Hello, and welcome to Kayne Anderson BDC, Inc. Fourth Quarter 2025 Earnings Call. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to turn the conference over to Andy Wedderburn-Maxwell, Senior Vice President. Good morning, and welcome to Kayne Anderson BDC, Inc. Fourth Quarter 2025 Earnings Call.

Today, I am joined by Ken Leonard and Doug Goodwillie, Co-CEOs of Kayne Anderson BDC, Inc., Frank Karl, President, and Terry Hart, CFO. Following our prepared remarks, we will be available to take your questions. Today's call may include forward-looking statements. Such statements involve known and unknown risks, uncertainties, and other factors, and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates, and projections about the company, our current and prospective portfolio investments, our industry, our beliefs and opinions, and our assumptions. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict. Actual results may differ materially from those expressed or forecasted in the forward-looking statements. We ask that you refer to the company's most recent filings with the SEC for important risk factors. Any forward-looking statements made today do not guarantee future performance, and undue reliance should not be placed on them. The company assumes no obligation to update any forward-looking statements at any time. Our earnings release, 10-K, and supplemental earnings presentation are available in the financial section of our website at kanebdc.com. I will now turn the call over to Ken Leonard.

Good morning, and thank you for joining us today. I will begin by providing an overview of our fourth quarter results, and then share some thoughts on the current direct lending market conditions. I plan to highlight how Kayne Anderson BDC, Inc.'s value lending strategy has created a unique portfolio well positioned to weather any current headwinds associated with the market dislocation related to software and/or tariffs. Frank Karl will then provide a more detailed overview of our portfolio and performance, before Terry Hart concludes with Kayne Anderson BDC, Inc.'s financial results. I am pleased to report another solid quarter for Kayne Anderson BDC, Inc. as we closed out 2025 on a strong note. For the fourth quarter, we generated net investment income of $0.44 per share, representing an increase from $0.43 per share in the third quarter and a premium to the declared dividend. This performance translates to an annualized return on equity of 10.8%, demonstrating our continued ability to generate attractive risk-adjusted returns for shareholders in what has otherwise been a noisy period for the BDC sector. Our net asset value per share was $16.32 at quarter end, down slightly from $16.34 in the prior quarter, reflecting the impact of some marks of the portfolio which was partially offset by new investment originations and our strategic share repurchase activity during the period. Our dividend coverage ratio was 110%, supporting our regular quarterly distribution, and our board of directors has declared a regular dividend of $0.40 per share for the first quarter payable on 04/16/2026 to shareholders of record as of 03/31/2026. I would like to add that based on our current view of the market and our portfolio, we expect to be able to pay the $0.40 dividend for the entirety of 2026. Our portfolio continues to perform…

Thank you, Ken. I will now provide a comprehensive overview of our portfolio composition and key performance metrics as of 12/31/2025. Our portfolio consists of 107 companies with a total fair market value of $2.2 billion, representing a well-diversified collection of core middle market investments. We maintain unfunded commitments of $287 million across our existing portfolio companies, providing us with additional opportunities to support our borrowers' growth initiatives. Since 12/31/2025, Kayne Anderson BDC, Inc. has closed or is in the final closing process on $50 million of new commitments, and we have seen a steady flow of opportunities so far this year, though it is too early to glean any sort of meaningful insights for total 2026 activity levels. Investments in Kayne Anderson BDC, Inc.'s portfolio, excluding those on the watch list and our opportunistic investments, have a weighted average leverage of 4.5x, interest coverage of 2.4x, and loan-to-enterprise value of approximately 43%. Weighted average EBITDA of our private middle market portfolio companies is $52.7 million, reflecting our focus on established businesses with meaningful scale. For the quarter, the number of companies in our portfolio declined by one, mainly due to our continued rotation out of the broadly syndicated loan portfolio. We continue to have a highly diversified portfolio with an average position size of approximately 0.9% of fair value, and our top 10 investments represent only approximately 20% of our portfolio. This approach allows us to maintain appropriate exposure to our best performing assets while also maintaining prudent diversification across the broader investment base. 95.7% of our debt investments are floating rate, which mirrors our liabilities, where the vast majority of our debt funding utilizes floating rate borrowings as well. The only fixed rate investment that we have is the SG Credit loan that closed in early Q3 2025…

Thanks, Frank. Let us first review results of operations. During the fourth quarter, we earned net income per share of $0.32 and net investment income per share was $0.44, compared to $0.43 in the prior quarter and $0.04 above our dividend. Total investment income for the fourth quarter was $61.9 million as compared to $61.4 million in the prior quarter. The increase to investment income was primarily driven by the full-quarter impact of portfolio rotations out of broadly syndicated loans into middle market loans and an increase in accelerated amortization of OID and prepayments related to realization activity. Our portfolio yield decreased by 30 basis points, mainly related to lower reference rates, and PIK interest for the quarter was elevated from prior quarters as a result of year-to-date interest income from our investment in Regiment being converted to PIK during the fourth quarter. PIK interest represented 7.4% of total interest income during the quarter but continues to be relatively low at 3.9% for the full year. As mentioned, during the fourth quarter, we had approximately $2.6 million of accelerated amortization of OID and prepayment fees related to realization activity. Total expenses for the fourth quarter were $31.8 million compared to $31.3 million for the prior quarter. The increase was primarily the result of higher average borrowings and the issuance of notes during the fourth quarter, partially offset by $500,000 of lower incentive management fees. During the quarter, our incentive management fees were reduced by the 12-quarter lookback incentive fee cap. During the fourth quarter, we had a small realized loss of approximately $600,000 related to the sale of several broadly syndicated loans, and we had net unrealized losses on the portfolio of $7.2 million compared to unrealized losses of $5 million in the prior quarter. The unrealized losses were largely…

We will now begin the question and answer session. Our first question comes from the line of Michael Brown with UBS. Please go ahead.

Hi, this is Cory Johnson on for Mike. I just have a question. So in regards to your NII for this quarter, I am guessing it was a partial impact from Fed rate cuts. How much do you estimate that was in the fourth quarter, and how much would you expect to be the impact in the first quarter of this year?

Thank you for the question. This is Doug Goodwillie. Terry, do you want to handle that?

Yes, sure. For the quarter itself, we can get you the exact details after the call, but I can say that we did not see the full impact of the Fed rate cuts in this quarter. During the first quarter, we would see the full impacts of that, so it was a partial impact during the quarter. Offsetting those cuts during the quarter, we saw an uptick in the full quarter's activity and full investment in SG Credit, and that helped offset some of those Fed cuts. In addition to that, as we mentioned, we did see a full-quarter impact of the rotations out of BSLs during the third quarter, and then also in the fourth quarter we saw additional rotations out of the BSLs, and that offset some of those Fed cuts.

Great. Thank you. And just one follow-up. You had mentioned about there possibly being opportunity for you to be able to take advantage of as other BDCs went more to software companies or are dealing with their credit issues. Can you maybe just talk a little bit more about what opportunities you expect to be able to see and take advantage of?

Yes, thanks for the question. This is Doug Goodwillie again. I think when we say capitalize on that, it is capitalizing by buying loans from any other stressed BDCs, so to speak. We agree with some of the commentary in terms of probably a bit of an overcorrection in the public markets for the AI risk for some of those software portfolios. But what we are talking about there is when a BDC has 20%, 30%, 40% of their portfolio in software, that becomes time consuming. If you are in any types of restructures or dealing with companies that could potentially be on a watch list, that tends to take up time, and then it also keeps valuations generally under, you know, a price to NAV of one in certain circumstances. So it allows those that are trading at better levels and those that have less stress and have portfolio capacity to put more capital to work in the current market.

Great. Thank you. Our next question will come from the line of Kenneth Lee with RBC Capital Markets. Please go ahead.

Just one on the target portfolio ramp. Any updated outlook in terms of time frames when you might get to the targeted range within the 1.0x to 1.25x? And given the current environment and what you are seeing, do you think you could be closer to the lower end or the higher end of the range in the near term there? Thanks.

Thanks, Ken. I will start there. Total deployment or net deployment for the quarter was effectively flat. I think we are seeing a decent amount of activity. I alluded to we have got $50 million of commitments sort of in process for Q1. We are still working out of the broadly syndicated book, which you did quarter over quarter and will continue to do in the first part of this year. Our repurchase program has been reasonably active, so there is a decent number of levers that we think will push that leverage ratio up a bit more towards the middle of the range. But putting any specific time frame on it is difficult to do and will depend on market conditions and deployment activity, which, again, I think we are reasonably seeing signs of some increases in activity. It will be a steady sort of progression over the next couple of quarters.

Right. I think, Ken, at the outset of what may be a bit of a dislocation in the credit markets, to be at 1.0x, with $550 million of dry powder, so to speak, or liquidity, we think it is a good position to be in. So we would expect that to increase beyond the 1.02x, I think, where we are as of this quarter, but likely to remain somewhere in the 1.0x to 1.2x range over the next few quarters.

Gotcha. Very helpful there. And just one follow-up, if I may, and appreciate that the portfolio with only 2% of software exposure. Wondering if you could just talk a little bit more about any investments on the current watch list, any particular areas where you are seeing any kind of stress within the portfolio or otherwise challenges within the companies there? Thanks.

Sure. This is Doug again. I will start. As it relates to software companies, there are no investments in software companies that we have that are on the watch list. As we talked about in Ken's section of the call, it is less than 2% of the portfolio. Less than 10% of the entire portfolio is on the watch list, and I think from our perspective, there are five credits that are on nonaccrual. So we think that is kind of, frankly, a normal course watch list. An amount of nonaccrual kind of in the mid-1% range is fairly low, I think, in respect to our competition. So we are happy with the portfolio. I would say from our perspective, I am not sure that anything that we have seen is all that new in terms of there has been continued pressure on the consumer affecting two or three of the companies on our watch list, and then, frankly, some management missteps that we are working with the sponsors and some management teams to correct. But those are really the two themes that do not really come back to what is going on around AI. I think what we have seen in terms of a theme in terms of stress has been a little bit more on the consumer side over the last 12 to 18 months.

Gotcha. Super helpful there. Thank you very much.

Our next question comes from the line of Binyan with Wells Fargo. Please go ahead.

Hi, everyone. Good morning. Just to start, a small follow-up on the preceding topic with Ken there. It looks like you have a pretty good clip of 2026 maturities. Is there a big overlay with that cohort and then the sort of underperformers as you described?

I think that when we think about the repayment outlook, it has been relatively slow in the first quarter and, thus far, I think for the second quarter. We will go through it name by name. It looks like it picks up at a reasonable level into the third and fourth quarter.

There is no concentration of names on the watch list in 2026 maturities.

Okay. That is helpful. And then we also want to ask about G&A, broadly in the context of the size of your book, the size of your platform. You guys are just off the scatter plot, in a good way, in regards to G&A expense being very low. Can you walk us through as many specifics as you will give as to what are the sort of conventional items that you elect not to expense that, say, your advisers or consultants told you that you could? And then how can we be sure that you will not change your mind one day in the future? Thanks.

Yes, good question. I will turn it over to Terry in terms of policy and what could be expensed, and maybe give some idea of that quantity too, Terry, as you answer the question.

Sure. Our agreements do allow us to pass through, and as you see other managers passing through, the cost of the CFO, in some cases the cost of the Chief Compliance Officer, and then their staff. We have a model where we outsource a lot of our administration and fund accounting, and so we do pass that through, but that tends to be much cheaper than if we had our own staff and then charged back all of that time. In magnitude, if you look at funds that are similar in size or BDCs that are similar in size, our ratio could be twice as high as it is today. From 40 basis points it could be 80 basis points or higher if we were to charge some of those things through. I think we take pride in having a low G&A cost generally, and I think that we do the right thing for our investors. Especially in an environment where coverage is tight, I think that we are going to be very mindful of our G&A expense. As we grow, are we always going to have a zero for any of those costs? That is hard to say, but like I said, we are going to be very mindful of our G&A as it relates to coverage and our dividend policy.

Very helpful. Thanks so much.

Thanks, Binyan.

Again, to ask a question, press 1. Our next question will come from the line of Paul Johnson with KBW. Please go ahead.

Yes, good morning. Thanks for taking my questions. Just wondering your thoughts generally: what is the supply chain sort of risk within the portfolio—food companies, distributors, trading companies, those sorts of businesses—given the recent disruption in the shipping market in the Middle East?

Yes. You are right that I think when we talk about our value lending philosophy and the stable industries, our biggest industries are industrial and business services, food products, health care. But the vast majority, and I will let Lee or Frank weigh in as well, of the supply chain is from the U.S. We took a deep dive on this when we were analyzing the prior and, I guess, potential tariff risk on the portfolio, finding it to be fairly minimal. But I will let Frank give some specific stats.

It gets back to—it is not the same analysis as the tariff risk—but there are some downstream effects. Is inflation picking back up, and what does that mean over the near and medium term for our borrowers? We think our book performed very well through a substantially elevated inflationary period. We think our book performed very well through tariffs and tariff uncertainty, and I think we would expect more of the same, admitting that it is hard to see around the corner for all scenarios and downstream effects.

Got it. Thanks for that. And then in terms of the remaining BSL rotation, you have already obviously taken a fairly measured approach to ramping the portfolio. Loan prices are obviously trading at a more depressed level this quarter. If that kind of sustains itself for the next few quarters or so, for any of the liquid names in the portfolio, how willing are you to be selling out at a small loss to fund new originations as opposed to kind of holding out for the volatility to maturity?

Yes, it is a good question. This is Doug. I will start. We are down to a handful of BSL names at this point. I think it was less than $50 million at the end of the quarter, and it is down from there. I will put Frank on the exact spot, but we have been actively continuing to exit that portfolio in this quarter. I think the good part of where we are at from a leverage perspective is we have still a decent ways to go before we are at the point of needing to make a decision around exiting a position at a loss—albeit very small dollars given the size of this book—versus funding new private credit assets.

Got it. Thanks. That is all for me. Thank you.

This concludes our question and answer session, and I will hand the call back over to Goodwillie for any closing comments.

I would like to thank everyone who joined our earnings call today for their time and continued interest in Kayne Anderson BDC, Inc. We hope you enjoyed the call and look forward to speaking again in a few months to discuss Q1 2026 performance. Thank you.

This concludes today's call. Thank you all for joining. You may now disconnect.