Good day, ladies and gentlemen and welcome to the Fidus Investment Corporation’s Fourth Quarter 2014 Earnings Conference 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 call is being recorded. I would like to introduce your host for today’s conference, Jody Burfening. Please go ahead ma’am.

Thank you, Danielle and good morning everyone. Thank you for joining us for Fidus Investment Corporation's Fourth Quarter and Full Year 2014 Earnings Conference Call. With me this morning are Ed Ross, Fidus Investment Corporation's Chairman and Chief Executive Officer; and Shelby Sherard, Chief Financial Officer. Fidus Investment Corporation issued a press release yesterday afternoon with details of the company's quarterly financial results. A copy of the press release is available on the Investor Relations section page of the company's website at fdus.com. I'd like to remind everyone that today's call is being recorded. A replay of today's call will be available by using the telephone numbers and conference ID provided in the earnings press release. In addition, an archived webcast replay will be available on the Investor Relations page of the company's website following the conclusion of this conference call. I'd also like to call your attention to the customary Safe Harbor disclosure regarding forward-looking information included in the earnings release. The conference call today will contain certain forward-looking statements including statements regarding the goals, strategies, beliefs, future potential, operating results, and cash flows of Fidus Investment Corporation. Although management believes these statements are reasonable based on estimates, assumptions and projections as of today, March 6, 2015 these statements are not guarantees of future performance. Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay. Actual results may differ materially 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 SEC. Fidus undertakes no obligation to update or revise any of these forward-looking statements. With that I would now like to turn the call over to Ed. Good morning Ed.

Good morning Jody. Thank you and good morning, everyone. Welcome to our fourth quarter and full year 2014 earnings call. I will start our call by highlighting our results for the fourth quarter and full year followed by a discussion of our investment activity and the performance of our investment portfolio. Then Shelby will go into more detail about our financial results and liquidity position. After that we will open up the call for questions. Starting with the fourth quarter and full year highlights; Fidus capped the year with a strong fourth quarter during which we generated net investment income of $6.7 million or $0.42 per share. Our adjusted net investment income which we define as net investment income excluding any capital gains, incentive fee attributable to realized and unrealized gains and losses was $6.8 million or $0.43 per share this quarter. For the full year we reported net investment income of $23.3 million or $1.62 per share. Adjusted net investment income for 2014 was $22.6 million or $1.57 per share. As of December 31, 2014 net asset value was $15.16 per share. For 2014 Fidus paid a total of $1.72 per share in dividends consisting of our regular dividend of $1.52 per share and a total of $0.20 per share from three special dividends. At December 31st estimated spillover income or taxable income in excess of distributions was $13.4 million. For the first quarter of 2015, as previously announced the Board of Directors has declared a regular quarterly dividend of $0.38 per share, which is payable on March 26, 2015 to stockholders of record on March 12, 2015. In the fourth quarter we made debt and equity investments totaling approximately $87.2 million, a record amount for Fidus, including investments in eight new portfolio companies. Several of the new portfolio…

Thank you, Ed, and good morning everyone. I’ll review our fourth quarter results in more detail and close with comments on our liquidity position. Similar to last quarter I will be providing comparative commentary versus the prior quarter Q3 2014. Total investment income was $13.7 million for the three months ended December 31, 2014, an increase of $2.3 million over the $11.3 million of total investment income for the third quarter of 2014, due to $1.2 million incremental and interest income and 1.2 million in incremental fee income related to increased investment activity. Total expenses were $6.6 million for the fourth quarter, an increase of $1 million versus the prior quarter due to $0.1 million increase in interest expense, a $0.7million increase in management incentive fees and $0.1 million increase in incremental professional fees incurred in the fourth quarter primarily related to the timing of year-end audit work. In the fourth quarter of 2014, we accrued $0.1 million of capital gain fees versus the reversal of $0.1 million in Q3. Excluding capital gains incentive fees, expenses increased by $0.8 million in Q4. Interest expense includes the interest paid on Fidus' SBA debentures and line of credit as well as any commitment and unrealized [ph] fee. As of December 31, 2014, the weighted average interest rate on our outstanding debt was 4%. Net investment income, or NII, for the three months ended December 31, 2014 was $6.7 million or $0.42 per share versus $0.41 per share in the third quarter. Adjusted NII was $0.43 per share in Q4 versus $0.40 per share in Q3. The quarter-over-quarter increase was driven by an increase in assets under management and strong Q4 investment activity resulting in higher interest income and transaction fee in Q4. Adjusted NII is defined as net investment income, excluding any…

Thanks, Shelby. As always I’d like to thank our team and the Board of Directors at Fidus for their dedication and hard work, and our shareholders for their continued support. I will now turn the call back over to Danielle for Q&A.

Thank you. [Operator Instructions]. And your first question comes from Bryce Rowe from Robert W. Baird. Your line is now open. Please go ahead.

Thanks. Good morning Ed and Shelby.

Good morning, Bryce. How are you?

Good, thanks. Ed, wanted to first touch on yields; you guys noted some yield compression within the portfolio as the newer investments kind of cycle on at lower yield. Just curious, whether we’ve seen some market volatility in the last quarter or so affecting the larger leverage loans markets more than the lower middle market, but wondering if we are just starting to see some firming in yields on new investments.

It's a great question Bryce and I think your last statement is exactly how I would characterize the market that we're participating in. I think stabilization or affirming of yields took place in the fourth quarter from our perspective. Right now I think that will stick, so that's good. Have they increased just slightly? That's a possibility but I think it's too early to say that. I mean there is still as you know available capital out there from a variety of sources but I do think that yields have kind of firmed up here a little bit which is a good thing for all of us.

Okay. And then maybe an unrelated follow-up. Ed, can you talk about maybe the leverage profiles of the more recent deals and how they compare to what you’ve seen in the past, just kind of curious as to what current multiples are looking like today versus maybe recent history. Thanks.

Sure, absolutely. That’s a, as you know, a tougher one at least for us to answer. I think leverage profiles for the market, I don't think the lower middle market is different than the broader market and the leverage profiles, I don't think have gotten nearly as high as really they did in the past pre-2007, but clearly nearly as high as the broader market. For Fidus, the leverage profiles of this -- we invested in 2014, I'll touch on that first and then touch on the first quarter here in '15, was actually relatively low. The weighted leverage profile our investments in the 2014 was in the twos. And so what that tells you is it reflects our focus on risk-adjusted returns. We are -- certain businesses can handle five times leverage and certain businesses should be leveraged more like two times. And so we very much structure our investments to both the company and the situation, but that's kind of what transpired in the fourth quarter and also really and throughout 2014. Here in 2015 thus far the investments we made -- the investments have been in the threes, so low to mid-threes I think if I'm thinking about it correctly. So I don't think there is any big change from our perspective meaning Fidus’ perspective on the leverage front. And again we continue to look at it more on a risk adjusted return basis as opposed to what the market. We will leverage something five times, if it's something that’s worth eight to 10 times but at the same time if not work that then we're going to have a different answer. So hopefully that's helpful.

That's super helpful. Thanks Ed.

Absolutely good talking to you Bryce.

Thank you.

Thank you and your next question comes from Vernon Plack from BB&T Capital Markets. Your line is now open. Please go ahead.

Thanks very much and I was looking for some of your thoughts on how you plan on drawing additional borrowings at this point. Will it come mostly from the SBA availability or will you be drawing down more on your revolver or will be a combination of the two, just interested in your thoughts there.

Sure, absolutely, great question Vernon. I think we still have a fair bit of availability under our SBIC license, if you will, or the second license we have. And when -- we're going to utilize cash, I would say first, as we move forward and then if an investment qualifies for our SBIC funds we will then quickly use those dollars first as opposed to the revolver. Clearly we're making some investments in companies that don't qualify as an SBIC investment. And in those cases obviously we then move to the revolver. There are cases where maybe we're making a little bit larger investment and we'll split the investments but generally speaking if it fits the SBIC and we utilize our cash than we're going to move to that, those funds.

Okay, great. And one big picture question. As you look at the underlying trends that you're seeing in your individual portfolio companies, both on the top line as well as the bottom line what is that telling you about the direction or the shape of the overall economy?

Great question, Vernon. Fortunately at least what we're seeing is continued slow growth from both -- in our portfolio, from both the revenue and an EBITDA perspective. Within that as you know we have outliers on either end, some that are underperforming and thankfully more that are exceeding expectations, or at least growing both at the revenue and EBITDA line. So what I would say is that slow to moderate growth in our portfolio and pretty stable as well. So we feel very good about the overall health of our portfolio.

Okay. That's very helpful. Thank you.

Absolutely. Good talking to you, Vernon.

Likewise, thanks.

Thank you. [Operator Instructions]. And your next question comes from Robert Dodd from Raymond James. Your line is now open. Please go ahead.

Hi, everyone. If I remember right, and I might be getting the timing off a little bit here, about six months ago Ed, you said you were seeing a lot of deals but the credit quality was poor and that might have been the first quarter, second quarter or last year. Obviously a record amount of deployments in the fourth quarter here and attachment points look pretty low as well. So could you give us any color, I mean what really changed over the course of six, nine months or the way you went from a lot of deals at poor credit quality to a lot of deals that look like very, very good credit quality. Could you give us any more color on that?

Sure. I am sure I said that as part of one of our calls. What I would tell, if I look back on 2014 deal flow was pretty strong throughout the year. The first quarter was a little slower than usual, I would say but -- or not usual, just a little slower than the rest of the quarters. Clearly in the second quarter there was a point in time and I was told a story recently we thought there were six transactions, six or seven transactions that could potentially close in that quarter. We ended up closing one for a lot of different reasons. And so that’s the year ended up very, very back-end weighted and many -- several of the deals actually just took more than six months to actually come to fruition. So I thought deal flow was spotty as always. I don't remember it being awful in the second quarter but in the third quarter deal flow picked up to a pretty good extent and then I think the stars aligned for us somewhat there was a, as you know relationships matter. We had a lot of deal flow from places where we have very good relationships. We had industry knowledge in [indiscernible] investments or very good industry knowledge in the investments that we made in the fourth quarter and I think all those things helped in trying to make investments. So we were busier than I ever would have anticipated but we tried to take advantage of the opportunities that was presented.

Okay. Thank you. Just sticking kind of with the leverage, I mean you said 2014 average attachment point are kind of two times, historically if I remember on this kind of the ballpark where guys start getting refi [ph] by seeing your bank lenders, so could you give us any more, I mean obviously you mentioned that some businesses shouldn't carry much more leverage than that. I mean is that a characteristic difference that's driving that is that asset light businesses banks are hesitant to lend to, any more color on that because obviously I mean two times in that quarter and a significant drop and improvement in interest coverage over the year, I mean the credit quality looks very, very robust at this point.

Sure. Well just to make sure I clarify, so the attachment point was probably in the ones actually but the detach remaining our leverage profile for the investments we made in 2014 was below three times but it wasn't two. I would say from -- again we were focused on high free cash flow businesses, so we are clearly cash flow and enterprise value investors and trying to invest with a pretty large margin of safety with regard to equity cushion. So some of these deals when we invested at 2.5 times leverage for instance they are probably companies that will be sold for 5 times or 4.5 to 5 times. And then there are others that are leveraged higher and they would be potentially sold for 7, 8, 10 times. And so it really, I think what we are focused on is very prudent capital structures, sustainable cash flows and high free cash flows to pay down our debt and derisk our investments. And so I think that’s the opportunity set that we were presented and how it kind of played out. I don’t think it was anything more specific than that.

Okay great, thanks. If I can one housekeeping one, you said obviously the deployments in 2014 were back end loaded. Can you give for the fourth quarter were -- all record levels of deployment, were all of those back end loaded within the quarter as well, i.e. it didn’t benefit the quarter very much in terms of coupon fees yes, [indiscernible] could you give us any kind of when they rolled in during the quarter?

Sure I think if my memory serves me correctly we have made three investments prior to the last call. And so we made five investments close to November 5th, if you will, I think that was the call date. I think a couple of those were in November and then there was probably three investments made in December.

Okay, got it. So roughly even.

Correct.

Got it, thank you.

Absolutely, good talking to you Robert.

Good talking to you.

Thank you. And I am not showing any further questions in queue at this time, I would like to -- actually we do have a follow-up from Bryce Rowe from Robert W. Baird. Your line is now open please go ahead.

Great, thanks. Sorry to prolong the call. Ed obviously you finished the year with no non-accruals now that you have exited, the Avrio investment and you are sitting on quite a healthy amount of spillover income I appreciate the conservative approach you guys have taken with respect to distributing that, so any thoughts on how you go about managing it over the course of ‘15? Thanks.

It’s a great question, Bryce and as you know we’ve talked about in the past. I think it’s worth just touching on our overall approach and then I’ll hit the spillover as well. But the -- we are focused on being pretty balanced from a dividend perspective first and foremost, trying to deliver long-term value in the form of stable and growing quarterly dividends, making periodic special dividends is clearly something we have done over the last two years and it’s something that is top of mind as well for the Board and what I would say it’s a big discussion topic every time we get together. Balancing that is though -- we also have a goal of growing our NAV on a per share basis overtime. We believe here at Fidus that that is a wining long-term strategy and we are very focused on both the near-term and the long-term and that a declining NAV makes performing well much more difficult. And so the NAV also is -- creates a balancing act for us. And lastly we are pretty conservative and we intend on continuing to manage the business with high margin of safety and that’s obviously both an offensive. It gives us available cash to invest and grow but it’s also a defensive, if we enter tougher times. So being both offensive and defensive there and having some surplus makes good sense to our Board. So I think we are going to continue to consider the spillover position every time we get together. It’s a big topic and you can be sure that we are focused on doing the best we can for our shareholders, by being conservative in nature as we move forward. Hopefully that’s helpful Bryce.

It is, thank you Ed.

Absolutely.

Thank you and you do have next question from Rob Brock from West Family Investments. Your line is now open. Please go ahead.

Yes, hi Ed. It's Jim Young actually. I was wondering, could you talk about your expected pace of repayments in 2015. Thank you.

Sure, it's a very good question. Our investment -- our repayments here in 2014 were about $63 million. What I would say is as we look at it our initial analysis or initial thoughts here in 2015 would be our repayments will be higher this year. So I think as we look at it we see a solid investment environment in M&A market in 2015 absent something changing but we do anticipate repayments being a little bit -- being higher. Now what that number’s going to be -- it's going to be unpredictable and it always is. We get surprised usually once a quarter on something coming back that we didn't think was. But -- so it's a very good question but I'd say our analysis is that repayments will be a little higher than last year. Hopefully that’s helpful.

Thank you. And I'm not showing any further questions at this time. I'd like to turn the call back to Ed for any further remarks.

All right, well thank you Danielle and thank you everyone for joining us this morning. We look forward to speaking with you on our first quarter call in early May. Have a great day and great weekend.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a great day.