Good morning, and welcome to First Eagle Alternative Capital BDC Incorporated Earnings Conference Call for its Q1 ended March thirty-first, two thousand twenty-two. It is my pleasure to turn the call over to Sabrina Rusnak-Carlson of First Eagle Alternative Capital BDC Incorporated. Ms. Rusnak-Carlson, you may begin. Thank you, operator. Good morning, and thank you for joining us. Joining me on today's call are Chris Flynn, President of First Eagle Alternative Credit, Jen Wilson, our Chief Accounting Officer, Jim Fellows, our Chief Investment Officer. Before we begin, please note that statements made on this call may constitute forward-looking statements within the meaning of the Securities Act of 1933 as amended. Such statements reflect various assumptions by First Eagle Alternative Capital BDC concerning anticipated results that are not guarantees of future performance and are subject to known and unknown uncertainties and other factors that could cause actual results to differ materially from such statements. The uncertainties and other factors are in some ways beyond management's control and include the factors included in the section entitled Risk Factors in our most recent annual report on Form 10-K, as updated by our quarterly report on Form 10-Q, and our periodic and other filings with the Securities and Exchange Commission. Although we believe that the assumptions on which any forward-looking statements are based on are reasonable, any of those assumptions could prove to be inaccurate and, as a result, the forward-looking statements based on those assumptions also could be incorrect. You should not place undue reliance on these forward-looking statements. First Eagle Alternative Capital BDC undertakes no duty to update any forward-looking statements made herein unless required by law. All forward-looking statements speak only as of the date of this call. Our earnings announcements and 10-K were released yesterday afternoon, copies of which can be found on our website, along with our Q1 earnings presentation that we may refer to during this call. A webcast replay of this call will be available until May 14, 2022, starting approximately 2 hours after we conclude this morning. To access the replay, please visit our website at www.feacbdc.com. With that, I'll turn the call over to Chris. Thanks, Sabrina. Good morning, and thank you for joining us on our earnings call. On today's call, I want to discuss recent actions we've taken to drive strategic initiatives as well as review our Q1 results and share some portfolio highlights. From there, I'll hand the call over to Jen to discuss our portfolio and financial results in more detail. We had a busy quarter working toward our three strategic initiatives. One, reducing our cost of debt. Two, increasing our portfolio yield. And three, increasing our portfolio diversification. We've made progress in these three goals this year. First, we've effectively reduced our debt financing. As announced in Q1 through our 8-K, we amended our credit facility to reduce the weighted average borrowing cost by 26 basis points. Further, since December 31, 2020, we have reduced our weighted average borrowing costs by 148 basis points. Second, we refinanced the Logan JV into a middle market CLO structure, which we expect to increase the dividend to FCRD as a result of this incremental leverage. We are very pleased that we were able to close the Logan JV CLO transaction on April nineteenth. Despite a challenging market stemming from the war in Ukraine, inflationary pressures, competition for AAA buyers, we were able to secure a deal that we believe is favorable to our shareholders and that speaks to the overall strength of our platform. The Logan JV CLO supports our strategic initiatives by increasing portfolio diversification through a reduction in FCRD's exposure to Logan to a 15%-16% and increasing our portfolio yield. Moreover, we expect a Logan JV return on equity to increase from around 10% historically to approximately 14% going forward with this new structure. At the same time, the middle market CLO, like many refinances, entails some upfront one-time costs to achieve longer-term benefits. To show our alignment with shareholders, we agreed to waive $400,000 of our management fee in Q1 and part of the management fee waiver in Q2 in order to maintain the $0.10 dividend. We noted during our last call in connection with increasing portfolio yield, we aim to increase our leverage range and increase our allocation to higher-yielding asset-based loans. In connection with the amendment to the credit facility, we've increased the credit facility size to $175 million and pushed out a maturity date which allowed us to further increase leverage. At 3/31, our consolidated leverage was 1.26 times, up from 1.18 at the end of Q4. This brings me to the results of FCRD's Q1 net income was in line with expectations at $0.10 per share. We anticipate the reduction in financing costs, more flexible capital, and increased utilization of leverage to drive more investment activity, which will help further stabilize NAV and drive NII. We entered the quarter with a net asset value of $6.12 per share, down 3.5% on a quarter-over-quarter basis. The decrease in NAV was primarily driven by the change in unrealized depreciation. Our non-accrual, income-producing second lien position in Loadmaster and our first lien position in Matilda Jane were written down $0.06 per share. The remaining write-downs were not material on an individual investment basis and spread across a handful of names in the portfolio. In line with our goal to reduce or eliminate exposure to non-income-producing positions, as noted in our recent update section in 10-Q, in early April, Aurotech, LLC entered into a purchase agreement to sell its common shares. The proceeds of the sale, which includes cash and amounts placed in escrow, were used to pay off and terminate the outstanding credit agreement. The company realized a loss of $1.8 million as a result of this transaction. This amount will be offset by a reversal and the unrealized loss on the investment. The remaining value on non-accrual in the portfolio represents about 1.8% of the total portfolio based on fair market value at March 31. We announced last quarter Aurotech defaulted. Since we monitored, reunderwrote the company and the prospects and ultimately believed that exit was in the best interest for shareholders, therefore, sought to exit the position as quickly as possible. Overall, the core portfolio continues to perform well in line with expectations. We believe our portfolio companies continue to maintain good liquidity profiles and the support from private equity sponsors. There were no significant amendments to existing loans in Q1 and no new loans placed on non-accrual. Similar to the broader market trends, we have seen a few of our portfolio companies facing supply chain challenges, labor shortages, as well as inflationary pressures, including increased wages and material costs. Matilda Jane, in particular, was impacted by supply chain issues and labor shortages. We continue to keep a close eye on impacted companies and the economy for signs of further weakness. As we've noted before, portfolio diversification and stabilization of our investment portfolio has been paramount focus. Our ability to increase leverage across more flexible capital terms will further these goals over time as we invest capital and add new investments. From an origination perspective, the private debt market kept up its typical trend of a slower Q1 relative to the rest of the year. We saw our private equity partners focused on closing and settling into new deals from a record- year of deployment in 2021. First Eagle direct lending origination activity in the Q1 was mainly focused on portfolio add-ons plus one new investment. Total deployment was $114 million versus $69 million in Q1 of 2021. In line with that trend, the FCRD portfolio invested $2.3 million in a new portfolio investment in Q1, with an additional $17.5 million invested in follow-on investments, including revolvers and delayed draw fundings. There were no significant repayments during the quarter, which resulted in a typical quarter with no prepayment premiums received or accelerated amortization of OID this quarter. Looking forward, our direct lending pipeline remains strong, including agency, cash loan, asset-based deals. The BDC continues to benefit from deal flow generated by First Eagle's approximate $5 billion direct lending platform. The growth of the platform allows the BDC to hold a more diversified portfolio with a number of positions up from 45 in Q1 of 2018 to 77 this quarter, while also allowing First Eagle to provide more capital to middle-market businesses. First Eagle's direct lending platform has remained robust, and we expect it to continue to provide us with attractive investment opportunities. We continue to be very selective about where we deploy capital and are mindful of the macro environment in our investment committee discussions. With that, I'll turn the call over to Jen. Thanks, Chris, and good morning, everyone. First, I'll start off with some investment and portfolio highlights. As Chris mentioned, Q1 was a relatively muted quarter for a new activity, with one new and several follow-on investments totaling $9.8 million at a blended yield of 6.5%. We had no notable realizations during the quarter. As of March thirty-first, our portfolio was valued at $400.7 million, up slightly from $392.1 million at the end of Q4. It was invested 78% in first lien senior secured debt and 18% in the Logan JV. As a reminder, Logan JV is 99% invested in first lien assets. The remaining 4% of the BDC's portfolio was held in second lien debt and other non-income producing and equity holdings, including our restructured equity-like second lien investment in OEM. The weighted average yield on the debt and income-producing portfolio based on cost and including Logan was 6.5% in Q1, which was flat with Q4. As Chris noted, we did not place any new investments on non-accrual during Q1. Total non-accruals as a percentage of our portfolio at fair value and at cost were 2% and 4.5% respectively. Now I'd like to address the financials for the Q1. During Q1, we recognized $7.4 million of investment income, primarily from interest and dividends. Interest income decreased approximately $548,000 from Q4 to $5.5 million for Q1. The decrease was primarily driven by the decline in accelerated amortization of OIDs from $367,000 in Q4 to $17,000 in Q1. This decline resulted from the decrease in repayments and refinancings during the current quarter. Dividend income from Logan JV was relatively flat quarter- over- quarter at $1.7 million, and other income of $230,000 was approximately half of Q4. Total expenses net of management fee waivers for the quarter were $4.5 million, down from $5.3 million in Q4. The biggest driver of the decrease were a $379,000 decrease in interest and fees on borrowings during the quarter due to our 2023 notes being fully redeemed prior to year-end, as well as a $433,000 decrease in management fees due to a decrease in our net asset value and a $400,000 waiver during Q1. From a leverage perspective, we ended Q1 with a debt-to-equity ratio of 1.26x. We have ample borrowing capacity on our credit facility to continue to grow and increase leverage towards our increased target of 1.3x-1.4x. With that, I'll turn the call back over to Chris. Thanks, Jen. Before I turn the call over to Q&A, I wanted to take a moment to assure our shareholders that we're committed to doing what's right here. We have the benefit of a $20 billion platform in direct and tradable credit assets where we successfully manage private funds, CLOs, separately managed accounts, levered and unlevered for institutional investors. We have, for the benefit of our shareholders, shifted our strategy and rotated out of legacy assets, outlined a specific process for driving higher- NII. We have brought in ABL assets to provide higher- yielding loans. We have restructured Logan to create a more accretive structure for the BDC. Along this process, we have waived management fees repeatedly to demonstrate to our shareholders that we are committed and invested in the success of the BDC. Notwithstanding the foregoing, we wish our stock price would be higher, recognizing these events. This transition of the balance sheet has taken longer than expected and as designed, had little room for error in terms of execution. I've asked the shareholders to be patient as we go through this process, and the shareholders have been compensated for said patience with management fee waivers supporting the dividend. As noted in previous releases, now that Logan is closed later than budgeted, we should be in a position to see NII growth, which should result in a dividend increase starting in Q3. If the dividend is not able to be increased or if stock continues to trade at a significant discount to our peer group, we recognize the status quo isn't acceptable to our shareholders and to be clear, is not acceptable to the management team. While our track record on executing this plan has been far from perfect, our track record of supporting the shareholders and doing what's right for the shareholders has been impeccable. I would ask the shareholders to look at the latter track record and take comfort that we, as the largest shareholder, are aligned with you. Operator, you can open the line for questions now. Thank you. Participants, as a reminder, to ask the question, you will need to press star one on your telephone keypad. Again, that's star, then the number one on your telephone keypad. To withdraw your question, press the pound key. Your first question comes from the line of Lee Cooperman from Omega Family Office. Your line is now open. Yeah, thank you very much, Chris. Good morning to you and everybody else. You know, I really could replay a Conference Call about a year ago. I turned 79 last Monday, but I think I asked these same questions when I was 78. I made the same comment then that I'll make now, that you have done a great job in trying to support the shareholders. Basically, you know, I really question whether we're at a size which makes sense for us to be publicly owned, you know? I'm gonna ask you 5 or 6 questions. I'll get them out on the table, and I'd like to get your response, some of which you've already anticipated. What is that cost of public ownership? Number one. Number two, are you willing to explore a sale of the company? We have a market cap of $115 million. We're irrelevant. You know, you've done a great job in trying to support the shareholders, but you've done a poor job in executing up until now. Okay, what are the intentions regarding a continued waiver of the fees? You know, with $400,000, it's about a penny and a fraction. So with a dividend is in excess of fully waived, you know, fully accrued fee income. Your expectations for dividend, you mentioned that you expect it to be increased in the Q3. Order of magnitude that you're thinking. Another question I'd ask is excess capital. If you have any to buy back equity, would you rather buy back equity at a discount to NAV or would you rather make a new loan and take the risk of what's going on in the economy? Those are my questions. Again, I compliment you on your support of the shareholders, but I think what we hoped to accomplish when we went public cannot be accomplished. Our cost of capital is too high. You know, Wall Street has created a lot of companies in the BDC, MLP, REIT space that only worked if they were able to sell stock at a premium to NAV. You sold stock, you bought assets to raise a dividend. You sold stock, bought assets, raised a dividend, so on and so forth. We're on a vicious cycle the wrong way. Our stock is at a low. You went public, I think at $13 or thereabout. Then you had an offering of $14.09. You had another offering of $14.62. You can't sell stock and you know, you know the story. The question is whether you're gonna become proactive or you wanna continue to stay public, and what is the cost of you being a public company? That's it. Perfect. Hey, Lee. Thanks. Appreciate the questions. I'm gonna take them probably in a random order, if that's okay. Sure. Whatever works for you. Yeah, yeah. First, the cost of being public is high. I can come back and give you the exact numbers. Just as a rule of thumb, as you look at the market today, I think being a public company at less than $1 billion of equity is probably punitive. I don't disagree with your statement. We're too small, and that puts us at somewhat of a disadvantage. As it relates to waivers, we've said publicly that we'll support the dividend through Q2 on that, on the $0.10. We did that in Q1. We expect to have a waiver of some sort in Q2 to maintain the $0.10, primarily related to the expenses associated with putting these financing packages in place. As it relates to the dividend, I think we said in the press release that based on our expectations of the new financing, that you could see that the dividend go up by anywhere from some 20-20% from where we are. Call it $0.11-$0.12. Excess capital. We have more flexibility of capital that we were able to upsize the ING facility. We do have a program in place where we are buying shares, albeit at modest amounts, just given the way the program works and the fact that our stock doesn't trade that much. Your second question, which was related to, you know, a sale of the business. I am not in a position to comment on that today. What I tried to address in my closing remarks was we called the play. You know, I paid for it. I paid for the optionality associated with the play. If the play results in our stock price sitting where it is today, obviously it didn't work. We've always come back and said that we'll do what's right for the shareholder. I'm gonna wait and see mode. You know, the period of time that we're gonna wait and see is probably much shorter than it was historically. Got you. I wish you luck, and I, again, I compliment you on standing behind your shareholders. I'm not happy with the results and the environment is become more hostile. I guess I'd like to dwell a little bit on the question. Given your excess capital, would you rather make a new loan, or would you rather buy stock back at $4 with a book value of $6.18? Yeah. Which would you think is the- I mean, mathematically, it's easy. We'd rather buy back stock. Obviously, the return on that is higher. If you look at what we did in the portfolio, we primarily just supported our existing portfolio companies, which is, you know, that's part of doing this business. The issue, though, is we're at odds, right? I just said being small is a competitive disadvantage, and buying back the stock only makes us smaller. We're trying to find, you know, a balance between the two. We have been actively buying stock in the market, and we'll continue to do so under the program that we have in place that was approved by the board. You must be buying it very carefully because it keeps going down. Okay. Thank you very much. Yeah. I appreciate your answer, and I wish you well, and you're a good guy. Thanks, Lee. Again, participants, if you would like to ask a question, you may press star then the number one on your telephone keypad. Your next question comes from the line of Ryan Lynch of KBW. Your line is now open. Hey, good morning, Chris. I wanted to follow- up a little bit on Lee's question. I know he asked a few. I kinda wanna take it just from a little bit of a different approach. You know, if I look at your slide deck, you have slide number 11 and slide 29, that really shows kind of the growth of your overall direct lending platform at First Eagle. It shows that FCRD is really just a small component of the overall direct lending platform as far as the deals you participate in. Slide 29 shows that you all have deployed $2.4 billion of capital across the platform, and obviously FCRD was a really small percentage of that. It just seems that FCRD is such a small little component of the overall direct lending platform. Obviously, FCRD, it's not been a good run for shareholders, you know, for the last five or six years as there's been, you know, the notable issues that you all have been trying to work through. As you've been very shareholder-friendly, I can't imagine this is really FCRD has been a super profitable, you know, entity for the overall First Eagle manager, given all the fee waivers and the low fees it generates. It's a big time commitment to run a public company. You know, Chris, your time's obviously very valuable. It's a lot harder to run a public company than in these private funds. I'm just wondering, like, I'm not sure really, you know, what you know why this entity, like, what are the reasons that it makes sense for this entity to stay public? I'm not really sure what parties are really benefiting from FCRD being a public company. Is there any point where you think that would not make sense? No. Hey, Ryan, appreciate the question and the perspective. You're right. It's interesting. If you think about the beginning of, I guess it was legacy THL and now, you know, First Eagle direct lending platform, you know, the BDC used to be the only vehicle that we had. I mean, at one point, I think it was like a $750 million vehicle. Unfortunately, you know, due to lots of things that we've talked about in the past, they had some portfolio issues, that vehicle has shrunk from $750 million down to, you know, call it $400 million. Outside of that, you know, we basically have grown, you know, private markets business from zero to over $5 billion. The team is very good at what we do, and we know how to build portfolios, we know how to execute. Therefore, we're bringing in a significant amount of capital, you know, alongside the BDC. If you look at the publicly traded vehicle and the way we look at it, we knew the vehicle was under pressure. We knew there was a path. I thought there would be a path. I hope there was a path forward to, you know, reposition of the portfolio to stabilize it and start seeing some growth. We're in the late stages of this. It's taking time. Like I said in my prepared remarks, if this, if it works, then the dividend's able to be increased, then we narrow the gap in book, that's great. We're 100% aligned with the shareholders 'cause we're still the largest shareholder in the platform. There is a lot of value to a permanent capital vehicle when it's run well and when it's trading, as Lee said, when they're above book. You can generate a lot of value. This one has just obviously been more difficult. You know, we ask ourselves these same questions all the time. That's why I think there's a good alignment of interest between us and the manager. You know, we appreciate the patience of the shareholders as we've tried to execute this turnaround, and as I said, we'll know here in short- order how the market's gonna react and we'll plan accordingly. Your next question comes from the line of Matt Tjaden from Raymond James. Your line is now open. Hey, all. Morning, and appreciate you taking my questions. Chris, wanted to pivot a little and maybe go a little more high- level. Was wondering what your outlook is for the private credit default environment at year-end 2022 and how that's changed versus maybe six months ago. That's a good question. I don't know. I'm not gonna put a specific number on it. I'll tell you, as we sit back and we're underwriting new business and we're looking at our portfolio companies, you know, listen, we're credit people, so it's always raining outside for us. I'd say maybe the intensity of the rain has increased as you just look at the different trends that are flowing- through. The good news from our position across the entire platform is, you know, we are not sitting here unsponsored mezz and portfolios are gonna see a lot of volatility. We control, you know, senior secured top of the capital structure to control the liquidity. To the extent there is something that there's a shock to the system, we're able to navigate that. If you go back and look at, you know, the COVID shock, I think, you know, our BDC and all of our private funds, and I think the private market in general, you know, performed very, very well in those circumstances. You know, right now, I think it's hard to come back and put a number on it, but I would just say to your point, yeah, we're probably more bearish than bullish as it relates to, you know, how we're underwriting credit. Now we're trying to, you know, reposition the portfolio, hence the reason why, you know, we're not chasing yield right now. We're not going deep in the capital structure. When we are deploying, we're gonna do it on a control basis at the top of the capital structure to minimize any loss given default if there is a step back in the economy. Got it. That's helpful. Last one for me as most have been asked and answered. When you're talking about potentially taking the dividend higher, are you embedding any benefit from rotation of either Loadmaster or OEM that the remaining fair value in those assets? We are not. Got it. That's it for me. I appreciate the time this morning. Thanks, Matt. Again, participants, if you would like to ask a question, that's star then the number 1 on your telephone keypad. We have a follow-up question coming from the line of Ryan Lynch from KBW. Your line is now open. Hey, Chris. Sorry, my phone got dropped. Yeah, no worries. I was like, that was an easy one. We're glad to have you back in the queue. The other question that I had was, you have obviously already started working on. You outlined some initiatives. Some of them have already been executed like refinancing and restructuring Logan to increase the ROE for that entity. I'm just curious, you know, in your slide deck, these initiatives, do you guys have any sort of target ROE that you guys are hoping FCRD will generate? Obviously, I know there's a lot of uncertainties out there. One of the, you know, sort of the positive uncertainties is that rising rates, you know, are gonna benefit your entities. So that will obviously, you know, interplay into what sort of ROE you think you can generate depends on where the risk-free rate ends up. Any sort of guidance that you have kind of where we sit here today of if you can execute on these strategies, what sort of operating ROE you think FCRD can generate? Yeah, I mean, that's, it's a critical component. You know, the asset side of the equation is basically the market. I mean, we've got some differentiated strategies with like ABL lending, where I think you can pick up some incremental yield. Being in a position now with a much more diversified portfolio to lower the liability side is what's driving what we believe to be going forward a more stable ROE. If you look at the balance sheet of FCRD on a standalone basis, you know, that should be in the, call it the 8%-8.5% range in this market. When you add in Logan, 'cause we're using more synthetic leverage there, we've already quoted that's around a 14% ROE. If you blend those out, you've got 15% of the portfolio out of 14. You got the balance at an 8 or a 9. I'm not gonna do that math in my head because I'll get it wrong, but that's basically where things stand. You know, lowering that cost of debt was mission-critical because we never wanna be in a position, even though our cost of debt was higher than it should have been, where we're taking excessive risk and chasing yield. You can see the discipline on the ROA side. Now we've got the balance sheet right. Now we can lower our cost of debt to drive a much more stable ROE on a combined basis. But that's how I look at it inside those two pockets. Logan standalone is around 14%. FCRD on its own is probably 8%-8.5%. Okay. As far as the ABL lending, I know that's kind of a newer initiative. Can you give us a sense of maybe just the broader direct lending platform? What percentage of the deals that you guys have closed have been in that ABL space? And do you see that changing going forward? Like do you expect to grow that going forward, or is that, you know, gonna be kinda consistent from what we've seen over the last couple quarters? Yeah. If you look at ABL across the entire platform, it's call it a 10%-15% allocation. There could be SMAs or asset-specific funds where that's a 100% allocation to ABL for institutions that want direct access. Think of it as about 10%-15% of the book across the entire $5 billion. Okay. Gotcha. I appreciate the time today. That's all for me. Perfect. Thanks, Ryan. Again, participants, if you would like to ask a question, you may press star then the number one on your telephone keypad. We have a follow-up question coming from Mr. Lee Cooperman from Omega Family Office. Your line is now open. Getting some rough approximations, but if you were able to raise your dividend by $0.02, that would be a $0.48 annual dividend. You divide that by 6, it's an 8% return on your book. Okay, it's not adequate to justify being a public company. Okay. I would just say that very strongly. I listen to everything you're saying, you seem to be very objective, but I think the conclusion is obvious. We have to bulk up and either First Eagle could buy us or somebody else could buy us. That is my conclusion. It's been my conclusion for well over a year, and the facts have supported that conclusion, and I think your own comments as well. I wish you luck, but I would say an 8% return on equity in this environment is not adequate. That's the way you wanna run the company, and I appreciate that, given the risks out there. That's it. Over and out. Thanks, Lee. We don't have any questions over the phone right now. Chris, please continue. Thank you, operator. We appreciate the support of our shareholders, and we look forward to providing you an update of our Q2 results this summer. If you have any questions, feel free to reach out to myself or Jen Wilson. Ladies and gentlemen, this concludes today's Conference Call. Thank you for your participation. You may now disconnect.