Fidus Investment Corporation Announces First Quarter 2024 Financial Results
Fidus Investment (NASDAQ:FDUS) announced its first quarter 2024 financial results, including total investment income of $34.7 million and net investment income of $17.6 million. The company paid total dividends of $0.65 per share and had a net asset value of $608.3 million as of March 31, 2024. Management commentary highlighted the healthy portfolio and attractive returns for shareholders.
Total investment income of $34.7 million for the first quarter 2024, representing a 19.3% increase from the same period in 2023.
Net investment income of $17.6 million, showing a 19.7% increase from the prior year.
Board of Directors declared total dividends of $0.59 per share for the second quarter, demonstrating the company's commitment to shareholder returns.
Adjusted net investment income per share decreased by 1.7% to $0.59.
Total expenses, including base management fee waiver and income tax provision, increased by 18.8% from the same period in 2023.
Insights
The disclosed financial results by Fidus Investment Corporation provide several key figures that are of interest to stakeholders and are indicative of the company's operational and financial health. Of particular note is the total investment income which showed a significant year-over-year increase of
The company's net investment income has also increased by
The net increase in net assets from operations saw a near
From a liquidity standpoint, Fidus appears to be in a strong position with $27.1 million in cash and cash equivalents and significant unused credit facility capacity. Moreover, the reported net asset value (NAV) of $19.36 per share provides a snapshot of the company's value on a per-share basis.
Reviewing Fidus Investment Corporation's investment activities reveals a strategy focused on portfolio diversity and growth. The seven new portfolio company investments indicate an aggressive approach to capital deployment, targeting a variety of sectors. The emphasis on first and second lien debt investments is indicative of a preference for secured lending, which typically offers a balance between risk and returns. Additionally, the investments in preferred and common equity suggest a willingness to partake in the potential upside of portfolio company performance.
It's also noteworthy that the majority of the debt investment portfolio is at a variable rate, which could have implications in the context of interest rate fluctuations and their potential impact on investment income. Given the current rate environment, this could lead to increased income should the rates rise, but it could also pose a risk if rates fall. Furthermore, the high weighted average yield on debt investments of
The company's ability to generate significant investment income growth, maintain a healthy NAV and support a stable dividend payout ratio can be seen as a positive signal to investors looking for steady income streams combined with capital appreciation potential. However, investors should also consider the risks associated with the lower middle-market sector, including potential volatility and sensitivity to economic cycles.
The financial results of Fidus Investment Corporation also require a risk-based evaluation, particularly considering the firm's investment focus on lower middle-market companies, which are often subject to higher levels of risk. The company’s proactive management of its investment portfolio, as evidenced by the net originations and the repayments and realizations, suggests a dynamic approach to risk management and capital reallocation. This, combined with disciplined underwriting practices, can be instrumental in mitigating credit risk and maintaining portfolio health.
Additionally, the balance between variable and fixed rate investments deserves attention, as it influences the portfolio's sensitivity to interest rate risk. The current predominance of variable rate positions could benefit the company in a rising rate environment, though it's important for investors to be cognizant of potential vulnerabilities should the interest rates decline unexpectedly.
A critical examination of the spillover income of $41.7 million is important as well since it indicates the potential for future dividends and provides a cushion for distributions. However, if spillover income continues to grow without corresponding distributions, it could suggest a mismatch between income generation and payout policies. Close monitoring of this metric, along with the company's distribution strategies, would be prudent for evaluating the sustainability of dividend payments.
Board of Directors Declared Total Dividends of
Base Dividend of
EVANSTON, Ill., May 02, 2024 (GLOBE NEWSWIRE) -- Fidus Investment Corporation (NASDAQ:FDUS) (“Fidus” or the “Company”), a provider of customized debt and equity financing solutions, primarily to lower middle-market companies based in the United States, today announced its financial results for the first quarter ended March 31, 2024.
First Quarter 2024 Financial Highlights
- Total investment income of
$34.7 million - Net investment income of
$17.6 million , or$0.57 per share - Adjusted net investment income of
$18.1 million , or$0.59 per share(1) - Invested
$145.9 million in debt and equity securities, including seven new portfolio companies - Received proceeds from repayments and realizations of
$60.2 million - Paid total dividends of
$0.65 per share: regular quarterly dividend of$0.43 and a supplemental dividend of$0.22 per share on March 27, 2024 - Net asset value (“NAV”) of
$608.3 million , or$19.36 per share, as of March 31, 2024 - Estimated spillover income (or taxable income in excess of distributions) as of March 31, 2024 of
$41.7 million , or$1.33 per share
Management Commentary
“With deal flow activity at reasonably high levels during the first quarter, we invested
(1) Supplemental information regarding adjusted net investment income:
On a supplemental basis, we provide information relating to adjusted net investment income, which is a non-GAAP measure. This measure is provided in addition to, but not as a substitute for, net investment income. Adjusted net investment income represents net investment income excluding any capital gains incentive fee expense or (reversal) attributable to realized and unrealized gains and losses. The management agreement with our investment adviser provides that a capital gains incentive fee is determined and paid annually with respect to cumulative realized capital gains (but not unrealized capital gains) to the extent such realized capital gains exceed realized and unrealized losses. In addition, we accrue, but do not pay, a capital gains incentive fee in connection with any unrealized capital appreciation, as appropriate. As such, we believe that adjusted net investment income is a useful indicator of operations exclusive of any capital gains incentive fee expense or (reversal) attributable to realized and unrealized gains and losses. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. Reconciliations of net investment income to adjusted net investment income are set forth in Schedule 1.
First Quarter 2024 Financial Results
The following table provides a summary of our operating results for the three months ended March 31, 2024, as compared to the same period in 2023 (dollars in thousands, except per share data):
| Three Months Ended March 31, | ||||||||||||||||
| 2024 | 2023 | $ Change | % Change | |||||||||||||
| Interest income | $ | 28,138 | $ | 25,956 | $ | 2,182 | 8.4 | % | ||||||||
| Payment-in-kind interest income | 2,049 | 637 | 1,412 | 221.7 | % | |||||||||||
| Dividend income | 397 | 384 | 13 | 3.4 | % | |||||||||||
| Fee income | 2,359 | 1,436 | 923 | 64.3 | % | |||||||||||
| Interest on idle funds | 1,708 | 643 | 1,065 | 165.6 | % | |||||||||||
| Total investment income | $ | 34,651 | $ | 29,056 | $ | 5,595 | 19.3 | % | ||||||||
| Net investment income | $ | 17,627 | $ | 14,723 | $ | 2,904 | 19.7 | % | ||||||||
| Net investment income per share | $ | 0.57 | $ | 0.59 | $ | (0.02 | ) | (3.4 | %) | |||||||
| Adjusted net investment income(1) | $ | 18,126 | $ | 14,876 | $ | 3,250 | 21.8 | % | ||||||||
| Adjusted net investment income per share(1) | $ | 0.59 | $ | 0.60 | $ | (0.01 | ) | (1.7 | %) | |||||||
| Net increase (decrease) in net assets resulting from operations | $ | 20,123 | $ | 15,489 | $ | 4,634 | 29.9 | % | ||||||||
| Net increase (decrease) in net assets resulting from operations per share | $ | 0.65 | $ | 0.62 | $ | 0.03 | 4.8 | % | ||||||||
The
For the three months ended March 31, 2024, total expenses, including the base management fee waiver and income tax provision, were
Net investment income increased by
For the three months ended March 31, 2024, the total net realized gain/(loss) on investments, net of income tax (provision)/benefit on realized gains, was
Portfolio and Investment Activities
As of March 31, 2024, the fair value of our investment portfolio totaled
First quarter 2024 investment activity included the following new portfolio company investments:
- Donovan Food Brokerage, LLC, a leading provider of professional foodservice sales and marketing services. Fidus invested
$10.0 million in first lien debt,$0.5 million in common equity and made additional commitments up to$1.0 million in first lien debt. - Informatics Holdings, Inc. (dba Wasp Barcode Technologies), a leading provider of barcode software solutions for asset and inventory management. Fidus invested
$12.5 million in first lien debt,$1.0 million in preferred equity and made additional commitments up to$1.0 million in first lien debt. - Janus Health Technologies, Inc., LLC, a leading provider of SaaS-based revenue cycle management solutions to healthcare systems and outsourced RCM service providers. Fidus invested
$5.0 million in first lien debt,$1.5 million in preferred equity and made additional commitments up to$2.5 million in first lien debt. - Quantum IR Technologies, LLC, LLC, a leading provider of software-automated thermal infrared data collection and predictive analytics for industrial process companies. Fidus invested
$12.0 million in first lien debt and$2.4 million in preferred equity. - R.F. Fager Company LLC, LLC, a leading regional distributor of plumbing, HVAC, and roofing products. Fidus invested
$14.0 million in second lien debt and$1.3 million in common equity. - ServicePower, Inc., LLC, a leading provider of SaaS-based field service management (FSM) software solutions for organizations seeking to optimize their employed and contracted workforces. Fidus invested
$21.0 million in first lien debt. - W50 Holdings, LLC, LLC, a leading executive-networking platform. Fidus invested
$12.5 million in subordinated debt,$0.9 million in preferred equity and made additional commitments up to$0.1 million in preferred equity.
Liquidity and Capital Resources
As of March 31, 2024, we had
Second Quarter 2024 Dividends Totaling
On April 29, 2024, our board of directors declared a base dividend of
When declaring dividends, our board of directors reviews estimates of taxable income available for distribution, which differs from consolidated income under GAAP due to (i) changes in unrealized appreciation and depreciation, (ii) temporary and permanent differences in income and expense recognition, and (iii) the amount of undistributed taxable income carried over from a given year for distribution in the following year. The final determination of 2024 taxable income, as well as the tax attributes for 2024 dividends, will be made after the close of the 2024 tax year. The final tax attributes for 2024 dividends will generally include ordinary taxable income but may also include capital gains, qualified dividends and return of capital.
Fidus has adopted a dividend reinvestment plan (“DRIP”) that provides for reinvestment of dividends on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, when we declare a cash dividend, stockholders who have not “opted out” of the DRIP at least two days prior to the dividend payment date will have their cash dividends automatically reinvested in additional shares of our common stock. Those stockholders whose shares are held by a broker or other financial intermediary may receive dividends in cash by notifying their broker or other financial intermediary of their election.
First Quarter 2024 Financial Results Conference Call
Management will host a conference call to discuss the operating and financial results at 9:00am ET on Friday, May 3, 2024. To participate in the conference call, please dial (844) 808-7136 approximately 10 minutes prior to the call. International callers should dial (412) 317-0534. Please ask to be joined into the Fidus Investment Corporation call.
A live webcast of the conference call will be available at http://investor.fdus.com/news-events/events-presentations. Please access the website 15 minutes prior to the start of the call to download and install any necessary audio software. An archived replay of the conference call will also be available in the investor relations section of the Company’s website.
ABOUT FIDUS INVESTMENT CORPORATION
Fidus Investment Corporation provides customized debt and equity financing solutions to lower middle-market companies, which management generally defines as U.S. based companies with revenues between
Fidus is an externally managed, closed-end, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940, as amended. In addition, for tax purposes, Fidus has elected to be treated as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. Fidus was formed in February 2011 to continue and expand the business of Fidus Mezzanine Capital, L.P., which commenced operations in May 2007 and was licensed by the U.S. Small Business Administration as a Small Business Investment Company (SBIC).
FORWARD-LOOKING STATEMENTS
This press release may contain certain forward-looking statements which are based upon current expectations and are inherently uncertain, including, but not limited to, statements about the future performance and financial condition of the Company, the prospects of our existing and prospective portfolio companies, the financial condition and ability of our existing and prospective portfolio companies to achieve their objectives, and the timing, form and amount of any distributions or supplemental dividends in the future. Any such statements, other than statements of historical fact, are likely to be affected by other unknowable future events and conditions, including elements of the future that are or are not under the Company’s control, such as changes in the financial and lending markets, the impact of the general economy (including an economic downturn or recession), and the impact of interest rate volatility, including the replacement of LIBOR with alternate rates and high interest rates; accordingly, such statements cannot be guarantees or assurances of any aspect of future performance. Actual developments and results are highly likely to vary materially from these estimates and projections of the future as a result of a number of factors related to changes in the markets in which the Company invests, changes in the financial, capital, and lending markets, and other factors described from time to time in the Company’s filings with the Securities and Exchange Commission. Such statements speak only as of the time when made, and are based on information available to the Company as of the date hereof and are qualified in their entirety by this cautionary statement. The Company undertakes no obligation to update any such statement now or in the future, except as required by applicable law.
| FIDUS INVESTMENT CORPORATION Consolidated Statements of Assets and Liabilities (in thousands, except shares and per share data) | ||||||||
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| Investments, at fair value: | ||||||||
| Control investments (cost: | $ | — | $ | — | ||||
| Affiliate investments (cost: | 80,316 | 83,876 | ||||||
| Non-control/non-affiliate investments (cost: | 967,755 | 874,030 | ||||||
| Total investments, at fair value (cost: | 1,048,071 | 957,906 | ||||||
| Cash and cash equivalents | 27,122 | 119,131 | ||||||
| Interest receivable | 15,708 | 11,965 | ||||||
| Prepaid expenses and other assets | 1,842 | 1,896 | ||||||
| Total assets | $ | 1,092,743 | $ | 1,090,898 | ||||
| LIABILITIES | ||||||||
| SBA debentures, net of deferred financing costs | $ | 170,176 | $ | 204,472 | ||||
| Notes, net of deferred financing costs | 247,521 | 247,243 | ||||||
| Borrowings under Credit Facility, net of deferred financing costs | 21,493 | (1,082 | ) | |||||
| Secured borrowings | 15,626 | 15,880 | ||||||
| Accrued interest and fees payable | 3,537 | 5,924 | ||||||
| Base management fee payable, net of base management fee waiver – due to affiliate | 4,364 | 4,151 | ||||||
| Income incentive fee payable – due to affiliate | 4,467 | 4,570 | ||||||
| Capital gains incentive fee payable – due to affiliate | 14,471 | 17,509 | ||||||
| Administration fee payable and other, net – due to affiliate | 798 | 789 | ||||||
| Taxes payable | 277 | 1,227 | ||||||
| Accounts payable and other liabilities | 1,673 | 741 | ||||||
| Total liabilities | $ | 484,403 | $ | 501,424 | ||||
| Commitments and contingencies | ||||||||
| NET ASSETS | ||||||||
| Common stock, | $ | 32 | $ | 31 | ||||
| Additional paid-in capital | 523,467 | 504,298 | ||||||
| Total distributable earnings | 84,841 | 85,145 | ||||||
| Total net assets | 608,340 | 589,474 | ||||||
| Total liabilities and net assets | $ | 1,092,743 | $ | 1,090,898 | ||||
| Net asset value per common share | $ | 19.36 | $ | 19.37 | ||||
| FIDUS INVESTMENT CORPORATION Consolidated Statements of Operations (unaudited) (in thousands, except shares and per share data) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2024 | 2023 | |||||||
| Investment Income: | ||||||||
| Interest income | ||||||||
| Control investments | $ | — | $ | — | ||||
| Affiliate investments | 869 | 1,050 | ||||||
| Non-control/non-affiliate investments | 27,269 | 24,906 | ||||||
| Total interest income | 28,138 | 25,956 | ||||||
| Payment-in-kind interest income | ||||||||
| Control investments | — | — | ||||||
| Affiliate investments | — | — | ||||||
| Non-control/non-affiliate investments | 2,049 | 637 | ||||||
| Total payment-in-kind interest income | 2,049 | 637 | ||||||
| Dividend income | ||||||||
| Control investments | — | — | ||||||
| Affiliate investments | 348 | 348 | ||||||
| Non-control/non-affiliate investments | 49 | 36 | ||||||
| Total dividend income | 397 | 384 | ||||||
| Fee income | ||||||||
| Control investments | — | — | ||||||
| Affiliate investments | 5 | 5 | ||||||
| Non-control/non-affiliate investments | 2,354 | 1,431 | ||||||
| Total fee income | 2,359 | 1,436 | ||||||
| Interest on idle funds | 1,708 | 643 | ||||||
| Total investment income | 34,651 | 29,056 | ||||||
| Expenses: | ||||||||
| Interest and financing expenses | 6,012 | 5,185 | ||||||
| Base management fee | 4,432 | 3,854 | ||||||
| Incentive fee - income | 4,467 | 3,647 | ||||||
| Incentive fee (reversal) - capital gains | 499 | 153 | ||||||
| Administrative service expenses | 537 | 473 | ||||||
| Professional fees | 937 | 816 | ||||||
| Other general and administrative expenses | 229 | 240 | ||||||
| Total expenses before base management fee waiver | 17,113 | 14,368 | ||||||
| Base management fee waiver | (69 | ) | (72 | ) | ||||
| Total expenses, net of base management fee waiver | 17,044 | 14,296 | ||||||
| Net investment income before income taxes | 17,607 | 14,760 | ||||||
| Income tax provision (benefit) | (20 | ) | 37 | |||||
| Net investment income | 17,627 | 14,723 | ||||||
| Net realized and unrealized gains (losses) on investments: | ||||||||
| Net realized gains (losses): | ||||||||
| Control investments | — | — | ||||||
| Affiliate investments | — | — | ||||||
| Non-control/non-affiliate investments | 1,743 | 58 | ||||||
| Total net realized gain (loss) on investments | 1,743 | 58 | ||||||
| Income tax (provision) benefit from realized gains on investments | 56 | — | ||||||
| Net change in unrealized appreciation (depreciation): | ||||||||
| Control investments | — | — | ||||||
| Affiliate investments | (3,236 | ) | (2,489 | ) | ||||
| Non-control/non-affiliate investments | 4,454 | 3,197 | ||||||
| Total net change in unrealized appreciation (depreciation) on investments | 1,218 | 708 | ||||||
| Net gain (loss) on investments | 3,017 | 766 | ||||||
| Realized losses on extinguishment of debt | (521 | ) | — | |||||
| Net increase (decrease) in net assets resulting from operations | $ | 20,123 | $ | 15,489 | ||||
| Per common share data: | ||||||||
| Net investment income per share-basic and diluted | $ | 0.57 | $ | 0.59 | ||||
| Net increase in net assets resulting from operations per share — basic and diluted | $ | 0.65 | $ | 0.62 | ||||
| Dividends declared per share | $ | 0.65 | $ | 0.66 | ||||
| Weighted average number of shares outstanding — basic and diluted | 30,776,758 | 24,803,951 | ||||||
Schedule 1
Supplemental Information Regarding Adjusted Net Investment Income
On a supplemental basis, we provide information relating to adjusted net investment income, which is a non-GAAP measure. This measure is provided in addition to, but not as a substitute for, net investment income. Adjusted net investment income represents net investment income excluding any capital gains incentive fee expense or (reversal) attributable to realized and unrealized gains and losses. The management agreement with our investment advisor provides that a capital gains incentive fee is determined and paid annually with respect to cumulative realized capital gains (but not unrealized capital gains) to the extent such realized capital gains exceed realized and unrealized losses for such year, less the aggregate amount of any capital gains incentive fees paid in all prior years. In addition, we accrue, but do not pay, a capital gains incentive fee in connection with any unrealized capital appreciation, as appropriate. As such, we believe that adjusted net investment income is a useful indicator of operations exclusive of any capital gains incentive fee expense or (reversal) attributable to realized and unrealized gains and losses. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. The following table provides a reconciliation of net investment income to adjusted net investment income for the three months ended March 31, 2024 and 2023.
| ($ in thousands) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| (unaudited) | ||||||||
| 2024 | 2023 | |||||||
| Net investment income | $ | 17,627 | $ | 14,723 | ||||
| Capital gains incentive fee expense (reversal) | 499 | 153 | ||||||
| Adjusted net investment income(1) | $ | 18,126 | $ | 14,876 | ||||
| (Per share) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| (unaudited) | ||||||||
| 2024 | 2023 | |||||||
| Net investment income | $ | 0.57 | $ | 0.59 | ||||
| Capital gains incentive fee expense (reversal) | 0.02 | 0.01 | ||||||
| Adjusted net investment income(1) | $ | 0.59 | $ | 0.60 | ||||
| (1) | Adjusted net investment income per share amounts are calculated as adjusted net investment income dividend by weighted average shares outstanding for the period. Due to rounding, the sum of net investment income per share and capital gains incentive fee expense (reversal) amounts may not equal the adjusted net investment income per share amount presented here. | |
| Company Contact: | Investor Relations Contact: |
| Shelby E. Sherard | Jody Burfening |
| Chief Financial Officer | LHA |
| (847) 859-3940 | (212) 838-3777 |
| ssherard@fidusinv.com | jburfening@lhai.com |
FAQ
What was Fidus Investment 's total investment income for the first quarter of 2024?
What was the net asset value of Fidus Investment as of March 31, 2024?
When will the dividends declared for the second quarter of 2024 be payable?
