Welcome to Monroe Capital Corporation's third quarter 2022 earnings conference call. Before we begin, I would like to take a moment and remind our listeners that remarks made during this call today may contain certain forward-looking statements, including statements regarding our goals, strategies, beliefs, future potential operating results or cash flows, particularly in light of COVID-19 pandemic. Although we believe these statements are reasonable, based on management's estimates, assumptions and projections as of today, November eighth, two thousand twenty-two, these statements are not guarantees of future performance. Further, time-sensitive information may no longer be accurate as of the time or any replay or listening. Actual results may differ materially as a result of risks, uncertainty or other factors, including but not limited to risk factors described from time to time in the company's filings with the SEC. Monroe Capital takes no obligation to update or revise these forward-looking statements. I will now turn the conference call over to Ted Koenig, Chief Executive Officer of Monroe Capital Corporation. Good morning, and thank you to everyone who has joined us on our call today. Welcome to our third quarter 2022 earnings conference call. I am joined by Mick Solimene, our CFO and Chief Investment Officer. Last evening, we issued our third quarter 2022 earnings press release and filed our 10-Q with the SEC. The M&A and financing markets maintained a cautious tone during the third quarter as concerns around slowing economic growth mounted in the face of inflationary and rising interest rate pressures. Since the end of the quarter, the Fed raised interest rates 225 basis points, inclusive of the 75 basis point rate increase announced last week in response to an annualized inflation rate that now stands at 8.2%. According to Refinitiv, middle market financing volume totaled almost $212 billion through the first nine months of the year, flat compared to nine months of last year. Middle market loan spreads in the LCD Middle Market Index continued to widen down approximately 27 basis points during the third quarter, but at a slower pace than during the second quarter when spreads widened by more than 100 basis points. Market volatility was much more pronounced in the public and leveraged financing markets where transaction volumes dropped significantly, and this created compelling opportunities for us in private credit to provide certainty of execution to our clients on more lender-friendly pricing and terms. We believe that the market dynamic will remain for the foreseeable future, and we are prepared to be a trusted financial partner to our clients. As a firm, we made over $3.7 billion of new investments through the first three quarters of 2022. The lower middle market remains active and current market conditions are showing us somewhat lower leverage levels and better-priced investment opportunities across our platform than we have witnessed in the same period last year, which was a record-breaking year for M&A and finance activity. Turning now to third quarter results, we are pleased to report adjusted net investment income of $7.1 million or $0.33 per share, up from adjusted net investment income of $5.4 million or $0.25 per share for the second quarter. We reported NAV of $226 million or $10.43 per share as of September 30, 2022, a decrease of 28 cents per share from NAV of $232.1 million or $10.71 per share as of June 30, 2022. The decline in NAV was substantially the result of unrealized losses as a result of fundamental performance on a couple of specific portfolio companies and the investment in MRCC Senior Loan Fund I, which suffered unrealized mark-to-market losses, which we refer to as the SLF. The decrease in value at SLF was driven by the unrealized mark-to-market losses on the SLF investments, which are loans to traditional upper middle market borrowers and have continued to experience higher volatility and valuations as a result of recent macroeconomic events. During the quarter, MRCC's debt-to-equity leverage decreased slightly from 1.38 times debt to equity to 1.33 times debt to equity. New origination activity at Monroe remains strong, and we expect to modestly increase leverage within our target leverage range of 1.3-1.4 times debt to equity. We believe that our existing portfolio companies will continue to be able to navigate a somewhat higher interest rate environment as debt service coverage is generally solid across our portfolio, and the companies are generally well-positioned to manage the inflationary supply chain and geopolitical headwinds that they are facing. The strong dollar has not materially affected our borrowers as unlike most large companies, most of the revenue generated by our lower middle market borrowers is from U.S.-based sales. We closely monitor and assess those risks as part of our portfolio management process, which involves close and regular communication with our portfolio companies. New deals continue to undergo a comprehensive underwriting process that includes downside stress scenarios to assess performance volatility and cushion from rising interest rates, margin pressures, and an economic slowdown. We believe that the portfolio continues to be well-positioned to benefit from an increase in short-term interest rates as all our borrowers were above their interest rate floors going into the fourth quarter. Therefore, any additional increases in interest rates should proportionally benefit our investment portfolio. MRCC enjoys a strong strategic advantage in being affiliated with a best-in-class middle-market private credit asset management firm with approximately $14.1 billion in assets under management and approximately 190 employees as of September 30, 2022. Our dividend coverage is trending positively. We will continue to focus on generating adjusted net investment income that meets or exceeds our dividend and positive long-term NAV performance despite some short-term macro market headwinds. I am now going to turn the call over to Mick, who is going to walk you through our financial results. Thank you, Ted. As of September 30, 2022, our investment portfolio totaled $508 million, down $28 million from $536 million as of June 30, 2022. Our investment portfolio consisted of debt and equity investments in 98 portfolio companies on September 30, as compared to debt and equity investments in 98 portfolio companies at June 30. During the quarter, we made investments in 5 new portfolio companies with fundings totaling $15.2 million. In addition, we had revolver, add-on, or delayed draw fundings to 25 existing portfolio companies totaling $36.2 million. During the quarter, we received 5 full payoffs totaling $45 million and had ordinary course loan repayments aggregating $28.5 million. We are well-positioned to redeploy this capital carefully into attractive assets that will benefit from increases in interest rates through participating in the substantial pipeline of opportunities generated at Monroe. At September thirtieth, we had total borrowings of $301.2 million, including $171.2 million outstanding under our floating rate revolving credit facility and $130 million of our 4.75% fixed-rate 2026 notes. Total borrowings outstanding decreased by $18.8 million during the quarter. The revolving credit facility had $83.8 million of availability as of September thirtieth, subject to borrowing base capacity. Now turning to our results. For the quarter ended September 30, 2022, adjusted net investment income, a non-GAAP measure, was $7.1 million or $0.33 per share, compared to $5.4 million or $0.25 per share in the prior quarter. This increase in adjusted net investment income is primarily the result of the receipt of previously unaccrued interest income associated with the repayment of an investment that had been on non-accrual status in advance of its repayment and the increase in the average portfolio yield during the quarter. When considering our target leverage, the rising interest rate environment, the favorable percentage of our fund leverage at a fixed rate and the current credit performance of MRCC, we believe that on a run rate basis, our adjusted NII will more than cover the current $0.25 per share quarterly dividend, all other things being equal. As of September thirtieth, our net asset value was $226 million, which decreased from the $232.1 million in net asset value as of June thirtieth. Our NAV per share decreased from $10.71 per share as of June thirtieth to $10.43 per share as of September thirtieth. The 28-cent per share NAV decrease was substantially the result of unrealized losses as a result of fundamental performance on a couple of specific portfolio companies and the investment in MRCC Senior Loan Fund I. The decrease in value at the SLF was driven by unrealized losses on the SLF investments, which are loans to traditional upper middle market borrowers and have continued to experience higher volatility in valuations. Looking to our statement of operations. Total investment income was $15.9 million during the quarter, up from $13 million in the second quarter. The $2.9 million increase in investment income was primarily the result of a one-time benefit of $2 million representing previously unaccrued interest income from the repayment of our loan investment in Curion Holdings LLC during the quarter. Curion had previously been on non-accrual status, and during the quarter, we received proceeds in excess of the cost basis of its investment as a result of a successful sale of the company. We also saw an increase in prepayment gains this quarter of approximately $400,000 and a decline in fee income this quarter of approximately $800,000. As we have previously discussed, these components of our interest income can be lumpy and based on specific transactions. In addition, during the quarter, we began to see the impact of increases in interest rates on our investment income as substantially all the portfolio borrowers exceeded their benchmark interest rates at the end of the second quarter. At September thirtieth, the effective yield on our debt and preferred equity portfolio was 9.9%, up from 8.5% at June thirtieth. SOFR rates, which had been at historically low levels, rose during the quarter with one-month SOFR at approximately 314 basis points at September thirtieth versus approximately 179 basis points at June thirtieth. All other things being equal, a rising interest rate environment will continue to improve the yield on our investment portfolio and increase net investment income. At September thirtieth, we had 4 investments on non-accrual status, representing 0.7% of the portfolio at fair market value, compared to 6 investments on non-accrual status, representing 2% of the portfolio at fair market value at June thirtieth. Our performance has steadily improved in this area as we have been working out the underperforming companies in our portfolio, as we said we would on previous calls. This is the direct result of the turnaround and workout capabilities of our external manager, Monroe Capital, and the resources they have provided to us. During the quarter, we placed no additional borrowers on non-accrual status and our investment portfolio risk rating distribution improved. Moving over to the expense side. Total expenses increased from $8 million in the second quarter to $9.7 million in the third quarter, primarily driven by higher incentive fees, net of associated fee waivers resulting from the increase in net investment income, higher interest and other debt financing expenses on our floating rate revolving credit facility due to the rising interest rate environment, and higher income tax expenses, primarily associated with blocker entities that hold certain of our equity investments. Net loss for the third quarter totaled $7 million compared to a net loss of $12.4 million in the second quarter. Net realized and unrealized losses on investments were $7.9 million for the quarter. Other net gains totaling approximately $900,000 during the quarter were related to foreign currency forward contracts used to hedge currency exposure on certain investments. As of September 30th, the SLF had investments in 62 different borrowers aggregating $192.1 million at fair value with a weighted average interest rate of 8.3%. The SLF's underlying investments are loans to middle-market borrowers that are generally larger and more sensitive to market spread movements than the rest of MRCC's portfolio, which is focused on lower middle-market companies. The SLF's portfolio decreased in value by 1.2% during the quarter from 94.8% of amortized cost as of June 30th to 93.6% of amortized cost as of September 30th. During the quarter, MRCC received income distributions from SLF of $900,000, consistent with the second quarter. As of September 30, 2022, the SLF had borrowings under its non-recourse credit facility of $129.3 million and had $45.7 million of available capacity under its credit facility, subject to borrowing base availability. I will now turn the call back to Ted for some closing remarks before we open the line for questions. Thank you, Mick. We feel that MRCC is well positioned to deliver stable and consistent dividends for our shareholders, especially where our earnings and dividend will benefit from an increase in market interest rates. We have made substantial progress on portfolio matters over the past couple of years, including the most recent quarter, where we achieved meaningful realization above our cost on Curion, and we saw our investment performance risk rating distribution improve. This has been a consistent pattern with our workout names in terms of recovery. We believe our purposefully defensive portfolio strategy is well positioned for potential economic volatility under the watch of a seasoned senior leadership team that has managed credit through multiple economic and business cycles. Our external manager is a team of approximately 100 investment professionals for us to draw upon. Our investment strategy remains focused on providing well-protected and well-structured senior secured first lien loans to companies with defendable market positions, resilient business models, strong management teams, and reliable sponsors and owners. We will continue to selectively deploy capital in sectors with resiliency to economic cycles and headwinds, including technology, healthcare, business services, and opportunistic. Our overall Monroe Capital platform has a strong pipeline. In excess of $2 billion of high quality and selective investment opportunities for all funds at Monroe, including MRCC. We are excited about our investment portfolio and our prospects, and continue to believe that Monroe Capital Corporation, which is affiliated with an award-winning, best in class external manager, provides a very attractive opportunity to our shareholders and other investors. Thank you all for your time today, and this now concludes our prepared remarks. I am going to ask the operator to open the call up now for questions. Certainly. At this time, if you'd like to ask a question, please press star one on your telephone keypad. To withdraw your question, again, press the star one key. Kevin Fultz with JMP Securities, your line is open. Hi, good afternoon, and thank you for taking my questions. You know, I wanted to dig in a bit on portfolio company metrics. Just curious if you could talk about where weighted average EBITDA interest coverage and portfolio company leverage were at quarter end and how that's trended over the last few quarters. Thanks for the question, Kevin. We don't disclose interest coverage metrics, and we don't disclose weighted average leverage. What I can say is that you know over the course of the quarter you know from a performance perspective we saw generally companies increase their top line. You know revenues were up on both a unit basis and a price basis. Margins were you know generally flat you know year to date and quarter-over-quarter or slightly down. In the context of a rising interest rate environment, what you can imagine is we saw you know a slight decline in kind of interest coverage metrics among our borrowers. When we, you know, underwrite our loans and when we, you know, perform surveillance on our loans, we are, you know, uber focused on making sure that, you know, coverage cushions remain, you know, adequate and comfortable. As we look at the portfolio, we feel that our interest coverage ratios and our interest coverage cushions are more than solid in this environment. Okay. That's helpful color, Mick. You know, my follow-up was on non-accrual that came off during the quarter. I guess first, congratulations on the positive resolution of Curion. I saw also that TJ came off non-accrual, and it looks like the sub positions were written off prior to maturity. Is that correct? That is correct. Okay. Just one more quick one on amendment requests. Just curious if you've seen any pickup in amendment requests, and can you discuss your expectation for that to potentially pick up in the near term? Sure. We've seen a modest increase or pickup in, you know, kind of amendment activity around financial covenants. You know, I'll contrast that with, you know, the COVID period of a couple years ago where it was significantly greater than it is today. We have seen, you know, kind of a modest pickup from our borrowers with respect to, you know, amendment activity and requests with respect to financial covenants. Okay. I'll leave it there. Thank you for taking my questions, and congratulations on a nice quarter. Thanks, Kevin. Robert Dodd with Raymond James, your line is open. Hi, guys. Congratulations on resolving non-accruals and good recovery there. It kind of follows up on the amendment request. Can you give us any color kind of conceptually like what with, you know, financial covenant, you know, maybe there's gonna be a little bit more pressure on those as we go forward. What kind of brings the PE firm to, because obviously this is a largely sponsor-backed transaction, sorry, to the table? I mean, do they come early? Do they wait until it's close? Obviously it's not gonna be a general problem in the portfolio. It's only gonna be, you know, a handful of borrowers maybe. You know, how much incremental information can you squeeze out of the sponsor when they come with an amendment request? Trying to get a real handle on, you know, is this just about the interest rates or is there something else going on? Yeah. I think I'll try that one, Robert. Thanks for the question. Here's the way it works in practice. In our market, we have covenants in all of our transactions. Mm-hmm. The covenants we tend to have are relatively similar. We have debt service, we have leverage, and we generally have some EBITDA covenants. Let's assume that those three covenants, and they're each designed to protect us against different elements of potential deterioration, profitability, you know, increased leverage and, you know, the ability to service our debt. We monitor our borrowers generally on a monthly basis. Our portfolio management group is watching our clients on a monthly basis so that we can anticipate quarterly covenant issues. We set covenants on a quarterly basis, but we monitor monthly. Unlike public companies or large cap companies or large upper middle market companies that report quarterly, but generally 60 days after the end of the quarter, we're receiving information 10 days after the end of each month on a flash basis so that we can anticipate where we are on a quarterly basis. I will tell you that across the portfolio, we've seen no material covenant or amendment request activity yet. Again, we're speaking as of November 2022. My estimation is that the overall economy will deteriorate somewhat in Q4 and in Q1 as interest rates continue to rise. I think we've done most everything we can do in our position to protect our portfolio by rotating out of highly cyclical industries, moving away from consumer-facing brand products, retail, restaurants, you know, the things that tend to be more consumer-driven or more immediately affected by, you know, a slowdown in the economy. We feel good about where the portfolio is. I will tell you that, you know, we've been monitoring things closely over the last several months with increasing interest rates, and we have not seen any pattern yet of covenant violations or amendment activities. I think we're, you know, hopefully gonna be able to say that again next call. You know, where our leverage point comes in is, as we see any deterioration in any of these debt service coverage, leverage, or EBITDA covenants, we can be prepared in the quarter if there's a violation of a covenant to bring that sponsor to the table and talk to the sponsor about what we're going to do to, you know, temporarily fix it or permanently fix it, depending on the situation. Unlike most of the market, those of us that play in this lower middle market, you know, have an additional benefit in that we can generally bring the sponsors to the table or the owners or the second or third generation family members, whoever it may be, to affect change. Sometimes that change is putting in more money. Sometimes that change is changing the way they operate, limiting CapEx, reducing dividends, limiting compensation. There's lots of things that, you know, lower middle market companies can do to steer the ship. Unlike, you know, the very large companies that can't take some actions, we can put in some relatively quick remedy solutions to solve covenant problems. I know that's a long-winded answer, but you gave me an open-ended question, so I figured I would answer it to the best of my ability. I really appreciate it. It was a very helpful answer, even if it was a bit long, so I really appreciate that. Thank you. Flipping to the other side, if I can quickly for follow-up. I mean, you said you're probably gonna take up leverage. You're seeing a lot of opportunities. I mean, what areas are particularly attractive right now for deploying new capital? Or do you expect that to mainly be follow-ons to existing portfolios? Are you talking about taking up leverage for new companies or just expanding the existing relationships? Both ways. What we did purposefully, this quarter and the quarter before is we've been stockpiling capacity. In an increasing interest rate environment, you know, we've been doing this for 20 years at Monroe, so I can give you some perspective on history. In an increasing interest rate environment or coming out of a downturn, we did this after the financial crisis, we did it after a couple of recessions, we did it after COVID. We try to stockpile a little bit of liquidity because the deals get better. The new deals get better. Existing deals, we're always funding add-on opportunities, but those have already been priced, those add-ons. Where you have the opportunity to move the needle in our business is to do new transactions at lower leverage attachment points at higher price spreads. All of the deals that we're doing today are virtually being done at 50-100 basis points of current return higher than we were doing a couple of quarters ago. You know, when I talk about optimism for the future and for, you know, for MRCC, you know, I'm looking at what we're doing today and what the pipeline we have today, and the pipeline that we're putting dollars to work at are 50-100 basis points higher in terms of interest rate margin than we were doing six months ago. What that means from a sector perspective, Ted, is, you know, focus on technology and recurring revenue deals, healthcare services deals, and opportunistic deals that have more kind of idiosyncratic characteristics. If you look at the deals we funded in the third quarter, they were deals in those sectors at spreads at greater spread levels that Ted described as well. Got it. Thank you. Thank you again. Yeah. Again, if you'd like to ask a question, please press star one on your telephone keypad. Christopher Nolan with Ladenburg Thalmann, your line is open. Hey, guys. Congratulations on Curion. You guys are getting a good reputation for working through these tough non-accruals. On that note, Vinci Brands, that's another large non-accrual you had. Can you give us any color what your expectations are for resolution of that, please? Sure, Chris. Good question. Vinci Brands, which was previously known as Incipio, we have a credit position in that borrower. That is a borrower that is in the throes of consumer as well as some macroeconomic headwinds right now. They make telephone cases for phones and particularly iPhones. You know, if you've been watching the news, you're seeing what's happening with iPhone, the iPhone launch, the new iPhone, the demand, supply imbalance. Foxconn is having some issues in China right now supplying all the demand. The good news is that Apple is experiencing the highest level of demand for their new phones that they've ever seen. The bad news is that because of COVID restrictions, local governments in China are closing down vast areas of manufacturing, and that's affected Foxconn tremendously in terms of being able to satisfy that demand. We've got some market headwinds there. We have basically a company doing, you know, $140 million or so of revenue. We've got a good company or a real company making a real product that is in the middle of a little bit of a headwind with getting iPhones made and some supply chain issues. We continue to work hard on that. I will tell you that that's a high priority item for us. you know, we're doing everything that we can do on that credit. You know, right now, there's some factors beyond our control that we're hoping and, you know, we're waiting on. You know, time's gonna help us there. We just have to get through some of these COVID restrictions in China, and Apple's gotta be able to produce and sell. Then we've got to be able to, you know, provide cases for the new phones that are being sold. Again, long answer to an easy question. We're hopeful that as time goes on, we'll be able to improve our overall recovery on that particular credit. Great. Thank you for the detail. As a follow-up, given that you have a fair amount of adjustable rate funding in terms of your bank facility, as interest rates go up, does that put you at a pricing disadvantage against other BDCs which may have more fixed rate funding? That's it. it. Thank you. Not really. Because if you look at the other BDCs that have fixed rate funding today, it's generally much higher fixed rate funding. You know, we still have on a relative basis because of the way we've established our capital stack between fixed and floating. You know, we're still floating off of you know, some lower bank lines of credit rates. You know, there's still a positive arbitrage for us to do that. We're gonna hold on to that positive arbitrage until we see rates move back in our favor before we think about doing any type of fixed rate debt. Great. That's it for me. Thanks, guys. Thank you, Christopher. Bryce Rowe with B. Riley, your line is open. Thanks. Good afternoon, Mick and Ted. I was curious if maybe you could speak to the improvement in the portfolio's internal risk weightings. Is that more a function of non-accruals getting resolved? Or were there some other factors at play? Yeah, good question, actually, Bryce. I'm gonna let Mick speak to it in detail, but there's two things that really move and affect that. Number one is non-accruals getting resolved. If you look at you know our history here over the last eight quarters, I will tell you, and Robert Dodd is really the kind of policeman here that's been watching this for everybody. We've done I think a really good job at moving you know non-accruals down and cleaning up some you know some historical you know portfolio companies and some sponsors that have had some challenges. That's number one. The second way things move in risk ratings is migration, both you know positive and negative. We've experienced some positive migration in companies, which means that we're doing a good job in our portfolio management and in holding, you know, companies' feet to the fire and holding sponsors' feet to the fire. Mick can, I think, speak more specifically on the migration, but I think that's a really good question. No, that's absolutely right, Ted. Those are the two components, non-accruals and net credit migration. We talked about the non-accrual topic with Curion being resolved during the course of the quarter, a very positive event. On the net migration front, we think about this in a couple of ways. First is exiting transactions from our portfolio. During the quarter, we were successful in migrating out of the portfolio, a credit that was in that risk rating category of three. So we were happy with that event. In terms of portfolio, you know, kind of movements that result from kind of upgrades and downgrades, we had, you know, a net positive experience in terms of that net upgrade, net downgrade activity during the course of the quarter. It was a good quarter in terms of credit and in terms of credit quality. Okay. That's helpful commentary. Then maybe a question on the SLF. The dividend coming into Monroe from the SLF has been stable here at $900,000. Just curious, with rates moving higher, is there an opportunity for, you know, income generated from the SLF to increase here in future quarters? All things being equal, we'd expect, you know, the SLF to perform, you know, at higher, you know, bottom line net income levels. You know, by extension, you know, we would expect, you know, performance of that portfolio to be, you know, accretive. Got it. Thank you so much. That's all for me. Appreciate the time. Thank you, Bryce. There are no further questions at this time. I'll now turn the call back over to the presenters for closing comments. Okay. I just wanna thank everybody for taking the time out today to catch up. It's an exciting time, I think, in our business. You know, generally from a firm standpoint, we've continued our firm's growth at the manager level, and it's very exciting, I think for the BDC industry right now. You know, those managers that have the workout portfolio management and asset management capabilities, I think can reap some rewards as rates continue to increase. That's certainly what our intention is to do here in the near term. Thank you all. We'll speak to you again next quarter. Then, to the extent you have any questions on an interim basis, feel free to reach out to Mick Solimene or to myself at any time. Thank you all. Bye-bye. This concludes today's call. We thank you for your participation. You may now disconnect.