Q1 2025 Goldman Sachs BDC Inc Earnings Call
Good morning, it's Austin here and remember the Investor Relations team for Goldman Sachs BDC, Inc. I would like to like to welcome everyone to the Goldman Sachs BDC, Inc. First quarter 2025 earnings Conference call. Please note that all participants will be in listen only mode until the end of the call. When we will open up the line for questions.
Austin Neri: Good morning, this is Austin Neri, a member of the investor relations team for Goldman Sachs BDC, Inc. And I would like to welcome everyone to the Goldman Sachs BDC, Inc. first quarter 2025 earnings conference.
Austin Neri: Please note that all participants will be in listen-only mode until the end of the call when we will open up the line for questions. Before we begin today's call, I would like to remind our listeners that today's remarks may include forward-looking statements. These statements represent the company's belief regarding future events that, by their nature, are uncertain and outside of the company's control. The company's actual results and financial condition may differ, possibly materially, from what is indicated in those forward-looking statements as a result of a number of factors, including those described from time to time in the company's SEC file.
Before we begin today's call I would like to remind our listeners that today's remarks may include forward looking statements. These statements represent the company's belief regarding future events.
By their nature are uncertain and outside of the company's control the company's actual results and financial condition may differ possibly materially from what is indicated in those forward looking statements. As a result of a number of factors, including those described from time to time in the company's SEC filings.
Austin Neri: This audio cast is copyrighted material of Goldman Sachs BDC, Inc., and may not be duplicated, reproduced, or rebroadcast without our Yesterday, after the market closed, the company issued an earnings press release and posted a supplemental earnings presentation, both of which can be found on the homepage of our website at www.goldmansachsbdc.com under the investor resources section, and which include reconciliations of non-GAAP measures to the most directly comparable GAAP measures. These documents should be reviewed in conjunction with the company's quarterly report on Form 10-Q filed yesterday with the SBA.
Speaker Change: Audiocast is copyrighted material of Goldman Sachs, BDC, Inc, and may not be duplicated reproduced or rebroadcast without our consent.
Speaker Change: Yesterday after the market close the company issued an earnings press release and posted a supplemental earnings presentation, both of which can be found on the homepage of our website at www Dot Goldman Sachs BDC Dot com under the Investor Resources section, which include reconciliations of non-GAAP measures to the most directly comparable GAAP measures.
Speaker Change: Documents should be reviewed in conjunction with the company. It's called the report on Form 10-Q filed yesterday with the SEC.
Austin Neri: This conference call is being recorded today, Friday, May 9th, 2025 for replay purposes.
Alex Chi: Conference call is being recorded today Friday may 9th 2025 for replay purposes, I will now I'll turn the call over to Alex Chi Co Chief Executive Officer of Goldman Sachs BDC, Inc.
Alex Chi: I'll now turn the call over to Alex Chi, Co-Chief Executive Officer of Goldman Sachs BDC. Thank you, Austin. Good morning, everyone. And thank you for joining us for our first quarter 2025 earnings conference. I'm here today with our co-CEO David Miller, our COO Tucker Greene, and our CFO Stan Matuszewski.
Alex Chi: Thank you Austin good morning, everyone and thank you for joining us for our first quarter 2025 earnings conference call I'm.
Speaker Change: I'm here today with our co CEO, David Miller, our <unk>.
Tucker Green: Oh Tucker Green.
Speaker Change: So Stan that is Jesse.
Alex Chi: We'll start the call with our thoughts on recent performance in light of a challenging macro environment, then pivot to our investing activity while framing how GSBD is positioned heading into the second quarter.
Speaker Change: Start the call with our thoughts on the recent performance in light of a challenging macro environment and pivot to our investing activity or framing how G. S. P. D is positioned heading into the second quarter.
Alex Chi: I'll then turn the call over to David and Tucker to describe our portfolio activity and performance in more detail before handing it over to Stan to take us through our financial results. And then finally, we'll open the line for Q&A.
Speaker Change: I'll, then turn the call over to David Tucker to describe our portfolio activity and performance in more detail before handing it over to Stan to take us through our financial results and then finally, we'll open the line for Q&A.
Alex Chi: Let's start by addressing macroeconomic conditions, tariffs, and their potential impact on the portfolio and deal formation. With respect to the portfolio, as mentioned on our previous call, we've conducted an in-depth company-by-company analysis across our entire direct lending portfolio with respect to tariff exposure and a potential recessionary or even stagflationary environment. While the second and third order effects remain difficult to quantify, the initial diagnosis is that only four out of our 163 companies within GSBD, or approximately 3% fair value, are considered to have high exposure, primarily due to their supply chain dependencies in China. The results of our analysis are not surprising, as the vast majority of our portfolio companies are asset light with minimal exposure to international supply chains.
Speaker Change: Lets start by addressing macro economic conditions tariffs and their potential impact on our portfolio and deal flow.
Speaker Change: With respect to the portfolio as mentioned on our previous call. We conducted an in depth company by company analysis across our entire direct lending portfolio with respect to tariff exposure and the potential recessionary or even stagflationary environment.
Speaker Change: While the second and third order effects remain difficult to quantify the initial diagnosis is that only four out of our hoggard 63 companies with N. G. S. P D or approximately 3% of fair value.
Speaker Change: It had to have high exposure, primarily due to their supply chain dependencies in China.
Speaker Change: The results of our analysis are not surprising as the vast majority of our portfolio companies are asset light with minimal exposure to international supply chains.
Alex Chi: are domiciled in the U.S. serving predominantly U.S. customers and operate primarily within service-based industries such as software, healthcare, and mission-critical business services. In addition, we find comfort in where the GSBD portfolio sits in the capital stack with over 96% of the investments in first lien risk and an attractive loan to value.
Speaker Change: Thomas I would in the U S serving predominantly U S customers and operate primarily within service based industries, such as software health care and mission critical business services.
Speaker Change: In addition, we find comfort in where the G. S. P. D portfolio sits in the capital stack with over 96% of the investments first lien risk and an attractive loan to value.
Speaker Change: With respect to deal flow.
Alex Chi: With respect to deal flow, as a result of the tariff-induced market volatility, the long-awaited resurgence of new M&A activity has been further pushed back. However, the deals that were already in process generally pivoted their financing back from the public syndicated market to direct lending. In addition, we continue to see deal flow for businesses that are shielded from tariff exposure. Again, primarily in services-related industries where private equity buyers are still prepared to pay healthy multibillion. We've continued to use our proximity to our investment banking franchise as a competitive advantage for Origination. In addition, market fundamentals continue to suggest the current lack of deal flow will eventually change as sponsors face mounting DPI pressure.
Speaker Change: As a result of the tap into this market volatility the long awaited resurgence of new M&A activity has been further pushback.
Where they push back.
Speaker Change: In addition, we continue to see deal flow for businesses that are shielded from tariff exposure. Again, primarily in services related industries, where private equity buyers are still prepared to pay healthy multiples.
Speaker Change: We've continued to use our proximity to our investment banking franchise as a competitive advantage for origination [inaudible]
Speaker Change: In addition, Market Fundamentals continue to suggest the current lack of deal flow will eventually change, as sponsors face mounting DPI pressure.
Alex Chi: With respect to all in yields, our focus for new investments is in the low to mid 9% range with weighted average spreads of our broader platform's new investments widening modestly, quarter over quarter, from 479 basis points to 510.
Speaker Change: With respect to all annealeds, our focus for new investments is in the low to mid 9% range with weighted average spreads of our broader platforms new investments widening modestly, quarter over quarter, from 479 basis points to 510 basis points.
Alex Chi: Now, turning to our first quarter results. Our net investment income per share for the quarter was $0.42, and net asset value per share was $13.20 as of quarter end, a decrease of 1.6% relative to the fourth quarter NAV, which was largely due to the $0.16 per share of special dividend and net realized and unrealized losses in the quarter. On the topic of dividends, as you'll recall from the last quarter, the board of GSBD enacted a revised dividend structure consisting of a base dividend of $0.32 per share with upside via supplemental variable distributions of at least 50% of net investment income in excess of the amount of base dividend.
Now, turning to our first quarter results [inaudible]
Speaker Change: Our net investing income per share for the quarter was 42 cents, and net asset value per share was $13.20 as a quarter end, a decrease of 1.6% relative to the fourth quarter nav, which was largely due to the 16 cents per share, a special dividend, and net realized and unrealized losses in the quarter.
Speaker Change: On the topic of dividends, as you'll recall from the last quarter,
The Board of G.S.B.D. enacted the revised dividend structure.
Speaker Change: consisting of a base dividend of $0.32 per share with upside via supplemental variable distributions of at least 50% of net investment income in access.
Alex Chi: An incentive fee reduction from 20% to 17.5% over a 7% hurdle in the interest of aligning the long-term earnings power of the portfolio to increase shareholder value. And over the subsequent three quarters, including the quarter ended March 31st, 2025, the board authorized a special dividend of 16 cents per share. The board declared our first quarter 2025 supplemental dividend of five cents per share payable on or about June 13th, 2025 to shareholders of record as of May 30th, 2025. Adjusted for the impact of the supplemental dividend related to the first quarter's earnings, the company's first quarter adjusted NAF per share is $13.15, which to note is a non-GAAP financial measure introduced as a result of the dividend policy.
Speaker Change: of the amount of base dividend and incentive fee reduction from 20% to 17.5% over a 7% hurdle in the interest of aligning the long-term earnings power of the portfolio to increase
Speaker Change: and over the subsequent three quarters, including the quarter ended March 31st, 2025, the board authorized a special dividend of $0.16 per share.
Speaker Change: The board declared at first quarter 2025 supplemental dividend, the five cents per share, payable honor about June 13, 2025 to shareholders of record as of May 30, 2025.
Speaker Change: Adjusted for the impact of the supplemental dividend related to the first quarter's earnings, the company's first quarter adjusted NAF for share is $13.15, which to note is a non-GAAP financial measure introduced as a result of the dividend policy change.
Alex Chi: The board also declared a base dividend per share of $0.32 and a special dividend of $0.16 per share to shareholders of record as of June 30, 2025. As anticipated, we made these distributions, remaining below our targeted debt-to-equity leverage ratio of one and a quarter times. We ended the quarter with a net debt to equity ratio of 1.16 times as of March 31st, 2025, as compared to 1.17 times as of December 31st, 2024. We remain focused on delivering on our new dividend structure, the core earnings power of the portfolio, and realizing exits of legacy portfolio companies while rotating into new vintage credit.
Speaker Change: The board also declared a base dividend per share of $0.32 in a special dividend of $0.16 per share to shareholders of record as of June 30th, 2025. The board also declared a base dividend per share to shareholders of record as of June 30th, 2025.
Speaker Change: As anticipated, we made these distributions where remaining below our targeted debt-to-equity leverage ratio of one-and-a-quarter times.
Speaker Change: We ended the quarter with a net debt to equity ratio of 1.16 times as of March 31st, 2025, as compared to 1.17 times as of December 31st, 2024.
Speaker Change: We remain focused on delivering on our new dividend structure the core earnings power of the portfolio and realizing exits of legacy portfolio companies while rotating into new vintage credits. For that, let me turn it over to my co-CEO, David Miller.
David Miller: With that, let me turn it over to my co-CEO, David Miller. Thanks, Alex. During the quarter, we made new investment commitments of approximately 87.8 million across 14 portfolio companies. comprised of six new and eight existing portfolio companies. we served as lead on five, or 72% at fair value. 100% of our originations during the quarter were in first lien loans, which reflects our continued bias in maintaining exposure to the top of the capital stack. We believe our platform thrives in times of market volatility through unique opportunities that channel through the Goldman Sachs ecosystem, which is beneficial to GSBD shareholders.
David Miller: Thanks, Alex. During the quarter we made new investment commitments of approximately 87.8 million across 14 portfolio companies, comprised of six new and eight existing portfolio companies.
David Miller: Of the six new portfolio companies, we served as lead on five, or 72% at fair value.
David Miller: 100% of our originations during the quarter were in first-lane loans which reflects our continued bias in maintaining exposure to the top of the capital stack.
David Miller: We believe our platform thrives in times of market volatility through the unique opportunities that channels through the Goldman Sachs ecosystem, which is beneficial to GSBD shareholders.
David Miller: One notable investment during the quarter that illustrated how our strong sponsor relationship secured us the role of admin agent, jointly into Rager, and cemented us as the largest lender of the company. It missed a competitive consortium was supporting the acquisition of Vermont information process. The company provides mission-critical, vertical-specific software and data services to distributors, suppliers, and retailers in the regulated beverage industry. while maintaining long standing relationship with sponsors shows its worth in choppy markets. So does retaining our position as an incumbent and admin agency in a high quality company, which was the case with Solero Commerce.
© transcript Emily Beynon
Speaker Change: One notable investment during the quarter that illustrated how our strong-sponsored relationship secured us the role of the Edmund agent, joint lean to rager, and cemented us as the largest lender of the company.
Edmissed.
Speaker Change: A competitive consortium was supporting the acquisition of Vermont information processing.
Speaker Change: The company provides mission-critical, vertical-specific software and data services to distributors, suppliers, and retailers in the regulated beverage industry.
Speaker Change: Well, maintaining long-standing relationship with sponsors shows its worth in choppy markets. So does retaining our position as an incumbent and admin agency in a high quality company, which was the case with Cilaro Commerce?
David Miller: Solero is a provider of integrated payment processing and business management solutions to small and mid-sized businesses across the United States. The GS Private Credit Platform has invested in the company since October 2020, and their business has grown both organically and inorganically through acquisition. Sales and repayment activity totaled $179.3 million during the quarter, down slightly quarter over quarter despite stagnant capital markets. primarily driven by the full repayment and refinancing of six portfolio It's also worth noting that 88% of the repayment amount was with existing legacy portfolio companies and will be redeployed in the new originations post Q1.
Speaker Change: Valero is a provider of integrated payment processing and business management solutions to small and mid-sized businesses across the United States.
Speaker Change: The GS Private Credit Platform has invested in the company since October 2020, and their business has grown both organically and inorganically through acquisitions.
Speaker Change: Fails in repayment activity totaled 179.3 million during the quarter, down slightly quarter over quarter, despite stagnant capital markets, primarily driven by the full repayment and refinancing of six portfolio companies.
Speaker Change: It's also worth noting that 88% of the repayment amount was with existing legacy portfolio companies and we'll be redeployed in the new originations, Post-Q1.
David Miller: For our portfolio composition, as of March 31, 2025, total investments in our portfolio were $3.38 billion at fair value. Priced at 96.1% Senior Secured Loans, including 90.7% First Lane, 5.4% First Lane Last Out Unitron. 2% in a combination of preferred and common stock. 1.4% second lien debt, as well as a negligible amount in unsecured debt.
Speaker Change: for our portfolio's composition as of March 31, 2025, total investments in our portfolio were $3.38 billion at fair value.
Speaker Change: Comprived to 96.1% senior secured loans, including 90.7% first lane, 5.4% first lane last out in a
2% in a combination of preferred and common stock
Speaker Change: 1.4% second-lean debt, as well as a negligible amount in unsecured debt.
Tucker Greene: With that, let me turn it over to Tucker to discuss Portfolio Fundamentals and Credit Quality. Thanks, David. At the end of the first quarter, the company held investments in 163 portfolio companies operating across 38 different industries. The weighted average yield of our debt and income producing investments at amortized costs and at the end of the first quarter was 10.8% as compared to 11.2% at the end of the fourth quarter. Despite a modest tightening in portfolio yield quarter over quarter, our portfolio companies have both top line growth and EBITDA growth. Order over quarter and year over year on a weighted average basis.
Tucker Green: With that, let me turn it over to Tucker to discuss portfolio fundamentals and credit quality.
Tucker Green: Thanks, David. At the end of the first quarter, the company held investments in 163 portfolio companies operating across 38 different industries.
Tucker Green: The weighted average yield of our debt and income-producing investments at amortized costs and at the end of the first quarter was 10.8% as compared to 11.2% at the end of the fourth quarter.
Tucker Green: Despite a modest tightening in portfolio yield, quarter-over-quarter, our portfolio companies have both top-line growth and EBITDA growth, quarter-over-quarter and year-over-year on a weighted average basis.
Tucker Greene: The EBITDA growth of the portfolio, combined with repayments of investments to companies with higher leverage levels, drove a decrease in the weighted average net debt to EBITDA of the companies in our investment portfolio to 5.8 times during the first quarter, from 6.2 times during the fourth quarter. At the same time, the current weighted average interest coverage of the companies in our investment portfolio at quarter end increased to 1.9 times in the first quarter, compared to 1.8 times during the fourth quarter.
Tucker Green: The EBITDA growth of the portfolio, combined with repayments of investments to companies with higher leverage levels, drove a decrease in the weighted average net debt to EBITDA of the companies in our investment portfolio, to 5.8 times during the first quarter, from 6.2 times during the fourth quarter.
Tucker Green: At the same time, the current weighted average interest coverage of the companies in our investment portfolio at quarter and increased to 1.9 times in the first quarter compared to 1.8 times during the fourth quarter. [inaudible]
Tucker Greene: And finally, turning to asset quality, during the quarter, the Pluralsight First Lean Senior Secured Debt position was restored back to accrual due to performance since restructure. Additionally, Animal Supply Intermediate LLC's second lean senior secured debt position, which was on non-accrual since Q3 2022, was exited. On the other hand, MPI Engineered Technologies' second lean senior secured debt position and ATX Network's first lean senior secured debt position was placed on non-accrual. At the end of the first quarter, investments on non-accrual status decreased to 1.9% of the total investment portfolio at fair value from 2% as of December 31, 2024.
Tucker Green: And finally, turning to asset quality. During the quarter, the plural site, first lean senior secured debt position, was restored back to a cruel due to performance sensory structure.
Tucker Green: Additionally, Animal Supply Intermediate LLC's Second Lean Senior Secured Deposition, which with Sonic Rolls since Q3 2022 was exited. On the other hand, MPI-Engineered Technology Second Lean Senior Secured
Tucker Green: Debt Position, and ATX Network's first-lane senior-secured debt position was placed on Nanakroul. At the end of the first quarter, investments on Nanakroul's status decreased to 1.9% of the total investment portfolio at fair value from 2% as of December 31, 2024.
Stanley Matuszewski: I will now turn the call over to Stan to walk through our financial results. Thank you, Tucker. We ended the first quarter of 2025 with total portfolio investments at fair value of $3.4 billion, outstanding debt of $1.9 billion, and net assets of $1.5 billion. Our ending net debt to equity ratio at the end of the first quarter was 1.16 times, which continues to be below our target leverage ratio of 1.25 times. At quarter end, approximately 48% of our total principal amount of debt outstanding was in unsecured debt. As of March 31st, 2025, the company had approximately 720 million of borrowing capacity remaining under the revolving credit facility.
Tucker Green: I will now turn the call over to Stan to walk through our financial results
Stan: Thank you, Tucker. We ended the first quarter of 2025 with total portfolio investments at fair value of $3.4 billion, outstanding debt of $1.9 billion, and net assets of $1.5 billion.
Stan: Our ending net debt to equity ratio as the end of the first quarter was 1.16 times which continues to be below our target leverage ratio of 1.25 times.
Stan: At quarter end, approximately 48% of our total principal amount of debt outstanding was an unsecured debt.
Stan: As of March 31st, 2025, the company had approximately 720 million of borrowing capacity remaining under the revolving credit facility.
Stanley Matuszewski: Before continuing to the income statement, as a reminder, in addition to GAAP financial measures, we also reference certain non-GAAP or adjusted measures. This is intended to make our financial results easier to compare to results prior to our October 2020 merger with Goldman Sachs Middle Market Lending Corp., or MMLC. These non-GAAP measures remove the purchase discount amortization impact from our financial results. For the first quarter, GAAP and adjusted after-tax net investment income were $49.6 million and $48.8 million, respectively, as compared to $56.6 million and $55.6 million, respectively, in the prior quarter. On a per share basis, GAAP net investment income was $4,200.
Stan: Before continuing to the income statement, as a reminder, in addition to GAAP financial measures, we also reference certain non-GAAP or adjusted measures.
Stan: This is intended to make our financial results easier compared to results prior to our October 2020 merger with Goldman Sachs middle market lending corp or MMLC.
Stan: for the first quarter gap and adjusted aftertax net investment income were 49.6 million and 48.8 million respectively as compared to 56.6 million and 55.6 million respectively in the prior quarter.
Stan: On a per share basis, Gap Net Investment Income was 42 cents.
Stanley Matuszewski: Excluding the impact of asset acquisition accounting in connection with the merger with MMLC, adjusted net investment income for the quarter was $0.41 per share, equating to an annualized net investment income yield on book value of 12.4%. Total investment income for the three months ended March 31, 2025, and December 31, 2024 was $96.9 million and $103.8 million, respectively. We observed PIC as a percentage of total investment income decreased to 11% for the first quarter ended March 31st, 2025, from 15% in the fourth quarter of 2024. As a reminder, excluding one-time adjustments for two portfolio companies, Q4 2024 PIC income as a percentage of total investment income would have been 12%, representing a 1% decrease from Q4 2024 to Q1 2025.
Stan: Excluding the impact of asset acquisition accounting in connection with the merger with MMLC, adjusted net investment income for the quarter was 41 cents per share, equating to an annualized net investment income yield on book value of 12.4%.
Stan: Total investment income for the three months ended March 31, 2025, and December 31, 2024 was 96.9 million and 103.8 million respectively.
Stan: We observed PIC as a percentage of total investment income decreased to 11% for the first quarter ended March 31st, 2025, from 15% in the fourth quarter of 2024.
Stan: As a reminder, excluding one-time adjustments for two portfolio companies, Q4 2024 pick income as a percentage of total investment income would have been 12%. Representing a 1% decrease from Q4 2024 to Q1 2025.
Alex Chi: With that, I'll turn it back to Alex for closing remarks. Thanks, Stan, and thanks, everyone, for joining our earnings call. Although the environment for new M&A activity and deployment has not exhibited the fervor we all expected coming into the year, we're all encouraged by the backlog of transactions, resilience of our portfolio, and our commitment to delivering on our refreshed dividend structure.
Alex Chi: With that, I'll turn it back to Alex for closing remarks.
Thanks Dan, and thanks everyone for joining our earnings call.
Alex Chi: Although the environment for new M&A activity and deployment has not exhibited the fervor, we all expected coming into the year, we're all encouraged by the backlog of transactions, resilience of our portfolio, and a commitment to delivering on our refreshed dividend structure.
Unknown Executive: With that, let's open the line for Q&A. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal.
Alex Chi: Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star 1 to ask a question. We will pause for just a moment to allow everyone an opportunity to signal.
Derek Hewett: And we can take our first question from Derek Hewett with Bank of America.
Alex Chi: And we can take our first question from Derek Hewett with Bank of America.
Derek Hewett: Good morning, everyone. And thanks for taking my question. The portfolio yield declined about 40 basis points on a cost basis quarter over quarter. I was expecting that to maybe stabilize a little kind of relative to what we've seen thus far for the first quarter for the BDC earnings season. So could you talk about that, the 40 basis point decline, and has the portfolio largely repriced now based off of the base rate cuts in the back half of last year?
© transcript Emily Beynon
Derek Hewitt: Good morning everyone, and thanks for taking my question. The portfolio yield declined about 40 basis points on a cost basis.
Derek Hewitt: quarter over quarter. I was expecting that to maybe stabilize a little kind of relative to what we've seen thus far for the first quarter for the BDC earnings season. So could you talk about that the 40 basis point decline and has the portfolio largely kind of reprised now based off of the base rate cuts in the back half of last year?
Unknown Executive: Hey, Derek, good morning. Thanks for the question. With respect to repricings, I think that's largely subsided. Most of the borrowers who wanted to reprice their loans took advantage of a more robust environment in the prior quarters. And so with respect to more of the new activity that we're seeing, it's, again, more heavily weighted towards buyouts and refinancings. And so I don't think you're going to see that. What you did see, though, was within the spreads for the deals that we did this year, it actually widened out by about 25 basis points. And we took advantage of the incumbency within our portfolio in order to get a bit more spread.
Derek Hewitt: Hey, Derek. Good morning. Thanks for the question. Respect to reprisings.
I think that's Marsley's subsided. [inaudible]
Derek Hewitt: Most of the borrowers who wanted to reprise their loans, took advantage of...
Derek Hewitt: of a more robust environment in the prior quarters. And so with respect to more than new activity that we're seeing, it's, again, more heavily weighted towards, you know, buyouts and refinancing.
Derek Hewitt: I don't think you're going to see that. What you did see, though, was within the spread for the deals that we did this year, it actually widened out by about 25 basis points. [inaudible]
Derek Hewitt: and we took advantage of the Income and see with our portfolio in order to get a bit more spread. So that's why you saw our average spreads go up a bit this water. But um.
Unknown Executive: So that's why you saw our average spreads go up a bit this quarter. Yeah, and the other thing I would just add on there is when you see overall portfolio of the yield coming down, that was driven by the exit of a couple of the nonaccrual positions that had very high coupons on them. But we were happy to see those go as evidence by our nonaccruals going down.
Speaker Change: Yeah, and the other thing I would just add on there is when you see overall portfolio of the yield coming down, that was driven by the exit, a couple of the non accrual positions that had very high coupons on them, but we were happy to see those goes as out of an evidence by our non accruals going down. [inaudible]
Unknown Executive: Okay, thank you.
Unknown Executive: And then in regards to the, I believe it was five identifiable loans that had direct tariff exposure. Was that reflected in the fair value of those investments as of the first quarter? Or will that be? determined in the subsequent quarters. And when we looked at the exposure, it doesn't necessarily mean that those companies were immediately impacted by tariffs. We just took a prospective look with respect to where there could be impacts just from high exposure. For example, we have a couple of companies who have supply chain exposure to China and to Mexico. And therefore, that's why we just, for conservative purposes, just put it in that category.
Speaker Change: Okay. Thank you. And then in regards to the, I believe it was five identified identifiable loans that had direct exposure. Was that reflected in the fair value of those investments as of the first quarter? Or will that be?
that determined in the in subsequent quarters.
Speaker Change: And let me look at the exposure. It doesn't necessarily mean that those companies were immediately impacted.
Speaker Change: By tariffs, we just look up, we took a prospective look with respect to where it could be in the tax and just from high exposure.
Speaker Change: For example, we have a couple of companies who have supply chain exposure to China and to Mexico and therefore that's why we just for conservative purposes just put in that category. That's the extent we do see any performance deterioration that would be reflected in the mark but we have not seen it yet.
Unknown Executive: That's the extent we do see any performance deterioration that would be reflected in the mark, but we have not seen it yet. Keep in mind, we want more clarity on what potential tariffs could be post quarter end, right, on April 2nd versus on March 31st as well. So there couldn't be more to come when we get some certainty on what the final tariffs are going to be.
Speaker Change: Keep in mind, we'll mark clarity on what potential tariffs could be post quarter end right on April 2nd versus on March 31st as well. So there, there, there could be more to come when we get some certainty on what the final tariffs are going to be. But, it's proof.
Unknown Executive: Okay, thank you. Thank you.
Good. Thank you.
Thank you. Thank you.
Unknown Executive: And another reminder to our audience, if you would like to ask a question, please press star one on your touchtone telephone. Alright, it does appear that there are no further questions at this time.
Speaker Change: And another reminder to our audience. If you would like to ask a question, please press star 1 on your touch tone telephone.
Speaker Change: Alright, it adds up here that there are no first questions at this time. Mr. Chi, I will turn the conference back to you for any closing remarks.
Alex Chi: Mr. Chi, I will turn the conference back to you for any closing remarks. Thank you. Well, thanks, everyone, for joining our call. We look forward to executing the second quarter, continue to navigate this environment.
Alex Chi: Have a great weekend.
Unknown Executive: This concludes today's call. Thank you for your participation.
Speaker Change: This concludes today's call. Thank you for your participation. You may now disconnect.
Unknown Executive: You may now disconnect.
Mark Hughes, Robert Dodd, David Miller, Austin Neri, Unknown Executive, Katherine Schneider, David Miller
Speaker Change: [music].