Fidus Investment Corporation (NASDAQ:FDUS) Q1 2024 Earnings Call Transcript
Welcome to the Fidus Investment Corporation’s first quarter 2024 earnings conference call. Yesterday, Fidus Investment Corporation released its quarterly financial results, sharing insights into the company’s performance and strategic direction.
“Good morning and welcome to our first quarter 2024 earnings conference call. With us today are Ed Ross, Fidus Investment Corporation’s Chairman and Chief Executive Officer, and Shelby Sherard, Chief Financial Officer,” commenced the call.
Ed Ross provided an overview of the first quarter’s achievements, highlighting the active investment landscape and strategic portfolio advancements. “As expected, the first quarter was very active from a new investment perspective. We succeeded in deploying capital effectively, noting an increase in our portfolio to over $1 billion,” Ross commented.
Fidus continued to focus on capital preservation and generating attractive risk-adjusted returns. The company disciplined in investing in industries and businesses within the lower middle market demonstrating defensive characteristics, sustainable business models, and positive long-term outlooks.
Regarding financial outcomes, Ross shared, “Our debt portfolio generated adjusted net investment income of $18.1 million, reflecting a 21.8% increase from last year.” This growth was primarily fueled by higher interest income and fee income for the quarter. Further, Fidus announced dividends for the second quarter of 2024, totaling $0.59 per share.
Shelby Sherard, Fidus CEO, then took the floor to provide a more detailed analysis of the financial results. Highlighting the income dynamics, Sherard noted, “Total investment income was $34.7 million for the first three months ended March 31, a slight decrease primarily due to lower interest and fee income.” However, she pointed out an uptick in dividend income and interest income on excess cash due to back-end loaded new investments in March.
The total expenses for the first quarter were reported at $17 million, a reduction from the previous quarter, driven by a decrease in the capital gains fee accrual and income taxes related to annual excise tax accrual.
Discussing the portfolio, Sherard explained that as of March 31, the investment portfolio’s fair value exceeded $1 billion, with a significant portion in first lien investments. “Our portfolio remains well-structured, positioned to produce high levels of recurring income and the potential for enhanced returns from the sale of equity securities,” she noted.
The portfolio’s health was emphasized, highlighting strict underwriting discipline and focus on businesses with strong cash flow generating capabilities and positive growth prospects.
In closing, Ed Ross expressed optimism about the future, despite expectations for a slower second quarter in terms of originations. “Our portfolio is healthy and positioned to continue generating adjusted net investment income well in excess of our base dividend,” he concluded, looking forward to sustained growth and attractive risk-adjusted returns.
As the call concluded, the Fidus team expressed their gratitude towards their shareholders for their ongoing support, their dedicated team, and the Board of Directors for their hard work and commitment to the company’s success.
The details shared on the call offer a comprehensive overview of Fidus Investment Corporation’s achievements in the first quarter of 2024, showcasing strategic investments, financial performance, and a strong commitment to shareholder value.
