• Interest Income: Record interest income of $33.7 million.
• Net Asset Value: $658.8 million, up 11.8% from $589.5 million as of December 31, 2023.
• Adjusted Net Investment Income: $20.4 million, a 12.3% increase from last year.
• Adjusted NII Per Share: $0.61, compared to $0.68 last year.
• Total Dividends: $0.57 per share, including a $0.14 supplemental dividend.
• Originations: $65.9 million, with $38.1 million in new portfolio companies.
• Debt Investments: $62.7 million, primarily in first-lien securities.
• Equity Investments: $3.2 million, with $2.3 million in new portfolio companies.
• Repayments and Realizations: $50.8 million, including $8.6 million from equity monetization.
• Total Investment Income: $38.4 million, a $2.7 million increase from Q2.
• Total Expenses: $17 million, $1.7 million lower than Q2.
• Net Investment Income Per Share: $0.64, up from $0.53 in Q2.
• Debt Outstanding: $479 million, with a debt to equity ratio of 0.7 times.
• Weighted Average Interest Rate on Debt: 4.6% as of September 30.
• Weighted Average Effective Yield on Debt Investments: 13.8% as of September 30.
• Liquidity: $154.4 million, including $54.4 million in cash and $100 million line of credit availability.

• Warning! GuruFocus has detected 6 Warning Sign with FDUS.

Release Date: November 01, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Fidus Investment Corp (NASDAQ:FDUS) reported record interest income of $33.7 million, demonstrating strong portfolio performance.
• Net asset value increased by 11.8% to $658.8 million compared to the end of 2023, indicating growth in the company's financial position.
• The company successfully obtained a new SBIC license, providing access to $175 million in additional SBA debentures.
• Adjusted net investment income grew by 12.3% to $20.4 million, reflecting higher interest and fee income.
• The portfolio remains healthy with sound credit quality, with nonaccruals under 1% for the third quarter.

Negative Points

• Investment activity was lighter during the third quarter, indicating potential challenges in deal flow.
• Adjusted net investment income per share decreased to $0.61 from $0.68 in the same period last year, partly due to a higher average share count.
• The weighted average effective yield on debt investments decreased slightly to 13.8% from 14% in the previous quarter.
• There is ongoing competition in the market, which could impact future investment opportunities and returns.
• Some portfolio companies are experiencing underperformance, leading to an increase in internal risk ratings for certain investments.

Q & A Highlights

Q: Are you seeing any early-stage indicators for 2025, given the current market conditions? A: Edward Ross, CEO: The quality of deals continues to be hit or miss, with M&A activity still relatively lackluster. We expect Q4 to be more active than Q3, and we are hopeful for a more robust 2025, but it's too early to tell definitively.

Q: Can you provide insights on spread compression in the market? A: Edward Ross, CEO: Spreads have compressed over the last 12 to 18 months by 50 to 150 basis points, depending on credit quality. While competition remains robust, we don't expect further significant compression from current levels.

Q: What can you tell us about the amendment fees this quarter? A: Edward Ross, CEO: The quarter saw healthy fee income from prepayments and amendments, reflecting active portfolio management. While credit quality remains good, we are navigating some underperformance in certain sectors like consumer discretionary and manufacturing.

Q: What is the timing for utilizing the new SBIC license? A: Shelby Sherard, CFO: The new SBIC license provides additional debt capital, allowing us to delay tapping the unsecured market. We expect to start utilizing the license in the first half of next year, with initial funding from equity capital.

Q: How has credit quality and company performance evolved over the year? A: Edward Ross, CEO: Company performance has been generally healthy, with EBITDA growth being flattish. While some companies face challenges due to high interest rates, the overall portfolio remains sound with a solid credit and equity position.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.