. I've noticed that the fee credits from the external manager for their portfolio company, you know, managerial assistance, have been running much lower quarterly this year than last fiscal year. Can you give us some insight into what's causing that decline and what's the outlook for that line item?

Hi Joe. Sure. Hi Mickey. Good morning.

Dave Dawn: That's going to be correlated to the deal activity that takes place during the quarter, so it's a little bit challenging to project that out, but you know I think you can look at, you know, the last couple quarters have been a little bit quieter from an investment perspective, so that's why it's a little bit lower.

Okay, I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I

Speaker Change: There's not a fundamental change in anything we do or whatever, it's just the timing as much as anything, as Rachael pointed out.

Speaker Change: Yeah, I understand. I just thought that some of that was also due to sort of ongoing assistance, but I do understand your answer. My follow-up question relates to Hobbs, which has been on non-accrual for more than two years,

Speaker Change: would seem like more than enough time to address, you know, whatever its issues are. Can you update us on what the company's done over that two years to get back on track? And, you know, when do you expect it to go back on accrual? And if it's not possible, have you thought about selling it?

Speaker Change: Sure, so yeah, as I think we alluded to in the script, I think Rachael mentioned in her part that one of those companies is actually now profitable, and that would be Hobbs.

And the answer to your question is two things. One...

Speaker Change: We, I think I've mentioned actually in prior calls, we've made change to the senior management team.

Speaker Change: And we're really excited about the team that's there now, both the CEO and also.

Speaker Change: The CFO, which is actually, he's been relatively new to the company, but now about six months or so.

Speaker Change: And where it a bit got off track, to be perfectly honest, is they do contracting with general contractors who are building, initially, single-family homes, multi-family homes, and they've been actually expanding into some industrial commercial type projects.

Speaker Change: The problem that occurred going back a couple of years now is those long-term contracts truthfully were either not very well-priced, not very well-managed, and so as a result of that...

Speaker Change: And recognizing that most of that accounting is done on a percentage of completion basis, that we would end up with jobs that have what they, in that, in that.

Speaker Change: in their terminology called job fade. So they actually are not being able to recoup some of their expenses as the job potentially would go along, recognizing some of these jobs could go on for over a year.

Speaker Change: Right, so that we finally got a grasp, to be truthful, on that aspect of it, number one. Number two, also they were able to then start taking jobs.

Speaker Change: This company is over $100 million plus in revenues, getting it down to a level that we're actually taking business only at a certain margin level and sticking with it. So that's all starting to come through the system currently. So therefore...

Speaker Change: That's kind of what we have done, how we've worked with the business and how we've helped get it to the level it is at.

Speaker Change: My hope would be, and it's just that, that, you know, coming back on accrual status could occur.

Speaker Change: Hopefully, shortly after that, we might start being able to bring some of it, maybe not all of it, back on accrual. So it's a long answer to your question, but again, it's a good, solid business, good management team making money now, and also, frankly, not requiring any additional cash or support from us, which is a good thing.

Dave Dawn: That's really good to hear, Dave. And in terms of the profitability you've mentioned, are they generating enough cash flow to service the debt at this point, or are we not there yet?

Speaker Change: Yeah, no, as I mentioned, you know, looking forward and to getting back on quote accrual and starting to pay. It's probably going to be, you know, a six, nine month time frame, and they start again some because right now they're generating cash, but it's obviously flowing back into the business from a working capital perspective, so.

Speaker Change: Okay, I understand. Those are my questions for this morning. Thanks for your time and Rachael, good luck on your future endeavors.

Speaker Change: Thanks very much. All right, can we have, who's up next, Bryce? Yes, our next question is from Bryce Rowe with B Riley Securities. Please proceed.

Speaker Change: Thank you and good morning. Congrats to Rachael and to Taylor. It's exciting stuff.

Speaker Change: I wanted to wanted to start, Dave, with you made this comment about an extremely active, you know, kind of opportunities out there. I don't know if I've heard you describe it like that before. Can you talk about, you know, or give us maybe a little detail around that comment?

Speaker Change: And, you know, if you could size up the opportunity in terms of the pipeline, I don't know if you can, but that would certainly be helpful for us to kind of right-size that comment.

Speaker Change: Yeah, no, I did use that word, and it's an adjective that, you know, I'm going to, going forward, probably not use again, Bryce, but no, seriously.

Speaker Change: I don't want to obviously say anything here that we shouldn't say, but I can only tell you that we are running very hard at all levels. One of my partners and senior managing director is actually sitting next to me here in this call this morning.

Speaker Change: Very active and stuff that she's doing in terms a couple of deals that frankly are going to hopefully close within the next

Speaker Change: you know, I don't know, a month or two, alongside of new deals that we're working on. It just truly is.

Speaker Change: three turns of Ibet Dag you know, lower than where the next level was gonna be. So that's, that's really, it's just overall just a lot of positive activity. We're not looking at stuff that's wasting our time. It's really good high-quality stuff. So the quantity is, is higher though the quality, I would also say, is higher. That's what I was thinking. Thank you very much.

Speaker Change: And I think also the other, and the third part, frankly, the size.

Speaker Change: of the companies we're looking at and are witting and able to now bid on and work through is a bit higher than we've historically done as well. So that's why I'm...

Speaker Change: extremely enthusiastic about where we are and of course we've got to keep just slogging and I mentioned, you know, we're doing the due diligence and that obviously as you know we're very careful in how we do that so that's why there's a lot of activity going on right now within the overall team and the portfolio.

Speaker Change: Okay, and Dave, I mean, how do you, how do you handicap? You made the comment about...

Speaker Change: Some transactions being a little more price, higher price than you'd like from a multiple EBITDA perspective. What gives you, you know, confidence that you know, the deals that are, I guess, getting closer to to the finish line, you know, aren't running into that same issue?

Yeah, only because of the way our process works.

Speaker Change: Let me define, if it's all right with you, getting close to the finish line, for us there are two levels. One would be when we do what we call an indication of interest, which means we're putting out what we say we're willing to do. That leads generally then...

Speaker Change: to an opportunity, as you would know, to go and meet the management team, et cetera, if we sort of made that first cut, right? So after we've done that, if we then think this is worthy of moving to the next level, we do some work, we then would put together what we call a letter of intent, which now pretty much solidifies for us what we're willing to pay. That LOI has to get approved by our investment committee, and if that is the case, we then submit that back. So at that point, that's getting close to the finish line, right? So when we do that, we generally have a relatively high degree of confidence that we are going to probably get selected. We don't always do. If we get selected, then frankly, and that's kind of at a stage where we're in with a number of companies right now, it's really up to us in.

Speaker Change: in terms of finalizing the due diligence, and unless we find something that really...

Speaker Change: you know, we, you know, preliminary work sort of comes out of the woodwork that we don't think really fits, we're going to get that deal done. And that's why I'd say those that I would put into that category, we have a reasonably high degree of confidence, we're going to get closed here in the next, you know, X number of months. So.

Speaker Change: I don't know if that helps you, but I don't know if I can be any more really specific than that. But I've got folks sitting around the table that would probably hit me over the head if I got more specific.

Thank you. Bye-bye.

Dave Dawn: All right, that's fine, Dave. Kind of in that context, we think about

Speaker Change: Funding new deals, I mean obviously you've got plenty of room on the credit facility at this point. How do you kind of weigh that relative to, you know, maybe raising equity by the ATM or looking at the unsecured market for another debt raise?

Rachel Eaton: Yeah, that's a great question and something obviously we're looking at doing and I'll turn it over to Rach. I'd like to have her address that. Yeah, absolutely. You know, I think we historically have kept a very conservative balance sheet and it's kind of for this reason, right?

Rachel Eaton: And, you know, also we are, we remain open to the potential of other, you know, future debt issuances as well, whether that might be, you know, in the near term or farther out into the future. But, you know, I think we kind of look at it all holistically and what makes sense in order to fund the pipeline.

Rachel Eaton: I think another way to briefly add to that is we are in a position where as we need to and there's a good likelihood we might, obviously as we hopefully continue growing, we will go and access.

Rachel Eaton: Certainly, the ATM market, if we need to, the stocks trading above NAV, and likewise, you know, more long-term permanent capital.

Rachel Eaton: which is, you know, a positive thing for us. So, yeah, we feel reasonably good around where we are today about the ability to raise capital as we need it for the new deals that we're looking at doing, including working with our line of credit that we currently have. Obviously, we do a new deal, we'll use the line of credit, we get to that point, then we think, okay, let's go raise long-term permanent capital and use that capital and then pay down the line of credit and so on and so forth. So, the conversations we've certainly had with bankers and others, we feel pretty good about that.

OK.

Speaker Change: Two more questions for me, kind of housekeeping. Number one, the dividend income in the quarter, I assume that was just one portfolio company. Any detail around that?

Speaker Change: That's correct. Yeah, it was just one portfolio company, really no additional detail. They were in the position to be able to pay us some dividend income. So as you know, that that can be kind of volatile quarter over quarter and is a little bit challenging to project out. But yeah, just one company there.

Speaker Change: Okay, and then the the the portfolio the debt yield was was steady in the quarter certainly Haven't really seen that across the space. We've seen a lot of yield compression so far with with earning season when when do your debt investments When is the when is the interest rate reset for those that are floating rate?

So 100% of our portfolio is

Speaker Change: and the other is variable rate debt. So, you know, there are actually, there's some ins and outs kind of in that number. So while it remains consistent quarter over quarter, obviously we did see the impact of decreasing SOFR in there. It was just generally offset by changes within the portfolio. So specifically, nth degree, the exit during the quarter, it just had a yield that was a little bit lower than the total average. So by removing that, you know, kind of was an offsetting increase.

And remember, Bryce, we also have floors.

Speaker Change: You know, we've benefited to some extent by that, obviously, but so for being up where it is, we don't, I guess, I may be thinking about this too much the wrong way, but I don't feel too strong about this issue of compression of yield because of the way in which we think about and certain new deals we do and deals we've done in the past.

Speaker Change: where we think very carefully about the floors that we want to have to achieve relative to the total dollars that we invest. And we may have talked about this in the past and what have you, when we look at

Speaker Change: yield on our total dollar investment, which means both the equity and the debt. We have a level that we want to strive to get to. So we either will set the floor on the debt pieces so that we can blend that yield around the assets that we're putting out. So yeah, I think we feel like we're in pretty decent shape. Would you agree with that? Yes, and so in reference to what Dave's discussing and so forth.

Speaker Change: We are looking at our portfolio on a weighted average basis. Overall, it's about 12% floors in place, so that's going to be the minimum we'll ever get to.

Speaker Change: Okay, all right. I think that's it for me. Appreciate your time.

Speaker Change: Our next question is from Matthew Hurwitz with Jeffreys, please proceed.

Hi, good morning, everyone. First question is...

Speaker Change: Cost Efficiency in the Portfolio, or I'm just curious about that movement.

So I think from the...

Speaker Change: revenue perspective, that's just going to be for the portfolio companies that are being valued using a revenue multiple. So that's only a small part of the portfolio as a whole.

Speaker Change: When we look at performance across the portfolio as it impacted fair value this quarter,

Speaker Change: a pretty good amount that was up in performance, so then you'll see that in the increasing EBITDA range. And then that was sort of offset by a handful of companies that saw a decreased performance, whether that is EBITDA or revenue. So the companies using a revenue multiple just saw a decrease this quarter.

Speaker Change: The portfolio fair value percent of cost went from $105 to $102 quarter-on-quarter. I'm kind of curious if there's some conservatism being baked into fair value estimates or... Yeah.

It's a multi-part, but that would be helpful. Thanks.

All right. So from a

Speaker Change: From a fair value perspective, we had the exit of Nth degree,

Speaker Change: unrealized appreciation that we had been carrying until exit when it when it was realized.

Speaker Change: So that's really responsible for the overall, I'd say, portfolio decrease when you're looking at that fair value percentage.

Speaker Change: Overall, excluding that reversal of any unrealized appreciation related to the degree when it was exited, we did experience about 11 cents per share of unrealized appreciation across the portfolio in the aggregate. So excluding that, we did see fair values across the board go up.

Speaker Change: and then you were you asking you're sorry asking just to go through kind of the the nav

Changes again.

Speaker Change: Yeah, it was just some of the puts and fakes on the net unrealized depreciations, which I think you mostly covered.

Oh, okay.

And then if I could ask... Oh, sorry, go ahead.

What's your next question?

Speaker Change: The last one is, I'm not asking you to be policy experts, but do you see any high-level impacts from the election outcome at this point on your business or portfolio businesses in particular that are worth calling out, whether they're positive or negative?

So, Matthew, we're not policy experts either.

Speaker Change: And again, I only taking a quick look, obviously things will settle down. We'll see things go up, go down, et cetera. You know, the obvious one, perhaps, and it's not something we are looking at all the time, we've been living with it for a number of years, obviously, would be issues around tariffs.

Speaker Change: and some of our companies that actually do have products produced overseas, China to some extent. And I would say that...

Most of those companies that we have

Speaker Change: A couple of things, one, we've already been living in somewhat of a tariff-oriented environment for a number of years with those companies. Some of them have also shifted their production knowingly to other countries where it works. Some of them come back to the United States. But I would say, as of right now, I don't honestly say that I can tell you that I see any major issue based on, you know, as a result of any changes that might be coming over the next, you know, we'll start hearing about sometime, I guess, the next six months or so. But we're obviously aware of it, and we'll take a look at it.

Okay, great. That's helpful. Thanks very much.

Speaker Change: Okay, next question. And we do have a follow-up with Mickey from Lattyburg, Southland and Holden.

Please proceed.

Speaker Change: Rachael, just one sort of modeling question. The income-based incentive fee was lower than I anticipated based on your, you know, pre-incentive fee NII. Is there some noise in that number or any explanation as to why it's probably lower than we would expect?

Um, you know, nothing that...

Speaker Change: There was nothing unusual in there. I think it's just a result of the calculation.

Yeah.

Speaker Change: And coming out, reduce the asset base. Yeah, I can't think of anything else that would have impacted your modeling.

Does the dividend payable have any impact on that calculation?

Now.

Speaker Change: No, I didn't think so. Okay, that's it for me. Thanks.

Speaker Change: Okay, next question. There are no further questions at this time. I would like to hand it back off to management. Oh, actually, we just got one.

Hello!

Mark Farone, he's a private investor. Please proceed.

Speaker Change: I don't know if you all can hear me but I just wanted to thank Rachael for all her years of service. She's a clear-headed, no-nonsense

Speaker Change: advocate, but her insights have been really, really great for us individual investors. And a big shout out to Dave and Michael and Dave. And you guys just do a fantastic job taking care of us individual investors. So thank you very much.

Speaker Change: Thank you for being a shareholder, and how much do we owe you for that discussion?

Speaker Change: You already paid him with that special dividend. Special dividend. Okay, thank you all. You guys just paid me over and over again.

Speaker Change: Okay, thank you again for saying that. We'll move on now to say goodbye to all of you for this quarter and we'll see you again next quarter. That's the end of this conference.

Speaker Change: Thank you. This will conclude today's conference. You may disconnect at this time and thank you for your participation.

Speaker Change: Michael & Erich Hellmold The Ethnic Anthology ofosely Michael & Erich Little Michael & Erich HelloIsland

Speaker Change: [music].

Speaker Change: Yeah.