Investcorp Credit Management BDC, Inc. ($ICMB)

Good morning, and thank you for joining today's Investcorp Credit Management BDC, Inc. Earnings Release Call for the first quarter ended March 31, 2026. It is now my pleasure to turn the floor over to Suhail.

Thank you. Andrew, why don't you please do the opening remarks, and then I'll take over.

Sure. Thanks, Suhail. Welcome, everyone, to Investcorp Credit Management BDC's Earnings Call for the quarter ended March 31, 2026. As you heard, I'm here with Suhail, President and Chief Executive Officer of the company. I would like to remind everyone that today's call is being recorded and that this call is the property of Investcorp Credit Management BDC. Any unauthorized broadcast of this call in any form is strictly prohibited. An audio replay of the call will be available on the Investor Relations page of our website at icmbdc.com. I would also like to call your attention to the safe harbor disclosure in our press release regarding forward-looking information and remind everyone that today's call may include forward-looking statements and projections. Actual results may differ materially from these projections. We will not update forward-looking statements unless required by law. To obtain copies of the latest SEC filings, please visit the company's registration statement on the SEC's EDGAR platform or our Investor Relations page on our website. The format for today's call is as follows: Suhail will provide an overall business and portfolio summary, and then I'll provide an overview of our results and summarize the financials. At this time, I would like to turn the call back over to Suhail.

Thank you, Andrew. Good morning, everyone, and thank you for joining our earnings call for the quarter ended March 31, 2026. We will begin with a business update and review of our first quarter results and portfolio activity, after which Andrew will walk through our financials in greater detail. As previously announced, the Board has formed a special committee of independent directors to evaluate strategic alternatives aimed at maximizing shareholder value. The special committee has retained Houlihan Multicapital Inc. as financial adviser to assist in this process. The Board and management team are committed to conducting a thorough and deliberate review. Given that the strategic review process is ongoing, we will not be taking questions on today's call. We want to share 2 steps taken to help manage the company's liquidity. First, our investment adviser voluntarily agreed to raise 56% of our base management fees for the quarter, resulting in approximately $456,000 in savings. This voluntary waiver reflects the adviser's ongoing commitment to support the company. Second, as noted in our 8-K filing on May 8, 2026, we amended our revolving credit facility to reduce the commitment from $100 million to $50 million. This better aligns the facility with our current needs and reduces our cost structure while maintaining adequate liquidity for our investment strategy. This will save the company approximately $401,000 in undrawn commitment fees annually. Turning to our first quarter results. ICMB reported net investment income before taxes of $0.3 million or $0.02 per share. Net assets declined approximately 14% sequentially with net asset value per share decreasing to $3.65 from $4.25 at December 31. This decline was primarily driven by the change in fair value adjustments, lower investment activity and higher repayments resulting in significant growth in NII. Nonaccruals remained consistent with the prior quarter with 5 positions and nonaccruals representing approximately 6.1% of the portfolio fair value compared to 6.9% last quarter. The portfolio remains diversified across 17 GICS industries with our largest issuer representing 7.6% of fair value. I would also note that our software exposure remains relatively low at 3.1% of fair value at quarter end. Consistent with our near-term priorities of capital preservation and liquidity management, new investment activity remained muted during the quarter. For the quarter ended March 31, we funded an incremental $79,000 under the first lien term loan C of American Nuts, an existing portfolio company to support the company's working capital requirements as it executes on its near-term growth initiives. American Nuts provides processing, packaging, sourcing and procurement services for nuts, seeds and dried fruits. Our yield on this position at cost is approximately 12.6%. On the realization side, we fully exited 3 portfolio company investments during the quarter, generating total proceeds of approximately $12.7 million with a blended IRR of approximately 10.7%. This included the full repayment of our term loan investments in I&W Manufacturing, PDI Holdings and our position in insurance Term Loan B-debt. I'll now turn the call back over to Andrew to review our financial results in more detail.

Thanks, Suhail. Let me begin by providing you with highlights of our quarterly performance. For the quarter ended March 31, 2026, the fair value of our portfolio was $151.4 million compared to $172.7 million on December 31. Our net assets were $52.7 million, a decrease of $8.6 million from the prior quarter. The quarterly change in net assets consisted of a $0.2 million increase from NII, offset by an $8.8 million decrease from net depreciation of portfolio assets. The weighted average yield of our portfolio -- our debt portfolio was 11.95% of fair value, an increase of 139 basis points from the December quarter. As of March 31, our portfolio consists of 34 borrowers, approximately 83% of our investments were in first lien debt and the remaining 17% was invested in equity, warrants and other positions. 97.8% of our debt portfolio was invested in floating rate instruments and 2.2% in fixed rate investments. The weighted average cash spread on our floating rate debt investments was 4.5%, relatively unchanged from the prior quarter. The average investment size per portfolio company on a fair market value basis was approximately $4.4 million or approximately 2.9%. Our largest portfolio company investment on a fair market value basis was [indiscernible], $11.6 million or approximately 7.6% of our total fair market value. Our largest industry concentrations by fair market value were professional services at 15.7%, commercial services and supplies at 11.2%, diversified consumer services at 9.7%, IT services at 9.2% and specialty retail at 7.6%. Gross leverage was 2.05x and net leverage was 1.83x on March 31 compared to 2.2x gross and 1.78x that, respectively, for the previous quarter. With respect to our liquidity, as of March 31, we had approximately $11.6 million in cash, of which approximately $8.8 million was restricted cash. In addition, we had $55.1 million of unused commitment under our revolving credit facility with Capital One, of which $3.6 million was available under our borrowing base. As discussed previously, subsequent to quarter end, we reduced our commitment from $100 million to $50 million, which leaves our borrowing base availability unchanged but reduces the ongoing cost as discussed, having a large undrawn fee associated with unneeded availability. Additional information regarding the composition of our portfolio and quarterly financial results are included in our Form 10-Q. And with that, I'd like to turn the call back over to Suhail.

Thank you, Andrew. As we mentioned in the previous quarter, our priorities remain clear: preserving capital and actively managing the portfolio. To summarize, the special committee continues its work with Houlihan Multi to evaluate strategic alternatives focused on maximizing shareholder value. We appreciate your continued support and look forward to updating you on our progress next quarter. And with that, we would like to conclude the call.

This concludes today's conference call. Thank you, everyone, for attending.