Fidus Investment Corporation Q1 FY2026 earnings call

Ed started by reviewing first quarter performance and portfolio at quarter end, sharing outlook for 2026. Shelby covered first quarter financial results and liquidity position. VITAS's adjusted NII grew due to increased interest income and fee income. Portfolio remains healthy with niche market leaders. Board declared a total dividend of $0.62 per share for Q2 2026. Originations, investments, repayments, and realizations details were provided. Shelby discussed investment income, expenses, net investment income, debt outstanding, portfolio statistics, and liquidity.

VITAS's first quarter results were extremely strong from an income statement perspective, with an adjusted NII of $23.7 million, up 14.8%, reflecting a 13.1% increase in interest income on higher average income producing assets and higher fee income. The adjusted NII per share was $0.62. The debt portfolio continued to over earn the base dividend of $0.43 per share and had estimated spillover income of $1.14 per share at quarter end. At quarter end, asset value held steady at $742 million, or $19.55 per share. Originations in the first quarter amounted to $118.7 million, nearly all first lien debt investments. $1.8 million was invested in equity securities of two new portfolio companies, and subsequent to quarter end, an additional $21.5 million was invested in one new portfolio company. Proceeds from repayments and realizations totaled $73.1 million, with $3.9 million in realized gains on equity investments but approximately $15 million in realized losses on Suited Connector debt conversion. The portfolio had a fair value of $1.4 billion at quarter end, with first lien investments comprising 87% of the debt portfolio. Equity investments in software and IT services companies totaled $16.1 million, or approximately 11% of the total equity portfolio. Only one portfolio company was on non-accrual, accounting for less than 1% of the total portfolio.

Pipeline of investment opportunities is decent. M&A activity is lackluster due to geopolitical uncertainties and market volatility. Expect a pickup in activity but pace dependent on reduction in uncertainty. Anticipate some decent growth in the portfolio this quarter but lighter on the repayment side overall.

Q: Shelby, were there any non-recurring items in the quarter?

A: There was a rather large fee of about $6.97 million related to the American Always debt refinancing.

Q: Robert Dodd asked about the American oil waste fee, position size, and if outsized refinancing fees could happen again.

A: Could happen to a certain degree but not the norm, it was for a specific solution needed.

Q: About the pipeline being decent but market lackluster, driven by uncertainties.

A: Deal flow was modest in Q1 prior to Middle East geopolitical conflict, still confident in pickup but pace dependent on uncertainty reduction.

Q: About spreads, thoughts on stability or expansion.

A: Seeing wider spreads, for great assets there's competition but still attractive spreads and strong terms in lower middle market.