Q4 2025 Portman Ridge Finance Corp Earnings Call

March 6, 2026

Operator: Hello, welcome to BCP Investment Corporation's Q4 and full year ended 31 December 2025 Earnings Conference Call. An earnings press release was distributed yesterday, 5 March, after market close. A copy of the release, along with an earnings presentation, is available on the company's website at www.portmanridge.com in the investor relations section and should be reviewed in conjunction with the company's Form 10-K filed yesterday with the SEC. As a reminder, this conference call is being recorded for replay purposes. Please note that today's conference call may contain forward-looking statements which are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in the company's filing with the SEC.

Speaker #1: earnings press release was distributed www.bcpinvestmentcorporation.com section and should be reviewed in conjunction with conference call may contain forward-looking statements future performance or results may differ materially from those in the which are not guaranteed yesterday with the recorded for replay forward-looking statements as a result of a number of on the company's website at Hello, and welcome to any such forward-looking factors including those described in Officer, President, and Director of statements unless required by Please go ahead,

Operator: BCP Investment Corporation assumes no obligation to update any such forward-looking statements unless required by law. Speaking on today's call will be Ted Goldthorpe, Chief Executive Officer, President, and Director of BCP Investment Corporation, Brandon Satoren, Chief Financial Officer, and Patrick Schafer, Chief Investment Officer. With that, I would now like to turn the call over to Ted Goldthorpe, Chief Executive Officer of BCP Investment Corp. Please go ahead, Ted.

Speaker #1: Ted.

Ted Goldthorpe: Good morning. Welcome to our Q4 and full year 2025 Earnings Call. I'm joined today by our Chief Financial Officer, Brandon Satoren, our Chief Investment Officer, Patrick Schafer, and the rest of the team. Following my open remarks on the company's performance and activities during the Q4 and full year, Patrick will provide commentary on our investment portfolio and our markets, and Brandon will discuss our operating results and financial condition in greater detail. I'd like to start by discussing some highlights, as 2025 was a transformational year for the company. In July, we completed our merger with Logan Ridge, and in August, we successfully completed a rebranding and name change. The merger meaningfully strengthened our platform, expanded our scale, and broadened our portfolio diversification.

Speaker #2: to our fourth quarter and

Speaker #2: Officer Patrick Schafer and the rest of financial condition in greater detail. I'd like to start by discussing some highlights, as 2025 was a Ridge, and in August, we successfully completed a rebranding and name change.

Speaker #2: The merger portfolio and our markets, and Brandon will meaningfully strengthened our platform, expanded July, we completed our merger with Logan our scale, and broadened our portfolio transformational year for the company.

Speaker #2: Diversification. At the same time, our rebranding better reflects our affiliation with a broader BC Partners credit platform and is a representation of our long-term vision as we position the company for its next phase of growth.

Ted Goldthorpe: At the same time, our rebranding better reflects our affiliation with the broader BC Partners Credit platform and is a representation of our long-term vision as we position the company for its next phase of growth. In December, we completed our tender offer by purchasing roughly 558,000 shares at an aggregate cost of approximately $7.6 million, which was accretive to NAV by $0.18 a share. Consistent with our diligent capital market management strategy, during the year, we also proactively extended and laddered our unsecured debt maturities, issuing $75 million of 7 and three quarters notes due October 2030 and $35 million of 7 and a half percent notes due October 2028, while also redeeming our 4 and seven-eighth notes due 2026. These actions further diversified our funding base and provide us with enhanced financial flexibility.

Speaker #2: In December, we completed our tender offer by purchasing roughly $558,000 shares at an aggregate cost remarks on the company's performance and activities during of approximately $7.6 million which was accretive to NAV by 18 cents a share.

Speaker #2: Consistent with our diligent capital market management strategy, during the year we also proactively extended and laddered our unsecured debt maturities issuing $75 million of 7 and 3/4 notes due October 2030 and $35 million of 7.5% notes due October 2028 while also redeeming our 4 and 7/8 notes due 2026.

Speaker #2: These actions further diversified our funding base and provide us with enhanced financial flexibility. As a result of this year's performance and the successful execution of of directors approved a quarterly base distribution of $0.32 a share for the quarter ended March 31, 2026.

Ted Goldthorpe: As a result of this year's performance and the successful execution of multiple strategic initiatives, the board of directors approved a quarterly base distribution of $0.32 a share for the Q1 ended 31 March 2026. Additionally, the board also approved the transition of the company's base dividend payment schedule from quarterly to monthly beginning in the month of April 2026, while retaining the potential for quarterly supplemental distributions. We believe this change better aligns our distribution schedule with shareholder interests. The board approved a regular monthly base distribution of $0.09 per share for each of the months of April, May, and June 2026. Also consistent with previous years, on 4 March 2026, the board authorized a renewed stock purchase program of up to $10 million for approximately a 1-year period.

Speaker #2: Additionally, the board also approved the transition of the company's base dividend payment schedule from quarterly to monthly beginning in the month of April 2026 while retaining the potential for quarterly supplemental distributions.

Speaker #2: We believe this change better aligns our distribution schedule with shareholder interests. The board approved a regular monthly base distribution of $0.09 per share for each of the months of April, May, and June discuss our operating results and 2026.

Speaker #2: Also consistent with previous years, on March 4, 2026, the board authorized a renewed stock purchase program of up to $10 million for approximately a one-year period.

Speaker #2: All these initiatives I've discussed are designed to enhance shareholder value and reaffirm our commitment to shareholders. During the quarter, we generated net investment income of $7.4 million or $0.57 a share compared to $8.8 million or $0.71 per share in the prior multiple strategic initiatives, the board quarter.

Ted Goldthorpe: All these initiatives I've discussed are designed to enhance shareholder value and reaffirm our commitment to shareholders. During the quarter, we generated net investment income of $7.4 million or $0.57 a share, compared to $8.8 million or $0.71 per share in the prior quarter. For the year, we generated $25.1 million or $2.28 per share, compared to $24 million or $2.59 per share for 2024. We remain focused on executing our strategic initiatives, managing expenses, optimizing portfolio positioning for earnings and distribution coverage over time. Before handing the call over, I'd like to take a moment to address recent developments in the broader credit markets, specifically regarding the software segment.

Speaker #2: For the year, we generated $25.1 million or $2.28 per share compared to $24 million or $2.59 per share for 2024. We remained focused on executing our strategic initiatives, managing expenses, optimizing portfolio positioning, support earnings, and distribution coverage over time.

Speaker #2: Before handing the call over, I'd like to take a moment to address recent developments in the broader credit markets. Specifically regarding the software segment, over the last several weeks, we've seen a notable risk-off move in public software evaluations driven largely by uncertainty and speculation around how quickly AI adoption might change competitive dynamics.

Ted Goldthorpe: Over the last several weeks, we've seen a notable risk off move in public software valuations, driven largely by uncertainty and speculation around how quickly AI adoption might change competitive dynamics rather than broad-based fundamental deterioration across the sector. As a reminder, BCIC remains broadly diversified with investments across 34 industries and software representing approximately 12.5% the portfolio's fair market value. We've been proactive in evaluating our software-related exposure through AI disruption lens. Based on our internal review, the overwhelming majority of software exposure we track is assessed as low to medium AI impact, and only a small portion is viewed as high impact.

Speaker #2: Rather than broad-based fundamental deterioration across the sector, as a reminder, BCIC remains broadly diversified with investments across 34 industries in software representing approximately 12.5% of the portfolio's fair market value.

Speaker #2: We've been proactive in evaluating our software-related exposure through AI disruption lens. Based on our internal review, the overwhelming majority of software exposure we track is assessed as low to medium AI impact and only a small portion is viewed as high market will increasingly differentiate between companies that are mission-critical and embedded in customer workflows often supported by proprietary data hire-switching costs and customers operating in regulated industries.

Speaker #2: impact. We also believe the Versus simpler point solutions that may be more vulnerable if they fail to incorporate AI into their products and operations.

Ted Goldthorpe: We also believe the market will increasingly differentiate between companies that are mission-critical and embedded in customer workflows, often supported by proprietary data, higher switching costs, and customers operating in regulated industries versus simpler point solutions that may be more vulnerable if they fail to incorporate AI into their products and operations. As a result, our focus remains on selectivity and credit quality structure with underwriting and monitoring that emphasizes revenue durability, retention, pricing power, and downside protection. Looking ahead, while macroeconomic headwinds persist, we believe current market dynamics continue to create compelling opportunities for our discipline strategy. We anticipate that 2026 will bring increased activity in the M&A market and expect to capitalize on opportunities in our portfolio. With a larger, more diversified platform and a stronger balance sheet heading into the year, we believe we are well-positioned to drive continued earnings growth and long-term value creation.

Speaker #2: As a result, our focus remains on sale activity and credit quality structure with underwriting and monitoring that emphasizes revenue durability, retention, pricing power, and downside protection.

Ted Goldthorpe: Looking ahead, while macroeconomic headwinds persist, we believe current market dynamics continue to create compelling opportunities for our discipline strategy. We anticipate that 2026 will bring increased activity in the M&A market and expect to capitalize on opportunities in our portfolio. With a larger, more diversified platform and a stronger balance sheet heading into the year, we believe we are well-positioned to drive continued earnings growth and long-term value creation. With that, I will turn over the call to Patrick Schafer, our chief investment officer, for a review of our investment activity.

Speaker #2: Looking ahead, while macroeconomic headwinds persist, we believe current market dynamics continue to create compelling opportunities for our disciplined strategy. We anticipate that 2026 will bring increased activity in the M&A market and expect to capitalize on opportunities in our portfolio.

Speaker #2: With a larger and more diversified platform and a stronger balance sheet heading into the year, we believe we are well positioned to drive continued earnings growth and long-term value creation.

Speaker #2: With that, I will turn over the call to Patrick review of our investment activity.

Ted Goldthorpe: With that, I will turn over the call to Patrick Schafer, our chief investment officer, for a review of our investment activity.

Speaker #1: Thanks, Ted. During the fourth quarter, we were intentionally prudent in new investment deployment as we executed on several key capital initiatives, including our debt refinancing and tender offer.

Patrick Schafer: Thanks, Ted. During Q4, we were intentionally prudent in new investment deployment as we executed on several key capital initiatives, including our debt refinancing and tender offer. We view this as disciplined capital management, we are looking to deploy into attractive opportunities as conditions warrant. Competition remains elevated across sponsor-backed direct lending, particularly for higher quality assets, we continue to see lenders competing not only on spreads, but also on terms and certainty of execution. In environments like these, we continue to stay disciplined, prioritizing transactions where we can achieve appropriate economics alongside strong documentation and downside protections. When pricing returns aren't compelling, we are comfortable stepping back and continuing to be selective from a credit quality perspective to focus on maximizing risk-adjusted returns for our shareholders. Turn to slide 10.

Speaker #1: We view this as disciplined capital management, and we are looking to deploy into attractive opportunities as conditions warrant. Competition remains elevated across sponsor-backed direct lending, particularly for higher-quality assets, and we continue to see lenders competing not only on spreads but also on terms and certainty of execution.

Speaker #1: In environments like these, we continue to stay disciplined, prioritizing transactions where we can achieve appropriate economics alongside strong documentation and downside protections. For pricing returns, our compelling but comfortable stepping back and continuing to be selective from a credit quality perspective to focus on maximizing risk-adjusted returns for our shareholders.

Speaker #1: Turning to slide 10, originations for the fourth quarter were $9.6 million, and repayments and sales were $40.4 million. Resulting in net repayments and sales of approximately $30.8 million.

Patrick Schafer: Originations for Q4 were $9.6 million, repayments and sales were $40.4 million, resulting in net repayments and sales of approximately $30.8 million. Overall yield on par value of new debt investments during Q4 was 11.8%. This compares to a 12.9% weighted average annualized yield, excluding income from non-accruals and collateralized loan obligations as of 31 December 2025. Our investment portfolio at year-end remained highly diversified. The end of the year with the debt investment portfolio, when excluding our investments in CLO funds, equities, and joint ventures, spread across 74 different portfolio companies and 34 different industries with an average par balance of $3.5 million per investment. Turning to slide 11.

Speaker #1: Overall yield on par value of new debt investments during the quarter was $11.8%. This compares to a 12.9% weighted average annualized yield excluding income from non-accruals and collateralized loan obligations.

Speaker #1: As of December 31, 2025, our investment portfolio at year-end remained highly diversified. At the end of the year, with the debt investment portfolio when excluding our investments in COO funds, equities, and joint ventures, spread across 74 different portfolio companies and 34 different industries, with an average par balance of $3.5 million per investment.

Speaker #1: During slide 11, at the end of 2025, we had 13 investments on non-accrual status, which were attributable to 10 portfolio companies representing 4.0% and 7.1% of the portfolio at fair value and cost respectively.

Patrick Schafer: At the end of 2025, we had 13 investments on non-accrual status, which were attributable to 10 portfolio companies, representing 4.0% and 7.1% of the portfolio at fair value and cost, respectively. This compares to 10 investments attributable to 8 portfolio companies on non-accrual status as of 30 September 2025, representing 3.8% and 6.3% of the portfolio at fair value and cost, respectively. On slide 12, excluding our non-accrual investments, we have an aggregate debt investment portfolio of $391.7 million at fair value, which represents a blended price of 92.7% of par value and is 81.5% comprised of first lien loans at par value.

Speaker #1: This compares to 10 investments attributable to eight portfolio companies on non-accrual status as of September 30, 2025, representing 3.8% and 6.3% of the portfolio at fair value and cost, respectively.

Speaker #1: On slide 12, excluding our non-accrual investments, we have an aggregate debt investment portfolio of $391.7 million at fair value, which represents a blended price of $92.7% of par value and is 81.5% comprised of first-line loans at par value.

Speaker #1: Assuming a par recovery, our December 31, 2025, fair values reflect a potential of $30.9 million of incremental net value or a $14.8% increase to NAV.

Patrick Schafer: Assuming a par recovery, our 31 December 2025 fair values reflect a potential of $30.9 million of incremental NAV value or a 14.8% increase to NAV. When applying an illustrative 10% default rate and 70% recovery rate, our debt portfolio would generate an incremental $1.46 per share of NAV or an 8.7% increase as it rotates. I'll now turn the call over to Brandon to further discuss our financial results for the period.

Speaker #1: When applying an illustrative 10% default rate and 70% recovery rate, our debt portfolio would generate an incremental $1.46 per share of NAV, or an 8.7% increase, as it rotates.

Speaker #1: Announcing the call over to Brandon. To further discuss our financial results for the period.

Speaker #2: Thanks, Patrick. For the quarter ended December 31, 2025, the company generated $17.5 million in investment income. A decrease of 1.4 million as compared to $18.9 million reported for the quarter ended September 30, 2025.

Brandon Satoren: Thanks, Patrick. For the quarter ended 31 December 2025, the company generated seventeen and a half million dollars in investment income, a decrease of $1.4 million as compared to $18.9 million reported for the quarter ended 30 September 2025. The decrease in investment income was primarily driven by the distribution from our Great Lakes joint venture coming in $1.3 million lower than the prior quarter and historical levels as a result of a non-recurring item, as well as the impact of 2 additional investments on non-accrual and decreases in base rates. For the year, total investment income was $61.2 million compared to $62.4 million in 2024.

Speaker #2: The decrease in investment income was primarily driven by the distribution from our Great Lakes Joint Venture coming in $1.3 million lower than the prior quarter and historical levels as a result of a non-recurring item.

Speaker #2: As well as the impact of two additional investments on non-accrual and decreases in base rates. For the year, total investment income was $61.2 million compared to $62.4 million in 2024.

Speaker #2: For the quarter ended December 31, 2025, total expenses were $10.1 million, which represents a 0.2 million decrease as compared to $10.3 million reported for the prior quarter.

Brandon Satoren: For the quarter ended 31 December 2025, total expenses were $10.1 million, which represents a $0.2 million decrease as compared to $10.3 million reported for the prior quarter. The decrease in expenses was primarily driven by lower incentive fees and general and administrative expenses, partially offset by higher financing costs associated with 30 days of duplicative interest expense associated with calling the company's April 2026 notes, which amounted to $0.5 million. For the year, total expenses were $36.2 million or a $2.2 million decrease as compared to $38.4 million in 2024. The decrease in expenses compared to the prior year was primarily driven by lower incentive fees.

Speaker #2: The decrease in expenses was primarily driven by lower incentive fees and general administrative expenses partially offset by higher financing costs associated with 30 days of duplicative interest expense associated with calling the company's April 2026 notes which amounted to $0.5 million.

Speaker #2: For the year, total expenses were $36.2 million or a 2.2 million decrease as compared to $38.4 million in 2024. The decrease in expenses compared to the prior year was primarily driven by lower incentive fees.

Speaker #2: Accordingly, our net investment income for the fourth quarter of 2025 was $7.4 million, or $57 per share. Which constitutes a million and a half dollar decrease or $0.14 per share from $8.9 million or $71 per share reported for the prior quarter.

Brandon Satoren: Accordingly, our net investment income for Q4 2025 was $7.4 million, or $0.57 per share, which constitutes a million and a half dollar decrease, or $0.14 per share from $8.9 million, or $0.71 per share reported for the prior quarter. Core net investment income for the fourth quarter was $4.1 million, or $0.32 per share, compared to $5.2 million, or $0.42 per share in Q3 2025. For the year, net investment income was $25.1 million or $2.28 per share, compared to $24 million or $2.59 per share in 2024.

Speaker #2: Core net investment income for the fourth quarter was $4.1 million, or $32 per share compared to $5.2 million. Or $0.42 per share. In the third quarter of 2025.

Speaker #2: For the year, net investment income was $25.1 million, or $2.28 per share compared to $24 million or $2.59 per share in 2024. As of December 31, 2025, our net asset value totaled $209.2 million.

Brandon Satoren: As of 31 December 2025, our net asset value totaled $209.2 million, a decrease of $22.1 million, or 9.6% from the prior quarter's NAV of $231.3 million. On a per share basis, NAV was $16.68 per share as of 31 December 2025, representing an $0.87 decrease, or 5% as compared to the company's prior quarter NAV per share of $17.55. Notably, the difference between the 9.6% decrease and 5% is the accretive impact of the tender offer and our buyback program.

Speaker #2: A decrease of $22.1 million or $9.6% from the prior quarter's NAV of $231.3 million. On a per-share basis, NAV was $16.68 per share as of December 31, 2025, representing an 87% decrease or 5% as compared to the company's prior quarter NAV per share of $17.55.

Speaker #2: Notably, the difference between the $9.6% decrease and 5% is the accretive impact of the tender offer and our buyback program. Broadly speaking, the decline in NAV was due to $14.5 million of net realized and change in unrealized losses on the portfolio as well as core net NII not covering the dividend paid during the quarter by approximately $2 million.

Brandon Satoren: Broadly speaking, the decline in NAV was due to fourteen and a half million dollars of net realized and change in unrealized losses on the portfolio as well as core net NII not covering the dividend paid during the quarter by approximately $2 million. As it relates to the right side of our balance sheet, we ended the year with gross and net leverage ratios of 1.5 and 1.4 times respectively, which compares to gross and net leverage ratios of 1.4 times and 1.3 times, respectively, for the prior quarter. Specifically, as of 31 December 2025, we had a total of $312.3 million of borrowings outstanding with a current weighted average contractual interest rate of 6.9%.

Speaker #2: As it relates to the right side of our balance sheet, we ended the year with gross and net leverage ratios of 1.5 and 1.4 times, respectively, which compares to gross and net leverage ratios of 1.4 times and 1.3 times, respectively, for the prior quarter.

Speaker #2: Specifically, as of December 31, 2025, we had a total of $312.3 million of borrowings outstanding with a current weighted average contractual interest rate of 6.9%.

Speaker #2: This compares to $324.6 million in borrowings outstanding as of the prior quarter with a weighted average contractual interest rate of 6.1%. The company finished the year with $124.7 million of available borrowing capacity under the senior secured revolving credit facilities which are subject to borrowing-based restrictions.

Brandon Satoren: This compares to $324.6 million in borrowings outstanding as of the prior quarter, with a weighted average contractual interest rate of 6.1%. The company finished the year with $124.7 million of available borrowing capacity under the senior secured revolving credit facilities, which are subject to borrowing based restrictions. Finally, I'm pleased to share that during the quarter, the company refinanced its $108 million of unsecured notes maturing in April 2026 by issuing $75 million of 7.75% notes due October 2030 and $35 million of 7.5% notes due October 2028. These actions reduced near-term refinancing risk and better ladder the company's debt capital structure by staggering the company's maturities, which improves the company's balance sheet.

Speaker #2: Finally, I'm pleased to share that during the quarter, the company refinanced its $108 million of unsecured notes maturing in April 2026 by issuing a $75 million of 7 and 3/4 notes due October 2030 and $35 million of 7.5% notes due October 2028.

Speaker #2: These actions reduced near-term refinancing risk and better laddered the company's debt capital structure by staggering the company's maturities which improves the company's balance sheet.

Speaker #2: With that, I will turn the call back over to Ted.

Brandon Satoren: With that, I will turn the call back over to Ted.

Speaker #3: Thank you, Brandon. I had a question I'd like to reemphasize our commitment to our shareholders. Our focus remains on disciplined capital allocation maintaining a high-quality portfolio and delivering attractive risk-adjusted returns.

Ted Goldthorpe: Thank you, Brandon. Ahead of questions, I'd like to re-emphasize our commitment to our shareholders. Our focus remains on disciplined capital allocation, maintaining a high-quality portfolio, and delivering attractive risk-adjusted returns. With a large more diversified platform and a strengthened balance sheet, we believe we're well positioned to drive continued earnings growth and value creation in the quarters ahead. Thank you once again to all our shareholders, employees, and partners for your ongoing support. This concludes our prepared remarks, and I will turn the call over for questions.

Speaker #3: The large or diversified platform and a strengthened balance sheet we believe were well positioned to drive continued earnings growth and value creation in the quarters ahead.

Speaker #3: Thank you once again to all our shareholders, employees, and partners for your ongoing support. This concludes our prepared remarks, and I'll turn the call over for questions.

Speaker #1: Thank you. Quick reminder before we start the Q&A. If you'd like to ask a question, please press star and the number one on your telephone keypad to raise your hand and enter the queue.

Operator: Thank you. Quick reminder before we start the Q&A. If you'd like to ask a question, please press star and the number 1 on your telephone keypad to raise your hand and enter the queue. If you'd like to withdraw a question or your question has been answered, please press star 1 again. Thank you. We will take our first question from Erik Zwick from Lucid Capital Markets. Please go ahead.

Speaker #1: If you'd like to address a question or your question has been answered, please press star one again. Thank you. We will take our first question from Eric Zwick from Lucid Capital Markets.

Speaker #1: Please go ahead.

Erik Zwick: Thanks. Good morning, everyone. You know, Ted, in your prepared comments, you mentioned, you know, the actions that you took in 2025 reflect the long-term vision as you position the company for its next phase of growth. I'm curious, just kind of, you know, from your perspective, as you think about the next year or two, what do you think the mix of growth looks like from a, you know, organic and acquisition mix? I guess I'm kind of curious on that, you know, latter potential source of growth, the acquisitions, you know, what the pipeline looks like in terms of, you know, opportunities. I guess if I add another piece in there, you know, are there any other initiatives for growth that you're considering at this point as well?

Speaker #4: Thanks. Good morning, everyone. Ted, in your prepared comments, you mentioned the actions that you took in 2025 reflect the long-term vision as you position the company for its next phase of growth.

Speaker #4: So I'm curious just kind of from your perspective, if you think about the next year or two, what do you think the mix of growth looks like from a organic and acquisition mix?

Speaker #4: And I guess I'm kind of curious on that ladder potential source of growth, the acquisitions. What the pipeline looks like in terms of opportunities and I guess if I add another piece in there, are there any other initiatives for growth that you're considering at this point as well?

Speaker #3: Yeah, it's a great question. So I don't see us pursuing organic growth. I mean, of anything, given where our stock trades it makes sense for us to continue to buy back stock.

Ted Goldthorpe: Yeah, it's a great question. You know, I don't see us pursuing organic growth. I mean, of anything given where our stock trades, it makes sense for us to continue to buy back stock. The tender plus share buybacks obviously were a pretty nice tailwind for NAV for us or NAV per share. In terms of like all this recent choppiness in the market and all the recent headlines, our M&A pipeline is probably bigger than it's ever been. And that includes both public entities and unlisted entities. We expect to be able to grow our platform, and we had to get Logan Portman done, and that sets us up to do continued M&A. As you know, we've kind of rolled up a number of-

Speaker #3: So the tender plus share buybacks, obviously, were a pretty nice tailwind to NAV for us, or NAV per share. In terms of all this recent choppiness in the market and all the recent headlines, our M&A pipeline is probably bigger than it's ever been.

Speaker #3: So, and that includes both public entities and unlisted entities. So we expect to be able to grow our platform. We had to get Logan Portman done.

Speaker #3: And that sets us up to do continued M&A. So, as you know, we've kind of rolled up a number of BDCs over the last couple of years.

Patrick Schafer: BDCs over the last couple years, and it's a key part to our strategy to basically continue to do that, optimize the portfolios, and continue to buy back stock.

Speaker #3: And it's a key part of our strategy to basically continue to do that—optimize the portfolios and continue to buy back stock.

Speaker #4: So that's helpful. And then, so I guess thinking about the pipeline for organic growth, and maybe the size of the portfolio, it sounds like you still consider the buyback a pretty attractive use of capital at this point.

Erik Zwick: That's helpful. I guess, you know, thinking about the pipeline for organic growth and maybe the size of the portfolio, it sounds like, you know, you still consider the buyback a pretty attractive use of capital at this point. Is that the right read on your comments there?

Speaker #4: Is that the right read on your comments there?

Speaker #3: Yeah. I mean, you can see our originations, our repayments, and sales are way higher than originations. And the reason for that is it's more accretive for us to basically take the liquidations and buy back stock.

Patrick Schafer: Yeah. I mean, you can see our originations, you know, like our repayments and sales are way higher than originations. The reason for that is it's more accretive for us to basically take the liquidation and buy back stock. That's what we've been doing. On a go-forward basis, you know, we're very cautious in terms of new deployment. We're really, really looking for areas where we can deploy capital at very wide spreads. Again, you know, those opportunities are just few and far between. We think there's a little bit of a disconnect between actual risk and the way risk is being priced. We are being pretty judicious on deploying new capital.

Speaker #3: So that's what we've been doing. On a go-forward basis, we're very, very, very cautious in terms of new deployment. So we're really, really looking areas where we can deploy capital at very widespreads.

Speaker #3: And again, those opportunities, there's few and far between. So we think there's a little bit of a disconnect between actual risk and the way risk is being priced.

Speaker #3: And so we are being pretty judicious on deploying new capital.

Speaker #4: That's great, Color. Thanks. And last one, maybe for Brandon, just looking at the dividend income, that you recognized in the quarter, I think it was around $200,000 or so, maybe $197,000.

Erik Zwick: That's great color. Thanks. Last one, maybe for Brandon. Just looking at the dividend income that you recognized in the quarter. I think it was around $200,000 or so, maybe $197. That was quite a bit below the prior kind of Q4 average, closer to, like, $1.0. Just curious if there's something noteworthy that changed in the Q4 and what the run rate of dividend income might look like going forward.

Speaker #4: And that was quite a bit below the prior kind of four-quarter average closer to 1.5 million. So just curious if there's something noteworthy that changed in the fourth quarter and what the run rate of dividend income might look like going forward.

Speaker #3: Yeah. So that's right, Eric. The decrease was driven by the much lower Great Lakes our Great Lakes joint ventures distribution this quarter. There was a non-recurring item associated with it's an evergreen product and every three years, it rolls into a new series that occurred in the prior quarter.

Brandon Satoren: Yeah, that's right, Erik. That's. The decrease was driven by the much lower Great Lakes, our Great Lakes joint venture's distribution this quarter. There was a non-recurring item associated with it's an evergreen product, and every 3 years it rolls into a new series that occurred in the prior quarter. That impacted the Great Lakes distribution this quarter. It's, you know, very much a non-recurring item. You know, the product is sensitive to rates, so where it was previously earning and distributing is probably higher than what we're modeling going forward, but it still should generate, call it, you know, low teens return on a near-term basis going forward.

Speaker #3: And that impacted the Great Lakes distribution this quarter. It's very much a non-recurring item. The product is sensitive to rates. So where it was previously earning and distributing is probably higher than what we're modeling going forward.

Speaker #3: But it still should generate call it low teens return on a near-term basis going forward. And I'd also make the distinction that the non-recurring item was just the difference between ROC versus income.

Patrick Schafer: I'd also make the distinction. The non-recurring item was just the difference between ROC versus income. It wasn't necessarily a cash distribution question. It was sort of how we kind of had to or are we supposed to recognize the cash in terms of ROC versus income.

Ted Goldthorpe: I'd also make the distinction. The non-recurring item was just the difference between ROC versus income. It wasn't necessarily a cash distribution question. It was sort of how we kind of had to or are we supposed to recognize the cash in terms of ROC versus income.

Speaker #3: So it wasn't necessarily a cash distribution question. It was sort of how we kind of had to or how we're supposed to recognize the cash in terms of ROC versus income.

Speaker #3: That's right.

Brandon Satoren: That's right.

Speaker #4: Great. Thank you for taking my questions this morning, guys.

Erik Zwick: Great. Thank you for taking my questions this morning, guys.

Speaker #3: Thank you.

Patrick Schafer: Thank you.

Speaker #1: Thank you. Our next question comes from the line of Christopher Nolan from Leader Group Tolman. Please go ahead.

Operator: Thank you. Our next question comes from the line of Christopher Nolan from Ladenburg Thalmann. Please go ahead.

Speaker #5: Hey guys, the declining dividend—should we use that as a proxy for the earnings run rate going forward in the second half of the year?

Christopher Nolan: Hey, guys.

Patrick Schafer: Hey, Chris.

Christopher Nolan: The declining dividend, should we use that as a proxy for the earnings run rate going forward in the second half of the year?

Brandon Satoren: No. Again, that was the non-recurring item that Erik had just asked about, Chris. There, you know, next quarter, we would expect that to return to more normalized historical levels.

Speaker #3: No. That was the non-recurring item that Eric had just asked about. Chris, so next quarter, we would expect that to return to more normalized historical levels.

Speaker #5: Okay. And then the driver and the realized loss?

Christopher Nolan: Okay. The driver and the realized loss?

Speaker #3: So, the largest driver on the realized was a portfolio company called CP Flex. Patrick, do you want to give some color on that?

Brandon Satoren: The largest driver on the realized was a portfolio company called C-P Flex. Patrick, do you wanna give some color on that?

Speaker #2: Yeah, I mean, to be honest, Chris, it was a company that was going through a sale process. The sale process had been going on for some time.

Patrick Schafer: Yeah. I mean, to be honest, Chris, we, it was a company that was going through a sale process. The sale process had been going on some time. We had a bid that fully, that was fully covering par plus accrued interest, and we're working towards the end. To be entirely honest, in the last, like, couple weeks of the transaction, there were some junior lenders in the capital structure that basically created a massive amount of hold-up value. The lenders were forced into this discussion of whether we should, like, file a company for a pre-pack and then get these guys out and move on.

Speaker #2: We had a bid that fully that was fully covering PAR plus accrued interest. And we're working towards the end. And to be entirely honest, in the last couple of weeks of the transaction, there were some junior lenders in the capital structure that basically created a massive amount of holdup value.

Speaker #2: And we were kind of—the lenders were forced into this discussion of whether we should file the company for a PPAC, and then get these guys out and move on.

Speaker #2: And again, we were a small part of the syndication, but there was just an overall view that between the costs associated with the PPAC and the risk that the buyer would move away from us, that lenders were kind of willing to accept again, what amounted to a good amount of holdup value at the end of the day.

Patrick Schafer: Again, we were a small part of the syndication, but there was just an overall view that between the cost associated with the pre-pack and the risk that the buyer would move away from us, that lenders were kinda willing to accept, you know, again, what amounted to a good amount of hold-up value at the end of the day. The difference effectively between, you know, what we had it on the books at and what we ended up realizing was sort of that last little bit of a couple folks holding us hostage.

Speaker #2: And so, the difference, effectively, between what we had on the books at and what we ended up realizing was sort of that last little bit of a couple of folks holding us hostage.

Speaker #5: Got it. And then I guess for unrealized depreciation, were there any particularly big drivers there?

Christopher Nolan: Got it. I guess for unrealized depreciation, were there any particularly big drivers there?

Patrick Schafer: Unrealized depreciation?

Speaker #2: Unrealized depreciation?

Patrick Schafer: Unrealized depreciation?

Speaker #5: Yes, please.

Christopher Nolan: Yes, please.

Speaker #2: Yeah. Yeah, yeah. Sorry. I thought you said depreciation. I just want to make sure I answered the question. The biggest one is called HTC Hostway.

Patrick Schafer: Yeah. Yeah. Yeah. Sorry. I thought you said appreciation. I just wanna make sure I answered the question. The biggest one is called HTC Hostway. Again, kind of a similar-ish story, but, they were working through LOIs and they have two different business units and selling two different business units. They ultimately completed the sale of one of the business units, but the other one, effectively the buyer came back and retraced, like, a $0.50 discount or something like that, which obviously didn't make any sense and weren't gonna take. We sort of said no. They came back at a higher valuation, but still not something that the company was comfortable with. There's a large lender that's leading the process there.

Speaker #2: Again, kind of a similar story, but we were working through—they were working through LOIs. And they have two different business units. And selling two different business units.

Speaker #2: They ultimately completed the sale of one of the business units, but the other one effectively, the buyer came back and retraded us like 50-cent discount or something like that, which obviously didn't make any sense and we weren't going to take.

Speaker #2: We sort of said no. They came back at a higher valuation, but still not something that the company was comfortable with. And there's a large lender that's leading the process there.

Speaker #2: So ultimately, the conclusion was to sell the first business where we kind of continued where we got a reasonable cash offer and paid down some debt.

Patrick Schafer: Ultimately, the conclusion was to sell the first business where we kinda continued, got a reasonable cash offer and paid down some debt. Then we'll kinda take the second business back to market at some point this year, would be my guess. For valuation purposes, we're using that sort of like lower retraded valuation for purpose of that. That is kind of the driver of the unrealized depreciation.

Speaker #2: And then we'll kind of take the second business back to market at some point this year, would be my guess. But for valuation purposes, we're using that sort of lower, retraded valuation for purposes of that.

Speaker #2: So that is kind of the driver of the unrealized depreciation. And that's the biggest needle-mover there.

Ted Goldthorpe: That's the biggest, and that's the big needle mover there.

Speaker #5: Got it. And then, I guess strategically—on your comments in terms of the growth drivers, acquisitions—are there a lot of potential BDC sellers out there?

Christopher Nolan: Got it. I guess strategically, but, you know, on your comments in terms of the growth drivers acquisitions, are there a lot of potential BDC sellers out there? You know, is the pricing for these things going down? I mean, what sort of color can you provide?

Speaker #5: And is the pricing for these things going down? I mean, those were color. Can you provide?

Speaker #2: I would say that there's a lot of permanent capital vehicles for sale. I think the choppiness is going to just exacerbate it. I mean, scale matters.

Ted Goldthorpe: I would say that, there's a lot of permanent capital vehicles for sale. I think, the choppiness is gonna just exasperate it. I mean, scale matters, and I think there's a lot of subscale vehicles that are having a hard time with originations costs, you know, and kinda growth and fundraising. As I said, our pipeline is really robust, and it's a mix of both private and public entities. Actually, we're pretty excited about the M&A market, and we think it's a really good way to create value for our shareholders.

Speaker #2: And I think there's a lot of subscale vehicles that are having a hard time with originations. Costs and kind of growth and fundraising. So as I said, our pipeline's really robust.

Speaker #2: And it's a mix of both private and public entities. So actually, we're pretty excited about the M&A market. And we think it's a really good way to create value for our shareholders.

Speaker #5: Interesting. Okay. Great. Thanks, guys.

Christopher Nolan: Interesting. Okay, great. Thanks, guys.

Speaker #2: Hey, Chris.

Ted Goldthorpe: Hey, great.

Speaker #1: Thank you. Our next question comes from the line of Angelo Guerino, a private investor. Please go ahead.

Operator: Thank you. Our next question comes from the line of Angelo Guarino, or a private investor. Please go ahead.

Speaker #6: Good morning. Thanks for taking my call.

Angelo Guarino: Good morning. Thanks for taking my call.

Speaker #2: Angelo.

Speaker #6: Hi. So this is going to be a little bit of a tough talk. Big picture, tough talk. I really trying to understand where you guys are focused on.

Ted Goldthorpe: Hi, Angelo.

Angelo Guarino: Hi. This is gonna be a little bit of a tough talk. Big picture, tough talk. I'm really trying to understand where you guys are focused on. Here's a couple data points. 30 June 2019, couple quarters after you took KCAP. NAV per share, split adjusted, $37 a share. Over that time, you've distributed $16 per share, split adjusted to shareholders. Now we're sitting $20 a share NAV below that. You know, I've been a big supporter of you, I've been a big supporter of management, been a big supporter of the strategy and growing. You keep on using terms like, you know, risk-adjusted returns, shareholder value, continued growth, and shareholder value.

Speaker #6: So here's a couple of data points. June 30, 2019, a couple of quarters after you took takeout. NAV per share split adjusted $37 a share.

Speaker #6: Over that time, you've distributed $16 per share, split-adjusted, to shareholders. And now we're sitting $20 a share NAV below that. And I've been a big supporter of you.

Speaker #6: I’ve been a big supporter of management. I’ve been a big supporter of the strategy and growing, but you keep on using terms like risk-adjusted returns, continued growth, and shareholder value.

Speaker #6: I'm trying to understand why it seems to me that, quarter after quarter, your hair isn't on fire about the drip, drip, drip of the base value of our investment, which is NAV.

Angelo Guarino: I'm trying to understand why it seems to me that quarter after quarter, your hair isn't on fire about the drip, drip of the base value of our investment, which is NAV. I mean, you have to agree that BDCs are rare that are going to trade at huge multiples of NAV. Why aren't I seeing or hearing you talk about being your hair on fire about what's been happening to NAV ever since you took KCAP?

Speaker #6: I mean, you have to agree that BDCs are rare that are going to trade at huge multiples of NAV. And why aren’t I seeing or hearing you talk about being your hair on fire about what’s been happening to NAV ever since you took takeout?

Ted Goldthorpe: Okay. Well, I'll answer that question. I mean, I don't necessarily subscribe to everything you said, but the reality is, I mean, we've probably bought back more stock than any BDC as a percentage of our business. When we say things like that, we're trying to be, you know, judicious about how we allocate capital. You know, we've obviously inherited a series of portfolios that were at the relative tail end of winding those down. If you look at a lot of the headwinds to our NAV, a lot of it's come from inherited positions. Again, when we took those on, we obviously have been working those out over the last, you know. I can't remember the start date you used was, but it's still over the last seven years.

Speaker #2: Okay. Well, I want to ask a question. I mean, I don't necessarily subscribe to everything you said, but the reality is, I mean, we've probably bought back more stock than any BDC as a percentage of our business.

Speaker #2: So when we say things like that, we're trying to be judicious about how we allocate capital. So we've obviously inherited a series of portfolios that were at the relative tail end of winding those down.

Speaker #2: So if you look at a lot of the headwinds to our NAV, a lot of it has come from inherited positions. But again, when we took those on, we obviously have been working those out over the last—I can't remember the start date you used was—but it's over the last seven years.

Speaker #2: And in the meantime, we bought back stock. We've refinanced the capital structure. And we've done a number of actions that we think are shareholder-friendly.

Ted Goldthorpe: In the meantime, you know, we bought back stock, we've refinanced the capital structure, and we've done a number of actions that we think are shareholder friendly. You know, I totally hear what you're saying, and the math is the math. When you say our hair is on fire, I wouldn't necessarily say that. I mean, I would say we have a good command over-

Speaker #2: So we I totally hear what you're saying. And the math is the math. But when you say our hair is on fire, I wouldn't necessarily say that.

Speaker #2: I mean, I would say we have a good command of our—

Angelo Guarino: No, I guess what I'm saying is I want your hair to be on fire. I don't hear a lot of discussion about I don't know what increasing shareholder value means, if quarter after quarter, year after year, NAV is just going down, down. It doesn't. I don't hear you just addressing it and in a way that is clear of where that turning point's gonna be, where we're gonna be seeing at least stable NAV, you know, at the same time. It doesn't. You know, sure, you did the stock buybacks. It was a good deal. Even in the face of stock buybacks, we had a decrease of NAV of $0.80 in just one quarter. That's just not a just a one-off. This has been going quarter after quarter after quarter.

Speaker #5: No, I guess what I'm saying is I want your hair to be on fire. I don't hear—I don't hear a lot of discussion about, I don't know, what increasing shareholder value means if quarter after quarter, year after year, NAV is just going down, down, down.

Speaker #5: And it doesn't—I don't hear you addressing it in a way that is clear, where that turning point's going to be, or if we're going to be seeing at least stable NAV at the same time.

Speaker #5: It doesn’t, sure. You did the stock buybacks. It was a good deal. But even in the face of stock buybacks, we had a decrease of NAV of $0.80 in just one quarter.

Speaker #5: And that's not just a one-off. This has been going quarter after quarter after quarter. So I guess what I'm trying to ask—I'm asking you as someone who is a supporter and has been very supportive since you bought Takeout, because I'm a Takeout—I was a Takeout holder.

Angelo Guarino: I guess what I'm trying to ask, I'm asking you as someone who is a supporter and has been very supportive all, you know, since you bought KCAP, 'cause I was a KCAP holder, so I've been here for this whole ride. Why aren't, why am I hearing what I think I need to hear that tells me when this is gonna, when this drip is gonna stop and this thing's gonna turn? I mean, just saying that I've bought back stock at a good deal, fine. Over six and a half years, I've lost $20 in NAV, and I've gotten $16 in distributions. I had to pay taxes on that distribution. It would've been better off to just liquidate KCAP and give it to me six and a half years ago and let me put them in treasuries.

Speaker #5: So, I've been here for this whole ride. Why aren't I hearing what I think I need to hear that tells me when this is going to—when this drip is going to stop and this thing's going to turn?

Speaker #5: So, I mean, just saying that I've bought back stock at a good deal—fine. But, over six and a half years, I've lost $20 in NAV.

Speaker #5: And I've gotten $16 in distributions. And I had to pay taxes on that distribution. So it would have been better off to just liquidate takeout and give it to me six and a half years ago and let me put them in treasuries.

Angelo Guarino: I'd love to understand where this is going and why I'm not hearing you address in these conference calls where this turn's going to occur. Is that a better way of putting it?

Speaker #5: I'm trying to understand where this is going, and when and why I'm not hearing you address in these conference calls where this turn's going to occur.

Speaker #5: Has that been a way of putting it?

Speaker #2: Yeah. I mean, listen, I think, listen, we're very open-minded to having a broad discussion. Maybe we should just take this offline, and we're happy to sit down with you and take you through it, and maybe optimize our communication next quarter.

Ted Goldthorpe: Yeah. I mean, listen, Listen, we're very open-minded to having a broad discussion. Maybe we should talk, take this offline. We're happy to sit down with you and take you through it and, you know, maybe optimize our communication next quarter. Why don't we take it offline, and we're happy to listen to you, of course, and listen to all of our shareholders, and, you know, happy to have that conversation.

Speaker #2: So, why don't we take it offline? And we're happy to listen to you, of course, and listen to all of our shareholders. We're happy to have that conversation.

Speaker #5: Okay. Thank you. Oh, next question comes from the line of Paul Johnson from KBW. Please go ahead.

Angelo Guarino: Okay.

Operator: Thank you. Our next question comes from the line of Paul Johnson from KBW. Please go ahead.

Speaker #4: Yeah, thanks for taking my questions. I just wanted to echo that a little bit. I mean, I just want to understand as well, kind of where you really can provide value for shareholders, just given where we're at.

Paul Johnson: Yeah, thanks for taking my questions. I just wanted to echo that a little bit. I mean, I just wanna understand as well, you know, kind of where you really can provide value for shareholders just given where we're at. In my opinion, at least at this point, I don't think that you've necessarily demonstrated that the mergers have been positive for shareholders, you know, that this has been, that any of these has worked out. It's clear that, you know, buying some of these assets at NAV has not necessarily been a good deal. It sounds like that is still the consideration and the plan going forward, but, to me, it hasn't been a great way to increase shareholder NAV for you guys.

Speaker #4: In my opinion, at least at this point, I don't think that you've necessarily demonstrated that the mergers have been positive for shareholders, that any of these has worked out.

Speaker #4: And it's clear that buying some of these assets at NAV is not necessarily been a good deal. So it sounds like that is still the consideration in the plan going forward.

Speaker #4: But to me, it hasn't been a great way to increase shareholder NAV. For you guys. So what other ways can we I guess stabilize what's in the portfolio today and you can provide shareholders aside from trying to scale up through mergers going forward?

Paul Johnson: What other ways can we, you know, I guess, stabilize what's, you know, in the portfolio today and you can provide shareholders, you know, aside from, you know, trying to scale up through mergers going forward?

Speaker #2: Yeah, I mean, we used to provide a lot of disclosure about where we bought the assets versus where we've monetized them. And we should put that back in the presentation and walk people through why we think a number of the actions we've taken were the right and prudent actions.

Ted Goldthorpe: Yes. I mean, we used to provide a lot of disclosure about where we bought the assets versus where we monetized them, and we should put that back in the presentation and walk people through why we think a number of the actions we've taken were the right, prudent actions. Again, we'll provide additional. We've historically disclosed that in a lot of detail, and obviously, you know, we should just continue to do that, and just lay out the roadmap for why we think that makes sense.

Speaker #2: So again, we'll provide additional historically disclosed information in a lot of detail. And obviously, we should just continue to do that, and then just lay out the roadmap for why we think that makes sense.

Speaker #4: Okay, thank you. That's all for me.

Paul Johnson: Okay. Thank you. That's all for me.

Speaker #5: Thank you. There are no further questions in the queue. I will now turn the call back over to our CEO, Ed Goldthorpe, for closing remarks.

Operator: Thank you. There are no further questions in the queue. I will now turn the call back over to our CEO, Ted Goldthorpe, for closing remarks.

Speaker #2: Great. Well, thank you all for attending our call. And as always, please feel to reach out to us with any questions which we're happy to discuss.

Ted Goldthorpe: Well, thank you all for attending our call. As always, please feel to reach out to us with any questions, which we're happy to discuss. We look forward to speaking with you again in May when we announce our Q1 2026 results. Thank you.

Speaker #2: We look forward to speaking with you again in May, when we announce our first quarter 2026 results. Thank you.

Operator: The meeting has now concluded. Thank you all for joining. You may now disconnect.

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