Golub Capital BDC - Earnings Call - Q2 2021

Transcript

Speaker 0

Welcome to the GBDC's 03/31/2021 Quarterly Earnings Conference Call. Before we begin, I would like to take a moment to remind our listeners that remarks made during this call may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts made during this call may constitute forward looking statements and are not guarantees of the future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward looking statements as a result of a number of factors, including those described from time to time in GBDC's filings with the SEC. For materials the company intends to refer to on today's earnings call, please visit the Investor Resources tab on the homepage of the company's website, www.gallopbdc.com, and click on the Event Presentation link.

GBDC's earnings release is also available on company's website in the Investor Resources section. As a reminder, this call is being recorded for replay purposes. I would now like to hand the call over to David Gollop, Chief Executive Officer of Gollop Capital BDC. Thank you, sir. Please go ahead.

Speaker 1

Thank you, operator. Hello, everybody, and thanks for joining us today. I'm joined by Chief Financial Officer, Ross Tooney Senior Managing Director, Greg Robbins and Managing Director, John Simmons. Yesterday in the afternoon we issued our earnings press release for the quarter ended March 31, and we posted an earnings presentation on our website. We're going be referring to this presentation throughout the call today.

For those of you who are new to GBDC, our investment strategy today is, and since inception it has been, to focus on providing first lien senior secured loans to healthy, resilient middle market companies that are backed by strong partnership oriented private equity sponsors. The headline for the quarter ended March 31 is that GBDC's results were strong. GBDC had both strong net investment income and continued strong credit performance. We'll discuss these topics in greater detail as we go through today's presentation. Gregory is going to start.

He's going to provide a brief overview of GBDC's performance for the March. And then he's going to hand it off to John and Ross for a more detailed review of the quarter's results. I'll then come back at the end to provide some closing commentary, and I'll open the line for questions. With that, Gregory, let's take a closer look at GBDC's results for the quarter and the key drivers of those results.

Speaker 2

Thank you, David. Turning to Slide four. For the quarter ended March 31, GBDC's adjusted NII per share was $0.29 adjusted EPS was $0.55 and ending NAV per share was $14.86 The key drivers of those strong results are summarized on Slide six. First, our portfolio companies generally continue to perform well. This won't come as a surprise if you happen to see the Golub Capital middle market report from March 31, which we published about a month ago based on actual financial data from Golub Capital's middle market borrowers.

The report for calendar Q1 showed the highest rate of year over year profit growth since we began tracking data in 2013. Strong earnings growth across GBDC's portfolio was reflected in the four positive credit quality trends listed on the right hand side of the slide. We'll go into them in more detail shortly. Second, GBDC took advantage of attractive market conditions to continue to optimize its balance sheet. We executed a second unsecured bond issuance, building on the success of our inaugural offering last year.

We also closed a new corporate revolver. These financings are consistent with the strategy you've heard us discuss before, low cost, flexible financing with limited near term maturities. Finally, middle market new deal activity was solid. It wasn't a record origination quarter like the December, but it was meaningfully improved from last year's June and September quarters. Let's drill down on the four positive credit quality trends listed on the right hand side of the slide, starting with our internal performance ratings.

Slide seven summarizes the positive trends in the internal performance ratings of GBDC's portfolio in the post COVID period. Specifically, since 03/31/2020, we've seen essentially no increase in the percentage of the portfolio performing materially below expectations in categories one and two. Those two categories constituted only 1.1% of the portfolio at quarter end. We have seen upward credit migration, a steady increase in categories four and five, and a corresponding decrease in category three. To remind folks, categories four underwriting.

And Category three are loans that are performing or expected to perform below expectations. In the quarter ended March 31, Categories four and five increased from 81% of the portfolio as of twelvethirty one to 86.9% of the portfolio as of threethirty one. Category three decreased from 17.9% to 12% over the same period. The proportion of the portfolio rated three as of threethirty one was pretty close to our pre COVID normal of around ten percent. A second key indicator of continued credit improvement is the fact that nonaccruals remain very low.

In fact, non accruals declined quarter over quarter from 1.2% to 1% as a percentage of investments at fair value at threethirty one and are now back to pre COVID levels. We'll come back to this point in our usual discussion of GBDC's financial results. Slide eight shows two other indicators of improving credit quality, no net realized losses and solid net unrealized gains. This slide provides a bridge from GBDC's 14.6 NAV per share as of twelvethirty one to its increased 14.86 NAV per share as of threethirty one. Let's walk through the bridge.

First, adjusted NII per share was $0.29 in line with our quarterly dividend. Second, no realized losses were recorded during the quarter. Third, net unrealized gains were $0.26 per share. These unrealized gains reflect the continued reversal of unrealized losses incurred in the March 2020 quarter. In fact, our strong unrealized gains through the post COVID period have driven reversals of over 85% of the March 2020 unrealized losses on a price basis.

Let's now take a closer look at our results for the quarter ended March 31. For that, let me hand the call over to John Simmons to walk you through the results in more detail. John?

Speaker 1

Thanks, Gregory. Please turn to Slide 10

Speaker 3

for a summary of our results for the quarter. You can see on the right hand side of the slide that for the quarter ended 03/31/2021, each of adjusted NII per share, adjusted net realized and unrealized gain per share and adjusted EPS were consistent with the prior quarter's strong results. As a result, our NAV per share at 03/31/2021 increased to $14.86 On 05/07/2021, our Board declared a quarterly distribution of $0.29 per share payable on 06/29/2021, to stockholders of record as of 06/11/2021. This distribution is consistent with our goal of having quarterly cash distributions of approximately 8% of NAV on an annualized basis. Turning to Slide 11.

New investment commitments for the quarter ended March 31 totaled $234,700,000 After factoring in total exits and sales of investments of $347,500,000 as well as unrealized appreciation and other portfolio activity, total investments at fair value decreased by 2.5% or $112,000,000 during the quarter. As Gregory noted, originations this quarter were quite strong, but so are repayments. As of 03/31/2021, we had $44,700,000 of undrawn revolver commitments and $160,600,000 of undrawn delayed draw term loan commitments. These unfunded commitments are relatively small in the context of our balance sheet and liquidity position. As shown at the bottom of the table, the weighted average spread over LIBOR on new floating rate investments of 5.5% declined closer levels.

Slide 12 shows that our portfolio mix by investment type has remained consistent quarter over quarter with one stop loans continuing to represent our largest investment category at 81% of the portfolio. Slide 13 shows that GBDC's portfolio remained highly diversified by obligor with an average investment size of less than 40 basis points. As of March 31, 97% of our portfolio remained in first lien senior secured floating rate loans and defensively positioned in what we believe to be resilient industries insulated from COVID-nineteen. Turning to Slide 14. This graph summarizes the portfolio yields and net investment spreads for the quarter.

Focusing first on the light blue line, this line is the income yield or the amount earned on our investments, including interest and fee income, but excluding the amortization of upfront origination fees and purchase price premium. The income yield increased by 10 basis points to 7.5% for the quarter ended 03/31/2021. The investment income yield, or the darker blue line, which includes the amortization of fees and discounts, also increased by 10 basis points to 8% during the quarter. The income yield and the investment income yield both increased primarily due to higher fee income and discount amortization. Our weighted average cost of debt, the aqua blue line, increased by 10 basis points to 3% primarily as a result of the acceleration of deferred financing fees from early redemptions of $165,000,000 in relatively higher priced SBIC debentures.

Our net investment spread, which is the green line, which is the difference between the investment income yield and the weighted average cost of debt, remains stable at 5%. With that, I'll hand the call over to Ross to continue the discussion of our quarterly results. Ross?

Speaker 4

Thanks, John. Flipping to the next two slides, nonaccrual investments as a percentage of total debt investments at cost and fair value remained low and decreased to 1.41% respectively as of March 31. During the quarter, the number of non accrual investments decreased to six portfolio company investments from seven portfolio company investments as one portfolio company investment returned to accrual status. As Gregory discussed in his opening commentary, as a result of strong portfolio company performance, the percentage of investments rated three on our internal performance rating scale decreased to 12% of the portfolio at fair value as of March 31. As a reminder, independent valuation firms value at least 25% of our investments each quarter.

Slide seventeen and eighteen provide further details on our balance sheet income statement as of and for the three months ended March 31. Turn to Slide 19. The graph on the top summarizes our quarterly returns and equity over the past five years, and the graph on the bottom summarizes our quarterly distributions as well as our special distributions over that same time frame. Turn to Slide 20. This graph illustrates our long history of strong shareholder returns since our IPO.

Slide 21 summarizes our liquidity and investment capacity as of March 31, which remains strong with over $800,000,000 of capital available through cash, restricted cash and availability in our revolving credit facilities. We also highlight our continued progress during the quarter on optimizing the right hand side of our balance sheet, three key highlights. First, on February 11, we closed on a $475,000,000 revolving credit facility with JPMorgan, which matures on 02/11/2026, and has an interest rate that ranges from one month LIBOR plus 1.75% to one month LIBOR plus 1.875%. Second, on February 24, we issued $400,000,000 of unsecured notes, which bear a fixed interest rate of 2.5% and mature on 08/24/2026. With the completion of our second unsecured debt issuance, our percentage of unsecured percentage of total debt increased to 38% as of March 31.

And finally, on February 23, we decreased the borrowing capacity under our revolving credit facility with Morgan Stanley to 75,000,000 After the end of the quarter, we further amended this revolving credit facility to, among other things, extend the reinvestment period through 04/12/2024, extend the maturity date to 04/12/2026, and reduce the interest rate on borrowings to one month LIBOR plus 2.05% from one month LIBOR plus 2.45%. Slide 22 summarizes the terms of our debt capital as of March 30 last, on Slide 23, we summarize our recent distributions to stockholders. Most recently, our Board declared a quarterly distribution of $0.29 per share payable on June 29 to stockholders of record as of June 11. With that, I'll now turn it back to David for some closing remarks. David?

Speaker 1

Thanks, Ross. So to sum up, GBDC had a strong quarter. Adjusted net investment income matched our dividend, realized credit losses were nil, and unrealized gains were substantial, continuing the reversal of unrealized losses that we incurred in the 03/31/2020 quarter. Let's talk about our outlook for the rest of this calendar year, and then we'll take your questions. At the risk of sounding out of character, the headline is that I'm cautiously optimistic.

We believe GBDC has four powerful tailwinds going into the coming period. One tailwind is GBDC's strong portfolio performance. We've highlighted through today's presentation the positive credit trends that we've seen over the last quarter and the last twelve months. Our pre COVID underwriting has proved strong. And as a consequence, we won't be distracted in the coming period by needing to play defense on a troubled portfolio.

A second tailwind is the economy. Many of the sectors we like to lend to are booming, areas like software and healthcare and business services. Just look at the record profit growth that we reported in the Q1 Golub Capital Middle Market report that Gregory referenced. Going forward, the economy is reopening, fiscal stimulus is taking effect, monetary policy remains accommodative. These factors all point to likely continued economic strength for the next several quarters.

A third tailwind comes from the strength of the private equity ecosystem in which we operate. The private equity industry has over $1,700,000,000,000 of dry powder. That's according to prequeen data. In the first quarter of twenty twenty one, the private equity industry had its strongest ever fundraising quarter. That's according to Private Equity International.

So we believe there's a lot of pent up demand for sponsor driven middle market M and A now that COVID uncertainty is abating. And we anticipate that the coming period's likely to be one of robust private equity deal making. Finally, a fourth tailwind is that GBDC has ample liquidity and flexibility to capture this attractive opportunity set. You'll recall that one of our key goals in navigating COVID was not only to fortify the company's balance sheet in the face of COVID related uncertainty, but also to put the company on even stronger footing to take advantage of new opportunities. I think we're in a good position to do that.

That all said, you know I'm not by nature an optimist, so let me elaborate on three reasons why I'm only cautiously optimistic. First, from a macro perspective, while near term economic prospects look bright, there is longer term uncertainty, especially around inflation. Our economy is booming. And yet at the same time, government and central bank policy right now is to apply even more fiscal stimulus and even more accommodative monetary policy. I don't know how that's going to play out.

I don't think anybody can predict the outcome of this economic policy cocktail. A big question is whether price increases that we're seeing right now in commodities and wage pressure, whether that's going to translate into accelerating inflation. And I don't think anybody knows the answer to that yet. Second reason for caution, liquid credit markets are strong. High yield spreads are at twenty year tights.

If this strength continues, I'd expect to see some continued pressure on loan spreads, terms and leverage in our market. As I've said many times before, the middle market is insulated but not immune from what's going on in broader credit markets. Third reason for caution, COVID's still raging in many parts of the world. This isn't just a tragedy for all the people in those communities. It also means we're very likely to see new COVID variants develop, variants our vaccines may not protect us from.

So we may not be done yet with this dreadful COVID virus. But enough on the cautions. There are always clouds in the sky. Overall, think GBDC is very well positioned and that the coming period will likely play to Golub Capital's strengths. Thanks, operator.

Please open the line for questions.

Speaker 0

And Your first question comes from Fiona O'Shea with Wells Fargo Securities.

Speaker 5

Hi, everyone. Good afternoon. First question, David, on the outlook for origination. Historically, you've been the the gold platform has been very active in these very large unit tranche offering, some exceeding 2,000,000,000. Those seem to be coming back, but, you know, in our observation, contrary to former periods where we'd see them, today, the syndication market appears very high as well.

Do do do you agree with that? But Is is this first, I guess, are these large market opportunities coming back? And second, are are they gaining do they represent lenders competing more heavily with the syndicated market or or the sponsor demand tilted in your favor? I'll I'll stop there.

Speaker 1

Thanks, Fin. Good to hear from you. So let me take a step back in answering that question, because I think there are a number of trends that are running in different directions. First trend is the development of a large unitranche product that sponsors can use if they want it. I think there's definitely been a marked change over the last couple of years.

We've been the leader, as you point out, in providing these large unitranches. But it's not just us. And I think sponsors increasingly look at the possibility of financing their deals with a large unit tranche as one of the options on the menu in a way that even as recently as three or four years ago wasn't the case. Now, under what circumstances do sponsors prefer doing a large unitranche to doing a broadly syndicated first lien, second lien deal? That's a second question.

And you're 100% right that when the broadly syndicated markets are hot, that it's possible sometimes to get a combination of pricing or leverage or terms or all three that are more attractive in the syndicated market than are possible to get in a private one stop. But even when markets are receptive like they are now, there are often transactions where a private one stop makes more sense. That may be because the sponsor needs to move more quickly than the syndicated market will permit, or needs to arrange a deal with more confidentiality, doesn't want to share information with a lot of market participants, Or it's a situation in which the company is going to be doing serial acquisitions, and we're growing, scaling up the company. It's going to be easier using a one stop capital structure as opposed to a more complicated multilayer capital structure. So my view is there's a secular trend toward increased market share for larger one stops, that that's going to continue.

There will be ups and downs in that secular trend that will be driven by where we what we're seeing in the M and A market and what we're seeing in the broadly syndicated market. I think right now, to your point, we're seeing a particularly robust syndicated market, and it's harder for private lenders to compete with than during periods when those markets are choppy. One thing I think we can all be certain of, which is that choppy markets will return at some point, and one has to look at these trends over an extended period of time. Make sense?

Speaker 5

Well, thank Yeah. No. Absolutely. It's very helpful. And I'll just do a follow on on your economic commentary at the end on the item of inflation, potentially labor inflation.

We are, you know, seeing on on the higher level more from, you know, viewpoints that that suggest that that that's a potential concern. Do do you see anything in your portfolio companies that are more labor intensive, perhaps restaurants, so forth? Any indications of of emerging pressure on that front?

Speaker 1

I'm seeing trends in our portfolio that are reflective of what we're all reading about in the front pages of the financial press, which is that it's increasingly challenging in many areas of the country to hire. And I think that can be a good thing or a bad thing depending on how one looks at it. I think the good aspect of it is that it's leading to some higher wages in some areas, which over the course of the last two decades, have seen stagnant wages. And that's probably a good thing. It's a bad thing if this becomes part of accelerating inflationary expectations, which then drives inflationary expectations into other areas.

I think it's going to be very interesting to watch the Bureau of Labor Statistics data over the course of the coming months. And tomorrow actually is the next release. And one of the pieces of data I like to look at, I think is really interesting, is they release a month over month version of inflation in addition to their annual version. And if you look at the recent month over month data, it's been accelerating. And so I'm very interested to see whether we're going to see a continuation of that acceleration or whether we're going to see a stabilization.

Speaker 5

Interesting, and we'll check that out tomorrow. Well, thanks for taking our questions, and congrats on the quarter.

Speaker 1

Thanks, Fin.

Speaker 0

Your next question comes from Ryan Lynch with KBW.

Speaker 6

Hey, good afternoon, guys. I wanted to I had a couple of questions on kind of your thoughts during some of the during your underwriting process for for a couple different, teams. So you guys are obviously a big, lender in the software space. And it seems that that annual recurring revenue, Wendy, is becoming much more and more prevalent. It seems like that's even accelerated kind of more during COVID and even now kind of as we're recovering coming out of COVID.

So just can you talk about from a higher level, how do you think about lending based on ARR versus cash flow for some of these software names or other recurring revenue names?

Speaker 1

Sure. So let me provide some context first just for those who perhaps aren't so familiar with what we're talking about. Golub Capital's been a leader in providing financing to the sponsor backed buyouts of software companies for many, many years, more than a decade. And about eight years ago, in addition to lending to more mature software companies that are generating significant cash flows, we began lending to companies that were at an earlier stage. We refer to these as recurring revenue bonds.

And these are companies that have a proven software as a service model. They've got great product. They've got loyal customers. They've got significant recurring revenues that are growing rapidly. Their clients are renewing their business with them at high rates.

But in part because these companies are growing rapidly and are investing a lot in sales and marketing, they're either not highly profitable, in some cases they're not profitable at all. And so traditional credit metrics don't book the same with these companies as those same credit metrics look like with the more mature software companies. We were a pioneer in identifying this recurring revenue loan niche as being an attractive niche. We've been very active in it, Brian, as you point out. Over the last eight years, we've had virtually no losses in this space.

It's been a very successful space for Golub Capital. As we look at those loans, the key underwriting criteria boil down to whether we believe there'd be a strategic buyer who'd want to buy the company at a price that would be more than sufficient to get us out if the growth projections of the company were not fulfilled. If something happened that caused the company's business plan to increase revenues at a rapid rate, not to be sustainable, we want to make sure there's an appropriate second way out for us so that we are not gonna be subjected to a meaningful credit loss. This is tricky because you're talking about companies that are not highly profitable, that are earlier stage in their development. And I think it requires enormous amounts of expertise, underwriting expertise, industry expertise, and underwriting skill.

I think it's something we're very good at. I don't think that it's inappropriate. I think it is appropriate that there have been some commentators around saying that there's some people who are active in this space who maybe don't have the level of expertise to be as active as they currently seem to be. This is not the easiest to learn kind of lending that there is. This is tricky stuff.

Speaker 6

That's that's really helpful color, you know, on kinda your overall thought process and your history in that area. Kind of on that that that same sort of topic, though, you know, obviously, there were certain businesses that were significantly impacted on the negative side, from COVID, and those businesses, you know, if they've survived, are are probably going to to, you know, have some some pretty major tailwinds as the economy reopens. Conversely, in some of these software needs, potentially, a lot of the the growth or adoption, you know, as as the economy or a lot of this business has has been digitalized and and and kinda work from home. So some of that growth or adoption might have been accelerated or pulled forward during COVID, and there might not be the same sort of tailwinds going forward. So how are you guys thinking about that and taking that into your your underwriting process as you guys look at at more deals, in the software space, you know, kind of at this point in time with with, hopefully, the economy reopening and some of those acceleration of of some of those trends may be fading?

Speaker 1

Yes. I guess I'm not a big believer in your premise. Think in many parts of the software look, every software company has got to be looked at individually. But what we've seen in many parts of our software universe is that there were COVID impacts. Not to say there wasn't still revenue growth, but the pace of revenue growth would have been higher if the sales force had been able to travel and meet in person with customers and push along the sales pipeline in the traditional way.

So if your premise was right, I think we'd be seeing right now, we'd be seeing a notable decline in the growth rate of software companies generally. And if I harken back to the College Capital Middle Market Index report that Gregory alluded to in our opening remarks, that's not what the numbers show. The numbers show continued very high revenue growth for software companies, and my bet is that, that's going to continue.

Speaker 6

Okay. That's fair enough. Just one last one if I can, kind of switching gears to to your capital structure first. Congrats on the your second unsecured debt issuance. That was a a very attractive rate.

And kind of on that point, when you guys were initially talking about layering on some unsecured debt, I kinda got the impression, and obviously, correct me if I'm wrong, that that you guys were gonna maybe have a third or so percent of your liability structure in unsecured notes. You know, with this most recent rate of 2.5%, of course, the you know, that rate can always move depending on the market terms. And of course, you want to ladder out your maturities for that unsecured debt. Does that change, though, that 2.5% rate, did that where you guys issued your last bond, has that changed kind of the way you guys are thinking about layering on unsecured debt as a percentage of your liability structure?

Speaker 1

It's a great question, Brian. And I think we always think about the debt structure in the same way, which is it's a balancing of multiple goals. Your point, if I'm understanding you right, is 2.5%, that's really low. And it's particularly low by historical standards for unsecured debt. Would that drive us toward potentially increasing the proportion of unsecured in our stack?

And the answer is yes, subject other goals, too, including, as you point out, laddering maturities. And also, you know, subject to our needing incremental capital. Right now, if you look at our right hand side of the balance sheet, we've got an enormous amount of unused capacity with almost none of the JPMorgan line drawn. So we certainly want to be careful not to take on incremental unsecured that we don't need. But in the long run, if unsecured is as inexpensive as it is now, I think that does change the calculus for the proportion of the capital structure that it may make sense to have an unsecured.

Speaker 6

Mhmm. Okay. Understood. That's all for me. I appreciate the time this afternoon, guys.

Speaker 0

And your next question comes from Robert Dodd with Raymond James.

Speaker 7

Hi, guys. And and congratulations on the the the quarter and the portfolio looks in in really good shape. So on one of the the the comments you you made, David, I mean, the liquid markets are hot, and there is a a a concern that I think you have a have. Not so much about the spreads. They're they're gonna do what they do.

But the terms, if you were to the terms and structures, if you were to look at things that say coming into your pipeline today versus maybe we're coming in in in January, has has the expectation from the borrower or the hope maybe from the borrower shifted even over that time frame on the on the structure side, less than the pricing? I mean, are people just asking for for more and more, and and can we expect that the the the structural protections to maybe weaken a little bit as as we go forward from here?

Speaker 1

So I think of these these trends more broadly, Robert, is are we in a a a borrower friendly period or a lender friendly period? And and when you're in one or the other, things tend to keep moving in that direction until until there's a turnabout. So since, I would say, June, we've been on a borrower friendly trend. And I think over successive months and quarters since June, I would say yes to your question. I would say that there's been movement that's been in favor of borrowers.

And that's been true in all three of pricing, meaning spreads, terms, meaning documentation terms and covenants, and levels of leverage, all three. Now in liquid markets, those changes have been more pronounced, more significant than they've been in private markets. But I think we're seeing it in private markets as well. It all goes back to that that same phrase. I I repeat like a mantra.

We're we're insulated but not immune in in the middle market from what's happening in broader credit markets. Markets.

Speaker 7

Understood. And another one, if I can tell you I mean, obviously, when when you look at the the the BSL market doesn't have delayed draw term loans, for example. It's one of the advantages of of of of doing some of these But when when the the incumbent borrowers that you've got in your portfolios, are are they you know, is there any increase in in in reaching out hope beginning the process of maybe adding or increasing the TTL opportunities if if, you know, the M and A market looks pretty hot. Are the existing borrowers looking to to maybe expand more into DTTL?

And and that was something, obviously, a year ago, we were trying to reduce. But is that and if that's the case, I mean, does that add extra incumbency protection? Because, obviously, that's something potentially you can do, but the BSL market probably isn't gonna offer people.

Speaker 1

So DDTLs are definitely a tool that some sponsors like to use, especially if they're doing buy and build strategies. And it is and it is the you're you're correct that it's easier to do it in private deals. It it is possible to do in in a syndicated deal. There are syndicated deals that have DDTLs. But it is easier to do in in private deals, And it's less expensive to do from an issuer standpoint in private deals.

A very significant chunk of the business that we do with existing companies in our portfolio comes in the form of acquisition financing, and that often is DDTLs. Not always. Sometimes it's it's some incremental term loan and some DDTL at the same time. Sometimes it's only incremental term loan. But I think the point you were making is really important, which is in in any of these scenarios, being the incumbent lender, being the incumbent lead is hugely valuable because you're the you're you're in the full position.

You're the go to lender for incremental needs, absent there being some really compelling reason to do a a global refinancing, which is distracting and expensive.

Speaker 7

I appreciate that.

Speaker 6

Thank you.

Speaker 0

I would now like to turn the callback over to David Gallup for closing remarks.

Speaker 1

Thank you, Brenda. I appreciate everyone joining us today. Thanks for your questions. Thanks for listening. And as always, if you have any questions over the course of the coming quarter, please feel free to reach out.

We look forward to talking to you again next quarter.

Speaker 0

And this does conclude today's conference call. Thank you for your participation. You may now disconnect.