Financial Data and Key Metrics Changes - For the quarter ended March 31, 2024, net investment income was 0.14 per share, an increase of approximately 32% from the previous quarter's net investment income of 0.11 per share [23][28] - Net asset value per share increased approximately 0.2% to 5.48 per share at the end of the prior quarter, driven by an increase in capital gains [23][28] - The fair value of the portfolio was 207.4 million on December 31, 2023 [28] Business Line Data and Key Metrics Changes - The weighted average yield of the debt portfolio increased to 12.36% compared to 11.46% for the quarter ended December 31, 2023 [28] - Fundings for new investments totaled approximately 21.2 million in proceeds with an IRR of approximately 17.09% [25][26] Market Data and Key Metrics Changes - Sponsored middle market direct lending new money volume in the quarter ending March 31, 2024, was down almost 10% from the quarter ended December 31, 2023 [25] - The weighted average EBITDA of the portfolio increased from 63.5 million this quarter [25] Company Strategy and Development Direction - The company is focused on capital preservation and maintaining a stable dividend while rotating and diversifying the portfolio into more stable credits [29] - The strategy includes investing in larger credits backed by known sponsors and managing watch list names diligently [25][29] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the pipeline and capacity to invest capital in high-quality opportunities despite a competitive market with tightening spreads [24][29] - The company is actively working on nonaccrual situations and believes the overall health of the portfolio remains strong [19][20] Other Important Information - The company covered its March quarterly dividend with net investment income and expects to earn its dividend through the next quarter end [24] - Gross leverage was 1.52 times and net leverage was 1.36 times as of March 31, 2024, compared to 1.70 times gross and 1.51 times net for the previous quarter [28] Q&A Session Summary Question: What was the driver for the change in the yields on the portfolio? - Management indicated that the change was largely due to market conditions, with spreads tightening and a lack of deal flow in the marketplace [14] Question: Any update on Klein Hersh, one of the larger nonaccruals? - Management stated that discussions are ongoing and they believe they are in a good place, with more information to be shared once restructuring is finalized [15] Question: Will earnings cover the base dividend or the entire base and supplemental? - Management confirmed that earnings are expected to cover the base dividend, but not necessarily the supplemental at this point [16] Question: Thoughts on refinancing the 2026 notes with a higher coupon? - Management is developing a strategy around the refinancing and has been reducing net leverage over time [17] Question: Resolution time frame for other nonaccruals and overall health of the credit portfolio? - Management expressed satisfaction with the overall health of the portfolio and indicated that there are no imminent issues, although a couple of situations are developing [18][19]
Investcorp Credit Management BDC(ICMB) - 2024 Q3 - Earnings Call Transcript