Greetings, and welcome to the Main Street Capital Corporation’s Second Quarter Earnings Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Zach Vaughan with Dennard Lascar, Investor Relations. Please go ahead.

Thank you, operator and good morning everyone. Thank you for joining us for Main Street Capital Corporation’s second quarter 2022 earnings conference call. Joining me today with prepared comments are Dwayne Hyzak, Chief Executive Officer; David Magdol, President and Chief Investment Officer; and Jesse Morris, Chief Financial Officer and Chief Operating Officer. Also participating for the Q&A portion of the call is Nick Meserve, Managing Director and Head of the Private Credit Investment Group. Main Street issued a press release yesterday afternoon that details the company’s second quarter financial and operating results. This document is available on the Investor Relations section of the company’s website at mainstcapital.com. A replay of today’s call will be available beginning an hour after the completion of the call and will remain available until August 12. Information on how to access the replay was included in yesterday’s release. We also advise you that this conference call is being broadcast live through the Internet and can be accessed on the company’s homepage. Please note that information reported on this call speaks only as of today, August 5, 2022 and therefore, you are advised that time-sensitive information may no longer be accurate at the time of any replay listening or transcript reading. Today’s call will contain forward-looking statements. Many of these forward-looking statements can be identified by the use of words such as anticipates, believes, expects, intends, will, should, may or similar expressions. These statements are based on management’s estimates, assumptions and projections as of the date of this call and there are no guarantees of future performance. Actual results may differ materially from the results expressed or implied in these statements as a result of risks, uncertainties and other factors, including, but not limited to the factors set forth in the company’s filings with the Securities and Exchange Commission, which can be found on the company’s website or at sec.gov. Main Street assumes no obligation to update any of these statements unless required by law. During today’s call, management will discuss non-GAAP financial measures, including distributable net investment income. Please refer to yesterday’s press release for a reconciliation of these measures to the most directly comparable GAAP financial measures. Certain information discussed on this call, including information related to portfolio of companies, was derived from third-party sources and has not been independently verified. And now I will turn the call over to Main Street’s CEO, Dwayne Hyzak.

Thanks, Zach. Good morning, everyone and thank you for joining us today. We appreciate everyone’s participation on this morning’s call. We hope that everyone is doing well. On today’s call, I will provide my usual updates regarding our performance in the quarter, while also providing updates on our asset management activities, our recent declarations of our supplemental dividend in September and the increase to our monthly dividends for the fourth quarter, our expectations for dividends going forward, our recent investment activities and current investment pipeline and several other noteworthy updates. Following my comments, David and Jesse will provide additional comments regarding our investment strategy, investment portfolio, financial results, capital structure and leverage, the impact of rising interest rates on our future net investment income and our expectations for the third quarter, after which we will be happy to take your questions. Before we begin with our normal quarterly commentary, I want to highlight a change we are making this quarter to our definition of distributable net investment income, or DNII, which Jesse will cover in more detail in his comments. Our goal in using DNII as a key operating metric has always been to increase the quality of our reporting by providing this metric of the amount of cash flow from our investment activities that is available to fund our recurring monthly dividends paid to shareholders and thereby increase the visibility our shareholders have regarding the quality and recurring nature of our monthly dividends. Given both the growth and increased variability of our deferred compensation expense or benefit a non-cash item, over the last few quarters, we have concluded that it is appropriate to modify our definition of DNII to adjust for this item. All of our comments this morning are provided using this new definition of DNII. We are…

Thanks, Dwayne and good morning everyone. As Dwayne highlighted in his remarks, we believe our strong second quarter financial results demonstrate the strength of Main Street’s platform, our differentiated investment approach and our unique operating model. We are pleased to report that the overall operating performance for most of our portfolio companies was strong during the quarter and contributed to our strong financial results at Main Street. Another major contributor to our results was our robust lower middle-market and private loan originations in the second half of 2021 and our private loan origination activities in the first half of 2022. As we have discussed in the past, the primary driver of our long-term success has been and continues to be our focus on the underserved lower middle-market and specifically, our strategy of investing in both the debt and the equity of our lower middle-market companies. When we evaluate new lower middle-market investments, we target our combined first lien debt and equity investments to achieve a blended internal rate of return in the mid to high-teens range and we are pleased that our total asset level returns in the second quarter were at the high-end of this expected range. From an underwriting standpoint, we achieved these targets by maintaining a disciplined mix of debt and equity investments with a typical investment comprised of approximately 75% to 80% debt and 20% to 25% equity. We are confident that our long-term proven success of investing in the lower middle-market combined with our prudent use of low to modest leverage at Main Street will continue to allow us to deliver very attractive financial results for our investors in the future. It is also important to note that as our lower middle-market investments mature in our portfolio, they generally deleverage, which increases their ability to…

Thank you, David. As Dwayne and David mentioned, we are very pleased with our operating results for the second quarter. Our total investment income in the second quarter increased by $17.9 million or 27% over the same period in 2021 to a total of $85.2 million. The strong top line growth was largely driven by an increase in interest income of $18 million as a direct result of the continued growth in our portfolio of debt investments, which David spoke to earlier. Fee income also increased by $0.6 million. These increases were partially offset by a $0.7 million decrease in dividend income from our portfolio equity investments. Of note, in further supporting the overall strength of our results, the combined impact of certain income lines, including dividends, accelerated OID, prepayment fees or other activity that are considered less consistent or non-recurring in the quarter decreased by $1.5 million or about $0.025 per share when compared to the second quarter of 2021 and was $1.4 million or $0.02 per share below the average of the prior four quarters. Total expenses for the quarter increased by $5.6 million or 22% over the same period of the prior year, largely driven by increases of $3.6 million in cash compensation expense, $2.9 million in interest expense, $0.8 million in G&A expense, with these increases partially offset by an increase of $0.9 million and expenses allocated to the External Investment Manager and a reduction of $0.9 million in non-cash compensation expenses. The increase in interest expense was driven by higher borrowing levels to support our investment activity. The increase in compensation expense was also driven by our increased investment activity and favorable operating results which have resulted in increased headcount, higher base compensation and increased incentive accruals. Our operating expenses to assets ratio was 1.4%…

First question comes from Kenneth Lee with RBC Capital Markets.

Hi. Good morning and thanks for taking my question. Just one on the LMM portfolio, in terms of the equity gains that you mentioned in the prepared remarks, wondering if you could just further flesh out what’s driving that strong performance? Are you seeing any kind of trends? Just wanted a little bit more detail around that? Thanks.

Sure, Ken. Good morning and thanks for the question. When you look at the lower middle-market appreciation we had in the quarter, I would say the things that we are pleased with is that it wasn’t you concentrated in only one company. There was fairly broad-based contribution to that appreciation across a number of companies. And when you look at the drivers, I would say it’s just the fundamental performance of those companies. It’s increased trailing our historical EBITDA and cash flows and then it’s just a positive outlook they have for the – at least the near-term future that drove the vast majority of the change quarter-over-quarter. So, outside of that, I wouldn’t say there was anything that was really a big driver, a big part of that increase.

Got it. Very helpful. And just one follow-up if I may, you also mentioned seeing potentially some increased third-party interest within the LMM portfolio. I am wondering if you could just talk a little bit more about what’s – any commonalities in terms of what’s driving interest, whether it’s just ongoing industry consolidation or anything else? Thanks.

Yes. Ken, we are limited on what we can say, obviously, because the portfolio of companies wouldn’t want us to disclose too much. But with a large portfolio of lower middle-market companies and with those companies performing at a high level and growing, it’s not unusual for us to have inbound interest, either from third-parties or from management teams and other equity owners of those businesses. They decided it makes sense to take a look at the marketplace and see what could be available to them if they were to look to sell the business. So, we have had a couple of those companies that are involved in situations that fit that profile. And at least one of those, I would say is further down the process there, would not be something that happens in the next month. But if it was to happen, we would expect it to happen between now and year-end. And we think that would be a transaction that would be a really positive outcome for us. But I wouldn’t say there is anything unusual there. It’s just with a large portfolio of high-performing companies, we do get that type of activity from time-to-time.

Great. Very helpful. Thanks again.

Thank you, Ken.

Thank you. I would like to turn the floor over to management for closing comments.

Okay. Thank you, operator, and thank you again to everyone for joining us this morning. We look forward to talking to you again in early November with our third quarter results.

This concludes today’s teleconference. You may disconnect your lines at this time and thank you for your participation.