Good day, ladies and gentlemen, and welcome to the Second Quarter 2016 Fifth Street Finance Corp. Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would like to introduce your host for today’s conference, Ms. Robyn Friedman, Head of Investor Relations. Ma’am, you may begin.

Thank you, Soraya. Good morning and welcome to Fifth Street Finance Corp’s second quarter 2016 earnings call. I’m joined this morning by Todd Owens, Chief Executive Officer, Ivelin Dimitrov, President and Chief Investment Officer; and Steven Noreika, Chief Financial Officer. Before we begin, I would like to note that this call is being recorded. Replay information is included in our May 10, 2016 press release and is posted on the Investor Relations section of Fifth Street Finance Corp’s website, which can be found at fsc.fifthstreetfinance.com. Please note that this call is the property of Fifth Street Finance Corp. Any unauthorized rebroadcast of this call in any form is strictly prohibited. Today’s conference call may include forward-looking statements and projections that reflect the company’s current views with respect to, among other things, future events, and financial performance. Forward-looking statements may include statements as to the future operating results, dividends and business prospects of Fifth Street Finance Corp. Words such as believes, expects, seeks, plans, should, will, estimates, projects, anticipates, intend and future or similar expressions are intended to identify forward-looking statements, although not all forward-looking statements include these words. These forward-looking statements are subject to the inherent risks and uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected or implied in these forward-looking statements. New risks and uncertainties arise over time and it is not possible for the company to predict those events or how they may affect it. Therefore, you should not place undue reliance on these forward-looking statements. We ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these forward-looking statements and projections. To obtain copies of our latest SEC filings, please visit our website or call Investor Relations at 203-681-3720. FSC undertakes no obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise except as required by law. The format for today’s call is as follows: Todd will provide an overview of our results and outlook, and Steve will summarize the financials. Then we will open the line for Q&A. I will now turn the call over to our CEO, Todd Owens.

Thank you, Robyn, and good morning, everyone. For the quarter ended March 31, 2016, FSC generated $0.17 of net investment income per share, which is slightly below our quarterly dividend of $0.18 per share. Our net investment income was impacted by low origination volumes limited turnover on portfolio and substantially higher professional expenses, partially offset by the reduction in our base management fee. Despite lower than normal volumes during the quarter, our net investment income would have covered our dividend for the 5th consecutive quarter, if adjusted to exclude incremental professional fees. The quarter was also marked by greater credit stability in our portfolio and a steady amount of loans on nonaccrual. Additionally, as part of our focus on delivering strong returns for our shareholders, we continue to repurchase our shares and operated within our targeted leverage ratio of 0.6 to 0.8 times debt to equity. Over the course of 2015, we took a number of actions to maximize shareholder value and renewed our focus on driving strong sustainable performance for our shareholders. That focus has continued in the March quarter as we took additional steps to drive shareholder value. In January, we permanently reduced FSC’s base management fee on total gross assets from 2% to 1.75%. As a result, shareholders benefited grew an over 10% decrease in management fees paid to our manager this quarter. As we previously mentioned, we do not pay management fees on cash and we have an 8% hurdle rate on our incentive fees, both of which compare favorably to the fee structures in the industry. For the second quarter in a row, the 8% hurdle rate benefited our shareholders meaningfully. Additionally, I’m pleased to report that we repurchased approximately $15 million of common stock in the open market this quarter, which was $0.07 per…

Thank you, Todd. We ended the second quarter of 2016 with total assets of $2.4 billion, down from $2.6 billion at 2015 fiscal year end. Portfolio investments totaled $2.3 billion at fair value, which were spread across 127 companies at March 31, 2016. At the end of the March quarter, we had $134.5 million of cash and cash equivalents on our balance sheet. Net asset value per share was $8.33 as of March 31, 2016, as compared to the net asset value per share of $8.41 at the end of the December quarter. NAV was impacted this quarter by a few factors, including a credit and spread-related write-down of $0.14 per share, of which over one-third was due to movements and quotes, and that was offset by $0.07 per share of accretion from our share repurchases during the quarter. I would like to note that while the high yield market rallied prior to the close in March quarter, the index that we utilize in our mark-to-market process, the LCD middle market index, generally lags the broader market and therefore was down slightly for the quarter. Subsequent to quarter end, we have seen the LCD index followed the broader market in a positive direction. We ended the December quarter at a 0.77 times debt to equity ratio within our target range. Subsequent to the end of the March quarter, we successfully repaid our $115 million of unsecured convertible notes using capacity under our ING revolving credit facility. We estimate that this will be $0.02 per share accretive to earnings on an annual basis. For the three months ended March 31, 2016, we generated total investment income of $59.6 million. The quality of our income continued to be high as net PIK, which is PIK accruals recorded in excess of PIK payments…

Thank you for joining us on today’s call. Soraya, please open the lines for questions.

[Operator Instructions] Our first question comes from Leslie Vandergriff of Raymond James. Your line is now open.

Good morning.

Good morning, Leslie.

So just first question, just quick color on originations and repayments in the quarter, I know they were low for you guys, it seems to be a trend going on in the market right now. Can you talk a little bit about what you saw this quarter and if you’re seeing a bit of front load fill in the second quarter after that?

Yes, I’m happy to take that question. Yes, the March quarter was very slow, interestingly it was slow in terms of portfolio turnover as well as slow on the origination side and the consequence of that was that we stayed pretty close from debt-to-equity perspective. And as I said in the prepared remarks, we saw a meaningful up tick in activity as we headed into the end of the quarter and that has continued into the – June quarter. And so we are expecting a higher level of activities in both regards, originations and portfolio turnover, refinancings and so forth. And so we think that – we think we’re going to rebound from very, very low levels of the March quarter to more levels in the June quarter.

Okay, thank you. And on the professional fees, I know you mentioned in your prepared remarks that they were higher on some of the legal actions right now. Is that the entirety of that increase or can you give some color on that breakdown.

The incremental professional fees are related really to two things, principally the litigation, the class-action lawsuit that is still pending, but as well related to preparation for our annual meeting.

Okay, so just the one quarter thing more?

Yes, as it relates to the shareholder meeting for FSC is behind us.

Okay.

And so we don’t expect any incremental costs there. And so we left at least part of the basis for us, saying that we expect those professional costs to decline although the class action litigation is still pending.

Okay. And then last question for me this morning, I know you guys were at $225 million on the SBA debentures and while there may not be a large proportion for you guys, looking into getting up to $300 million on that second license, any color there?

Okay, I’m going to let Steve to take that one Leslie.

Hi, Leslie. Yes, it’s an interesting opportunity currently we do have meaningful cash balance in our SBA entities that due to some repayments that we had that we would like to deploy before we look any further into increasing the license.

Okay. All right, thanks for the color.

Thanks very much.

Thank you.

Thank you. Our next question comes from the line of Doug Mewhirter of SunTrust. Your line is now open.

Hi, good morning. Just a couple of questions, first for your adjusted net income number, just a clarification, I saw you put that on a basic share basis, is there a reason why you didn’t report on a diluted share basis?

Doug, we generally view the P&L on a non-diluted basis. Doug, if you want to take it offline, we can certainly recalculate that for you. But there is no particular reason we didn’t, that’s just not the way we analyze our P&L.

Okay, thanks. The – moving on the – to Ameritox, I guess it was already on non-accrual this quarter. If I read it correctly, it sounds like there – was there a mix of debt-in-equity in the new restructuring and would there be any incremental I guess interest that would come back on to the P&L in the next quarter from the Ameritox, the new structure.

Yes, hi Doug. It’s Steve. I can give you a little color on that. Yes, we exchanged our debt investment for debt-in-equity component and there will be a cash interest earnings portion of debt along with that.

Okay. And also with the share repurchase, I know you kind of up maybe towards – you’re still within the debt-to-equity range and there is some more activity, but is there any room for more additional share repurchases beyond what you did subsequently end of the quarter.

Doug thanks for the question. Yes, look I think there is room for additional repurchases as and when we decided to pursue that with our Board. But as we get nearer the top end of our range, it does reduce somewhat our flexibility there or maybe another way to put and just give some factor that we think about. As we mentioned, we have already completed $10 million of repurchases in this quarter. That is a same June quarter and notwithstanding where we were from a leverage perspective. So obviously the 77% debt-to-equity ratio is not – it doesn’t preclude us from doing buyback, which so we’ve actually already completed meaningfully in this quarter.

Okay, thanks. That’s all my questions.

Okay, thank you Doug.

Thank you. [Operator Instructions] And at this time, I’m showing there are no further participants in the queue. I would like to turn the call to management for any closing remarks.

Yes, thanks to everyone for joining us this morning.

Ladies and gentlemen, thank you for your participation on today’s conference. This concludes your program. You may now disconnect. Everyone have a great day.