Fidus Investment Corporation Q3 FY2025 earnings call

• The third - quarter debt portfolio performed well, generating adjusted NII well exceeding the base dividend. • Per - share adjusted NII was $0.50 in Q3 2025, covering the base dividend of $0.43 with a cushion. Total dividends paid were $0.57 per share. • The fourth - quarter dividend was declared as $0.50 per share. • Net asset value grew by 2.7% to $711 million at quarter end. • Originations included $69.7 million in first lien securities and $4.7 million in equity investments. • Proceeds from repayments and realizations totaled $36.7 million. • The portfolio grew to $1.2 billion on a fair value basis. • First lien investments made up 82% of the debt portfolio; the equity portfolio was $143.4 million. • Portfolio credit quality was sound, with less than 1% of the portfolio on nonaccrual at fair value.

For the third quarter, Fidus' debt portfolio performed well. First lien investments made up 82% of the debt portfolio, and the equity portfolio stood at $143.4 million, accounting for 12% of the total portfolio at quarter end. The total investment portfolio had a fair value of $1.2 billion as of September 30. Originations in the third quarter consisted of $69.7 million in first lien securities and $4.7 million in equity investments, totaling $74.5 million. Proceeds from repayments and realizations amounted to $36.7 million. Net originations were $37.8 million, and the portfolio grew to $1.2 billion on a fair value basis. The weighted average effective yield on debt investments was 13% as of September 30.

• The Board declared a total dividend of $0.50 per share for the fourth quarter of 2025, which consists of a base dividend of $0.43 per share and a supplemental dividend of $0.07 per share. • This reflects 100% of the surplus in adjusted NII over the base dividend from the prior quarter. • It will be payable on December 29, 2025, to stockholders of record as of December 19, 2025. • Market activity is expected to be relatively decent in the fourth quarter, and efforts are being made to convert opportunities from the pipeline of potential investments in new and existing portfolio companies.

• There is limited exposure to companies relatively exposed to importation from China, accounting for between 5% and 6% of the total portfolio. However, the portfolio companies are managing the risk. • There is limited exposure to companies with direct exposure to government contracts due to the government shutdown, and currently, no concerns or problems are being seen in these areas.

Q: Congratulations on another good quarter. I was going to ask about your coming market activity outlook for 4Q. I think you call it -- it looks relatively decent. I mean, the earlier comments have been the deal activity picking up, you've already done $40 million in October. I mean, can you give us any more -- do you think it's going to slow any? Or do you think it's just going to continue to ramp? And is there -- given some of the Q3 ramp slipped into October, like you said, is there a risk that there's a lot of activity, but some of it ends up in January?

A: It's a great question, Robert. I think from a deal flow perspective, things starting to pick up a little in Q2, latter half. That trend continued, which isn't always the case in the summertime. But in Q3, fair number of things pushed out. We lost a couple of -- didn't lose deals, a couple of deals fell apart at the end, things like that, which accounted for a little slower quarter than we were expecting, but from an investment perspective. But having said that, deal flow was pretty good. And deal flow continues to be pretty good as we sit here today and this week. And so I think that bodes well for the overall current environment. I wouldn't call it robust, but it's healthy. And so that's a good thing. So what does that mean for us? I think originations in Q4, it's our belief it will be pronged, both from an incremental new investment perspective and from add - on investment perspective. And we've also had several add - on investments so far this quarter as well. So it's a busy quarter at the moment. And our expectation as we sit here today is for that kind of trend to continue. Hopefully, that's helpful.

Q: Ed, this quarter, we've seen in the space, more impact from tariff policy, particularly in relation to China. We've been talking about this for a while, but these things develop slowly. Can you remind us, do you have companies that are relatively exposed to importation from China? And is pressure developing on those companies?

A: Great question, Mickey. We have exposure, but what I would say is quite limited. Really, we have 2 portfolio companies that have meaningful direct exposure from an import perspective. We have others that I'd put it in the moderate category. And the moderate ones, to be honest, the moderate ones and the -- obviously, the high - risk ones and so we call them -- we have 2 that are in the high - risk category. Both of those companies are performing well as we sit here today and are managing the risk. And so we -- from just an overall magnitude perspective, I think it's quite limited. It's between 5% and 6% of our total portfolio. And then what I would say is it's not meaningfully impacting the profitability of the businesses as we sit here today. Obviously, there's been a various actions taken by these portfolio companies, whether it's price increases, whether it's negotiations, what have you. But we feel good about kind of the outlook of both of those companies and quite frankly, the rest of the portfolio.

Q: And a follow - up question. It may be transient, but the government shutdown is now longer than we would like. Is that going to impact any of your portfolio companies? I know it may be a short - term sort of event, but it could take a while to get things back to normal as the government reopens.

A: No, good point and great question. And from our -- we do have a couple of companies that have some, what I would call, limited direct exposure to government contracts but in both those cases, we are not experiencing or seeing problems with regard to those contracts or at those portfolio companies. So I think our exposure is quite limited there. And at the moment, we're not seeing concerns or problems. Clearly, obviously, things can change, but it's not expected in either one of those cases.