Q3 2025 Investcorp Credit Management BDC Inc Earnings Call

Management BDC conference call powered by comfort zone.

Please into your pass code.

Thanks are you the host for this conference if yes press, one or is no breasts too.

I'm connecting you know you're muted on this call. This call is being recorded.

Overall the portfolio.

Welcome to Congress, saying Ma'am. Please have your first and last name.

Welcome to the conference thing Memphis, Xavier first and last name.

Yeah.

Okay.

Thank you so much I'll, Rachel and the name of your company's name.

Of any spell it out.

Alright, just a euro.

I think it's a much Rachel I'm going to go ahead and that beat your back in the main conference one moment.

Thanks.

Okay.

Okay.

He will now be placed into the conference you're muted on this call. This call is being recorded.

Compressing spreads and limiting opportunities for compelling new operator nations.

We remain highly selective in evaluating opportunities that meet our targeted yield and credit quality criteria approximately 57% of sponsor backed private credit deals with price with spreads below 500 basis points in the current quarter.

While we actively manage the portfolio will not rotating into lower yielding assets simply for growth.

All deals entering our pipeline this quarter fewer than 10% advanced or deeper diligence instead.

Instead, our focus remains on credit quality and structural protections, we're not chasing the lowest yielding deals approximately 73% of our investments on covenant deals. Looking ahead, we expect NII to benefit from these are from new fundings and we remain committed to disciplined.

Portfolio management to drive long term shareholder value.

I will now turn to a summary of our investment activity for the quarter.

This was a lighter quarter for sure to investment activity during the quarter ending September reinvested approximately $25000 and the preferred equity of poor air technologies, an existing portfolio company to support incremental equity raise and our existing.

Possessions.

We also fully realized two portfolio company investments generating total proceeds of $6 5 million with an IRR of approximately 12 five 7%.

We realize that firstly in terms of on positions in PRC are listed on our Soi as a M. C. P clean acquisition company and one call medical both of which were refinanced during the quarter, our realized IRR Sunpower star and one caused by 11, 5% and 13.7% risk.

Spectrum.

I'll now turn the call back over to Andrew to review, our financial results in more detail.

Thanks Sunil.

We begin by providing you with highlights of our quarterly performance.

For the quarter ended September 30th 2025, the fair value of our portfolio was 196 1 million compared to $204 1 million on March 31.

Our net assets were $72 7 million a decrease of $3 3 million from the prior quarter.

Our portfolio's net decrease in net assets from operations. This quarter was approximately $1 3 billion and the remaining $2 million was due to distribution of cash dividends to shareholders.

The weighted average yield of our portfolio.

That works.

10.9% slight increase from 10, 6% in the previous quarter ended June 30th.

As of September 30th our portfolio consisted of investments in 41 companies approximately 78% of these investments.

First lien debt and the remaining 22% was invested in equity warrants and other securities.

Eight 5% of our debt portfolio was invested in floating rate instruments, and 1.5% and fixed rate investments.

The weighted average spread on our floating rate debt investments was four 6% relatively unchanged from the prior quarter.

The average size per portfolio company on a fair market value basis was approximately 4.7 million or approximately 2.5% total.

And our largest portfolio company investment on a fair market value basis was bio plan at $13.4 million.

Our largest industry concentrations by fair market value were professional services at 13.7%.

<unk> at 10.4% containers and packaging at eight 9%.

It services at eight 5% and trading companies and distributors at eight 4%.

Overall, our portfolio of companies are spread among 18 kicks industries as of quarter end, including our equity and warrant positions.

We're also pleased to announce that on November 10th 2025, the board of directors declared a distribution for the quarter ended December 31, 2025 of 12 cents per share and a supplemental distribution of <unk> <unk> per share payable in cash on December 12, 2025 to stockholders.

Of record as of December one 2025.

Gross leverage was 1.75 times and net leverage was 159 times as of September 30th compared to 177 times gross and 1.54 times net respectively for the previous quarter.

With respect to our liquidity as of September 30th we had approximately $11.6 million of cash of which approximately $7 8 million was restricted cash with $36 $5 million of capacity under our revolving credit facility with capital one.

Additional information regarding the composition of our portfolio and quarterly financial results are included in our Form 10-Q.

With that I would like to turn the call back over to Suhail.

Thank you Andrew to close we remain focused on executing our strategy and positioning the portfolio for long term value creation.

We believe we are well positioned for the current environment with a robust portfolio of strong capital backing and a disciplined investment posture that prioritizes credit quality and income stability over.

Held.

As it back as the broader backdrop remains uncertain, our emphasis continues to be on maintaining flexibility protecting asset value and ensuring our dividend remains fully supported.

The refinancing commitment from our banks affiliate and basketball up capital underscores the confidence nonpaying support trauma burn company further strengthening our balance sheet and providing additional financial flexibility as we navigate this environment.

The $65 million commitment to refinance the four and seven 8% notes coupled with approximately $3 6 million shares held by our parent are reflective of investcorp strong commitment to increasing shareholder value and aligning interests.

While market activity remains subdued we continue to see solid underlying portfolio performance with strong coverage metrics and healthy diversification across sectors.

We remain patient and selective ready to deploy capital when attractive opportunities arise.

Thank you again for your time and continued support we look forward to updating you on our progress next quarter.

That concludes our prepared remarks, operator, please open the lineup for Q&A.

Ladies and gentlemen at this time, we will conduct the question and answer session. If you would like to state. A question. Please press seven pound on your phone now and you will be placed in the queue in the order received our press seven pound again at any time to remove yourself from the queue. Please.

Please listen for your name to be announced and be prepared to ask your question. When prompted you are now.

<unk> ready to begin.

Our first.

Question comes from Christopher Nolan with Ladenburg Palmer go ahead. Please.

Alright. Thank you for taking my questions on the backstop could you clarify whether or not that too.

Hi.

The full refinance Mount for the maturing $65 million bonds or is that simply just to cover the principal and coupon payments.

From the new bonds.

No it's the former.

The backstop.

Christopher is to refinance the notes in the event that we have not refinanced them.

<unk> at the upper class training 26 maturity date.

Great and is there any sort of parameters in terms of the coupons.

Yes, I believe the letter outlines it.

Bob.

It's an exhibit to the 10-Q.

We have a big goo sulfur plus $5 50 on a floating rate, but he says as the new.

Great.

Second question I guess.

For Andrew from what was a spillover income in the quarter. Please.

Well I think as we said last time, we don't give the specifics spillover income but.

I think.

You've probably noticed in the past that our dividend has been above NII, obviously, the amount that we've chosen to pay out.

The spill back about acquired so you could make a similar assumption for the declared dividend paid in December of this year.

Great and the follow up question how is this gonna have recline Hirsch.

This is non accrual, but the cost basis of zero in the fair value of zero.

I'll keep it on the.

It does can peripheral hurdle.

The sub notes.

We're required to.

Under accounting rules you have to.

But everything on there that has any chance of being paid at any time, you can see the careerbuilder warrants Ron Theyre also marked at zero.

Those were not expected to and now that obviously the restructuring is complete certainly will moderate in the future pay any thanks.

Something we're required to do and we have had thanks Martin zero before interestingly.

Notes or.

Client hurts that are on non accrual actually happens zero coupon to them I think if they were on accrual status, we would theoretically up to amortize the 100% discount over time, which I think will distort the results pretty materially.

Okay. Thank you.

Thank you.

Thank you very much and again if you have any questions. Please go ahead and press.

Seven pounds again seven pounds for your question.

I don't see any other question Sir great.

Excellent.

Well, thank you everyone and we appreciate it.

Your time, and we look forward to speaking again.

Next quarter. Thank you Luke.

Youre welcome Sir and this concludes today's conference call. Thank you everyone for attending.

The moderator has ended the conference Goodbye, Thank you for calling.