Fidus Investment Corporation — Second Quarter 2026 Earnings Summary

Financial Performance

• Total investment income increased 8.8% year-over-year to $43.5 million for the three months ended June 30, 2026, compared to $39.97 million in the prior period.
• Net investment income rose 0.3% to $18.7 million ($0.49 per share), up from $18.6 million ($0.53 per share) in the second quarter of 2025.
• Adjusted net investment income decreased 5.1% to $18.9 million ($0.50 per share), down from $19.96 million ($0.57 per share) in the prior year period.
• Net increase in net assets resulting from operations fell 21.0% to $19.96 million ($0.53 per share) from $25.28 million ($0.72 per share) in the prior year.
• Total expenses increased 16.2% to $24.8 million from $21.3 million, driven by higher interest and financing expenses and base management fees.
• Net realized gains on investments, net of taxes, were $6.1 million, a reversal from a net realized loss of $7.6 million in the prior year.
• Net asset value (NAV) totaled $738.5 million ($19.46 per share) as of June 30, 2026, down from $741.9 million ($19.55 per share) at year-end 2025.
• Estimated spillover income (taxable income in excess of distributions) was $38.0 million ($1.00 per share) as of June 30, 2026.

Guidance and Future Outlook

• Management stated the portfolio remains well-positioned to deliver attractive risk-adjusted returns despite ongoing geopolitical uncertainties and market volatility.
• The company expects to continue adding to its portfolio with a focus on highly structured first lien investments.
• Dividend declarations are based on estimates of taxable income available for distribution, with final tax attributes determined after the close of the 2026 tax year.

Business Segments and Product Lines

• The investment portfolio fair value totaled $1.4 billion, consisting of 100 active portfolio companies and eight companies that have sold their underlying operations.
• Total portfolio investments were approximately 102.0% of the related cost basis as of June 30, 2026.
• Debt investments in 61 portfolio companies bore variable rates, representing $930.6 million (72.4%) of the debt portfolio on a fair value basis.
• The weighted average yield on debt investments was 12.5% as of June 30, 2026.
• New investments included $98.0 million in debt and equity securities across four new portfolio companies: Acorn VMS Holdco, LP, BPCP Dcom, Inc., National OnDemand, Inc., and PureCars Technologies, LLC.
• Proceeds from repayments and realizations totaled $39.2 million during the quarter.

Market and Competitive Landscape

• Ongoing geopolitical uncertainties and market volatility weighed on activity levels during the quarter.
• The company focuses on lower middle-market U.S. companies with revenues between $10 million and $150 million.
• The portfolio includes AI-enabled vertical market software and customer data management platforms alongside traditional asset-light managed services and fiber construction providers.

Risks and Challenges

• Geopolitical uncertainties and market volatility continue to impact activity levels.
• Interest rate volatility and changes in the financial and lending markets are cited as factors affecting future performance.
• The company exited second lien and subordinated debt investments in Virtex Enterprises, LP, resulting in an aggregate realized loss of $11.0 million following a $0.2 million recovery.

Management Commentary and Tone

• Edward Ross, Chairman and CEO, described the portfolio as healthy with sound credit quality overall.
• Management highlighted that debt investments generated adjusted net investment income in excess of the base dividend and equity monetizations delivered realized gains.
• The tone conveyed confidence in the portfolio's ability to deliver risk-adjusted returns despite external headwinds.

Other Key Points

• The Board declared a total dividend of $0.50 per share for the third quarter 2026, consisting of a $0.43 base dividend and a $0.07 supplemental dividend, payable September 29, 2026.
• Total dividends paid in the second quarter were $0.62 per share ($0.43 regular and $0.19 supplemental).
• The company received $35.5 million in proceeds from SBA debenture issuances and $120.0 million from June 2029 Notes, while fully redeeming $125.0 million of 3.50% Notes due November 2026.
• As of June 30, 2026, total debt outstanding included $296.0 million in SBA debentures, $120.0 million in 6.625% Senior Unsecured Notes due June 2029, and $200.0 million in 6.75% Notes due March 2030, with a weighted average interest rate of 5.8%.
• Unused capacity under the SPV Credit Facility was $112.4 million as of June 30, 2026.
• Subsequent to the quarter, the company issued an additional $7.5 million in SBA debentures on July 24, 2026.