Monroe Capital (MRCC) CEO Ted Koenig On Q4 2021 Results - Earnings Call Transcript

Monroe Capital (NASDAQ:MRCC) Q4 2021 Earnings Conference Call March 3, 2022 11:00 AM ET

Company Participants

Ted Koenig - Chairman, President & CEO

Aaron Peck – CIO & CFO

Conference Call Participants

Christopher Nolan - Ladenburg Thalmann

Sarkis Sherbetchyan - B. Riley Securities

Matt Tjaden - Raymond James

Robert Dodd - Raymond James

Disclaimer*: This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are designed to help you navigate the audio should the corresponding text be unclear. The machine-assisted output provided is partly edited and is designed as a guide.

Operator

00:03 Welcome to Monroe Capital Corporation's Fourth Quarter and Full Year 2021 Earnings Conference Call. Before we begin, I would like to take a moment to 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 the COVID-19 pandemic. Although, we believe these statements are reasonable based on management's estimates, assumptions and projections as of today, March 3, 2022, these statements are not guarantees of future performance.

00:39 Further, time-sensitive information may no longer be accurate as of the time of any replay or listening. Actual results may differ materially as a result of risks, uncertainty or other factors, including, but not limited to the 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.

01:01 I will now turn the conference over to Ted Koenig, Chief Executive Officer of Monroe Capital Corporation.

Ted Koenig

01:07 Good morning and thank you everyone who has joined us on our call today. Welcome to our fourth quarter and full year 2021 earnings conference call. I’m joined by Aaron Peck, our CFO and Chief Investment Officer. Last evening, we issued our fourth quarter and full year 2021 earnings press release and filed our 10-K with the SEC.

01:31 We are pleased to report another strong quarter of financial results with solid net investment income and increased NAV performance. 2021 was a year punctuated by very strong M&A, buyout and related financing activity, particularly in the fourth quarter as transaction volumes increased across the board.

01:53 Total U.S. middle market volume across direct and syndicated lending markets hit a record of $319 billion in 2021, up 85% from $173 billion (2:15) in the year earlier and a prior high of 2018 by 12%. Activity was strong in anticipation of expected tax law changes and in the face of inflationary pressures supply chain shortages and employment challenges.

02:27 Turning now to the fourth quarter results. We are pleased to report adjusted net investment income of $5.4 million or $0.25 per share. We also reported a net increase in assets resulting from operations of $6.8 million (ph) or $0.32 per share during the quarter, which was driven by net investment income of $5.4 million or 25% -- $0.25 per share and net gains of almost $1.5 million or $0.07 per share.

03:00 As a result, our NAV and per share basis grew from $11.45 per share on September 30 to $11.51 per share at the end of the year. This represents the seventh consecutive quarter of growth in NAV per share, which has increased by almost 15% since the end of first quarter 2020. During the quarter, MRCCs regulatory debt to equity leverage increased slightly from 1.11 times debt to equity to 1.13 times debt to equity. Total leverage also increased slightly from 1.34 times debt to equity to 1.35 times debt to equity during the quarter. This modest increase in leverage was primarily driven by an increase in the size of the portfolio during the quarter.

03:55 New origination activity at Monroe remains strong and we expect to continue to modestly increased leverage with a new target total leverage range of 1.3 to 1.4 times debt to equity in the near term after giving effect to the repayment of our SBIC debt and transfer of loan assets from our SBIC subsidiary to MRCC. Aaron will discuss this development later in the call. This targeted level of GAAP leverage should support strong adjusted net investment income performance in future periods.

04:34 As we have discussed in prior calls, our continued focus is on making new investment with attractive risk return dynamics while proactively managing in constructing our portfolio. Most of our portfolio companies have continued to see performance improvements as the economy has rebounded, which has contributed to the positive NAV performance in the quarter. Our loan underwriting focus continues to be on those companies with defendable market positions, resilient business models, exceptional management teams and strong sponsors or owners.

05:10 MRCC enjoys a strong strategic advantage in being affiliated with a best-in-class middle market private credit asset management firm with approximately $13 billion in assets under management and over 150 employees as of December 31, 2021. We will continue to focus on generating adjusted net investment income that meets or exceeds our dividends and positive NAV performance just as we have shown in the last seven consecutive quarters.

05:44 I am now going to turn the call over to Aaron, who is going to walk you through our financial results.

Aaron Peck

05:50 Thank you, Ted. During the quarter, we funded a total of approximately $45.1 million in investments, which consisted of $13.8 million in fundings to five new portfolio companies and $31.5 million of revolver and delayed-draw fundings to existing portfolio companies. This solid portfolio growth was offset by sales and repayments on portfolio assets, which aggregated $40.9 million during the quarter.

06:16 At December 31, we had total borrowings of $337.9 million, including $151 million outstanding on our revolving credit facility, $130 million of our 2026 notes and $56.9 million of SBA debentures payable. Total borrowings outstanding increased by $6.6 million during the quarter driven by borrowings on our ING led revolving credit facility to support portfolio growth outside of our SBIC subsidiary. We are well situated to continue to carefully grow our portfolio through participating in the substantial pipeline of opportunities generated at Monroe. The revolving credit facility had $104 million of availability as of December 31 subject to borrowing base capacity.

07:06 Turning to our results for the quarter ended December 31 adjusted net investment income, a non-GAAP measure was $5.4 million or $0.25 per share, down from the $6.4 million or $0.30 per share in the prior quarter. When considering our targeted leverage and the current credit performance at MRCC, we continue to believe that on a run rate basis, our adjusted NII can cover the $0.25 per share quarterly dividend without significant fee waivers in the future all other things being equal.

07:37 LIBOR rates remained at historically low levels during the quarter with three-month LIBOR at approximately 21 basis points as of December 31. We maintain LIBOR floors in nearly all our deals with the majority of floors at a level of at least 1%. On most amendments and on virtually all of our new originated deals, we are now focused on pricing our deals as a spread to the secured overnight financing rate or SOFR, an advance of LIBOR going away, which is anticipated to occur in 2023.

08:07 As of December 31, our net asset value was $249.5 million, which increased from the $246.7 million in net asset value as of September 30. Our NAV per share increased from $11.45 per share at September 30 to $11.51 per share as of December 31. The $0.06 per share NAV increase was substantially the result of net realized and unrealized gains on the portfolio during the fourth quarter of $0.07 per share.

08:40 Looking to our statement of operations, total investment income was $13 million during the fourth quarter, down from $15.2 million in the third quarter. Total investment income for the third quarter included $1.7 million in additional interest and dividend income from certain investments that were returned to accrual status due to improvements in underlying credit performance. During the fourth quarter, we placed no additional borrowers on non-accrual status.

09:06 Total non-accruals approximate 2.6% of the portfolio at fair value at December 31, down from 3.1% of the portfolio at fair value at September 30% and 4.1% at December 31, 2020. The effective yield on our debt and preferred equity portfolio increased slightly to 8% at year end, up from 7.9% at September 30.

09:31 Moving over to the expense side, total expenses for the quarter decreased from $8.9 million in the third quarter to $7.7 million in the fourth quarter, primarily due to lower incentive fees, net of associated fee waivers as a result of lower net investment income. At the end of the quarter, our regulatory leverage was back up a little to approximately 1.13 times debt to equity, which is a slight increase from the regulatory leverage level of 1.1 times at the end of the prior quarter, as a result of portfolio growth during the quarter.

10:05 Total leverage was 1.35 times debt to equity at year end, up modestly from the 1.34 times debt to equity level at the end of the third quarter. The level of regulatory leverage at December 31 is consistent with the targeted leverage range we have guided you to on prior calls of 1.1 to 1.2 times debt to equity. As of December 31, we had restricted cash in our SBIC subsidiary of approximately $15.5 million up from restricted cash of $8 million at September 30.

10:37 On March 1, the MRCC -- SBIC subsidiary repaid all its remaining SBA debentures and transfered its loan positions to MRCC. This was achieved through borrowings on our revolving credit facility and the use of the restricted cash held in our SBIC subsidiary. While the repayment of the SBA debentures will increase the level of regulatory leverage at MRCC it will slightly reduce total leverage all other things being equal.

11:05 In recent quarters, we have had substantial restricted cash in the SBIC subsidiary resulting from loan repayments, which could only be used to repay SBA debentures on a semi-annual basis. The full repayment of our SBA debentures will help reduce the drag associated with a large cash balance previously held at the subsidiary and should positively impact net investment income going forward.

11:32 As a result of the repayment of the SBA debentures and the transfer of loan positions to MRCC, we are no longer providing regulatory leverage guidance and instead are targeting total GAAP leverage in the 1.3 to 1.4 times debt to equity range as with the repayment of our SBA debentures, there is no longer a difference between our regulatory leverage and our GAAP leverage.

11:53 As of December 31, the SLF had investments in 57 different borrowers aggregating $189.1 million at fair value with a weighted average interest rate of approximately 5.9%. The SLF had borrowings under its non-recourse credit facility of $94.8 million and $80.2 million of available capacity under this credit facility subject to borrowing base availability.

12:19 I will now turn the call back to Ted for some closing remarks before we open the line for questions.

Ted Koenig

12:25 Thank you, Aaron. In closing, we continue to benefit from the strong M&A and financing markets as well as a strong portfolio management skills at Monroe to create differentiated risk adjusted returns for our shareholders. Our overall Monroe Capital platform continues to maintain a very strong pipeline of high quality investment opportunities for all funds at Monroe, including MRCC.

12:49 As a result, we continue to be excited about our investment portfolio and our prospects. The key is our conservative underwriting, a purposefully defensive portfolio and our access to a large and experienced portfolio management team with experience managing through multiple economic cycles. As such, we continue to believe that Monroe Capital Corporation provides a very attractive investment opportunity to our shareholders and other investors for the following reasons.

13:15 Number one, our stock pays a current dividend rate of over 9%. Number two, our dividend is fully supported by consistent adjusted net investment income coverage. Number three, we are currently trading at a discount to our per share NAV and a discount to the price to book ratio of most of our BDC peers. Number four, we have sufficient liquidity and the opportunity to grow our portfolio to achieve leverage at the upper end of our guided range. And number five, we are affiliated with an award-winning best-in-class external manager which has decades of experience over 150 highly skilled employees and approximately $13 billion of assets under management.

14:02 Thank you all for your time today and this concludes our prepared remarks. I'm going to ask the operator to open the call now for questions.

Question-and-Answer Session

Operator

14:11 [Operator Instructions] Our first question comes from Christopher Nolan with Ladenburg Thalmann.

Christopher Nolan

14:28 Yeah. The repayment of all the SBIC, I mean up, sorry last quarter you guys were hinting that you might pay some of the back. What was the catalyst for paying it all off?

Aaron Peck

14:46 Yeah. Good question, Chris. As we went into year-end, we saw the cash balance increase again in the SBIC subsidiary and we didn't see the kind of quality deals that we like at Monroe that would fit well into the SBIC subsidiary. And so, we made the decision, given that you can only payback debentures at the SBA twice a year. We made the decision that we didn't want to keep running with cash drag and so we decided that it was no longer a significant benefit for us to keep the SBI -- SBA subsidiary in place.

15:15 The reality is with the new leverage rules from a few years ago, it doesn't have the same value add that used to have. And on a rate spaces, it's frankly not that different from what we are -- what we pay on our revolving credit facility. So there really wasn't any pickup in cost by borrowing on the credit facility versus borrowing with debentures and there's a lot of operational cost and other costs to maintain it. And so, it just wasn't a great use of our attention and time anymore. It wasn't generating the bank for the buck that it used to. So, we finally made the decision to pay it off at the hand back that license for the BDC sub.

Christopher Nolan

15:58 Great. As a follow-up, how does this affect your capital strategy because right now you have a lot of revolving credit facility debt and obviously it's going to go up, but we're entering into a phase where the market is expecting multiple tightenings by the Fed. And so, does this mean that you guys are going to try to one go after some fixed rate debt?

Aaron Peck

16:25 We'll continue to monitor the markets and make decisions about the liability side of our balance sheet. We haven't made any determinations definitively today about what about the need to go out and raise more fixed rate debt or the desire to do that. And I will remind you, and you know this well, Chris that while there's definitely expectations of rate increases. Those things tend to be priced into the market, right. So, the market knows that that expectations there. So, what we're really concerned about would be more increases in rates than what the market currently expects which would increase rates, but the market rates are impacted by what people think the Fed's going to do. So even with that the low end of the – the short end of the curve remains relatively low rate wise. I think you could see some, some steepening of the curve. Wouldn't be that impactful to us since we typically borrow on short-term LIBOR and in the future likely short term for. So, for now, we're going to keep with the current strategy using our revolver and keep the fixed rate notes that we have in place, but we're always talking and always examining the market and if we make any changes. We'll be sure to let the market now.

Christopher Nolan

17:36 Okay. Thanks, sir.

Operator

17:38 Our next question comes from Sarkis Sherbetchyan with B. Riley Securities.

Sarkis Sherbetchyan

17:46 Hey. Good morning and thank you for taking my question here. Just as a follow-up to the prior question on the repayment of the SBIC, you mentioned that there are some operational costs and other costs that are involved with that. Any -- I guess thought processes on your run rate operating expenses going forward after you kind of collapse that license in the operations there?

Aaron Peck

18:12 There really isn't anything I can point to or give you specifics at this moment. It is not a, it's not something we've ever broken out in terms of what we pay, but and so I'm not sure it's going to be a major savings, but there will be some savings. I would estimate, probably 50 to 100 grand a year, maybe in that range in terms of just the maintenance of that subsidiary. We can do a little more work on the specifics and come back, but it's just -- it also provides us significant efficiencies to not have to deal with reporting to the SBA, separate audit costs associated with the sub, separate testing. So, but probably my best guess would be about $100,000 a year in actual cost savings.

Sarkis Sherbetchyan

19:01 Okay. Got it. So, it sounds like were there any, I guess accelerated kind of prepayments or repayments happening in that bucket, if you will, we're kind of if you then go out and look for opportunities, you're not really seeing that's so therefore the cash balance was building and you just thought, it's more prudent to kind of collapse it into your operations and deploy the incremental capital in your current strategy, is that the right way to think about it?

Aaron Peck

19:35 I think it's sort of, I'd say, we certainly see lots of opportunities to redeploy capital in our pipeline at Monroe is huge. We had -- as a firm, we have the biggest fourth quarter in history and Ted, I'm sure we'll talk more about that, but what was getting more difficult was to find deals that specifically would fit for the SBIC subsidiary. And it's not just whether they fit or not, but it was trying to be competitive in the marketplace. When you ask borrowers to allow you to put their debt in your SBIC subsidiary, you also have to ask them to sign a significant amount paperwork and Rep to certain things.

20:15 And in a competitive market environment that's a little bit more challenging to get done and the reality is we don't have a lot of active SBIC subsidiaries today that are out lending. So, there wasn't like there was a need across the firm for SBIC eligible investments and so it's just, it wasn't easy to redeploy the cash in things that were specifically eligible from an SBIC standpoint. So, we would prefer to be more unbridled in our investment strategy and be able to do whatever deals, make the most sense on a risk adjusted basis and there's lots of those opportunities for us as a firm, and so we're happy to collapse the sub and move forward on a more regular way basis and allow the BDC to participate pro rata on deals with all the other funds that Monroe that aren't SBIC subsidiaries. I don’t know if Ted, do you have anything else to add to that?

Ted Koenig

21:06 Yeah. I think it's really to two questions Sarkis. Number one is, we had some cash that wasn't being utilized that we could utilize, so there a drag associated with that cash. Number two, the SBIC rules are a little more complicated and that they require you to lend or invest in companies that are defined as small businesses. Those tend to be companies with net income of $6 million or less. And frankly, given where the market is today. We thought it was more prudent from a credit standpoint to focus on companies with higher net income than those that were SBIC eligible companies. So those were really the two driving strategic reasons for paying those that off and moving forward. There is plenty of opportunities for us to deploy those dollars and generate good solid arbitrage will return dividend standpoint, and we thought we would kind of look at this and do what's in the best interest of the shareholders.

Sarkis Sherbetchyan

22:08 No. Thank you for that. And I want to switch gears here for a moment to focus a little bit on the non-accrual side of your balance sheet. Any updates there? I think in the past, we've talked about how you would like to turn on some of those non-accruing assets back to accrual status. And then I think over time, right that's, that's a good thing because it helps kind of you redeploy capital back into earning assets. Any updates on the non-accrual side and kind of any incremental ideas there that you can share with us?

Aaron Peck

22:43 Sure. So, I think generally we are seeing that happen. We're seeing generally non-accrual assets improve and, in some cases, turn back on, in some cases there's, it's a little more challenging hard to see what's going on. So, for example, we had a non-accrual assets that became an accrual asset and then it became a paying asset, and then it got sold and it left the portfolio. So, it's -- and so we were able to do exactly that redeploy that capital now with the new traded assets. So, we are seeing improvements you're seeing both improvements on a non-accruals on a fair value and cost basis both of the things are improving. We continue to work very hard to see improvements in all of our assets that are rated below or two.

23:26 And generally speaking, some are doing better than others, but generally speaking, we continue to see positive momentum in our more difficult portfolio quarter-after-quarter, and so we will continue to focus on this. We expect to continue to see assets on non-accrual status. Little by little become accrual assets or get realized and allow us to redeploy that cash into occurring assets. One of the two outcomes is likely.

Ted Koenig

23:52 Yeah, just a follow-up on that, I mean, we've done a good job here. I don't know if people are really understood that, but we were 4.1% a year ago, 2.6% now fair value. We grow almost by 50%. We've cut our non-accruals and our plan is to continue to do that in this year. So, I think that 21 was a great year for us to reduce non-accrual exposure put those dollars to work and we are all over this, I told you that last time, last couple of calls, this is one of our highest priorities and we're making really good progress on it.

Sarkis Sherbetchyan

24:31 Yeah. No, certainly appreciate the color there. And then one more for me and I'll hop back in the queue. Regarding kind of the incentive fee waivers that are outstanding for you to kind of maintain that $0.25 per share dividend levels. Does that still kind of hold true from an operating philosophy standpoint into 22 as some of the balance sheet changes work through here with the collapse of the SBIC?

Ted Koenig

24:55 Yeah, I'll take that Aaron.

Aaron Peck

24:57 Go ahead, Ted.

Ted Koenig

24:59 Yeah. We are going to do everything we can to maintain the consistency of our dividend and the stability of our dividend, we've shown that I think over the last 10 years since we've been public. So, from a manager standpoint, we've always put the interest of the shareholders ahead of any other interest in managing MRCC and we intend to continue to do so.

Sarkis Sherbetchyan

25:25 Thank you. That's all from me.

Operator

25:31 Our next question comes from Matt Tjaden with Raymond James.

Matt Tjaden

25:37 Hey, guys. Good morning and thanks for taking my questions. First one for me, maybe congrats on getting the non-accruals down, notable progress on that front. I'd be interested following up on Sarkis question, the exits you've seen over the past three quarters in non-accrual names or the exit, are you generally seeing exits at fair value realization slightly excess of quarter-end marks, are they fairly consistent with where they were marked the prior quarter?

Aaron Peck

26:05 It's good question. It's kind of a mixed bag. Generally speaking, they are around the marks most of the time. We make a concerted effort to be updated and thoughtful about providing information to our valuation providers so that they can have all of the information necessary to mark the assets really carefully and intelligently. Occasionally, we get some positive surprises and occasionally, we get some negative surprises right. So, for example, we had a deal in our portfolio called Luxury Optical that we had been a challenge in deal for a while and end up rebounding.

26:47 We did a lot of work and a lot of time and effort on that we've talked about this in past calls and really improve the operations that hired a great team, there to fix the business and that one ended up realizing above our mark at through a sale process considerably. But some of the others have been sort of when we have realized them have been sort of around the mark or may be slightly below from time to time. I think on a net-net basis, generally it's around our mark. And so, it's been a pretty good process and we generally have a marked right and that's a good testament to our process, but generally speaking, it works.

Matt Tjaden

27:14 Got it. Fair enough. Just one for me, maybe taking a little bit of a different of a route. Can you give us a sense of the weighted average LIBOR floor in the SLF and how you think about the dividend up to MRCC in a raising rising rate environment?

Ted Koenig

27:30 I can answer the second part of the question a lot easier than I can answer the first part and I'd have to get back to you guys on the weighted average floor in the SLF that's not something I have handy, but generally speaking, as you would expect a rising rate environment is a positive thing, all other things being equal, for our portfolio both in the SLF and in our portfolio and in our base portfolio. And our base portfolio tends to have on average higher weighted average LIBOR floors then what we would expect to see in the SLF portfolio that would be my, my guess based on what I know about the portfolio. So, you'll probably see more impact at the SLF level on a direct basis for near-term movements then you would see in our base portfolio were on average that we tend to have about a 1% LIBOR floor. So, my guess is, is over time, you'll see the benefit come through more on the SLF in the near term than you would in our parent portfolio, but once you get above that kind of 1% rate, you start to see a commensurate benefit on both sides of the portfolio.

Matt Tjaden

28:33 Got it. That's it for me. I appreciate the time this morning.

Ted Koenig

28:37 Yeah. Thanks, Matt.

Operator

28:42 [Operator Instructions] Our next question comes from Robert Dodd with Raymond James.

Robert Dodd

28:49 Hi, guys. Good morning. Sorry, I had technical difficulties so doubling up with that. So, I just kind of a follow-up to the normal call question for this, to your point, Ted. I mean, a year ago December 20 you had 12 companies on the -- recall now six, I'd say half [indiscernible] et cetera. I mean, we've talked in the past about sometimes you're willing to go through a much longer process with an asset to recover ideally know even more than cost. Also, six is that what's left in the portfolio now the six remaining of those going to be longer term cost with this, but you just said maybe some are going to be resolved in 2002, or what mix balance should we expect on the incremental improvements on that to be more stretched out given, given your track record on getting good recoveries, if you could?

Ted Koenig

29:53 So, good question, Robert. So here is the philosophy that we've had at Monroe, for a long time. Our job is to manage our portfolio and generate the best risk adjusted returns for shareholders. And part of that philosophy means getting every dollar we can back as opposed to cutting and running and trading asset. So, Aaron mentioned Luxury Optical that was a really good example that was a deal that we had pre-COVID was a good performance deal, it was in the high-end retail optical space, primarily in New York City, in and around the York City, a very good business that business got hit hard by COVID and we didn't think it was justified. So, what we did is we double down in that company. We brought in new management. We acquired a vertical supplier and we've built a high quality company with we took that over there was probably a $50 million enterprise value on that business. Our debt was right about there. And we turn the company around. We use our portfolio management strengths and we sold that business for about $130 million at the end of last year. And what happened was, it was a big success. We've got other companies in our portfolio that are in various stages those types of turnarounds, it's easy to take a loss and move on, that's not in the best interest of our shareholders all the time and particularly, over the long term, we have to manage our business on a quarter-to-quarter basis that may be the right thing to do, but recall that MRCC is about 8% of the total assets of Monroe Capital. So, we are very, very focused as a firm in getting back every dollar for every one of our funds, because we take a longer-term approach to this and try to generate MOIC returns, MOIC which is real returns on invested capital as opposed to fast IRR returns.

32:03 So in, in my view the shareholders are MRCC are better served by Monroe using the full panoply of our infrastructure. Now 150 people when we have deals that don't perform as well as we'd like or in a circumstance where some of these deals when we have private equity sponsors that don't do the right thing and continue to support their companies. We sometimes we have no choice but to step in and do the catalyst for change in some of these deals. So, the short answer to question is, we've made I think tremendous progress in 2021 moving to our non-accruals from 12 to six and I anticipate ‘22, we will make additional progress are moving these other names down, as Aaron mentioned, we don't, we haven't put any new assets on non-accrual. We like our portfolio, we think we're in a good position today we're past COVID we're past a lot of the stress so, I'm optimistic about what we can do with the remaining part of the portfolio.

Robert Dodd

33:36 Got it. I appreciate the color. Thank you, Ted.

Operator

33:41 [Operator Instructions] I'm showing no further questions at this time. I'd like to turn the call back to Ted Koenig for closing remarks.

Ted Koenig

33:57 Good. Thank you all for appearing on the call today. I know there's lots of things happening in the world. Right now, our hearts go out to the Ukrainian people. I tweeted out something the other day message and support. There is no place in this world for what's been happening. We call it for immediate end to this is craziness and the atrocities but from our standpoint, our job is to focus as best we can on our shareholders and our investor partners and

you all are very important part of that community that we interact with and we certainly appreciate the support from this group of people on the call today and we will do everything in our power to continue to generate solid risk-adjusted returns and increase our NAV for MRCC. So, thank you all and we will see you and speak to you again next quarter. Thank you.

Operator

35:03 This concludes today's conference call. Thank you for participating. You may now disconnect.