FIDUS INVESTMENT Corp Q1 FY2025 earnings call

• First quarter deal activity in the lower middle market was modest, continuing lackluster M&A trends. - Built debt portfolio on strength of sponsor relationships, expertise, etc., co-investing in equity of nearly all new portfolio companies. - Assets under management up 6% from Dec 31, 2024. - Adjusted net investment income $18.5 million in Q1 vs $18.1 million in prior year Q1. - Dividends paid $0.54 per share in Q1, with $0.54 per share declared for Q2 2025. - Originations totaled $115.6 million in Q1, with $102.1 million invested in seven new portfolio companies. - Debt investments $111.6 million, first lien securities 94% of total. - Proceeds from repayments and realizations totaled $57.3 million in Q1, monetized equity investments for $13.3 million gain. - Portfolio well diversified, credit quality healthy with nonaccrual under 1% of fair value portfolio.

At quarter end, assets under management stood at approximately $1.2 billion on a fair value basis, up 6% compared to December 31, 2024. Adjusted net investment income for the quarter was $18.5 million compared to $18.1 million in the prior year Q1 2024. On a per share basis, adjusted NII was $0.54 compared to $0.59 for the same period last year. Net asset value was $677.9 million, or $19.39 per share at quarter end. Debt investments totaled $111.6 million, with first lien securities accounting for approximately 94% of the total. The debt portfolio totaled approximately $1 billion on a fair value basis, 79% of which consisted of first lien investments, and the equity portfolio stood at $137.8 million, or 11.9% of the total portfolio at quarter end.

• Second quarter 2025 dividend declared at $0.54 per share. - Decent outlook for originations in Q2 based on new investment pipeline. - Expect more interesting investment environment in periods of high volatility. - Well positioned from capitalization and liquidity perspective.

• Macroeconomic challenges and uncertainties associated with Administration's current trade policies. - Potential risks in portfolio companies, such as Quantum IR being at nonaccrual and valuation issues with Quest Software related to LME event liability management execution.

Q: Could you provide more color on the tariff exposure of the portfolio?

A: Fidus direct exposure to tariffs is quite limited, just over 5% of the portfolio from a direct material exposure perspective. Plans of high and medium risk companies are manageable.

Q: What needs to change for the M&A market to rebound?

A: It's the uncertainty. Once there is more stability and a new level playing field, M&A will come back. Lower middle market activity will continue but at lower levels.

Q: Any updates on Quantum IR and the write-downs in Vertex and Suited Connector?

A: For Quantum IR, all hands on deck but no material update. Vertex and Suited Connector have quarter-to-quarter performance issues reflected in valuation, but both companies are stable.