Strategic Positioning and Market Dynamics

• Launched PSSL2 joint venture to drive future earnings, with an objective to scale the vehicle to over $1 billion in assets consistent with existing JVs.

• Maintained a deliberate underweight position in software (4.4% of portfolio) to avoid the high-leverage, covenant-light, and PIK-heavy structures prevalent in the broader market.

• Focused software exposure exclusively on mission-critical enterprise applications in heavily regulated sectors like defense and healthcare where replacement cycles are slow.

• Observed an uptick in middle-market M&A activity, which management expects will expand the investment pipeline and facilitate exits from equity co-investments.

• Prioritized the 'core middle market' (companies with $10-$50 million EBITDA) to secure stronger covenant protections and more rigorous due diligence access than the upper middle market.

• Reported high portfolio stability with PIK interest at 2.5% of income and non-accruals representing only 0.1% of the portfolio at market value.

• Attributed recent NAV decline primarily to '2021 vintage' assets, specifically consumer-facing and logistics businesses that faced post-COVID normalization challenges.

Outlook and Dividend Sustainability

• Projected run-rate net investment income to cover the current dividend as the PSSL2 portfolio ramps toward its $1 billion target.

• Anticipated a 12 to 24-month timeline to fully scale the new joint venture, with the actual pace heavily dependent on the recovery of M&A volumes.

• Expected future M&A activity to drive 'equity rotation,' allowing the company to exit non-income producing equity co-investments and reinvest in current income-producing debt.

• Maintained a target debt-to-equity leverage range of 1.4 to 1.6 times following post-quarter asset sales to the joint ventures.

• Assumed that the core middle market will continue to offer attractive first-lien pricing between SOFR plus 475 and 525 basis points.

Operational and Structural Adjustments

• Commenced PSSL2 investment activities with $197 million invested during the quarter and an additional $133 million post-quarter.

• Expanded PSSL2 credit facility to $250 million with an accordion feature allowing for a further increase to $350 million.

• Recorded a $30 million net realized and unrealized loss, largely driven by specific marks on 2021-vintage consumer and marketing services investments.

• Incurred $500,000 in one-time credit facility amendment costs during the fiscal first quarter.

Q&A Session Summary

Strategic rationale for underweight software exposure

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