Q4 2024 Stellus Capital Investment Corp Earnings Call
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Operator: © The Ultimate Parody Site! Good morning, ladies and gentlemen, and thank you for standing by. At this time, I would like to welcome everyone to Stellus Capital Investment Corporation's conference call to report financial results for its fourth fiscal quarter ended December 31st, 2024.
Yes.
Speaker Change: Good morning, ladies and gentlemen, and thank you for standing by.
Speaker Change: At this time I would like to welcome everyone to Astellas capital Investment Corporation's Conference call to report financial results for its fourth fiscal quarter ended December 31st 2024.
Operator: At this time, all participants are on a listen-only mode and a question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
Speaker Change: At this time, all participants are on a listen only mode.
A question and answer session will follow the formal presentation.
Speaker Change: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Speaker Change: This conference is being recorded today March 15 2025.
Operator: This conference is being recorded today, March 5th, 2025.
Operator: It is now my pleasure to turn the call over to Mr. Robert Ladd, Chief Executive Officer of Stellus Capital Investment Corporation. Mr. Ladd, you may begin your conference.
Speaker Change: It is now my pleasure to turn the call over to Mr. Robert Ladd, Chief Executive Officer of status Capital Investment Corporation. Mr. <unk> you may begin your conference.
Robert Ladd: Yes, thank you, Ali, and good morning, everyone. Thank you for joining the call.
Speaker Change: Yes, Thank you Ali and good morning, everyone. Thank you for joining the call and welcome to our conference call covering the quarter and the year ended December 31 2024.
Robert Ladd: Welcome to our conference call covering the quarter and the year ended, December 31st, 2024.
Todd Huskinson: Joining me as usual this morning is Todd Huskinson, our Chief Financial Officer, who will cover important information about forward-looking statements and then start off our discussion. Thank you, Rob. I'd like to remind everyone that today's call is being recorded. Please note that this call is the property of Stellus Capital Investment Corporation and that any unauthorized broadcast of this call in any form is strictly prohibited. Audio replay of the call will be available by using the telephone number and PIN provided in our press release announcing this call.
Speaker Change: Joining me as usual. This morning is Todd has considered chief financial Officer, who will cover important information about forward looking statements and then start off our discussion.
Todd: Thank you Rob.
Speaker Change: I'd like to remind everyone that today's call is being recorded. Please note that this call is the property Astellas capital investment Corporation and that any unauthorized broadcast of this call in any form is strictly prohibited.
Speaker Change: A replay of the call will be available by using the telephone number and 10 provided in our press release announcing this call.
Todd Huskinson: I'd also like to call your attention to the customary safe harbor disclosure in our press release regarding forward-looking information. Today's conference call may also include forward-looking statements and projections, and we ask that you refer to our most recent filing with the SEC for important factors that could cause actual results to differ materially from these projections. We will not update any forward-looking statements unless required by law.
Speaker Change: I'd also like to call your attention to the customary safe Harbor disclosure in our press release regarding forward looking information.
Speaker Change: Today's conference call May also include forward looking statements and projections and we ask that you refer to our most recent filing with the SEC for important factors that could cause actual results to differ materially from these projections.
Speaker Change: We will not update any forward looking statements unless required by law.
Todd Huskinson: To obtain copies of our latest SEC filings, please visit our website at www.stelluscapital.com under the Public Investors link or call us at 713-292-5400.
Speaker Change: To obtain copies of our latest SEC filings. Please visit our website at www Dot Astellas capital Dot com.
Speaker Change: Under the public investors link or call us at 700 329 to 500 400.
Speaker Change: Now I'll cover our operating results for the quarter I would like to start off with our life to date activity.
Todd Huskinson: Now we'll cover our operating results for the quarter.
Todd Huskinson: We would like to start off with our life to date activity. Since our IPO in November 2012, we've invested approximately $2.6 billion in over 200 companies and received approximately $1.6 billion of repayments while maintaining stable asset quality. We've paid over $288 million of dividends to our investors, which represents $16.69 per share to an investor in our IPO in November 2012, which was offered at $15 per share.
Speaker Change: Since our IPO in November 2012, we've invested approximately $2 6 billion and over 200 companies and received approximately $1 $6 billion of repayments, while maintaining stable asset quality.
Speaker Change: State over $288 million of dividends to our investors, which represents $16 69 per share to an investor in our IPO in November 2012, which was offered at $15 per share.
Turning to our current operating results in the fourth quarter, we generated 35 per share of GAAP net investment income and core net investment income of 37 per share, which excludes estimated excise taxes.
Todd Huskinson: Turning to our current operating results, in the fourth quarter, we generated $0.35 per share of gap net investment income and core net investment income of $0.37 per share, which excludes estimated excise tax.
Todd Huskinson: Net asset value per share decreased $0.09 during the quarter due to net unrealized depreciation on our investment portfolio and reduction of spillover income. offset by net realized gains on our investment portfolio, primarily related to one equity investment. Our ATM program was active during the quarter, and we issued 441,754 shares for $6.1 million. in shares at an average gross price of $13.86 per share. All issuances were above net asset value.
Speaker Change: Net asset value per share decreased nine during the quarter due to net unrealized depreciation on our investment portfolio and reduction of spillover income.
Speaker Change: Offset by net realized gains on our investment portfolio, primarily related to one equity investment.
Speaker Change: Our ATM program was active during the quarter, we issued 441754 shares for $6 $1 million.
Speaker Change: And shares at an average gross price of $13 86 per share all issuances were above net asset value.
Speaker Change: Regarding portfolio and asset quality, we ended the quarter with the investment portfolio at fair value of $953 $5 million across 105 portfolio companies up from $908 7 million across 99 companies as of September 32024.
Todd Huskinson: Regarding portfolio and asset quality, we ended the quarter with an investment portfolio at fair value of $953.5 million across 105 portfolio companies, up from $908.7 million across 99 companies as of September 30th of 2024. During the fourth quarter, we invested $76.5 million in nine new portfolio companies and had $33 million in other investment activity, all at par. We also received three full repayments totaling $46.9 million and received $15.6 million of other repayments, both at par. We also received one full equity realization and one material partial realization that generated proceeds of $6.5 million and realized gains of 5.5%.
Speaker Change: During the fourth quarter, we invested $76 $5 million in nine new portfolio companies and had $33 million in other investment activity all at par.
Speaker Change: We also received three full repayments totaling $46 9 million and received $15 6 million of other repayments both at par.
Speaker Change: We also received one full equity realizations and one material partial realizations that generated proceeds of $6 $5 million in realized gains of $5 5 million.
Speaker Change: At December 31, 98% of our loans were secured and 95% were priced at floating rates.
Todd Huskinson: December 31st, 98% of our loans were secured and 95% were priced at floating rate. The average loan for a company is $9.5 million, and the largest overall investment is $21.2 million, both at fair value. All but one of our portfolio companies are backed by a private equity fund. Overall, our asset quality is on plan. At fair value, 24% of our portfolio is rated a 1 or ahead of plan and 21% of the portfolio is marked an investment category of 3 or below plan, meaning not meeting plan or expectations.
Speaker Change: The average loan for our company is $9 $5 million and the largest overall investment is $21 2 million both at fair value all but one of our portfolio companies are backed by a private equity firm.
Speaker Change: Overall, our asset quality is on plan a.
Speaker Change: At fair value, 24% of our portfolio is rated a one or ahead of plan and 21% of the portfolio is marked at an investment category of three or below plan, meaning not meeting plan or expectations.
Todd Huskinson: Currently, we have loans to seven portfolio companies on non-accrual, which comprise 5.4% of the fair value of the total loan portfolio.
Speaker Change: Currently we have loans to seven portfolio companies on nonaccrual, which comprise five 4% of the fair value of the total loan portfolio.
Robert Ladd: And with that, I'll turn it back over to Rob to discuss the overall outcome. Okay, very good. Thank you, Todd.
Speaker Change: That I will turn it back over to Rob to discuss the overall outlook.
Rob: Very good thank you Todd.
Rob: So as we look ahead to the first quarter of 2025, I'll cover portfolio growth equity realizations and dividends.
Robert Ladd: So as we look ahead to the first quarter of 2025, I'll cover portfolio growth, equity realizations, and dividends. The active fourth quarter has continued into the first quarter of 2025. As of last Friday, we have funded an additional $47 million, bringing our portfolio to a billion dollars for the first time in our firm's history. We expect that level to maintain and probably finish the quarter at the billion dollar number. As Todd noted earlier, we had realized equity gains in the fourth quarter of five and a half million. We expect we'll see more equity gains in 2025 with approximately four to five million.
Rob: The active fourth quarter has continued into the first quarter of 2025.
As of last Friday, we have funded an additional $47 million, bringing our portfolio to $1 billion for the first time in our firm's history.
Rob: We expect that level to maintain and probably finished the quarter at the $1 billion number.
Rob: As Todd noted earlier, we had realized equity gains in the fourth quarter of $5 5 million.
We expect we will see more equity gains in 2025, with approximately $4 $4 million to $5 million.
Robert Ladd: by June 30. And as a reminder, our equity co-invest business, we have equity co-investments across 92 companies. with a cost basis of $59 million. We believe over time that we should see meaningful uplift from here. Our historical results would indicate realizations in excess of two times our cost.
Rob: By June 30.
Rob: And as a reminder, our equity co invest business, we have equity co investments across 92 companies with a cost basis of $59 million.
Rob: We believe over time that we shouldnt see meaningful uplift from here are our historical results would indicate.
Rob: Realizations in excess of two times our cost.
Rob: And finally regarding dividends, we declared the dividend for the fourth quarter of sorry for the first quarter of 2025 at a rate of <unk> 40 per share again payable monthly.
Robert Ladd: And finally, regarding dividends, we declared the dividend for the first quarter of 2025 at a rate of 40 cents per share, again, payable monthly. We do expect that level of dividend, again, 40 cents per share payable monthly, to continue into the second quarter.
Rob: We do expect that level of dividend again, <unk> 40 per share payable monthly to continue into the second quarter.
Robert Ladd: and based on spillover or previous year's earnings. that have not been distributed, we would expect this level to continue throughout the year.
Rob: And based on spillover or previous Years' earnings that have not been distributed we would expect this level to continue throughout the year of course all of this subject to board approval.
Robert Ladd: Of course, all of this subject to board approval.
Rob: And with that we'll open up for questions. Please.
Operator: And with that, we'll open up for questions. Ali, please begin the Q&A session, please. Thank you. At this time, we'll be conducting our 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 your line is in the question key. 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 start. One moment, please, while we pull for questions. Thank you.
Rob: Please begin the Q&A session. Please.
Rob: Thank you.
Rob: At this time, we will be conducting a question and answer session.
Rob: If you would like to ask a question. Please press star one on your telephone keypad.
Rob: Information tone will indicate your line is in the question Keith.
Rob: Press Star two if you would like to remove your question from the key.
Rob: Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Rob: Please while we poll for questions.
Operator: Thank you. Our first question is coming from Sean Paul Evans with Raymond James Your line is life.
Sean Paul Adams: Our first question is coming from Sean Paul Adams with Raymond James. Your line is live. Hey, guys.
Speaker Change: Hey, guys good morning.
Operator: Good morning. Morning. Good morning.
Rob: Morning.
Sean Paul Adams: So when it comes to, you know, discussions about, you know, potential tariff impacts to, you know, companies within the portfolio, and also discussions about potential changes in credit quality.
Speaker Change: Good morning, so when it comes to discussions about potential tariff impacts too.
Rob: Companies within the portfolio.
Rob: And also discussions about potential changes in credit quality, what are your thoughts on leverage.
Robert Ladd: What are your thoughts on leverage going into 2025 and 2026, and just the potential concerns about the magnification of that potential credit rate? Yeah, good morning. Good question. So, as you know, we're operating at a lower leverage level than we've normally operated. Our target regulatory leverage is one-to-one and a gap would be two-to-one, but we're certainly at a lower level than that now. So, I'd say, you know, I think we continue to shoot for that target leverage. We're certainly cautious about the uncertainty that's being created by the executive branch of the government. But I think that at this point, we'd like to, so to speak, wait and see the impact of what's happening.
Rob: Into 2025, and 2026 and just the potential concerns about the magnification of that potential credit risk.
Rob: Okay.
Rob: Yes, good morning, good question.
Rob: So as you know we're operating at a lower leverage level than we've normally operated our target regulatory leverages one to one.
Rob: And GAAP would be two to one but we're certainly at a lower level than that now.
Rob: So I would say.
Rob: We continue to shoot for that targeted leverage.
Rob: We are certainly cautious about the uncertainty that's being created by the executive branch of the government.
Rob: But I think that at this point, we'd like to so to speak wait wait and see.
The impact of what's happening, but we're certainly cautious about.
Robert Ladd: But we're certainly cautious about what that could mean. You know, we certainly have most, substantially all of our businesses are based in the United States, but some would touch government activities, some would have activities cross border. So, we're certainly cognizant of that, but I think we're in a wait-and-see attitude, but cautious, as you say.
Rob: What that could mean.
Rob: We certainly have.
Rob: Most substantially all of our businesses are based in the United States, but some would touch government activity some wood would have.
Rob: Activities Cross border. So we're certainly cognizant of that but I think we're in a wait and see attitude and but cautious as you say.
Rob: Perfect answer thank you.
Sean Paul Adams: Perfect answer. Thank you.
Rob: Thank you.
Rob: Thank you.
Christopher Nolan: Our next question is coming from Christopher Nolan with Ladenburg-Thalman. Your line is live.
Speaker Change: Our next question is coming from Christopher Nolan with Ladenburg Thalmann. Your line is live.
Chris: Hey, guys good morning, Chris.
Operator: Hey guys. Good morning, Chris.
Rob:
Robert Ladd: Rob, could you give us a little thoughts in terms of, given all the outlook information you gave, which is always appreciated, do you think the first quarter EPS will cover the dividend? You know, we don't have it quite, but probably not fully covered. You know, we'll see what the balance of the quarter looks like, but probably not. would be close. And again, I think part of this is we look at the dividend and we look at earnings. One, we have substantial earnings from the past that have not been paid out. So that's helpful. effectively covering.
Rob: Rob could you give.
Speaker Change: Give us a little thoughts in terms of given all the.
Speaker Change: Outlook information you gave which is always appreciated do you think the first quarter EPS will cover the dividend.
Speaker Change: We don't have a quite big but probably not fully covered.
Speaker Change: We will see what the balance of the quarter looks like but probably not.
Speaker Change: But be close and again I think part of this as we look at the dividend and we look at earnings.
Speaker Change: One we have substantial <unk> in the past that have not been paid out so thats helpful.
Speaker Change: Effectively covering and then we look at it over time and as I mentioned we.
Todd Huskinson: And then we look at it over time, and as I mentioned, likely to start seeing some equity realizations kick in that will be helpful. But I think as a technical matter, Todd, we probably won't quite cover in the first quarter.
Speaker Change: Likely to start seeing some equity realizations kick in that will be helpful. But I think as a technical matter Todd.
Speaker Change: Probably won't quite cover in the first quarter, Yes, that's right, Chris we think will be off.
Todd Huskinson: Yeah, that's right, Chris. We think we'll be off, you know, by a few cents. And that That general trend will, you know, may kind of continue throughout the year, just given kind of the rate environment and the spread. Gotcha.
Speaker Change: By a few cents and that debt.
Speaker Change: That general trend will kind.
Speaker Change: Continued throughout the year, just given kind of the rate environment and the spread environment.
Speaker Change: Got you and then on the topic of spreads.
Todd Huskinson: And then on the topic of spreads.
What was the driver for the decrease in investment yields in the first quarter.
Todd Huskinson: What was the driver for the decrease in investment yields in the first quarter? So, so good.
Speaker Change: So good so in terms of spreads.
Todd Huskinson: So, in terms of spreads, maybe as a macro thought. So, as we started twenty twenty four. You know, we were seeing spreads in the sixes, and as we end the year, seeing spreads in the fives. So you probably, that's one factor. Two, SOFR did decline quarter over quarter. And then probably some impact again for some additional non-accrual. But the good news is it's in excess of 10%.
Speaker Change: Maybe as a macro thoughts so as we started 2024.
Speaker Change: We were seeing spreads sixes and as we end the year seeing spreads in the fives.
Speaker Change: So you'd probably that's one factor.
Speaker Change: Two silver did decline quarter over quarter.
Speaker Change: And then probably some impact again for some additional non accruals Chris.
Speaker Change: But the good news is in excess of 10% currently.
Speaker Change: And on the topic of leverage Youre Leverages, just so low I mean, what's the thought here in terms of.
Todd Huskinson: And on the topic of leverage, your leverage is just so low. I mean, what's the thought here in terms of.
Speaker Change: Your leverages artificial it seems to be artificially low.
Robert Ladd: your leverage seems to be artificially low, the EPS outlook doesn't quite cover the dividend, and you're in a tightening spread environment, why don't you just increase leverage a little bit? Yes, so that it counterbalanced to the first question, so yes, so we, as I say, are we're targeting a one-to-one, you know, being cautious about it, and so we, you may see that come happen over time this year, and there's some different ways to achieve that leverage, but more to come. Gotcha.
Speaker Change: EPS outlook doesn't quite cover the dividend and unit.
Speaker Change: Tightening spread environment once you just increase leverage a little bit.
Speaker Change: So that a good counterbalance of the first question.
Speaker Change: So yes, so we as I say, we're targeting a one to one being cautious about it and so we are you may see that come up and over time. This year and there are some different ways to achieve that leverage, but but more to come.
Speaker Change: Got you and final question I know that you've got you got you paid off part of the SBA.
Robert Ladd: Final question. I know you paid off part of an SBA maturity in the first quarter of 2025. Are you guys going to re-up for more SBA lending capacity?
Speaker Change: Maturity in the first quarter of 2025.
Speaker Change: Are you guys going to re up for more SBA lending capacity.
Speaker Change: Yes, we are we're.
Robert Ladd: Yes, we are. We're moving forward with a third license. And thanks for noting that after 10 years, our first licensed debentures are starting to come due. And so we did prepay the first debenture payment in mid-February of roughly $16 million.
Speaker Change: Moving forward with the third license and thanks for noting that.
Speaker Change: After 10 years, our first license debentures are starting to come due and so we did prepay. The first debenture payment in mid February of roughly $16 billion. So, but we were in the.
Operator: But we're in the process of obtaining hopefully a third license, and we'll continue that program along the way. Great. Thank you very much. Thank you, Chris. Thank you.
Speaker Change: Process of obtaining a hopefully a third license and will continue that program along the way.
Speaker Change: Great. Thank you very much.
Chris: Thank you Chris.
Speaker Change: Thank you. Our next question is coming from Eric Zwick with Lucid capital markets. Your line is live.
Erik Zwick: Our next question is coming from Erik Zwick with Lucid Capital Markets. Good morning, Erik. Thank you. Good morning. Yeah, good morning.
Speaker Change: Good morning, Thank you and good morning, yes.
Speaker Change: Hey, good morning wanted to start first on the pipeline. The obviously you had some nice excuse.
Operator: I wanted to start first on the pipeline. You obviously had some nice new origination activity in the fourth quarter, and it seems like you're off to a good start here in the first quarter as well. So maybe just quantitatively, can you update us on where the pipeline stands today relative to 90 days ago, and additionally what that mix looks like between new versus add-on opportunities? Yes, so I'd say that again, very busy fourth quarter and really the last month or two of the fourth quarter and then really through the first two, two months were this quarter we're on a pace that's be exceptional.
Speaker Change: Excuse me new origination activity in the fourth quarter. It seems like you're off to a good start here in the first quarter as well so maybe just quantitatively can you.
Speaker Change: Maybe kind of update us on kind of where the pipeline stands today relative to 90 days ago, and additionally, kind of what that mix looks like between.
Speaker Change: Between new versus add on opportunities.
Speaker Change: Yes, so I would say that again very busy fourth quarter and really the last month or two in the fourth quarter and then really through the first two two months were this quarter, we're on a pace that's.
Speaker Change: What would be exceptional.
Robert Ladd: So I think we've seen a little bit of slowness, but continued activity. As you know, our platform is a three plus billion dollar platform overall, and so our investment teams are seeing a number of deals. So I think, you know, good pipeline, good deal flow. Probably not expecting the same level every month that we had in the first two. But then I'd also say so.
Speaker Change: So I think we've hit a little bit of slowness, but continued activity. Our Juno platform is at three plus billion dollars platform overall and so.
Speaker Change: Our investment teams are seeing a number of deals every week, so I think.
Speaker Change: Okay. Good pipeline good deal flow.
Speaker Change: Probably not expecting the same level every month that we had in the first two.
Speaker Change: But then I'd also say so so following question about new investments.
Robert Ladd: So following question about new investments. versus follow-on. So the follow-ons are very helpful. They come in two ways. One would just literally be a new follow-on to the same company. And then alternatively, or in addition to that, we'll have delayed draw term loans where someone is tapping an existing commitment that's been made. And this is helpful in that it's already in place and everything's been negotiated. So it comes in both ways. But I'd say the quantum of that is probably two-thirds are new transactions, and roughly a third would be follow-ons or draws under DDC.
Speaker Change: For versus follow on so the following is a very helpful. They come in two ways. One we're just literally be a new follow on to the same company.
Speaker Change: And then Alternatively are in addition to that.
Speaker Change: We will have delayed draw term loans, where someone is tapping and existing commitment. That's been made and this is helpful in that.
Speaker Change: It's already in place and everything has been negotiated so it comes in both ways, but I'd say the quantum of that is probably two thirds are new transactions and roughly a third would be follow ons or draws under <unk>.
Speaker Change: Great. Thanks, I appreciate the color there and just a reminder in terms of.
Robert Ladd: Great, thanks, appreciate the color there. And just a reminder, in terms of most of the delayed draw term loans you have, do the companies need to meet some sort of financial hurdles to be able to draw on that, or are they at the discretion of the company?
Speaker Change: Most of the delayed draw term loans you have the companies to meet some sort of.
Speaker Change: Financial hurdles to be able to draw on that or are they at the discretion of the company interests are behind me, how how those are typically structured.
Robert Ladd: Just remind me how those are typically structured. Right, they're typically structured that they're a true commitment, but they are subject to certain tests. So one, it would be, are they in compliance with all the covenants? And they typically would have in addition to that what's known as an incurrence test. So the leverage quotient at the time they draw would have to be similar to the time when the loan first closed. So keeping the leverage at where we started out.
Speaker Change: Right they are typically structured.
Speaker Change: That there are true commitment, but they are subject to certain tests. So wanted to be in compliance with all their covenants and they typically would have in addition to that with some of it is an incurrence test.
Speaker Change: And so the leverage quotient at the time they draw would have to be similar to the time when the loan first closed.
Speaker Change: So keeping the leverage at where we started out.
Speaker Change: And then in addition to that.
Robert Ladd: And then in addition to that, you could have what needs to be used for a certain purpose, and typically it's for an acquisition or some expansion.
Speaker Change: In addition to that assuming you could have well it needs to be used for a certain purpose and typically it's for an acquisition or some expansion.
Speaker Change: Yes that makes sense okay.
Speaker Change: And then transitioning to the spillover at I think you mentioned it in the prepared remarks with regard to.
Robert Ladd: Transitioning to the spillover, I think you mentioned it in the prepared remarks with regard to the dividend and having some ability to support the dividend in the near term. With that, can you remind us of where the dollar level of the spillover is this quarter or at the end of the fourth quarter? Yeah, we had, Erik, we had $45 million of spillover at the end of the year. So that's kind of what we're working against during 2025. Perfect.
Speaker Change: The dividend and having some ability to support the dividend in the near term.
Speaker Change: With that can you remind us of where the.
The dollar level of the spillover is.
Speaker Change: This quarter or at the end of <unk> into the fourth quarter, yes.
Speaker Change: Yes, we had Eric we had $45 million of spillover at the end of the year, So that Scott what we're working against during 2025.
Speaker Change: Okay perfect.
Erik Zwick: Thank you. That's all for me today. I appreciate it. Thank you, Erik. Thank you.
Speaker Change: Thank you that's all for me today I appreciate it.
Speaker Change: Thank you Eric.
Speaker Change: Thank you. Our next question is coming from Paul Johnson with <unk>. Your line is live.
Paul Johnson: Our next question is coming from Paul Johnson with KBW. Your line is live. Good morning, Paul. Morning, thanks for taking my question.
Paul Johnson: Good morning, Paul.
Paul Johnson: Morning, Thanks for taking my question.
Robert Ladd: Just a little bit more on the just kind of tariff risk in general, higher level, but have you guys run any sort of analysis or assess the portfolio in any way in terms of just kind of how much of the portfolio might be at risk of, you know, any of the tariff issues ongoing as well as just exposure to maybe kind of government services or any sort of anecdotal data points you'd be able to provide. Sure, Paul. So we've certainly analyzed it or been looking at it. It would appear that the impact from tariffs would be more than the impact from the government kind of exposure.
Paul Johnson: Just a little bit more on the.
Paul Johnson: Just kind of tariff risk in general higher level.
Paul Johnson: But have you guys run any sort of.
Paul Johnson: Analysis or assess the portfolio in any way in terms of just kind of how much of the portfolio might be.
Paul Johnson: At risk of any of the tariffs issues ongoing as well as just exposure to maybe kind of Gov.
Paul Johnson: Governments government services or any sort of anecdotal data points you'd be able to provide.
Sure. So we certainly analyze that I've been looking at it.
Paul Johnson: It would appear that <unk>.
Paul Johnson: Impact from tariffs would be more than the impact from the government kind of exposure.
Robert Ladd: probably like a two to one there. You know, our rough estimate is that that it's probably could be up to 10%. I mean, it depends how you grade them and what actually happens. But at this point, it would not appear to be material in terms of the overall activity. But we're, as I said at the outset, we're going to wait and see what really comes through from what's said at the government level and what actually ends up. I appreciate that.
Paul Johnson: Probably like a two to one there.
Paul Johnson: Our rough estimate is that.
Paul Johnson: But it's probably could be up to 10%.
Paul Johnson: Depends how you create them and what actually happens but.
Paul Johnson: At this point would not appear to be material in.
Paul Johnson: In terms of the overall activity, but we're as I said at the outset, we're going to wait and see and what really comes through from let's set at the government level, what actually ends up happening.
Paul Johnson: Got it appreciate that and then just last one.
Robert Ladd: And then last one, on the realized gains this quarter, was there any additional markup at all from those investments that were exited? Yes, and Tommy, but it was a few million dollars. We have one equity position that is continuing to grow. in addition to the partial realization. value was increased as well. Got it. Great.
Paul Johnson: On the realized gains this quarter was there any additional mark up at all from those investments that were exited.
Paul Johnson: Yeah.
Paul Johnson: In the fourth quarter.
Paul Johnson: But it was a few million dollars.
Paul Johnson: We have one equity position that is continuing to grow in <unk> and.
Paul Johnson: And in addition to the partial realization.
Paul Johnson: <unk> value was increased as well.
Paul Johnson: Got it great. Thank you very much that's all for me.
Paul Johnson: Thank you very much. That's all for me.
Operator: Okay, thank you, Paul. Thank you.
Paul Johnson: Okay. Thank you Paul.
Speaker Change: Thank you.
Robert Ladd: As we have no further questions on the line, I will now hand the call back over to Mr. Ladd for any closing comments. Okay, great. Thank you.
Speaker Change: We have no further questions on the line I'll now hand, the call back over to Mr. Ladd for any closing comments.
Okay, great. Thank you and again, thank you everyone for your support of our company, we look forward to getting back with it with you in early May as we discussed the first quarter.
Operator: And again, thank you everyone for your support of our company. We look forward to getting back with you in early May as we discuss the first quarter. Thank you ladies and gentlemen.
Thank you ladies and gentlemen. This concludes today's conference and you may disconnect. Your lines at this time and we thank you for your participation.
Operator: This concludes today's conference and you may disconnect your lines at this time and we thank you for your participation.