Fidus Investment ((FDUS)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Fidus Investment Company painted a picture of cautious optimism. The company reported a generally positive performance with increased net investment income and strong portfolio credit quality, alongside improved liquidity. However, these positives were balanced by a significant net realized loss and rising expenses. This mix of factors suggests a stable outlook, albeit with some caution due to non-recurring income components.
Increased Adjusted Net Investment Income
Fidus Investment reported an increase in adjusted net investment income (NII) for Q2 2025, reaching $20 million, up from $18.4 million in Q2 2024. This growth was largely driven by fee income, which accounted for about half of the $1.6 million increase. Despite the rise in income, the adjusted NII per share remained steady at $0.57 for both periods.
Dividend Increase
The Board of Fidus declared a total dividend of $0.57 per share for Q3 2025, an increase from $0.54 in Q2 2025. This dividend consists of a base dividend of $0.43 per share and a supplemental dividend of $0.14 per share, reflecting the company’s commitment to returning value to shareholders.
Portfolio Growth and Strong Credit Quality
The company’s net asset value grew to $692.3 million by the end of Q2 2025, up from $677.9 million at the end of Q1 2025. The portfolio remains well-diversified, with companies on nonaccrual accounting for less than 1% of the total portfolio on a fair value basis, underscoring the strong credit quality.
Robust Originations
Fidus reported robust originations totaling $94.5 million for Q2 2025. This includes new investments in four portfolio companies and additional investments, primarily in first lien debt securities, indicating active portfolio management and growth.
Improved Liquidity
At the end of Q2 2025, Fidus had improved its liquidity position, with approximately $252.7 million available. This includes cash, line of credit availability, and SBA debentures, providing the company with a solid financial cushion.
Net Realized Loss
The company recorded a net realized loss of $7.6 million in Q2 2025, primarily due to a $14.4 million loss on the exit of an investment in Quantum IR Technologies. This loss overshadowed $6.8 million in net realized gains, highlighting the challenges in managing investment exits.
Increased Expenses
Total expenses for Q2 2025 rose to $21.3 million, marking a $3.1 million increase over Q1 2025. This increase was largely due to a $1 million rise in the capital gains incentive fee accrual and a $1 million increase in interest expense.
Episodic Income Components
The earnings for Q2 2025 were bolstered by $1.3 million in prepayment fees and $600,000 in amortized fees. However, these income components are not expected to recur at the same levels in Q3, indicating potential variability in future earnings.
Forward-Looking Guidance
During the earnings call, Fidus provided guidance on several key financial metrics. The company expects continued growth in adjusted net investment income and has declared dividends totaling $0.57 per share for Q3 2025. The net asset value is projected at $692.3 million, with a robust liquidity position of $252.7 million. Despite a $7.6 million net realized loss, the outlook for the second half of 2025 remains optimistic, with expectations of increased M&A activity.
In conclusion, Fidus Investment’s earnings call highlighted a stable yet cautious outlook, with positive growth in net investment income and dividends. However, the company faces challenges with realized losses and increased expenses. Investors should note the potential variability in income due to non-recurring components, while the optimistic guidance for the latter half of 2025 suggests potential opportunities for growth.