Begin Time: 09:00 January 1, 0000 9:39 AM ET
Fidus Funding (NASDAQ:FDUS)
Q2 2022 Earnings Convention Name
August 05, 2022, 09:00 AM ET
Ed Ross – Chairman and CEO
Shelby Sherard – CFO, Chief Compliance Officer and Secretary
Jody Burfening – IR
Convention Name Individuals
Robert Dodd – Raymond James
Ryan Lynch – Keefe, Bruyette & Woods
Mickey Schleien – Ladenburg
Good day, and welcome to the Fidus Second Quarter 2022 Earnings Name. At the moment’s name is being recorded.
I might now like to show the convention over to Jody Burfening. Please go forward.
Thanks, Lisa, and good morning, everybody. And thanks for becoming a member of us for Fidus Funding Company’s second quarter 2022 earnings convention name. With me this morning are Ed Ross, Fidus Funding Company’s Chairman and Chief Govt Officer; and Shelby Sherard, Chief Monetary Officer. Fidus Funding Company issued a press launch yesterday afternoon with the main points of the corporate’s quarterly monetary outcomes. A replica of the press launch is accessible on the Investor Relations web page of the corporate’s Web page at fdus.com.
I would additionally wish to name your consideration to the customary Protected Harbor disclosure concerning forward-looking info included on at this time’s name. The convention name at this time will comprise forward-looking statements, together with statements concerning the objectives, methods, beliefs, future potential, working outcomes and money flows of Fidus Funding Company. Though administration believes these statements are cheap based mostly on estimates, assumptions and projections as of at this time, August 5, 2022, these statements aren’t ensures of future efficiency. Time delicate info could not be correct on the time of any telephonic or webcast replay. Precise outcomes could differ materially because of dangers, uncertainties and different elements together with, however not restricted to, the elements set forth within the firm’s filings with the Securities and Trade Fee. Fidus undertakes no obligation to replace or revise any of those forward-looking statements.
With that, I might now like to show the decision over to Ed. Good morning, Ed.
Good morning, Jody, and good morning, everybody. Welcome to our second quarter 2022 earnings convention name. On at this time’s name, I will begin with a overview of our second quarter efficiency and our portfolio at quarter finish, after which give you an replace of our views on market circumstances within the decrease center market. Shelby will cowl the second quarter monetary outcomes and our liquidity place. After we now have accomplished our ready remarks, we’ll be comfortable to take your questions.
Our second quarter outcomes demonstrates the deserves of our technique of investing in debt securities to generate recurring curiosity earnings and an fairness securities for incremental revenue and a margin of security. We generated larger curiosity earnings from our debt portfolio this quarter and a web realized achieve of $18.2 million or $0.74 per share from monetizing a small portion of our fairness portfolio.
By redeploying fairness proceeds, we proceed to construct fastidiously and intentionally our debt portfolio, investing in top quality firms that function in industries that we all know nicely, generate money movement to service debt and assist development and possess resilient enterprise fashions and constructive long-term outlooks. On account of this confirmed funding technique and philosophy of managing for the long run, our portfolio total stays wholesome, however ongoing financial uncertainties and stresses.
Adjusted web funding earnings, which we outline as web funding earnings, excluding any capital achieve incentive charge attributable to realized and unrealized features and losses, was $10.4 million, or $0.43 per share, primarily unchanged versus $10.4 million or $0.42 per share final yr. NAV was $484 million or $19.80 per share. For the second quarter, Fidus paid a base dividend of $0.36 per share and a supplemental dividend of $0.07 per share, equal to 100% of the excess in adjusted NII over the bottom dividend from the primary quarter.
For the third quarter, the Board of Administrators declared a base dividend of $0.36 per share and a supplemental dividend of $0.07 per share. The dividends shall be payable on September 23, 2022 to stockholders of document as of September 9, 2022. As well as, the Board of Administrators declared a base dividend of $0.36 per share and a supplemental dividend of at the least $0.07 per share for the fourth quarter. The dividends shall be payable on December 16, 2022 to stockholders of document as of December 2, 2022.
As a RIC, we’re required to distribute at the least 90% of our funding firm taxable earnings, or ICTI. The declaration of a minimal This fall dividend now’s meant to fulfill the distribution requirement of our 2021 ICTI. We count on to have additional info concerning incremental This fall supplemental and to our particular dividends at our subsequent earnings name in early November.
Originations for the quarter have been strong, albeit not as robust as the primary quarter, as we proceed to redeploy fairness proceeds into earnings producing belongings. Investments in new portfolio firms, nevertheless, have been a bit weaker than anticipated, as getting offers throughout the end line is proving a bit tougher on this surroundings. In complete, we invested $45.7 million in debt and fairness securities, together with $19.5 million in two new portfolio firms that we introduced as subsequent occasions on the primary quarter name.
As a reminder, we invested $8.5 million in first lien debt and made a dedication as much as $1 million of extra first lien debt in Selection Expertise Options, LLC doing enterprise as Selection Service provider Options, LLC, a number one omnichannel international funds platform. We invested $11 million in second lien debt of Virtex Enterprises, LP, a number one vertically built-in digital manufacturing providers supplier.
The remaining $26.2 million was primarily associated to the brand new $15 million subordinated debt funding in vitality, fundings beneath present commitments, and different add-on investments in portfolio firms. Nearly all the $45.7 million was invested in debt securities unfold pretty evenly amongst first lien, second lien and subordinated debt securities. Whereas we now have been and stay centered on first lien debt investments, we’ll proceed to opportunistically make second lien and subordinated debt investments as nicely.
By way of repayments and realizations within the second quarter, we obtained proceeds totaling $44.8 million. As I discussed on the primary quarter name, a few of our portfolio firms had initiated strategic different discussions. For that reason, monetization of fairness investments accounted for about half of the overall repayments and realizations this quarter, bringing the overall fairness proceeds for the primary half of the yr to $35 million and year-to-date web realized features to $25.1 million.
By way of gross sales and exits, we obtained fee in filled with $8.8 million, together with a prepayment penalty, on our first lien debt in Comply365 LLC. We obtained fee in filled with $11.6 million, together with a prepayment penalty, on our second lien debt in Argo Turboserve Company. We obtained a distribution of $2.4 million and realized a achieve of 1.9 million associated to the sale of TransGo, LLC.
We obtained a distribution of $1.2 million and realized a achieve of $0.8 million associated to the sale of AVC Buyers, LLC. We obtained proceeds of $0.8 million and realized a achieve of $0.4 million associated to the exit of our funding in CRS Options Holdings, LLC. And we obtained proceeds of $18.3 million and realized a achieve of $15.3 million associated to the exit of our fairness funding in Pinnergy Ltd.
Subsequent to the tip of the quarter, we invested and/or made commitments totaling $45.7 million, together with in three new portfolio firms. We invested 7.8 million in first lien debt, 2 million in subordinated debt, and 1 million in widespread fairness of AmeriWater, LLC, a number one supplier of water purification programs and aftermarket components & consumables for healthcare and industrial functions.
We made a dedication of $4.9 million in second lien debt of Magenta Purchaser, LLC, doing enterprise as Trellix, a number one international cybersecurity firm. We made a dedication of $20 million in first lien debt of BP Thrift Purchaser LLC, doing enterprise as Distinctive and Eco Thrift, an proprietor and operator of retail thrift shops.
We additionally obtained $50.3 million in repayments and realizations consisting of the next. We obtained a distribution on our widespread fairness funding and realized a achieve of roughly $1.9 million associated to the sale of Palisade Firm, LLC. We obtained a distribution on our widespread fairness funding and realized the achieve of roughly $3.2 million associated to the sale of Bandon Health (Texas) Inc.
We obtained fee in filled with $4.5 million on our first lien debt in Bedford Precision Components LLC. We obtained a distribution on our widespread fairness funding in SES Buyers, LLC, doing enterprise as SES Foam, and realized a achieve of roughly $9 million. We obtained fee in filled with $5.3 million, together with a prepayment penalty on our first lien debt funding in Healthfuse, LLC.
And we bought a portion of our fairness funding in Pfanstiehl, Inc. and realized a achieve of roughly $24.3 million. Along with the transaction, we invested $10 million in subordinated debt. Subsequent to quarter finish in complete, we now have obtained incremental proceeds from our fairness investments of $40.4 million and realized web features of roughly $38.4 million.
The honest worth of the portfolio at quarter finish was $810.5 million equal to 109.6% of value. We ended the second quarter with 73 energetic portfolio firms and 12 firms which have bought their underlying operations. General, our portfolio stays wholesome and nicely structured to provide recurring earnings and thru our fairness investments to supply us with not solely incremental income, but additionally an affordable margin of security.
From a danger perspective, our deal with investing in firms which have resilient enterprise fashions and defensive traits, together with pricing energy, is serving us nicely within the face of ongoing macroeconomic and geopolitical uncertainties, and inflationary value pressures. That does not imply all of our portfolio firms are immune from these dynamics.
We skilled slight depreciation in our debt portfolios. Two of our portfolio firms are dealing with robust headwinds within the present surroundings. Spreads are additionally widening and we positioned EbLens, EBL, LLC, a sneaker and attire retailer centered on city areas on nonaccrual. Nonaccruals as of June 30 accounted for about 1% of our complete portfolio on a good worth foundation.
On account of the excessive degree of fairness monetization in the course of the quarter, the overall portfolio combine on a good worth foundation continued to shift in favor of debt investments. As of June 30, debt investments comprised 83% of the overall portfolio in comparison with about 80% as of March 31, 2022 and about 77% as of December 31, 2021.
First lien debt as a share of debt investments was in step with the primary quarter at round 66%. The yield on debt was additionally unchanged from the primary quarter. Fairness investments as a share of the overall portfolio on a price foundation stays beneath 10%, in step with our goal allocation.
Looking forward to the second half of the yr, from our perspective, the decrease center market ought to stay comparatively energetic very like the primary half of the yr, providing us alternatives to additional redeploy fairness proceeds into earnings producing belongings and alternatives to put money into firms which are positioned to carry out nicely within the present surroundings, though we do count on offers to take longer to shut than final yr on this unsure surroundings.
The identical time our confirmed underwriting requirements, disciplined funding choice and deal with first lien debt and structuring investments with a excessive share of fairness cushion hold us on observe to generate enticing danger adjusted returns over the long run and ship worth for our shareholders.
Now, I will flip the decision over to Shelby to supply some particulars on our financials and working outcomes. Shelby?
Thanks, Ed, and good morning, everybody. I will overview our second quarter leads to extra element and shut with feedback on our liquidity place. Please word I shall be offering comparative commentary versus the prior quarter Q1 2022.
Complete funding earnings was 21.2 million for the three months ended June 30, a $0.6 million enhance from Q1 primarily as a consequence of $2.1 million enhance in curiosity earnings, together with PIK, offset by a $0.6 million lower in charge earnings and a $0.9 million lower in dividend earnings.
The curiosity earnings enhance was pushed by a rise in common debt funding balances excellent. Please recall that almost all of Q1 investments closed in March and subsequently have been extra backend weighted within the quarter.
Complete investments, together with earnings tax provision, have been 10.1 million for the primary quarter in step with Q1. The capital features incentive charge accrual decreased by 0.9 million. Be aware the capital achieve incentive charge is accrued for GAAP functions, nevertheless, is just payable yearly in arrears to the extent cumulative realized features exceed realized losses and unrealized appreciation.
Excluding the accrued capital features incentive charge, complete bills in Q2 have been roughly 0.8 million larger than Q1 as a consequence of a $0.2 million enhance in curiosity expense, a $0.4 million enhance in administration and earnings incentive charges, a $0.2 million enhance in different G&A bills, primarily associated to proxy solicitation for the annual shareholders assembly, and a $0.1 million enhance in taxes offset by a $0.2 million lower in skilled charges.
We ended the quarter with 395.8 million of debt excellent, comprised of 128.5 million of SBA debentures, 250 million of unsecured notes and 17.3 million of secured borrowings. Our debt to fairness ratio as of June 30 was 0.8x or 0.6x statutory leverage, excluding exempt SBA debentures. The weighted common rate of interest on our excellent debt was 3.8% as of June 30, 2022.
Internet funding earnings, or NII, for the three months ended June 30 was $0.45 per share versus $0.42 per share in Q1. Adjusted NII, which excludes any capital features incentive charge accruals or reversals attributable to realized and unrealized features and losses on investments, was $0.43 per share in Q2 in keeping with Q1. For the three months ended June 30, we acknowledged roughly 18.2 million of web realized features, primarily from gross sales associated to our fairness investments in Pinnergy, TransGo, Abaco [ph] and CRS Texas.
Turning now to portfolio statistics. As of June 30, our complete funding portfolio had honest worth of 810.5 million. Our common portfolio firm funding on a price foundation was 10.1 million, which excludes investments in 12 portfolio firms that bought their operations in the course of the strategy of winding down. Now we have fairness investments in roughly 80% of our portfolio firms, with a mean totally diluted fairness possession of three.7%.
Weighted common efficient yield on debt investments was 11.9% as of June 30. The weighted common yield is computed utilizing the efficient rates of interest for debt investments at value, together with the accretion of unique situation low cost and mortgage origination charges, however excluding investments on nonaccrual, if any.
Now I would wish to briefly focus on our obtainable liquidity. As of June 30, our liquidity and capital sources included money of 72.5 million, 41.5 million of accessible SBA debentures and 100 million of availability on our line of credit score, leading to complete liquidity of roughly 194 million. Considering our subsequent occasions, we now have roughly 207.6 million of liquidity.
Now I will flip the decision again to Ed for concluding feedback.
Thanks, Shelby. As all the time, I would wish to thank our group and the Board of Administrators at Fidus for his or her dedication and arduous work and our shareholders for his or her continued assist.
I’ll now flip the decision over to Lisa for Q&A. Lisa?
Thanks. [Operator Instructions]. We’ll take our first query from Robert Dodd with Raymond James. Please go forward.
Good morning, Ed and Shelby, and congratulations on not simply the quarter, however the publish quarter in addition to the general efficiency of the technique, which has been very, superb. So a few questions. I’ll ask you concerning the dividend, however you in all probability knew that was coming. However the first one, on — your remark, Ed, you sort of went again to this a few instances, getting offers throughout the ending line is tougher now. Seems like fairly optimistic about pipeline, however what’s — is there a niche between your ask on pricing and the debtors ask, is there — is that an issue on the sponsors agreeing on value? Is there extra divergence on pricing construction or something like that? Or is it another sort of issue that is making individuals transfer a little bit slower proper now I am simply curious?
Certain. Nice query, Robert. As you possibly can think about, I believe most folk making investments at this time actually wish to make it possible for the corporate’s performing as anticipated. And what we have seen in expertise — fairly frankly, we have had three offers that we have been awarded collapse within the final 90 days or so. And two have been as a consequence of buy value points. And people got here from, I might say, efficiency points, perhaps lacking funds a little bit bit which clearly offers rise to a purchase order value dialogue. The opposite was a construction query for us the place we had signed up a time period sheet based mostly on a sure construction, after which the corporate and the borrower didn’t wish to have that construction on the finish of the day. And so we backed away. So we’re clearly on this surroundings, however all the time been very disciplined on how we do issues. But it surely’s a harder surroundings to get issues finished. I believe everyone seems to be in discovery mode a little bit bit. And I believe that is a great factor, fairly frankly, as a result of we wish to make sure that we really feel nice about what we’re investing in as we shut transactions. So it is a good drawback to have from our perspective.
Sure, thanks for that. On the alternatives you are seeing, clearly, if we glance again over actually the final a number of years and even long term, the IRRs, or nevertheless we wish to put it, due to you it is perhaps an outlier, however even the core belongings, your IRRs have been very enticing. Do you assume the alternatives that you simply’re seeing at this time and the constructions you are seeing at this time are set as much as meet sort of the core IRR, not simply your inner targets, your hurdle charges perhaps, however the core IRR that you’ve got delivered traditionally? Can you continue to match that or is there something that shifted on that entrance?
Nice query. From my perspective — so a little bit little bit of it has to do with portfolio constructions. At the moment, we now have about — 80% of our portfolio firms are coupled with fairness investments. And so in these instances, clearly there’s a possibility for larger returns all-in, and we do be ok with the investments we’re making at this time and do assume they’re similar to what we have finished up to now. So I do not see a change there. The combo of debt solely investments for us is perhaps a little bit larger than traditional. We could have been nearer to 90% at one time limit. And so which will alter returns just a bit bit. I do not assume will probably be sufficient of a transfer to be vital. So we proceed to see a really enticing surroundings from a danger adjusted return or on a danger adjusted return foundation. We proceed to love the fairness alternatives that we’re uncovering, however clearly it takes arduous work and self-discipline and being affected person. And we will proceed the identical technique that we have all the time deployed.
Obtained it. I recognize that. Thanks for that shade. I bought to ask you on the dividends. Sure, I understand you mentioned that you will have extra info on the subsequent name. However that is three months from now. Prior to now if you’ve had massive realized features, you have utilized the total spectrum. You’ve got finished all the pieces, deemed distribution to a particular dividend to supplementals. Are you able to give us — and clearly it is a Board choice, however you’re a member of the Board. Are you able to give us any shade sort of which — deemed distribution means that you can retain some capital, however you have bought quite a lot of capital, fairness proceeds coming in versus simply paying out massive specials, you do not essentially get full credit score from the market. So are you able to give us any considered which method doubtlessly you lean proper now with out — not going to set your toes in concrete on this?
Let me give some ideas on simply really why we postponed issues a little bit bit in addition to simply perhaps spotlight the completely different choices which are on the desk. However as you may think, Robert, I have been cautious with what I say.
Sure, honest sufficient.
But additionally, as you may think, we spent quite a lot of time on the Board degree excited about distributions and dividend coverage questions. And likewise, as you realize, our spillover place at 630 may be very excessive at $2.37 per share. And as you additionally know, the features early right here in Q3 will solely additional enhance that spillover place. So what we have finished is, given the truth that we’re solely seven months into the yr, we consider it solely is smart to be affected person, at the least till the Q3 earnings name to debate additional 2022 dividend choices. The Q3 and This fall dividend declarations that we announce are anticipated to fulfill the RIC distribution necessities associated to the 2021 funding firm taxable earnings, or ICTI. So we count on to be discussing this stuff rather a lot over the subsequent 90 days till we now have our subsequent name. Lastly, what I will say is, look, our prime precedence is to carry out nicely for shareholders over time. And for us, which means delivering secure to rising dividends to shareholders whereas additionally rising NAV over the long run as nicely. In order it pertains to our spillover place, we’re evaluating a lot of choices. It consists of making particular choose money distributions, consists of rising the bottom dividend and/or supplemental dividend coverage. It could make sense to retain a wholesome degree of spillover nonetheless for a wet day. After which lastly, a deemed distribution is certainly on the desk as nicely, which might allow us to retain capital on the BDC degree as a way to proceed to develop NAV in addition to incomes over the long run. So there’s three or 4 issues, I assume 4, which are on the desk from our perspective, and it is in all probability some mixture of some of these on the finish of the day. I hope that is useful, however I bought to be clearly cautious with what I say.
That may be very useful. Thanks. And I apologize for the background.
No drawback. Thanks, Robert. Good speaking to you.
We’ll take our subsequent query from Ryan Lynch with KBW.
Hello. Good morning.
Good morning, Ryan.
The primary query I had was sort of following up on Robert’s query, as a result of it sort of struck me as nicely when he talked about offers having a tougher time getting throughout the end line on this surroundings. I believe that is perhaps the primary time I’ve actually heard that on the convention requires the BDC sector this quarter. And so — as a result of most others on the market talked about actually the bettering deal surroundings and what I might name perhaps some extra lender pleasant phrases that they are been capable of obtain now versus six months in the past or so. Clearly, the financial surroundings continues to be very unsure going ahead. In order that does current some challenges. So I would love to only — when you may simply unpack, is there one thing that is notably distinctive in sort of the decrease center market the place perhaps phrases aren’t shifting as rapidly as perhaps the core center or higher center market that will trigger you to make these statements?
Certain. Nice query, Ryan, and never a simple one to reply fairly frankly. However I believe phrases are shifting to a sure diploma. I believe spreads are secure to widening. So we’re experiencing the identical development, perhaps it is not as a lot as within the liquid markets, however covenants have all the time been a constructive for the decrease center market, they usually proceed to be and assist us — and leverage ranges are clearly not out of bounds and possibly are coming down just a bit bit as nicely. Once more, these are for very top quality conditions. From a deal movement perspective, I assumed Q2 was a little bit slower than Q1 for positive. And I believe there was quite a lot of value discovery happening and quite a lot of simply credit score discovery happening. However what I might additionally say is at this time within the final three to 4 weeks, deal movement has been very robust. And so we’re beginning to see a good quantity of top quality conditions. So we’re enthusiastic about the remainder of the yr, fairly frankly. With regard to tougher to get stuff throughout the end line, your remark surprises me a little bit bit, perhaps simply individuals did not say it. However I believe a little bit bit that’s only a product of our expertise the place we did have within the final 90 days three offers collapse for the explanations I simply talked about. And I believe that is wholesome. If issues aren’t as anticipated, then I would relatively wait and see versus go forward and shut the transaction. However the lengthy and in need of it’s, is we’re persevering with to see a good variety of alternatives, top quality alternatives. And we do assume it is a extra lender pleasant surroundings than beforehand. There’s much less competitors. There’s some lenders which have pulled again, fairly frankly. And in order that’s a great factor as nicely for us and for the decrease center market. I hope that helps.
Sure, that is useful. And I fully agree that being considerate and self-discipline and having offers fall, backing off on offers if they are not proper, it makes full sense. And likewise you is also proper that perhaps different firms aren’t explicitly stating that. And there are offers which are type of not getting finished, perhaps simply the offers which are getting finished are in higher phrases, however there might be perhaps quite a lot of different offers that aren’t getting throughout the end line as nicely. In order that’s honest. The opposite query I had was, congrats in your partial monetization of a quick deal in third quarter. Are you able to discuss what was the character of that partial monetization? And why was it solely a partial monetization versus a full monetization? What was the character behind that?
Certain. Properly, it is a firm that we have been invested in now for, name it, 10 years or so round a little bit bit. Very top quality firm. The monetization from our perspective was a negotiation with the first proprietor of the enterprise. And from our perspective, getting partial liquidity made sense. So we ended up promoting lower than half of our place. And the explanation for that’s we be ok with the long-term prospects of our funding in addition to for the corporate. It is a very top quality firm. And so we’re happy to have the ability to retain that fairness possession and see the way it goes sooner or later. However we’re additionally more than happy with the partial realization as we thought it made sense to do this. Hopefully, that is smart. However we favored that. We simply assume a partial liquidity occasion was a wise factor to do for our shareholders.
Sure, it is smart simply taking a couple of chips off the desk on a very profitable funding. Simply the final one I had, which may be very arduous to foretell, however perhaps for Shelby. Dividend earnings dropped considerably this quarter. I do know it is actually arduous to foretell on a quarter-to-quarter foundation, however — that may be sort of lumpy. However do you could have any preliminary ideas on what we needs to be anticipating within the third quarter for that?
Sure. What I might simply say is Q1 was in all probability bigger than what I might count on on a run fee foundation. Now we have a couple of choose portfolio firms that perhaps make an annual dividend. And in order that’s sort of what triggered Q1 to be extra outsized. Sort of going ahead, I might count on issues to be extra in step with Q2.
Okay, that is useful. I recognize the time at this time and recognize you taking my questions.
Thanks, Ryan. I recognize it. Good speaking to you.
[Operator Instructions]. We’ll take our subsequent query from Mickey Schleien with Ladenburg.
Good morning, everybody. Ed, I needed to ask you a danger administration query. There’s this idea on the market that the one method the Fed’s going to get inflation beneath management is simply to kill the buyer given how a lot the buyer represents as a part of the economic system, the home economic system. I’ve additionally heard arguments that the center class and the — higher, center class are wonderful. It is the decrease center class that the parents which are dwelling paycheck to paycheck that is perhaps struggling beneath the present financial circumstances. And so maybe there’s not as a lot danger there as is perceived. So given the Fed’s battle with inflation, how a lot danger is there in your portfolio with respect to the buyer? And particularly, I believe I heard you say you invested in a thrift store? And does that — is that in step with my feedback?
Certain, it is an awesome query. With regard to the thrift store, we simply dedicated to that. The deal ought to shut later within the quarter. It is an awesome enterprise, fairly nicely diversified and performing very nicely additionally on this surroundings. So we really feel like, we clearly checked out earlier cycles after we checked out, and this firm has carried out fairly nicely by all these cycles. So it is a secure enterprise from our perspective and one we really feel superb about on this surroundings as nicely. So it is differentiated from that perspective. I agree, to a sure extent, along with your feedback about perhaps the extra decrease earnings bracket, if you’ll, I do assume they’re being impacted extra by issues like larger fuel costs, larger meals costs, extra staples day after day dwelling kind of spending and taking market share from extra discretionary gadgets, if you’ll. We skilled that in Evelyn’s [ph] fairly frankly. Evelyn’s might be centered on a client that is extra centered on city areas, if you’ll. So I agree along with your feedback. And the final query I believe you requested, or one of many questions you requested was how uncovered is our portfolio? And I might say, we now have some client publicity, nevertheless it’s very restricted, fairly frankly. And so we really feel like we’re nicely positioned as we transfer ahead. It is actually perhaps a handful of names which have publicity. And I believe we’re feeling some strain a little bit bit proper now on two of the businesses, considered one of them being Evelyn’s. So total, we really feel nice about our portfolio building and really feel superb concerning the outlook of our portfolio, however that it is a tough working surroundings.
I agree. That is it for me this morning. I recognize your time. I hope you could have a great weekend. Thanks.
Thanks. You too, Mickey.
And that does conclude the question-and-answer session. I wish to flip the decision again over to Ed Ross for any extra or closing remarks.
Thanks, Lisa, and thanks everybody for becoming a member of us this morning. We stay up for talking with you on our third quarter name in early November 2022. Have an awesome day and an awesome weekend.
And that concludes at this time’s presentation. Thanks to your participation. And you could now disconnect.