Fidus Investment Corporation · NASDAQ:FDUS
Fidus Investment — Q2 2020 Earnings Presentation
28 slides from Fidus Investment's earnings presentation, August 2020
Slide 1: Investor Presentation – August 2020
Investor Presentation – August 2020 NASDAQ: Common Stock – FDUS 5.875% Notes due 2023 – FDUSL 6.000% Notes due 2024 – FDUSZ 5.375% Notes due 2024 - FDUSG
Slide 2: Disclosure
Disclosure Fidus Investment Corporation (“Fidus”) cautions that statements in this presentation that are forward- looking, and provide other than historical information, involve risks and uncertainties that may impact our future results of operations. The forward-looking statements in this presentat
Slide 3: Overview
Overview Investment Objective • Long term focus on delivering stable dividends and growing net asset value per share, with an emphasis on capital preservation Investment Strategy • Provide customized debt and equity financing solutions primarily to lower middle market companies based in the U.S. – $
Slide 4: Investment Highlights
Investment Highlights • Highly experienced and invested management team • Lower middle market offers significant opportunity for attractive risk-adjusted returns • Well established origination network • Differentiated investment strategy focused on capital preservation • Strong balance sheet and liq
Slide 5: Since June 2011 IPO
Since June 2011 IPO* • Maintained high quality of investment portfolio • Completed six secondary equity offerings – Investment portfolio of $732.6 million, at fair value, in 67 – Raised net proceeds of approximately $38.0 million in an companies as of June 30, 2020 offering that closed on September
Slide 6: Consistent Distributions and Dividend Coverage
Consistent Distributions and Dividend Coverage • Adjusted net investment income has covered regular dividend on a cumulative basis • Undistributed taxable income of $1.12 per share as of June 30, 2020 • History of paying special dividends • 14.1% annualized dividend yield (based on regular dividend
Slide 7: History of Capital Preservation
History of Capital Preservation Generated cumulative net investment income and net realized gains in excess of cumulative regular dividends since IPO Capital. Partnership. Expertise. 7 www.fdus.com
Slide 8: Experienced & Cohesive Management Team
Experienced & Cohesive Management Team • Senior management of Fidus Investment Advisors has an average of more than 25 years experience – Founding members have worked together for majority of last 20+ years • Management team is meaningfully invested in the company Professionals Role Prior Experience
Slide 9: Significant Opportunities in Lower Middle Market
Significant Opportunities in Lower Middle Market • Large, fragmented market – More than 100,000 companies in the lower middle market – Target companies with annual revenues between $10 and $150 million • Underserved by traditional capital providers – Exacerbated by credit crisis which led to exit of
Slide 10: Well Established Origination Network
Well Established Origination Network • Broad network of long-standing relationships in lower middle market – Built from many years of investing and advising in this market – Quality of relationships and reputations are important • Directly originate investment opportunities across multiple channels
Slide 11: Differentiated Investment Strategy
Differentiated Investment Strategy • Provide custom-tailored debt and equity financing solutions for lower middle market companies – Finance event-driven transactions such as leveraged buyouts, refinancings, recapitalizations, acquisitions and growth capital • No turnarounds or distressed situations
Slide 12: Focused Criteria & Approach
Focused Criteria & Approach • Companies with: – Proven business models with strong free cash flow characteristics • Annual EBITDA of $5 to $30 million – Experienced management teams with meaningful equity ownership – Niche market leaders with defensible market positions – Diversified customer and su
Slide 13: Benefits of SBIC Funding
Benefits of SBIC Funding • SBIC licenses provide long-term committed funding facility – Access to low cost, fixed rate, long-term funds – Maximum of $350 million in SBA debentures for three or more SBICs under common control • 10-year loans with attractive terms – No financial covenants – Interest o
Slide 14: Advantageous Regulatory Framework
Advantageous Regulatory Framework • Operate as a Business Development Company (BDC) – Regulated by SEC 1940 Act – Publicly-traded, private investment company – Asset diversification requirements reduce investment concentration risk – Maximum debt-to-equity ratio of 1:1 (excluding SBA debt) allows fo
Slide 15: Diversified Investment Portfolio
Diversified Investment Portfolio Fair Value of Investments of $732.6 million as of June 30, 2020 64 Active Portfolio Companies Across 22 Industry Segments (1) Capital. Partnership. Expertise. (1) Residual investments in three portfolio companies that have sold their underlying operations (2) Percent
Slide 16: Diversified Investment Portfolio
Diversified Investment Portfolio Fair Value of Investments of $732.6 million as of June 30, 2020 Capital. Partnership. Expertise. 16 www.fdus.com
Slide 17: High Yielding Debt Portfolio
High Yielding Debt Portfolio (1) Weighted average yield calculated based on effective interest rates for all debt investments at cost at end of period, including accretion of original issue discount and loan origination fees but excluding investments on non-accrual, if any. Capital. Partnership. Exp
Slide 18: Growing Portfolio Value
Growing Portfolio Value (1) Portfolio count excludes residual investments in portfolio companies that have sold their underlying operations Capital. Partnership. Expertise. 18 www.fdus.com
Slide 19: Statements of Operations
Statements of Operations ($ in 000s, except per share data) Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Total Investment Income $18,068 $19,201 $19,507 $19,983 $20,433 Expenses: Interest Expense $4,052 $4,421 $4,875 $4,960 $4,863 Base Management Fee 3,016 3,179 3,333 3,272 3,193 Incentive Fee - Income 1,299 2,163
Slide 20: Statements of Assets & Liabilities
Statements of Assets & Liabilities ($ in 000s, except per share data) Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Investments, at fair value Control Investments $ 5,218 $ 15,132 $ 21,820 $ 20,551 $ 21,929 Affiliate Investments 117,470 111,872 121,555 67,504 70,566 Non-control/Non-affiliate Investments 574,584 602
Slide 21: Key Takeaways
Key Takeaways • Highly experienced and invested management team • Lower middle market offers significant opportunity for attractive risk- adjusted returns • Well established origination network • Differentiated investment strategy focused on capital preservation • Strong balance sheet and liquidity
Slide 22: Corporate Data
Corporate Data Executive Officers Investment Committee Corporate Headquarters Research Coverage Edward H. Ross John H. Grigg 1603 Orrington Avenue B. Riley FBR, Inc. Chairman & CEO Managing Director Suite 1005 Tim Hayes Evanston, IL 60201 Thomas C. Lauer Thomas C. Lauer www.fdus.com Janney Montgomer
Slide 23: Appendix
FIDUS INVESTMENT CORPORATION Appendix
Slide 24: Investment Portfolio as of June 30, 2020
Investment Portfolio as of June 30, 2020 $ in '000s Portfolio Company Nature of Principal Business Investment Types (1) Cost Fair Value Accent Food Services, LLC Vending Equipment Manufacturing SL-Debt, Equity $ 36,128 $ 16,134 Allied 100 Group, Inc. Healthcare Products SUB-Debt, Equity 22,044 22,43
Slide 25: Investment Portfolio as of June 30, 2020
Investment Portfolio as of June 30, 2020 $ in '000s Portfolio Company Nature of Principal Business Investment Types (1) Cost Fair Value OMC Investors, LLC (dba Ohio Medical Corporation) Healthcare Products SL-Debt, Equity $ 10,479 $ 10,590 Palisade Company, LLC Information Technology Services SUB-De
Slide 26: Reconciliation of Adjusted Net Investment Income
Reconciliation of Adjusted Net Investment Income The following are reconciliations of net investment income (NII) and NII per share computed in accordance with GAAP to Adjusted NII, a non-GAAP measure, and Adjusted NII per share which exclude capital gains incentive fee expense or (reversal) based o
Slide 27: Disciplined Investment Process and Proactive Risk Management
Disciplined Investment Process and Proactive Risk Management Initial Due Diligence Documentation Portfolio Sourcing Evaluation & Underwriting & Closing Management • Extensive network of • Preliminary due • Site visits and facility • Focus on capital • Proactive monitoring long standing diligence rev
Slide 28: Capital. Partnership. Expertise.
Capital. Partnership. Expertise. www.fdus.com