ICMB

Good morning, thank you for joining today's Investcorp Credit Management BDC, Inc earnings release call for the first quarter ended March 31, 2026. It is now my pleasure to turn the floor over to Suhail. Go ahead, please.

Okay. Yes. Thank you. Andrew, why don't you please do the opening remarks, and then I'll take over.

Sure. Thanks, Suhail. Welcome everyone to Investcorp Credit Management BDC's earnings call for the quarter ended March 31st, 2026. As you heard, I'm here with Suhail, President and Chief Executive Officer of the company. I would like to remind everyone that today's call is being recorded and that this call is a property of Investcorp Credit Management BDC. Any unauthorized broadcast of this call in any form is strictly prohibited. An audio replay of the call will be available on the investor relations page of our website at icmbdc.com. I would also like to call your attention to the safe harbor disclosure in our press release regarding forward-looking information and remind everyone that today's call may include forward-looking statements and projections. Actual results may differ materially from these projections. We will not update forward-looking statements unless required by law.

To obtain copies of the latest SEC filings, please visit the company's registration statement on the SEC EDGAR platform or our investor relations page on our website. The format for today's call is as follows: Suhail will provide an overall business and portfolio summary, and then I'll provide an overview of our results and summarize the financials. At this time, I would like to turn the call back over to Suhail.

Thank you, Andrew. Good morning, everyone, and thank you for joining our earnings call for the quarter ended March 31, 2026. We will begin with a business update and review of our first quarter results and portfolio activity. After which Andrew will walk through our financials in greater detail. As previously announced, the board has formed a special committee of independent directors to evaluate strategic alternatives aimed at maximizing shareholder value. The special committee has retained Fulcrum Multi-Capital Inc as financial advisor to assist in this process. The board and management team are committed to conducting a thorough and deliberate review. Given that the strategic review process is ongoing, we will not be taking questions on today's call. We want to share two steps taken to help manage the company's liquidity.

Our investment advisors voluntarily agreed to waive 56% of our base management fees for the quarter, resulting in approximately $456,000 in savings. This voluntary waiver reflects the advisor's ongoing commitment to support the company. As noted in our 8-K filing on May 8, 2026, we amended our revolving credit facility to reduce the commitment from $100 million to $50 million. This better aligns the facility with our current needs and reduces our cost structure while maintaining adequate liquidity for our investment strategy. This will save the company approximately $401,000 in undrawn commitment fees annually. Turning to our first quarter results, ICMB reported net investment income before taxes of $0.3 million or $0.02 per share.

Net assets declined approximately 14% sequentially, with net asset value per share decreasing to $2.65 from $4.25 at December 31st. This decline was primarily driven by the change in fair value adjustment, lower investment activity, and higher dividends resulting in non-significant growth in NII. Non-accruals remained consistent with the prior quarter, with five positions on non-accruals representing approximately 6.1% of the portfolio fair value compared to 6.9% last quarter. The portfolio remains diversified across 17 GICS industries, with our largest issuer representing 7.6% of fair value. I would also note that our software exposure remains relatively low at 3.1% of fair value at quarter end. Consistent with our hands-on priorities of capital preservation and liquidity management, new investment activity remained muted during the quarter.

For the quarter ended March 31st, we funded an incremental $79,000 under the first term loan C of American Nuts, an existing portfolio company, to support the company's working capital requirements as it executes on its near-term growth initiative. American Nuts provides processing, packaging, sourcing, and procurement services for nut seeds and dried fruits. A yield on this position at cost is approximately 12.6%. On the realization side, we fully exited three portfolio company investments during the quarter, generating total proceeds of approximately $12.7 million with a blended IRR of approximately 10.7%. This included the full repayment of our term loan investment in high-end luxury manufacturing, BBI Holdings, and our position with Insurance Term Loan B debt. I'll now turn the call back over to Andrew to review our financial results in more detail.

Thanks, Suhail. Let me begin by providing you with highlights of our quarterly performance. For the quarter ended March 31st, 2026. The fair value of our portfolio was $151.4 million, compared to $172.7 million on December 31st. Our net assets were $52.7 million, a decrease of $8.6 million from the prior quarter. The quarterly change in net assets consisted of a $0.2 million increase from NII, offset by an $8.8 million decrease from net depreciation of portfolio assets. The weighted average yield of our portfolio, our debt portfolio was 11.95% of fair value, an increase of 139 basis points from the December quarter. As of March 31st, our portfolio consists of 34 borrowers.

Approximately 83% of our investments were in first lien debt, the remaining 17% was invested in equity, warrants, and other positions. 97.8% of our debt portfolio was invested in floating rate instruments and 2.2% in fixed rate investments. The weighted average cash spread on our floating rate debt investments was 4.5%, relatively unchanged from the prior quarter. The average investment size per portfolio company on a fair market value basis was approximately $4.4 million or approximately 2.9%. Our largest portfolio company investment on a fair market value basis was ArborWorks, $11.6 million or approximately 7.6% of our total fair market value.

Our largest industry concentrations by fair market value were professional services at 15.7%, commercial services and supplies at 11.2%, diversified consumer services at 9.7%, IT services at 9.2%, and specialty retail at 7.6%. Gross leverage was 2.05x, and net leverage was 1.83x on March 31st, compared to 2.02x gross and 1.78x net, respectively, for the previous quarter. With respect to our liquidity, as of March 31st, we had approximately $11.6 million in cash, of which approximately $8.8 million was restricted cash. In addition, we had $65.1 million of unused commitment under our revolving credit facility with Capital One, of which $3.6 million was available under our borrowing base.

As discussed previously, subsequent to quarter end, we've reduced our commitment from $100 million to $50 million, which leaves our borrowing base availability unchanged but reduces the ongoing costs as discussed, having a large undrawn fee associated with unneeded availability. Additional information regarding the composition of our portfolio and quarterly financial results are included in our Form 10-Q. With that, I'd like to turn the call back over to Suhail.

Thank you, Andrew. As we mentioned in the previous quarter, our priority remains clear: preserving capital and actively managing the portfolio. To summarize, the special committee continues its [audio distortion] to evaluate strategic alternatives to focus on maximizing shareholder value. We appreciate your continued support and look forward to updating you on our progress next quarter. With that, we would like to conclude the call.

This concludes today's conference call. Thank you everyone for attending.

Good morning, ladies and gentlemen, and welcome to today's Investcorp Credit Management BDC's quarter ended September 30, 2025 Earnings Call. It is now my pleasure to turn the floor over to Andrew Muns, Chief Financial Officer.

Thank you, operator. Welcome, everyone to Investcorp Credit Management BDC's earnings call for the quarter ended September 30, 2025. I'm joined today by Suhail Shaikh, President and Chief Executive Officer of the company. I would like to remind everyone that today's call is being recorded and that this call is the property of Investcorp Credit Management BDC. Any unauthorized broadcast of this call in any form is strictly prohibited. An audio replay of the call will be available on the Investor Relations page of our website at icmbdc.com. I would also like to call your attention to the safe harbor disclosure in our press release regarding forward-looking information and remind everyone that today's call may include forward-looking statements and projections. Actual results may differ materially from these projections. We will not update forward-looking statements unless required by law. To obtain copies of our latest SEC filings, please visit the company's registration statement on the SEC's EDGAR platform or our Investor Relations page on our website. The format for today's call is as follows: Suhail will provide an overall business and portfolio summary, and then I'll provide an overview of our results, summarizing the financials. This will be followed by Q&A. At this time, I would like to turn the call over to Suhail.

Good morning, everyone, and thank you for joining our third quarter earnings call. We'll start with an update followed by a review of our third quarter results, current market conditions, portfolio activity, and then Andrew will walk through our financials for the quarter. I'm pleased to announce that the managers parent Company continues to provide strong support for the BDC. Our Board of Directors has approved Investcorp Capital, an affiliate of Investcorp Group to provide a backstop commitment to refinance our [ 4.78% ] new notes due April 1, 2026. When this commitment enhances our flexibility proactively addresses the near-term maturity and strengthens our balance sheet. Turning to our third quarter results. We reported net investment income before taxes of $0.6 million or $0.04 per share, a decrease of $0.02 per share from the previous quarter. The sequential decline in NII was primarily driven by a decline in income earning assets due to the loss of PIK dividend income from Fusion's preferred equity position which was placed on nonaccrual status as well as portfolio repayments and our continued discipline and not chasing lower-yielding investments. Net assets declined by approximately 4% with net asset value per share increase -- decreasing to $5.04 per share from $5.27 last quarter. This was largely the result of fair value adjustments and 2 legacy borrowers and the payment of a dividend in excess of NII. Nonaccruals accounted for 4.4% of the portfolio for a fair value, up from 1.6% last quarter following the addition of Fusion's preferred equity position. Although modestly higher, sequentially, the level remains comparable to the 4.8% reported a year ago, underscoring the continued stability of the portfolio and our proactive management of underperforming credits especially legacy credits. Overall, the portfolio remains healthy. Approximately 82% of assets at fair value are rated in the top 2 risk rating categories. Our weighted average interest coverage ratio improved to 2.3x compared to 2x a year ago, reflecting enhanced portfolio strength. Weighted average LTV remains approximately 41%, while weighted average leverage declined to 4.6x in the current period from 4.8x in the prior quarter as weighted average EBITDA increase. The portfolio is broadly diversified across 18 industries with average exposure to any single company representing less than 3% of the portfolio's fair value. As we reflect on the quarter, we continue to operate in a backdrop of solid fundamentals but heightened caution. Deal flow and sponsor-led M&A remains slow with many transactions still working their way through the processes rather than closing. Refinancing and portfolio redeployment activity has also slowed compressing spreads and limiting opportunities for compelling new originations. We remain highly selective in evaluating opportunities that meet our targeted yield and credit quality criteria. Approximately 57% of sponsor-backed private credit deals were priced with spreads below 500 basis points in the current quarter. While we actively manage the portfolio, we're not rotating into lower-yielding assets simply for growth of all deals entering our pipeline this quarter, fewer than 10% advanced to deeper diligence. Instead, our focus remains on credit quality and structural protections. We're not chasing the lowest yielding deals. Approximately 73% of our investments are in covenanted to deals. Looking ahead, we expect NII to benefit from these -- from new fundings, and we remain committed to disciplined portfolio management to drive long-term shareholder value. I will now turn to a summary of our investment activity for the quarter. This was a lighter quarter for sure for investment activity. During the quarter ending September, we invested approximately 25,000 in the preferred equity of 4L Technologies, an existing portfolio company to support an incremental equity raise and our existing position. We also fully realized 2 portfolio company investments, generating total proceeds of $6.5 million with an IRR of approximately 12.7%. We realized our first lien term loan positions in PureStar listed on our SOI as AMCP Clean Acquisition Company and One Call Medical, both of which were refinanced during the quarter. Our realized IRRs from PureStar and One Call were 11.5% and 13.7%, respectively. I'll now turn the call back over to Andrew to review our financial results in more detail.

Thanks, Suhail. Let me begin by providing you with highlights of our quarterly performance. For the quarter ended September 30, 2025, the fair value of our portfolio was $196.1 million compared to $204.1 million on March 31. Our net assets were $72.7 million, a decrease of $3.3 million from the prior quarter. Our portfolio's net decrease in net assets from operations this quarter was approximately $1.3 million, and the remaining $2 million was due to distribution of cash dividends to shareholders. The weighted average yield of our portfolio from debt was 10.9%, slight increase from 10.6% in the previous quarter ended June 30. As of September 30, our portfolio consisted of investments in 41 companies, approximately 78% of these investments was first lien debt and the remaining 22% was invested in equity warrants and other securities. 98.5% of our debt portfolio was invested in floating rate instruments and 1.5% in fixed rate investments. The weighted average spread on our floating rate debt investments was 4.6%, relatively unchanged from the prior quarter. The average size per portfolio company on a fair market value basis was approximately $4.7 million or approximately 2.5% of total and our largest portfolio company investment on a fair market value basis was Bioplan at $13.4 million. Our largest industry concentrations by fair market value were professional services at 13.7%, insurance at 10.4%, containers and packaging at 8.9%, IT services at 8.5% and trading companies and distributors at 8.4%. Overall, our portfolio companies are spread among 18 GICS industries as of the quarter end, including our equity and warrant positions. We're also pleased to announce that on November 10, 2025, the Board of Directors declared a distribution for the quarter ended December 31, 2025, of $0.12 per share and a supplemental distribution of $0.02 per share payable in cash on December 12, 2025 to stockholders of record as of December 1, 2025. Gross leverage was 1.75x and net leverage was 1.59x as of September 30, compared to 1.77x gross and 1.54x net, respectively, for the previous quarter. With respect to our liquidity as of September 30, we had approximately $11.6 million of cash, of which approximately $7.8 million was restricted cash with $36.5 million of capacity under our revolving credit facility with Capital One. Additional information regarding the composition of our portfolio and quarterly financial results are included in our Form 10-Q. With that, I would like to turn the call back over to Suhail.

Thank you, Andrew. To close, we remain focused on executing our strategy and positioning the portfolio for long-term value creation. We believe we are well positioned for the current environment with a robust portfolio of strong capital backing and a disciplined investment posture that prioritizes credit quality and income stability over yield. As the broader backdrop remains uncertain, our emphasis continues to be on maintaining flexibility, protecting asset value and ensuring our dividend remains fully supported. The refinancing commitment from our parent affiliate, Investcorp Capital, underscores the confidence and ongoing support from our parent company. Further strengthening our balance sheet and providing additional financial flexibility as we navigate this environment, the $65 million commitment to refinance the [ 4.78% ] notes, coupled with approximately 3.6 million shares held by our parent are reflective of Investcorp's strong commitment to increasing shareholder value and aligning interest. While market activity remains subdued, we continue to see solid underlying portfolio performance with strong coverage metrics and healthy diversification across sectors. We remain patient and selective, ready to deploy capital when attractive opportunities arise. Thank you again for your time and continued support. We look forward to updating you on our progress next quarter. That concludes our prepared remarks. Operator, please open the line up for Q&A.

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

On the backstop, could you clarify whether or not that's to buy up the full refinance amount for the maturing $65 million bond? Or is that simply just to cover principal and coupon payments from the new bonds?

No, it's the former. So the backstop, Christopher, is to refinance the notes in the event that we have not refinanced them prior to the April 1, 2026 maturity debt.

Right. And is there any sort of parameters in terms of the coupons...

Yes, I believe the letter outlines it. We published and it's an exhibit to the 10-Q. We have agreed to SOFR plus 550 on a floating rate basis as the new coupon.

Great. Second question, I guess for Andrew, what was the spillover income in the quarter, please?

Well, I think as we said last time, we don't give the specific spillover income, but I think you probably noticed in the past that our dividend has been above NII. And obviously, the amount that we've chosen to pay out is reflective of the spillback amount that's required so you could make a similar assumption for the declared dividend to be paid in December of this year.

Right. And the final question I had is for Klein Hersh. This is nonaccrual, but the cost basis is 0 and the fair value is 0. So why keep it on the investment portfolio at all?

The sub notes?

We're required to -- under accounting rules, you have to put everything on there that has any chance of being paid at any time. You see the CareerBuilder warrants are on there also marked at 0. Those were not expected to and now that, obviously, the restructuring of that is complete. It certainly will not in the future, pay anything. So that's just something we're required to do and we have had things market 0 before. Interestingly, the notes for client that are on nonaccrual actually have a 0 coupon to them. I think if they were on accrual status, we would theoretically have to amortize the 100% discount over time, which I think would distort the results pretty materially.

[Operator Instructions] I don't see any other questions, sir.

Great. Excellent. Well, thank you, everyone, and we appreciate your time, and we look forward to speaking again next quarter. Thank you, Luke.

You're welcome, sir. And this concludes today's conference call. Thank you, everyone, for attending.

Good morning, ladies and gentlemen, and welcome to today's Investcorp Credit Management BDC's Quarter Ended June 30, 2025, Earnings Call. It is now my pleasure to turn the call over to Andrew Muns, Chief Financial Officer.

Thank you, operator. Welcome, everyone, to Investcorp Credit Management BDC's Quarter ended June 30, 2025, Earnings Call. I'm joined today by Suhail Shaikh, President and Chief Executive Officer of the company. I would like to remind everyone that today's call is being recorded and that this call is the property of Investcorp Credit Management BDC. Any unauthorized broadcast of this call in any form is strictly prohibited. Audio replay of the call will be available by visiting our Investor Relations page on our website at icmbdc.com. I would also like to call your attention to the safe harbor disclosure in our press release regarding forward-looking information and remind everyone that today's call may include forward-looking statements and projections. Actual results may differ materially from these projections. We will not update forward-looking statements unless required by law. To obtain copies of our latest SEC filings, please visit the company's registration statement on the SEC's EDGAR platform or our Investor Relations page on our website. The format for today's call is as follows: Suhail will provide an overall business and portfolio summary, and then I will provide an overview of our results, summarizing the financials, followed by a question-and-answer session. At this time, I would like to turn the call over to Suhail.

Good morning, everyone, and thank you for joining our second quarter 2025 earnings call. Firstly, I would like to say that the Board of Directors and I are very pleased that Andrew Muns has accepted the role of CFO of the company, which became effective on July 16, 2025. Andrew was appointed as the COO of the company on March 24, 2025, which led us to expand his role as the CFO. This was a busy quarter for us on several fronts. And while some of the headline results were mixed, we remain focused on executing our strategy and positioning the portfolio for long-term value creation. Turning to our second quarter results. We reported net investment income before taxes of $0.8 million or $0.06 per share, an increase of 1% from the previous quarter. This represents an annualized return on equity of 4.3%, up approximately 80 basis points sequentially, reflecting stable income generation and continued discipline on both the investing and expense fronts. This trend continues to reflect our broader 2025 theme of steady execution amid an improving yet selective deployment environment. Net assets declined modestly during the quarter, and our net asset value per share decreased to $5.27 per share from $5.42 in the previous quarter, largely driven by fair value adjustments, including two positions being placed on nonaccrual. Importantly, even though with these additions, our nonaccruals as a percentage of the total portfolio at fair value remained stable at 1.6%, in line with the previous quarter. Notably, this is down meaningfully from 5% in the same period last year, underscoring the continued progress we've made in credit resolution and the effectiveness of our disciplined investing approach. Additionally, the overall portfolio continues to demonstrate resilience, and we continue to benefit from the diversity of industries we are invested in. Performance across our underlying borrowers remains largely in line with expectations. While the median EBITDA is relatively unchanged at approximately $55 million, the weighted average net leverage declined to approximately 4.8x from 4.9x and the weighted average LTV remained relatively unchanged at approximately 46% from the quarter ended March 31. One of the defining features of the quarter was a pickup in origination activity with $19 million in originations this quarter, up from $5.1 million last quarter. Most of this activity occurred in June and was concentrated in existing portfolio companies. This demonstrates both our conviction in our long-standing sponsor relationships and the continued selectivity in the broader market where new opportunities that meet our underwriting criteria remain limited. We continue to take a highly selective approach and maintain a rigorous diligence process to ensure that any additions to the portfolio meet our underwriting standards and long-term investment objectives. As we look ahead, we are seeing early signs of renewed momentum in the middle market. Our pipeline is beginning to rebuild in July, and we are cautiously optimistic that this momentum will carry into the second half of the year. Market spreads remained relatively stable throughout the quarter, and we continue to see disciplined pricing across the middle market. While volume has started to pick up, the quality of deal flow continues to vary, and we remain focused on maintaining high underwriting standards. Our priorities remain centered on resolving legacy credit issues and repositioning the portfolio to support long-term performance. I will now turn to a summary of our investment activity for the quarter. During the quarter ended June, we invested in one new portfolio company and four existing portfolio companies. Fundings for new investments totaled $19 million at cost, as I mentioned earlier. The weighted average yield of debt investments made in the quarter was approximately 9%. In the same period, we fully realized three portfolio companies investments totaling $9.5 million in proceeds with an IRR of approximately 32.8%. First, we invested in the first lien term loan of One Call Medical. One Call is a tech-enabled provider of managed care solutions that serves workers' compensation and other health markets in the U.S. We are currently invested in the term loan across our other funds on our platform. Our yield at cost is approximately 9.2%. We participated in the refinancing of American Auto Auction, also known as XLerate. XLerate is the second largest player in the used car whole auction market. We invested in the first lien term loan and our yield-at-cost is approximately 9.1% Lastly, we -- as mentioned earlier, we made a number of incremental investments in existing portfolio companies that we were able to opportunistically purchase in the secondary markets. These include an investment in Integrity Marketing, Asurion and Max U.S. Bidco, also known as Alphia. Our yield-at-cost is approximately 8.5%, 8.9% and 9.2%, respectively, in these investments. Turning to our realizations. We realized our first lien term loan position in XLerate as part of the refinancing that I mentioned and 4L Technologies, both of which were refinanced during the quarter. Our realized IRRs on XLerate and 4L are 20.4% and 19.9%, respectively. We also realized our equity position in RESA Power. We participated in the co-investment of RESA Power alongside Investcorp's North American private equity team a few years ago. Our realized IRR is 64.1%. I would now like to turn the call over to Andrew to discuss our financial results.

Thanks, Suhail. Let me begin by providing you with highlights of our quarterly performance. For the quarter ended June 30, 2025, the fair value of our portfolio was $204.1 million compared to $192.4 million on March 31. Our net assets were $76 million, a decrease of $2.1 million from the prior quarter. Our portfolio's net decrease in net assets from operations this quarter was approximately $434,000 with the remaining $1.7 million due to the distribution of cash dividends to shareholders. The weighted average yield of our portfolio was 10.6%, a slight decrease from 11% in the previous quarter. As of June 30, our portfolio consisted of 43 borrowers, approximately 79% of our investments were in first lien debt and the remaining 21% was invested in equity, warrants and other positions, 98.5% of our debt portfolio was invested in floating rate instruments and 1.5% in fixed rate instruments. The weighted average spread on our floating rate debt investments was 4.6%, a slight decrease from 4.7% in the prior quarter. The average investment size per portfolio company on a fair market value basis was approximately $4.7 million and our largest portfolio company investment on a fair market value basis remained BioPlan at $13.6 million. Our largest industry concentrations by fair market value were professional services at 13.8%, insurance at 9.9%, containers and packaging at 8.8%, IT services at 8.7% and trading companies and distributors at 8%. Overall, our portfolio companies are spread among 19 different GICS industries as of quarter end, including our equity and warrant positions. I would like to announce that on August 7, 2025, the Board of Directors authorized the company to repurchase up to $5 million of its shares of common stock pursuant to a new stock repurchase program. The timing, manner, price and amount of any share repurchases will be determined by the company in its discretion based on the evaluation of economic and market conditions, the company's stock price, applicable legal, contractual and regulatory requirements and other factors. The program is expected to be in effect until August 7, 2026, unless extended or until the aggregate repurchase amount that has been approved by the company's Board of Directors has been extended. The program does not require the company to repurchase any specific number of shares, and the company cannot assure stockholders that any shares will be repurchased under the program, program may be suspended, extended, modified or discontinued at any time. We are pleased to announce that on August 7, 2025, the Board of Directors declared a distribution for the quarter ended September 30, 2025, of $0.12 per share and a supplemental distribution of $0.02 per share payable in cash on October 9, 2025, to stockholders of record as of September 18, 2025. Gross leverage was 1.77x and net leverage was 1.54x as of June 30 compared to 1.53x gross and 1.37x net, respectively, for the previous quarter. With respect to our liquidity, as of June 30, we had approximately $17.3 million in cash, of which approximately $14.4 million was restricted cash with $29.5 million of capacity under our revolving credit facility with Capital One. Additional information regarding the composition of our portfolio and quarterly financial results are included in our Form 10-Q. With that, I would like to turn the call back over to Suhail.

Thank you, Andrew. We remain confident in the strength of our platform and the disciplined approach our team takes in managing the portfolio and cultivating strong origination relationships. As we move through 2025, our priorities continue to be maintaining NAV stability, delivering sustainable net investment income and selectively deploying capital into high-quality opportunities with attractive risk-adjusted returns. With increased activity emerging in the middle market, we believe the second half of the year will represent compelling investment opportunities. Over the past year, we have made meaningful progress in positioning the company for long-term success, and we're optimistic about our ability to create consistent value for our shareholders going forward. We appreciate your continued support and look forward to updating you on our progress in the quarters ahead. That concludes our prepared remarks. Operator, please open the line up for Q&A.

[Operator Instructions] We are now ready to begin. Our first question comes from Christopher Nolan, Ladenburg Thalmann.

Andrew, congrats on the promotion.

Thank you.

What was the spillover income for the quarter, please?

I'll have to look up the exact amount of the spillover income, but you rightly pointed out that, that was the big reason for the distribution to shareholders being in excess of the change in assets from operations. The net income before taxes of $0.06 a share was about $0.04 a share after taxes and negative $0.03 a share after taking into account losses. So the distribution of $0.12 a share with the supplemental of $0.02 is obviously in excess of that. And that, as you pointed out, is related to the spill back.

Okay. On a more broader question, you guys are running with a really high leverage. The profitability is somewhat low and the asset quality is actually pretty good. And I'm just trying to understand what is the strategy to improve returns, please?

Yes, it's a great question, Chris. And I think if I recall, you probably asked a similar question last quarter as well. I think the big issue for the vehicle right now is the expense base. And as we grow our assets under management for Investcorp's private credit business, we can absorb some of those expenses broadly across a variety of end markets and that's going to improve the profitability of the company. At a high level, that is -- we've mentioned that before, and we continue to focus on that. I think as you rightly pointed out, it's taken us a few quarters to stabilize the book. We feel very, very good about where we are today. Nonaccruals are down. Income is fairly steady. And we're deploying capital at a decent pace as repayments come in. So we're very cautious about the fact that we are not sort of trying to get that leverage number too much higher than what our stated goal is to be at that 1.5-ish on the high end. So hopefully, that kind of gives you a sense of where we're headed.

And I guess on the leverage ratio, should we expect portfolio contraction in coming quarters to get the leverage ratio back down?

I think -- well, two things. One, we do expect repayments to pick up in the second half of the year. So that's going to be a natural deleveraging event to the extent we don't find decent assets to replace those with, and we have a line of sight to some assets that we think are going to get refinanced. The market overall, as I stated in my prepared comments, is improving. M&A market is improving. So we do see that -- we do expect a number of positions that are going to get refinanced, and so that's one, and then secondly, we watch the leverage number pretty carefully. So with respect to deployments, we try to measure our deployments against where we are on the total leverage.

Okay. And I guess final question is, given where the stock is trading, which is somewhere around 50% of NAV, do you guys -- I mean, Monroe Capital recently sold all of its BDC assets to a related entity within the broader Monroe Capital and converted itself to cash and then sold the cash to Horizon, which is another Monroe vehicle. But you ever guys ever considered just wrapping up the BDC, converting it to cash, enabling investors to get an improved return on the stock?

We think about a lot of things, Christopher. So look, our primary focus is to improve shareholder value, and in order to do that, you've got to start with first, stabilizing the book, making sure that the book is stable. I'm not intimately familiar with the transaction that you're describing. So we will study that, but that's -- I saw the news flash, but I haven't really paid much attention to it to date.

[Operator Instructions] I don't see any other questions, sir.

Okay. Thank you, Luke. Thank you, everyone, for dialing in, and we look forward to speaking with you all again at the end of the next quarter. Thank you, Luke.

And this concludes today's conference call. Thank you, everyone, for attending.