Q1 2026 Bain Capital Specialty Finance Inc Earnings Call

May 12, 2026

Operator: Good day and welcome to the Bain Capital Specialty Finance Q1 ended 31 March 2026 earnings conference call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. To register to ask a question at any time, please press star 1 on your keypad. Please be advised that today's call is being recorded. I'd now like to turn the call over to Katherine Schneider. Please go ahead.

Speaker #2: At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. To register to ask a question at any time, please press *1 on your keypad.

Speaker #2: Please be advised that today's call is being recorded. We are standing by if you should need any assistance. I now like to turn the call over to Katherine Schneider.

Speaker #2: Please go ahead. Thanks, Jamie. Good morning and welcome, everyone, to the Bain Capital Specialty Finance, first quarter ended March 31, 2026 conference call. Yesterday, after market closed, we issue our earnings press release and investor presentation of our quarterly results, a copy of which is available on Bain Capital Specialty Finances investor relations website.

Katherine Schneider: Thanks, Jamie. Good morning and welcome everyone to the Bain Capital Specialty Finance Q1 ended 31 March 2026 Conference Call. Yesterday, after market closed, we issued our earnings press release and investor presentation of our quarterly results, a copy of which is available on Bain Capital Specialty Finance's Investor Relations website. Following our remarks today, we will hold a question and answer session for analysts and investors. This call is being webcast, and a replay will be available on our website. This call and the webcast are property of Bain Capital Specialty Finance, and any unauthorized broadcast in any form is strictly prohibited. Any forward-looking statements made today do not guarantee future performance and actual results may differ materially.

Speaker #2: Following our remarks today, we will hold a question-and-answer session for analysts and investors. This call is being webcast and a replay will be available on our website.

Speaker #2: This call and the webcast are property of Bain Capital Specialty Finance and any unauthorized broadcast in any form is strictly prohibited. Any forward-looking statements made today do not guarantee future performance and actual results may differ materially.

Speaker #2: These statements are based on current management expectations, which include risks and uncertainties, which are identified in the risk factor section of our most recently filed annual report on Form 10-K and any subsequently filed quarterly reports on Form 10-Q, as well as other filings with the SEC that could cause actual results to differ materially from those indicated.

Katherine Schneider: These statements are based on current management expectations, which include risks and uncertainties, which are identified in the Risk Factors section of our most recently filed annual report on Form 10-K and any subsequently filed quarterly reports on Form 10-Q, as well as other filings with the SEC that could cause actual results to differ materially from those indicated. Forward-looking statements made today include, without limitation, statements regarding dividend sustainability, investment pipeline, leverage targets, credit quality trends, and the potential impact of AI disruption on portfolio companies. Bain Capital Specialty Finance assumes no obligation to update any forward-looking statements at this time unless required to do so by law or by the rules of the NYSE on which our securities are listed. Lastly, past performance does not guarantee future results. With that, I'd like to turn the call over to our CEO, Michael Ewald.

Speaker #2: Forward-looking statements made today include without limitations statements regarding dividend sustainability, investment pipeline, leverage targets, credit quality trends, and the potential impact of AI disruption on portfolio companies.

Speaker #2: Bain Capital Specialty Finance assumes no obligation to update any forward-looking statements at this time unless required to do so by law or by the rules of the NIYSA.

Speaker #2: And which are securities are listed. Lastly, past performance does not guarantee future results. So with that, I'd like to turn the call over to our CEO, Michael Ewald.

Speaker #3: Thanks, Katherine. And good morning, and thanks to all of you for joining us here today on our earnings call. I'm joined here by Mike Boyle, our President, and our Chief Financial Officer, Amit Joshi.

Michael Ewald: Thanks, Katherine, good morning and thanks to all of you for joining us here today on our earnings call. I'm joined here by Michael Boyle, our President, and our Chief Financial Officer, Amit Joshi. In terms of the agenda for the call, I'll start with an overview of our Q1 results and then discuss the broader market environment and our positioning. Thereafter, Mike and Amit will discuss our investment portfolio and financial results in greater detail. Of course, we'll leave some time for questions at the end. Beginning with our financial results, net investment income per share for Q1 was $0.42, representing an annualized return on equity of 10.0%.

Speaker #3: In terms of the agenda for the call, I'll start with an overview of our first quarter results, and then discuss the broader market environment and our positioning.

Speaker #3: Thereafter, Mike and Amit will discuss our investment portfolio and financial results in greater detail. And, of of course, we'll leave some questions for time.

Speaker #3: We'll leave some time for questions at the end. So beginning with our financial results, net investment income per share for the first quarter was 42 cents.

Speaker #3: Representing an annualized return on equity of 10.0%. Our net investment income fully covered our regular dividend during the quarter, demonstrating the continued earnings power and resilience of our portfolio.

Michael Ewald: Our net investment income fully covered our regular dividend during the quarter, demonstrating the continued earnings power and resilience of our portfolio. Q1 earnings per share were $0.05, primarily driven by net unrealized losses across our investment portfolio. These losses were largely attributed to idiosyncratic credit weakness within certain portfolio companies, as well as broader market-driven valuation adjustments stemming from credit spread widening and multiple compression during the quarter. Subsequent to quarter end, our board declared a Q2 dividend of $0.42 per share, payable to shareholders of record as of 15 June 2026. Our Q2 dividend equates to an annualized yield of 10.0% based on ending book value as of 31 March 2026. Credit performance across the portfolio remained fundamentally sound. Non-accrual levels continued to remain low and stable as no new investments were shifted to non-accrual during the quarter.

Speaker #3: Q1 earnings per share were 5 cents, primarily driven by net unrealized losses across our investment portfolio. These losses were largely attributed to idiosyncratic credit weakness within certain portfolio companies, as well as broader market-driven valuation adjustments stemming from credit spread widening and multiple compression during the quarter.

Speaker #3: Subsequent to quarter end, our board declared a second quarter dividend of 42 cents per share. Payable to shareholders of record as of June 15, 2026.

Speaker #3: Our Q2 dividend equates to an annualized yield of 10.0% based on ending book value as of March 31, 2026. Credit performance across the portfolio remained fundamentally sound.

Speaker #3: Non-accrual levels continued to remain low and stable as no new investments were shifted to non-accrual during the quarter, and our borrowers generally demonstrated healthy operating performance and resilient credit fundamentals despite the more uncertain macroeconomic backdrop.

Michael Ewald: Our borrowers generally demonstrated healthy operating performance and resilient credit fundamentals despite the more uncertain macroeconomic backdrop. In fact, the Q1 was an increasingly challenging market environment characterized by heightened public market volatility, investor concerns surrounding AI disruption risk on software valuations, renewed inflationary pressures fueled by geopolitical uncertainty, and retail outflows from private credit vehicles. These factors contributed to a more cautious and selective risk environment across broader credit markets. Against this backdrop, our pace of new investment activity moderated during the Q1, with our funding split between supporting new portfolio companies and providing add-on financings and fundings to existing borrowers. BCSF continues to benefit from Bain Capital's private credit platform, whose long-standing presence, deep relationships, and extensive expertise in the core middle market position us favorably in the current market.

Speaker #3: In fact, the first quarter was an increasingly challenging market environment characterized by heightened public market volatility, investor concerns surrounding AI disruption risk on software valuations, renewed inflationary pressures fueled by geopolitical uncertainty, and retail outflows from private credit vehicles.

Speaker #3: These factors contributed to a more cautious and selective risk environment across broader credit markets. Against this backdrop, our pace of new investment activity moderated during the first quarter with our funding split between supporting new portfolio companies and providing add-on financings and fundings to existing borrowers.

Speaker #3: BCSF continues to benefit from Bain Capital's private credit platform, whose longstanding presence, deep relationships, and extensive expertise in the core middle market position us favorably in the current market.

Speaker #3: While much of the recent net retail outflows have been concentrated among large-cap private credit managers, potentially tempering new investment activity in that space, our platform remains well-positioned to serve as a consistent, long-term capital provider to our target core middle market borrowers.

Michael Ewald: While much of the recent net retail outflows have been concentrated among large cap private credit managers, potentially tempering new investment activity in that space, our platform remains well-positioned to serve as a consistent long-term capital provider to our target core middle market borrowers. We remain focused on our long-standing investing tenets of disciplined underwriting, maintaining meaningful control over our debt tranches and strong financial covenant protections. Spreads on our Q1 new originations average approximately 550 basis points on a weighted average basis, while net leverage levels remain prudent at 4.4x EBITDA. Looking ahead into Q2 to date, we have begun to see a pickup in volumes for new investment activities.

Speaker #3: We remain focused on our longstanding investing tenets of disciplined underwriting, maintaining meaningful control over our debt tranches, and strong financial covenant protections. Spreads on our Q1 new originations average approximately 550 basis points on a weighted average basis.

Speaker #3: While net leverage levels remain prudent at 4.4 times EBITDA. Looking ahead into the second quarter to date, we have begun to see a pickup in volumes for new investment activities.

Speaker #3: The current investing environment for lenders has been moderately more favorable as we have observed pricing widened by an additional 25 to 50 basis points, reflecting the market's increasingly cautious tone.

Michael Ewald: The current investing environment for lenders has been moderately more favorable as we have observed pricing widen by an additional 25 to 50 basis points, reflecting the market's increasingly cautious tone. As we discussed in detail on our previous earnings call, BCSF software exposure, including software adjacent companies, represents approximately 13% of our total portfolio. Our private credit platform has remained disciplined and highly selective in investing capital, enabling us to thoughtfully target the areas of the market where we see the most compelling risk-adjusted opportunities. While the past several years have been characterized by significant capital formation and heightened competition across sectors such as software and technology, we maintained a measured underwriting approach and resisted the broader trend toward increasingly aggressive structures.

Speaker #3: As we discussed in detail in our previous earnings call, BCSF software exposure, including software-adjacent companies, represents approximately 13% of our total portfolio. Our private credit platform has remained disciplined and highly selective in investing capital, enabling us to thoughtfully target the areas of the market where we see the most compelling risk-adjusted opportunities.

Speaker #3: While the past several years have been characterized by significant capital formation and heightened competition across sectors such as software and technology, we maintained a measured underwriting approach and resisted the broader trend toward increasingly aggressive structures.

Speaker #3: In addition, given our history in the space and broad investment platform, we have expertise and experience in a large number of diverse industries, thereby limiting our over-reliance on any one sector.

Michael Ewald: In addition, given our history in the space and broad investment platform, we have expertise and experience in a large number of diverse industries, thereby limiting our overreliance on any one sector. Importantly, evaluating the potential risks and implications associated with AI-driven disruption is not a new exercise for our platform. We believe BCSF is uniquely differentiated amongst its peers through the breadth of expertise and institutional knowledge embedded across Bain Capital's broader credit platform, as well as adjacent business units, including ventures, tech opportunities, and private equity. These teams have all been actively incorporating AI-related risk assessment and management frameworks into their investment process for several years, allowing us to continuously refine our underwriting standards and integrate best practices and proprietary insights into our own investment framework.

Speaker #3: Importantly, evaluating the potential risks and implications associated with AI-driven disruption is not a new exercise for our platform. We believe BCSF is uniquely differentiated amongst its peers through the breadth of expertise and institutional knowledge embedded across Bain Capital's broader credit platform, as well as adjacent business units including ventures, tech opportunities, and private equity.

Speaker #3: These teams have all been actively incorporating AI-related risk assessment and management frameworks into their investment process for several years, allowing us to continuously refine our underwriting standards and integrate best practices and proprietary insights into our own investment framework.

Speaker #3: Over the years, our software investment strategies remain intentionally centered on mission-critical systems of record software, and highly specialized vertical software businesses that serve deeply embedded and essential functions within their respective markets.

Michael Ewald: Over the years, our software investment strategies remain intentionally centered on mission-critical systems of record software and highly specialized vertical software businesses that serve deeply embedded and essential functions within their respective markets. During Q1, we conducted a comprehensive risk reassessment to evaluate the potential substitution risks that emerging AI technologies may pose across our portfolio companies. Based on this analysis, the majority of our software investments carry a relatively low risk of AI-driven disruption, reflecting the differentiated nature and resilience of these businesses, as well as our disciplined approach, investment approach and framework when we first evaluated these companies. Importantly, our software portfolio companies continue to exhibit strong underlying credit fundamentals, supported by healthy operational performance and consistent earnings growth since the time of underwriting.

Speaker #3: During the first quarter, we conducted a comprehensive risk reassessment to evaluate the potential substitution risks that emerging AI technologies may pose across our portfolio companies.

Speaker #3: Based on this analysis, the majority of our software investments carry a relatively low risk of AI-driven disruption, reflecting the differentiated nature and resilience of these businesses as well as our disciplined approach.

Speaker #3: Investment approach and framework when we first evaluated these companies. Importantly, our software portfolio companies continue to exhibit strong underlying credit fundamentals, supported by healthy operational performance and consistent earnings growth since the time of underwriting.

Speaker #3: As of quarter end, median LTV in that segment is approximately 37%, when adjusted for current enterprise value multiples. In addition, these borrowers maintain solid interest coverage levels of approximately 2.0 times.

Michael Ewald: As of quarter-end, median LTV in that segment is approximately 37% when adjusted for current enterprise value multiples, and these borrowers maintain solid interest coverage levels of approximately 2.0x. Looking ahead, we believe BCSF remains well-positioned to navigate the current market environment. Our portfolio continues to demonstrate solid underlying health and is supported by a well-diversified liability structure, strengthened by the issuance of unsecured debt earlier this year to proactively address our near-term 2026 maturity. While we ended the quarter at the upper end of our target net leverage range of between 1.0x and 1.25x, we believe we remain in a position to capitalize on attractive investment opportunities as the portfolio continues to generate healthy levels of repayment activity.

Speaker #3: Looking ahead, we believe BCSF remains well-positioned to navigate the current market environment. Our portfolio continues to demonstrate solid underlying health and is supported by a well-diversified liability structure, strengthened by the issuance of unsecured debt earlier this year to proactively address our near-term 2026 maturity.

Speaker #3: While we ended the quarter at the upper end of our target net leverage range of between 1.0 and 1.25 times, we believe we remain in a position to capitalize on attractive investment opportunities as the portfolio continues to generate healthy levels of repayment activity.

Speaker #3: Against this backdrop, we believe BCSF's regular dividend of 42 cents per share can be maintained in the current environment. However, at the same time, we will continue to thoughtfully evaluate our dividend policy alongside our board on a quarterly basis.

Michael Ewald: Against this backdrop, we believe BCSF's regular dividend of $0.42 per share can be maintained in the current environment. At the same time, we will continue to thoughtfully evaluate our dividend policy alongside our board on a quarterly basis, consistent with our disciplined approach to capital management and long-term shareholder value creation. I will now turn the call over to Michael Boyle, our President, to walk through our investment portfolio in greater detail. Mike.

Speaker #3: Consistent with our disciplined approach to capital management and long-term shareholder value creation. I will now turn the call over to Mike Boyle, our president, to walk through our investment portfolio in greater detail.

Speaker #3: Mike.

Speaker #4: Thanks, Mike, and good morning, everyone. I'll start with our investment activity for the first quarter and then provide an updated, more detailed on our portfolio.

Michael Boyle: Thanks, Mike. Good morning, everyone. I'll start with our investment activity for Q1, then provide an update in more detail on our portfolio. New fundings during Q1 were $243 million into 107 portfolio companies, including $124 million in 13 new companies, $111 million in 93 existing companies, and $9 million into the Senior Loan Program, or SLP. Sales and repayment activity totaled approximately $255 million, resulting in net sales and repayments of $12.2 million quarter-over-quarter. Our new investment fundings were split between new and existing portfolio companies, with new fundings representing 51% of total versus 49% of fundings made to existing companies.

Speaker #4: New fundings during the first quarter were 243 million dollars into 107 portfolio companies, including 124 million dollars in 13 new companies and 111 million dollars in 93 existing companies and 9 million dollars into the senior loan program, or SLP.

Speaker #4: Sales and repayment activity totaled approximately 255 million dollars, resulting in net sales and repayments of 12.2 million dollars quarter over quarter. Our new investment fundings were split between new and existing portfolio companies.

Speaker #4: With new fundings representing 51% of total, versus 49% of fundings made to existing companies. This quarter, we remain focused on investing in First Lean, Senior Secured Loans, with 93% of our new fundings within First Lean structures, 4% into investment vehicles, 2% in prep and common equity, and 1% into subordinated debt.

Michael Boyle: This quarter, we remain focused on investing in first lien senior secured loans, with 93% of our new fundings within first lien structures, 4% into investment vehicles, 2% in pref and common equity, and 1% into subordinated debt. New investment activity for the quarter continued to benefit from Bain Capital's deep industry expertise and long-standing sponsor relationships. We remain focused on investing in defensive sectors such as food and beverage, business services, and healthcare, where we believe companies are best positioned to demonstrate resilience across varying economic environments. We also continue to favor core middle market-sized companies, a segment that we believe offers attractive terms and structure combined with a large market opportunity of high-quality borrowers, consistent deal flow, and more favorable competitive dynamics relative to other market segments.

Speaker #4: New investment activity for the quarter continued to benefit from Bain Capital's deep industry expertise and longstanding sponsor relationships. We remain focused on investing in defensive sectors such as food and beverage, business services, and healthcare, where we believe companies are best positioned to demonstrate resilience across varying economic environments.

Speaker #4: We also continue to favor core middle-market-sized companies, a segment that we believe offers attractive terms and structure combined with a large market opportunity of high-quality borrowers, consistent deal flow, and more favorable competitive dynamics relative to other market segments.

Speaker #4: Reflecting this focus, the median EBITDA across our new companies added to the portfolio during the quarter was 41 million dollars. Sales and repayment activity remained healthy during the quarter, driven by a combination of full realizations and repayments as well as partial sales and repayment activity.

Michael Boyle: Reflecting this focus, the median EBITDA across our new companies added to the portfolio during the quarter was $41 million. Sales and repayment activity remained healthy during the quarter, driven by a combination of full realizations and repayments, as well as partial sales and repayment activity. Turning now to the investment portfolio specifically. At the end of Q1, the size of the portfolio at fair value was $2.5 billion across a highly diversified set of 212 portfolio companies operating across 30 different industries. The average position size across single names in our portfolio was approximately 40 basis points. Our portfolio primarily consists of first lien investments, given our focus on downside management and investing in the top of capital structures.

Speaker #4: Turning now to the investment portfolio specifically, at the end of the first quarter, the size of the portfolio at fair value was 2.5 billion dollars, across a highly diversified set of 212 portfolio companies operating across 30 different industries.

Speaker #4: The average position size across single names in our portfolio was approximately 40 basis points. Our portfolio primarily consists of First Lean investments. Given our focus on downside management and investing in the top of capital structures, as of March 31st, 66% of the investment portfolio at fair value was in First Lean debt.

Michael Boyle: As of 31 March, 66% of the investment portfolio at fair value was in first lien debt, 1.2% in second lien debt, 3% in subordinated debt, 6.7% in preferred equity, 6.8% in common equity and other interests, with 16% across our joint ventures, including 9% in the International Senior Loan Program and 7% in the Senior Loan Program. In both of which the vast majority of underlying investments are first lien loans. As of 31 March 2026, the weighted average yield on the portfolio at amortized cost and fair value was 10.8% and 10.9% respectively, consistent with 31 December 2025. As of 31 March 2026, approximately 93% of our debt investments bear interest at a floating rate. Moving on to portfolio credit quality trends.

Speaker #4: 1.2% in second Lean debt, 3% in subordinated debt, 6.7% in preferred equity, 6.8% in common equity and other interests, with 16% across our joint ventures.

Speaker #4: Including 9% in the International Senior Loan Program and 7% in the Senior Loan Program. Both of which, the vast majority of underlying investments are first lien loans.

Speaker #4: As of March 31st, 2026, the weighted average yield on the portfolio at amortized cost and fair value was 10.8% and 10.9%, respectively. Consistent with December 31, 2025.

Speaker #4: As of March 31st, 2026, approximately 93% of our debt investments bear interest at a floating rate. Moving on to portfolio credit quality trends. Fundamentals across the companies remain solid during the quarter, continuing to reflect the resilience and quality of our portfolio construction.

Michael Boyle: Fundamentals across the companies remained solid during the quarter, continuing to reflect the resilience and quality of our portfolio construction. Median net leverage across our borrowers was 4.6x EBITDA, representing a modest improvement from the prior quarter, and median interest coverage remained healthy at 2.1x across our borrowers. Watch list investments represented approximately 5% of the portfolio at fair value, in line with recent quarters. Importantly, the composition of these names has remained stable, we have not observed a meaningful migration of new borrowers onto our watch list. Rather, the category continues to be concentrated within a limited number of idiosyncratic situations versus broad-based credit deterioration.

Speaker #4: Median net leverage across our borrowers was 4.6 times EBITDA, representing a modest improvement from the prior quarter, and median interest coverage remained healthy at 2.1 times across our borrowers.

Speaker #4: Watchlist investments represented approximately 5% of the portfolio at fair value, in line with recent quarters. Importantly, the composition of these names has remained stable, and we have not observed a meaningful migration of new borrowers onto our watchlist.

Speaker #4: Rather, the category continues to be concentrated within a limited number of idiosyncratic situations versus broad-based credit deterioration. In addition, our exposure to these investments remained primarily positioned in First Lean loans, providing us with what we believe to be favorable positions within each capital structure, with greater potential for downside protection.

Michael Boyle: In addition, our exposure to these investments remained primarily positioned in first lien loans, providing us with what we believe to be favorable positions within each capital structure with greater potential for downside protection. Non-accrual levels remained low across our portfolio as of quarter end, representing 1.4% at amortized costs and 0.6% at fair value. This reflected a modest improvement from the prior quarter's level of 1.6% and 0.8% respectively. Notably, no new companies were added to non-accrual during the quarter. Taking all of this together, the health and credit quality of our portfolio remains on solid footing. Amit will now provide a more detailed financial review.

Speaker #4: Not a cruel levels remained low across our portfolio as of quarter-end, representing 1.4% at amortized costs and 0.6% at fair value. This reflected a modest improvement from the prior quarter's level of 1.6 and 0.8%, respectively.

Speaker #4: And notably, no new companies were added to non-accrual during the quarter. Taking all of this together, the health and credit quality of our portfolio remains unsolid footing.

Speaker #4: Amit will now provide a more detailed financial review.

Speaker #5: Thank you, Mike, and good morning, everyone. I'll start the review of our first quarter results with our income statement. Total investment income was 66.2 million for the three months ended March 31, 2026, as compared to 68.2 million for the three months ended December 31, 2025.

Amit Joshi: Thank you, Mike. Good morning, everyone. I'll start the review of our Q1 results with our income statement. Total investment income was $66.2 million for the 3 months ended 31 March 2026, as compared to $68.2 million for the 3 months ended 31 December 2025. The decrease in investment income was primarily driven by decrease in effective yield on the existing debt investments, which reduced interest income. The quality of our investment income continues to be high, as vast majority of our investment income is driven by contractual cash income across our investments. Interest income and dividend income represented 98% of our total investment income in Q1. PIK interest income represented approximately 13% of our overall investment income in Q1.

Speaker #5: The decrease in investment income was primarily driven by decrease in effective yield on the existing debt investments which reduced interest income. The quality of our investment income continues to be high, as vast majority of our investment income is driven by contractual cash income across our investments.

Speaker #5: Interest income and dividend income represented 98% of our total investment income in Q1. Pick interest income represented approximately 13% of our overall investment income in Q1.

Speaker #5: Notably, the vast majority of our pick income is derived from investments that were underwritten with PIC, totaling 81% of our total PIC income. Only a small portion of our PIC income is related to amended or restructured investment.

Amit Joshi: Notably, the vast majority of our PIK income is derived from investments that were underwritten with PIK, totaling 81% of our total PIK income. Only a small portion of our PIK income is related to amended or restructured investments. Total expenses before taxes for Q1 was $37.9 million, as compared to $37.7 million in Q4. The increase in expenses was driven by higher interest and debt fee expenses, driven by the issuance of March 2031 note for $350 million in January, partially offset by lower management and incentive fee. Net investment income for the quarter was $27.4 million or $0.42 per share as compared to $29.7 million or $0.46 per share for the prior quarter.

Speaker #5: Total expenses before taxes for the first quarter was 37.9 million as compared to 37.7 million in the fourth quarter. The increase in expenses was driven by higher interest and debt fee expenses, driven by the issuance of March 2031 note for 350 million in January.

Speaker #5: Partially offset by lower management and incentive fee. Net investment income for the quarter was 27.4 million, or 42 cents per share, as compared to 29.7 million, or 46 cents per share for the prior quarter.

Speaker #5: During the three months ended March 31, 2026, the company had net realized and unrealized losses of $24 million, or $0.37 per share.

Amit Joshi: During the 3 months ended 31 March 2026, the company had a net realized and unrealized losses of $24 million or $0.37 per share. As Mike highlighted earlier, our net losses were largely attributed to idiosyncratic credit weakness within a limited number of our portfolio company, in addition to broader market-related mark-to-market adjustments. Net income for the 3 month ended 31 March 2026 was $3.4 million or $0.05 per share. Moving over to our balance sheet. As of 31 March, our investment portfolio at fair value totaled $2.5 billion and total assets of $2.6 billion. Total net assets were $1.1 billion as of 31 March 2026.

Speaker #5: As Mike highlighted earlier, our net losses were largely attributed to idiosyncratic credit weakness within a limited number of our portfolio companies. In addition to broader market-related mark-to-market adjustments.

Speaker #5: Net income for the three months ended March 31, 2026 was 3.4 million, or 5 cents per share. Moving over to our balance sheet, as of March 31, our investment portfolio at fair value totaled 2.5 billion and total assets of 2.6 billion.

Speaker #5: Total net assets were 1.1 billion as of March 31, 2026. NAV per share was $16.86, a decrease of 37 cents per share from $17.23 at the end of fourth quarter.

Amit Joshi: NAV per share was $16.86, a decrease of $0.37 per share from $17.23 at the end of Q4, driven by net losses of $0.37 per share. As of 31 March, approximately 80% of our outstanding debt consisted of floating rate debt, with the remaining 20% comprised of fixed rate debt. Our approach to liability management continues to reflect a disciplined and proactive strategy. Through a successful execution of unsecured debt issuance during Q1, we were able to effectively pre-fund and address upcoming 2026 maturities, while simultaneously extending the duration of our debt profile and enhancing overall financial flexibility. For the three month ended 31 March 2026, the weighted average interest rate on our debt outstanding was 4.6%, consistent with the prior quarter.

Speaker #5: Driven by net losses of 37 cents per share. As of March 31, approximately 80% of our outstanding debt consisted of floating rate debt, with the remaining 20% comprised of fixed rate debt.

Speaker #5: Our approach to liability management continues to reflect a disciplined and proactive strategy. Through a successful execution of unsecured debt issuance during the first quarter, we were able to effectively pre-fund and address upcoming 2026 maturities.

Speaker #5: While simultaneously extending the duration of our debt profile and enhancing overall financial flexibility. For the three months ended March 31, 2026, the weighted average interest rate on our debt outstanding was 4.6%, consistent with the prior quarter.

Speaker #5: The weighted average maturity across our total debt commitment was approximately 4.1 year at March 31, 2026. At the end of Q1, our debt-to-equity ratio was 1.34 times, as compared to 1.32 times from the end of Q4.

Amit Joshi: The weighted average maturity across our total debt commitment was approximately 4.1 year at 31 March 2026. At the end of Q1, our debt-to-equity ratio was 1.34 times as compared to 1.32 times from the end of Q4. Our net leverage ratio, which represent principal debt outstanding less cash and unsettled trades, was 1.28 times at the end of Q1 as compared to 1.24 times at the end of Q4. Liquidity at quarter end was strong, totaling $7,729 million, including $660 million of undrawn capacity on our revolver credit facility, $34.2 million of cash and cash equivalent, including $17.6 million of restricted cash and $34.6 million of unsettled trade net of receivables and payables of investments.

Speaker #5: Our net leverage ratio, which represents principal debt outstanding less cash and unsettled trades, was 1.28 times at the end of Q1, as compared to 1.24 times at the end of Q4.

Speaker #5: Liquidity at quarter-end was strong, totaling $729 million including $660 million of undrawn capacity on our revolver credit facility, $34.2 million of cash and cash equivalent including $17.6 million of restricted cash, and $34.6 million of unsettled trade net of receivables and payables of investments.

Speaker #5: With that, I'll turn the call back over to Mike Ewald for closing remarks.

Amit Joshi: With that, I'll turn the call back over to Michael Ewald for closing remarks.

Speaker #6: Thanks, Amit. In closing, we were pleased with the continued execution of our investment strategy on behalf of our shareholders during the first quarter. Our portfolio continued to generate attractive levels of investment income.

Michael Ewald: Thanks, Amit. In closing, we are pleased with the continued execution of our investment strategy on behalf of our shareholders during Q1. Our portfolio continued to generate attractive levels of investment income while credit quality across our middle market borrowers remained stable. We believe the company remains well-positioned to capitalize on compelling new investment opportunities in the current market. We remain committed to delivering value for our shareholders through disciplined portfolio and liability management and producing attractive returns on equity. Thank you for the privilege of managing our shareholders' capital. With that, Jamie, please open the line for questions. Thanks.

Speaker #6: While credit quality across our middle market borrowers remained stable. We believe the company remains well positioned to capitalize on compelling new investment opportunities in the current market.

Speaker #6: We remain committed to delivering value for our shareholders through disciplined portfolio and liability management and producing attractive returns on equity. And thank you for the privilege of managing our shareholders' capital.

Speaker #6: With that, Jamie, please open the line for questions. Thanks.

Speaker #7: Thank you. At this time, if you would like to ask a question, please press star one on your keypad. You may remove yourself from the queue at any time by pressing star two.

Operator: Thank you. We'll take our first question from Paul Johnson with KBW. Please go ahead.

Speaker #7: Once again, that is star one to signal for a question, and star two to remove yourself from the queue. We will pause for just a moment to allow questions to assemble.

Speaker #7: We'll take our first question from Paul Johnson with KBW. Please go ahead.

Speaker #8: Thanks. Good morning. Thanks for taking my questions. So, I mean, earnings were in line with the dividend this quarter and, as you mentioned, you evaluate the dividend each quarter.

Paul Johnson: Thanks. Good morning, thanks for taking my questions. I mean, earnings were in line with the dividend this quarter, and as you mentioned, you evaluate the dividend each quarter. I would imagine, you're taking a close look at that now. I'm just curious, though, I mean, as you approach those discussions is, you know, you have generally generated a higher operating ROE than in this space in general, for a few reasons. I'm wondering, is that still sort of the goal in mind going forward? You know, if so, I guess how much is under evaluation here in terms of, you know, not just the dividend level, but the fee structure and those sorts of things to continue to generate an above market ROE.

Speaker #8: I would imagine you're taking a close look at that now. I'm just curious, though. I mean, as you approach those discussions, is you have generally generated a higher operating ROE than this space in general, for a few reasons.

Speaker #8: And I'm wondering, is that still sort of the goal in mind going forward? And if so, I guess, how much is under evaluation here in terms of not just the dividend level, but the fee structure and those sorts of things to continue to generate an above market ROE?

Michael Ewald: Thanks, Paul. Look, on the dividend front, I mean, it is a continuous evaluation, right? Base rates certainly drive a fair amount of that discussion. They were on a somewhat downward trajectory there for a while. They have held here at a kind of intermediate level based on inflation forecasts, everything else. I'm guessing they'll probably stick around here for a while. That is certainly one driver of our decision regarding dividends. You know, clearly earnings from JVs, things like that are also going to be impactful there. As I said in my remarks, as we look at it, as we sit here today, we certainly feel comfortable with that $0.42 dividend for Q2.

Speaker #6: Thanks, Paul. Look, on the dividend front, I mean, it is a continuous evaluation, right? And base rates certainly drive a fair amount of that discussion.

Speaker #6: They were on a somewhat downward trajectory there for a while. They have held here at a kind of intermediate level based on inflation forecasts, everything else.

Speaker #6: I'm guessing they'll probably stick around here for a while. So that is certainly one driver of our decision regarding dividends. Clearly, earnings from JVs, things like that, are also going to be impactful there.

Speaker #6: As I said in my remarks, the as we look at it, as we sit here today, we certainly feel comfortable with that 42 cent dividend for Q2.

Speaker #6: And then we'll continue to evaluate that going forward. Regarding our ROEs, I wasn't sure which way you're going with that. If we have good ROEs, are you suggesting that maybe we even increase fees?

Michael Ewald: We'll continue to evaluate that going forward. Regarding our ROEs, I wasn't sure which way you're going with that. If we have good ROEs, are you suggesting that maybe we need to increase fees? Wasn't quite sure what you meant there. Look, it's certainly something where we continue to ensure that we're competitive with other BDCs out there, both in terms of our return levels, our consistency of dividend, and then take into account, you know, what other folks are doing on pricing and how they're performing as well. It is a continuous evaluation and discussion with our board.

Speaker #6: I wasn't quite sure what you meant there. But look, it's certainly something where we continue to ensure that we're competitive with other BDCs out there.

Speaker #6: Both in terms of our return levels are consistency of dividend. And then taking into account what other folks are doing on pricing and how they're performing as well.

Speaker #6: So it is a continuous evaluation and discussion with our board.

Speaker #8: Got it. Appreciate it. That's helpful. And then just, I guess, in terms of the spread widening and your ability, I guess, to kind of capture a new vintage going forward here, with investment activity, with leverage is where it is, where it is.

Paul Johnson: Got it. Appreciate it. That's helpful. Then just I guess in terms of, you know, the spread widening and, you know, your ability, I guess, to kind of capture, you know, a new vintage going forward here with investment activity. You know, with leverage is where it is at 1.3 times. How do you think, you know, you're able to, I guess, capitalize on that if you do see meaningfully, you know, increased activity, you know, at better terms? You know, do you have, I guess, better line of sight on, you know, repayments that you would expect over the course of the year? Or is there still capacity within some of the JVs to take on some of that activity?

Speaker #8: At 1.3 times, how are you do you think you're able to, I guess, capitalize on that if you do see meaningfully increased activity at better terms?

Speaker #8: Is it do you have, I guess, better line of sight on repayments that you would expect over the course of the year or you're still capacity within some of the JVs to take on some of that activity?

Speaker #8: Just that'd be great to hear. Thanks.

Paul Johnson: Just, that'd be great to hear. Thanks.

Speaker #6: Yeah. Look, you really touched on two of the big drivers there, right? One is repayments, which are somewhat notoriously difficult to forecast. We'll get a heads up a week before we're getting repayment.

Michael Ewald: Yeah. Look, you really touched on two of the big drivers there, right? One is repayments, which are somewhat notoriously difficult to forecast. You will get a heads up 1 week before we're getting a repayment. Always difficult to tell what that schedule is going to look like, and we continuously get those. We certainly benefited from some of those in the Q1, so we're able to rotate out some investments there. The second point you mentioned too is those JVs where there still is additional capacity and, you know, potentially, the ability to add some more over time as well.

Speaker #6: So I'm always difficult to tell what that schedule is going to look like. And we continuously get those. We certainly benefited from some of those in the first quarter so we're able to rotate out some investments there.

Speaker #6: And then the second point you mentioned too is those JVs where there still is additional capacity and potentially the ability to add some more over time as well.

Speaker #6: So you'll notice that some of our 'repayments' were actually sales down to those JVs. So there continues to be an opportunity to grow those as well.

Michael Ewald: You'll notice that some of our, quote-unquote, repayments were actually sales down to those JVs. There continues to be an opportunity to grow those as well.

Speaker #8: Appreciate it. That's all from me. Thanks.

Paul Johnson: Appreciate it. That's all for me. Thanks.

Speaker #6: Thanks, Paul.

Michael Ewald: Thanks, Paul.

Speaker #7: Once again, ladies and gentlemen, that is star one if you would like to signal for a question. We'll hear next from Derek Hewitt with Bank of America.

Operator: Once again, ladies and gentlemen, that is star one if you would like to signal for a question. We will hear next from Derek Hewett with Bank of America. Please go ahead.

Speaker #7: Please go ahead.

Speaker #9: Good morning, everyone. So it appears that GAIL Aviation drove most of the unrealized loss this quarter. So what was the change in the investment thesis that caused the loss and then for you to exit the investment?

Derek Hewett: Good morning, everyone. It appears that Gale Aviation drove most of the unrealized loss this quarter. What was the change in the investment thesis that caused the loss and then for you to exit the investment?

Speaker #10: Overall, we exited the investment during the quarter. So it was more based on realization. As you can appreciate, there were approximately five planes which, as you have highlighted in the past, we have been trying to liquidate that investment.

Michael Ewald: Overall, we exited the investment during the quarter, so it was more based on realization. We, as you can appreciate, there were approximately 5 planes which, as we have highlighted in the past, we have been trying to liquidate.

Amit Joshi: Overall, we exited the investment during the quarter, so it was more based on realization. We, as you can appreciate, there were approximately 5 planes which, as we have highlighted in the past, we have been trying to liquidate.

Amit Joshi: That investment. As we were ironing things out, we have been revisiting based on our projection, the fair valuation. I think based on compared to prior mark, it came very close to that, and we exited the investment during that quarter. Again, as we have highlighted in the past, aviation is a sector overall we do look at it. That's an area where we have teams which are focused on it. Depending on how we look at it from a long-term perspective, we, for this portfolio, we wanted to exit out of that investment, and that's what happened during Q1.

Speaker #10: And as we were ironing things out, we have been revisiting based on our projection the fair valuation. So I think based on compared to prior mark, it came very close to that.

Speaker #10: And we exited the investment during the quarter. Again, as we have highlighted in the past, aviation is a sector. Overall, we do look at it.

Speaker #10: That's an area where we have teams which are focused on it. So depending on how we look at it from a long-term perspective, for this portfolio, we wanted to exit out of that investment.

Speaker #10: And that's what happened during Cuba.

Speaker #9: Okay.

Derek Hewett: Okay.

Speaker #8: And I'll just add, if you think about on the look, there's a number of asset-backed opportunities that we've always got going on in the background.

Michael Ewald: Yeah. I would just add, if you think about, you know, there's a number of asset-backed opportunities that we've always got going on in the background. Aviation's certainly one of those. You know, the trade around leasing to airlines and planes has got a little more saturated. You know, the opportunity set isn't quite as attractive there as it was when we first got into it several years ago. We made the decision to exit that. As Amit mentioned, you know, we still have a pretty strong positive view around aerospace and defense in general and continue to actively invest there. Also opportunistically, we're looking, you know, at some other asset-backed plays as well.

Speaker #8: Aviation is certainly one of those. The trade around leasing to airlines and planes has gotten a little bit more saturated. So the opportunity set isn't quite as attractive there as it was when we first got into it several years ago.

Speaker #8: So we made the decision to exit that. But as Amit mentioned, we still have a pretty strong positive view around aerospace and defense in general and continue to actively invest there.

Speaker #8: And also opportunistically, we're looking at some other asset-backed plays as well.

Speaker #9: Okay. Thank you for that. And then of the 27 cents of unrealized losses, during the quarter, what percentage of that was just due to just your general kind of spread widening?

Derek Hewett: Okay. Thank you for that. Of the $0.27 of unrealized losses, during the quarter, like what % of that was just due to your general kind of spread widening? What was just due to kind of specific credit issues?

Speaker #9: And then what was just what was due to kind of specific credit issues?

Speaker #6: Yeah. Look, it's a little tougher to parse that out and be too exact there. If you have a company that misses its budget, but it's up 10% over last year, and there's a slight markdown there, is that because it missed budget?

Michael Ewald: Yeah, look, it's a little tougher to parse that out and be too exact there. You know, if you have a company that misses its budget, but it's up 10% over last year, you know, and there's a slight mark down there. Is that because it missed budget? It's still up over last year. Is that 'cause of spread widening? There's a whole bunch of little puts and takes across the portfolio. What I would say is the majority of it was limited to companies on non-accrual, which tend to bop around a little bit.

Speaker #6: It's still up over last year. Is that because of spread widening? So there's a whole bunch of little puts and takes across the portfolio.

Speaker #6: But what I would say is the majority of it was limited to companies on non-accrual, which tend to bop around a little bit. We actually had a we actually had an increase in one of our non-accrual names this quarter as well.

Derek Hewett: Okay.

Michael Ewald: We actually had an increase in one of our non-accrual names this quarter as well. There's always gonna be a little bit of noise in that bucket as well as that spread widening piece.

Speaker #6: So there's always going to be a little bit of noise in that bucket. As well as that spread widening piece.

Speaker #9: Okay. Great. And then lastly for me, what are the puts and takes of executing on your buyback? I believe it's roughly $50 million which would be accretive kind of based on where the stock is trading today versus kind of a new originations just given the more investor-friendly environment where you can get spreads of, I believe you said 25 to 50 basis points higher than what you were previously receiving.

Derek Hewett: Okay. Great. Then lastly for me, like what are the puts and takes of executing on your buyback? I believe it's roughly $50 million, which would be accretive kind of based on where the stock is trading today versus kind of new originations, just given the more investor-friendly environment where you can get like spreads of, I believe you said 25 to 50 basis points higher, than what you were previously receiving.

Speaker #6: Yeah. Look, that's certainly another item of debate that we engage in with our board at our quarterly meetings and even between those quarterly meetings as well.

Michael Ewald: Look, that's certainly another item of debate that we engage in with our board at our quarterly meetings and even between those quarterly meetings as well. We're constantly evaluating the math around, you know, a potential bit of a short-term boost from buybacks versus being able to reinvest some of that capital in an existing attractive market. And, you know, there's also just the added the added governor of, you know, operating closer to the top, you know, end of our of our leverage range. Those are all considerations that we do take into account. To date, we haven't executed on that, but it certainly is an open topic.

Speaker #6: We're constantly evaluating the math around the potential bit of a short-term boost from buybacks versus being able to reinvest some of that capital in existing attractive markets.

Speaker #6: And there's also just the added governor of operating closer to the top end of our leverage range. So those are all considerations that we do take into account.

Speaker #6: To date, we haven't executed on that, but it certainly is an open topic.

Speaker #9: That's all from me. Thank you.

Derek Hewett: That's all for me. Thank you.

Speaker #7: Thank you.

Operator: Thank you.

Speaker #6: Oh, sorry. Derek, the other sorry, the other point on the stock buyback too is just it's not the most liquid stock, as you can probably appreciate as well.

Michael Ewald: Oh, sorry.

Operator: We'll return now.

Michael Ewald: Derek, the other point on the stock buyback too is just, it's not the most liquid stock, as you can probably appreciate as well. You know, that can make stock buybacks a little bit difficult too.

Speaker #6: So that can make stock buybacks a little bit difficult too.

Speaker #9: Yeah. Understood.

Derek Hewett: Yeah. Understood.

Speaker #7: We'll return now to Paul Johnson with KBW. Please go ahead.

Operator: We'll return now to Paul Johnson with KBW. Please go ahead.

Speaker #8: Yeah. Thanks. Just one more follow-up. Thanks for taking me. I was wondering if I could ask just what a specific credit, if you don't mind.

Paul Johnson: Yeah, thanks. Just one more follow-up. Thanks for taking me. I was wondering if I could ask just about a specific credit, if you don't mind. I noticed its maturity was pushed back from last quarter, and there's several other lenders in the loan, and I'm not sure if you're in a position of, you know, control or not. I noticed your mark was lower than a few of your peers. Premier Imaging, I was just wondering if you could provide any sort of color on what the situation is there. I guess if, you know, the sponsor has been supportive of the company.

Speaker #8: I noticed that the maturity was pushed back from last quarter, and there are several other lenders in the loan. I'm not sure if you're in a position of control or not.

Speaker #8: But I noticed your mark was lower than a few of your peers. But Premier Imaging I was wondering if you could provide any sort of color on what the situation is there.

Speaker #8: I guess if the sponsor if it's supportive of the company, but then as well as just more broadly with kind of all the volatility that we've had, I guess, in the software technology market, has that impacted the M&A?

Paul Johnson: You know, as well as just more broadly, you know, with kind of all the volatility that we've had, I guess, in the software, you know, technology market, has that impacted the M&A, I guess, environment, you know, within the healthcare sector at all? If that was also obviously has been a challenged sector for the last several years.

Speaker #8: I guess, environment within the healthcare sector at all, if that was also obviously has been a challenged sector for the last several years?

Speaker #9: So I'd say we have not on the healthcare side to start. We really have not seen any meaningful degradation in the exposures we have to that space.

Michael Boyle: We have not on the healthcare side to start, we really have not seen any meaningful degradation in the exposures we have to that space. Part of that's because we've been much more active in recent vintages. Think 2023 and 2024 deals in healthcare when we felt like many of the issues, particularly around roll-ups, were already exposed in the market. It allowed us to lend into companies at lower leverage points with lower adjustments. We've continued to see the health of that portfolio be reasonably strong. On your specific name question about a name, it's one that we're actually a fairly small holder of the tranche.

Speaker #9: And part of that's because we've been much more active in recent vintages. So I think 2023 and 2024 deals. In healthcare, when we felt like many of the issues, particularly around roll-ups, were already exposed in the market.

Speaker #9: And so it allowed us to lend into companies at lower leverage points with lower adjustments. So we've continued to see the health of that portfolio be reasonably strong.

Speaker #9: And then on your specific name, question about a name, it's one that we're actually a fairly small holder of the tranche. And so we do work with our third parties to evaluate the mark that we're using as we do with all the other assets in the portfolio.

Michael Boyle: We do work with our third parties to evaluate the mark that we're using as we do with all the other assets in the portfolio. This is one that we are not in a control position, and so that could be a component reflected in our valuation versus some peers that might have more of a control stake.

Speaker #9: But this is one that we are not in a controlled position. And so that could be a component reflected in our valuation versus some peers that might have more of a controlled stake.

Speaker #8: Got it. Thank you. It's all from me.

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

Speaker #9: Sure. Thank you.

Michael Boyle: Sure. Thank you.

Speaker #7: And with no further questions in queue at this time, I'd like to turn the floor back over to Michael Ewald for any additional or closing comments.

Operator: With no further questions in queue at this time, I'd like to turn the floor back over to Michael Ewald for any additional or closing comments.

Speaker #6: Thanks, Jamie, for all your help today. And thanks again for everyone's time and attention on the call. We're happy to report first quarter results here and look forward to speaking with you all again soon.

Michael Ewald: Thanks, Jamie, for all your help today. Thanks again for everyone's time and attention on the call. We're happy to report Q1 results here and look forward to speaking with you all again soon. Have a great day. Thanks.

Speaker #6: Have a great day. Thanks.

Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.