Good day, ladies and gentlemen and welcome to the Fidus Investment Corporation's Fourth Quarter 2015 Earnings Conference Call. At this time, all participant lines are in a listen-only mode to reduce background noise, but later we will be conducting a question-and-answer session. Instructions will follow at that time. [Operator Instructions] As a reminder, today's conference call is being recorded. I would now like to introduce your first speaker for today, Jody Burfening. You have the floor Ma'am.

Thank you, Andrew and good morning everyone. Thank you for joining us for Fidus Investment Corporation’s fourth quarter and full-year 2015 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 the details of the company's quarterly financial results. A copy of the press release is available on the Investor relations 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. The conference call today will contain 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 04, 2016 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 and thank you and good morning everyone. Welcome to our fourth quarter and full-year 2015 earnings call. I will start our call by highlighting our results for the fourth quarter and full-year followed by comments about our fourth quarter investment activity, the performance of our investment portfolio and our views about 2016. Then Shelby will go into more detail about our financial results and liquidity position. After that, we will open up the call for questions. We finished 2015 with our strongest quarter ever marked by record investment income and net investment income. Our investment portfolio generated net investment income of $7.2 million or $0.44 per share while adjusted net investment income was redefined as net investment income excluding any capital gains incentive fee attributable to realized and unrealized gains and losses was $7.3 million or $0.45 per share. We are very pleased with both our absolute and relative performance this quarter and believe these results clearly demonstrate both the overall quality of our portfolio and our underwriting discipline. As of December 31, 2015 our net asset value is $247.4 million or $15.17 per share. On December 11, 2015 Fidus paid a special dividend of $0.04 per share and on December 18, 2015 paid a regular quarterly dividend of $0.39 per share. For all of 2015 we paid a total of $1.60 per share in dividends consisting of regular dividends of $1.54 per share and a total of six cents per share from two special dividends. At December 31, estimated spillover income or taxable income in excess of distributions was $14.9 million or $0.91 per share. For the first quarter of 2016 Board of Directors has declared a regular quarterly dividend of $0.39 per share which is payable on March 25, 2016 to stockholders of record on…

Thank you, Ed and good morning everyone. I will review our fourth quarter results in more detail and close with comments on our liquidity position. When we look at the last quarter, I will be providing comparative commentary versus the prior quarter Q3, 2015. Total investment income was $15.1 million for the three months ended December 31, 2015, $1.5 million increase over Q3 2015. Interest income increased by $1.1 million related to higher average assets under management. An $800,000 increase in fee income due to more investment activity in Q4 including a prepayment fee of $400,000 was partially offset by a $0.3 million increase in dividend income primarily related to two distributions from equity investments received in Q3. Total expenses were $7.5 million for the fourth quarter approximately $1 million higher than the prior quarter. Interest expense increased by $0.2 million. G&A expenses increased by $0.2 million and base management incentive fees increased by roughly 0$.6 million, which includes $0.4 million and crude capital gain fees. Interest expense includes the interest paid on Fidus' SBA debentures and line of credit as well as any commitment in unused line fees. As of December 31, 2015 the weighted average interest rate on our outstanding debt was 4%. In the fourth quarter we incurred annualized tax expense of $0.4 million related to our estimated spillover of $14.9 million or $0.91 per share. Net investment income or NII for the three months ended December 31, 2015 was $7.2 million or $0.44 per share versus $0.43 per share in Q3 2015. Adjusted NII was $0.45 per share in Q4 versus $0.41 per share in Q3. The quarter-over-quarter increase in adjusted NII was driven by the increase in accrued capital fees in Q4. Adjusted NII is defined as net investment income excluding any capital gains incentive…

Thanks, Shelby. As always I’d like to thank our team and our 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 Andrew for Q&A.

[Operator Instructions] Our first question comes from the line of Bryce Rowe from Baird. Your line is open.

Thanks, good morning.

Good morning, Bryce. How are you?

I’m good, I’m good. Congrats on another good quarter Ed.

Thank you, thank you.

Just I wanted to follow up on the comments made on the SBA and I’m sure you are anticipating this question. We’ve heard from different BDCs may be different approaches to try to access additional debentures. What do you think your approach will be, will you look to find access to another $75 million on the second license or you think, you start the approach of applying for third license now.

Yes, that’s a great question Bryce. I think, first and foremost, we think this new legislation is obviously a very good thing for us over the long term. I would say given our liquidity position at the movement which is in pretty good shape, we have not approached the SBA yet regarding the commitment increase to our second license. We most likely will apply for a commitment increase in 2016, but what amount we are not sure at this point and so without applying for a third license the maximum increase that we could potentially apply for is $75 million. And I think it would be under, probably the second license, that’s the current thinking at this point.

Okay and then may be a follow up to that Ed, obviously BDCs and externally managed BDCs have struggled from a stock price perspective with most stock prices trading below book value. If we assume that continues and you do get further access to SBIC or SBA debentures, is there a kind of a maximum comfort level from a debt to equity perspective that you guys have?

Yes, it’s a great question. I think, from a comfort perspective, when were private we ran at 2 to 1 right debt to equity. So, given our approach I don’t think I’m scared if you will of increasing the leverage amount. Having said that, I don’t – and I think we’ve talked about this on previous calls to some degree, I don’t think we want to be a huge out layer relative to the industry. So we are okay going over one to one. I think the answer to that is yes. We are very comfortable doing that, but at some point, it’s probably too much of an out layer and so whether it’s one in a quarter or what have you, I think it’s in that range will probably be the maximum that we would kind of move forward with.

All right, that’s very helpful. Thanks guys. I appreciate it.

Thank you, good talking to you, Bryce.

Thank you. Our next question comes from the line of Robert Dodd from Raymond James. Your line is open.

Hi and congratulations on the quarter as well. Housekeeping one first, if I can, obviously big chunk of fee income the $1.1 million in the quarter, it looks to me also there might have been maybe $750,000 in accelerated amortization in the line as well as that like or in the right kind of ballpark?

I think Shelby is trying to look at something, I do not think that is correct, you’re correct. We did get a large prepayment fee of $400,000. We also had pretty robust quarter from an investing perspective and so I think those dollar amounts probably represented $600,000 or $700,000 of fee income. Right?

Right. So we had slightly above $600,000 of fee income just from normal course closings as well as Ed mentioned about 375 to be precise of prepayment fees that we recognized in the fourth quarter. So it largely makes up that 1.1 of fee income that we experienced.

Got it, got it. On the kind of – on the market, I mean the color you gave in your prepared remarks, I mean indicated risk adjusted returns have started to move in the lower middle market and that, obviously that is a plus, on the other and that could be driven by M&A. I mean what are you seeing so far in terms of how those multiples are shifting in your end of the market? We’ve heard some, from different BDCs the Tier A companies are still getting very high multiples and activities up that but that is multiple compression in other areas and how sort of, kind of what is the dynamic of play between obviously your ability to get equity, your ability for equity gains if multiples are compressing or vice versa?

Sure. I think we’re in a market right now where very like you call them Tier A companies, but very high quality business that are trading at higher multiples. I think there is still a real desire to invest in those type of companies, whether it’s strategic or private equity groups and people are willing to pay up and use a lot of equity to make those investments and from a debt perspective, I think people are willing to also continue to leverage those Tier A companies in a meaningful way. So I don’t think they are being big drops in from a leverage perspective for that top tier company, ones that we think are going to going to be very resilient even in a recessionary environment, just a high quality situation if you will. I do think and I just think there is less activity when you drop down into the Tier B and Tier C levels. I think for us, we’re trying to stay away from those types of situations and I think quite frankly leverage levels have dropped with regard to those situations. I think banks for instance are going to want to stay very, very close to the assets when they are lending to companies like that. So I do think there has been a little bit of a pull back from a leverage perspective for sure on those types of situations. And an industrious overall activity, I think that’s where you’re seeing activity dropped if you will.

Got it, got it. And then one conceptional question regarding the dividend, obviously it’s a good problem to have that you have earned that for significant amount $0.91 of spillover, obviously that is a little bit more than two quarters depending when you file your final taxes et cetera. You now the IRS gives you a funny look obviously if that goes too close to not being - risk of not being distributed by the tax filing. Right, so can you give us a little conceptional, I’m not asking are you going to pay a special dividend, but you have a pattern of doing that, but conceptually how are you going to manage that spillover going forward given it’s pretty high at this point?

Sure. Great question and it’s one we talk about obviously a lot at the board level. Just to step back and you've heard me say this before, over the long term our goal is to perform very well in the form of stable to growing dividends. Secondly, making periodic special distributions is something that we, as you mentioned do have a history of and our hope is to continue to do that from time to time. And I think thirdly and very importantly, is we also have a goal of maintaining or growing our NAV on a per share basis over time and that clearly is playing into the equation here to say the least. But I would say is, we’re continuing to consider our spillover position. It’s a top of mind discussion. We’re obviously proud of the seven special distributions we’ve made over the last two and half years that has accounted for $0.68. And so, I think what I can say is that the top of mind subject, but we are continuing to manage the business as a high margin of safety and so we’re going to be as you would expect kind of careful and thoughtful about those distributions and NAV piece is a significant aspect of our decision.

Got it. I appreciate it and congratulations again.

Thank you. Good talking to you.

Thank you. [Operator Instructions] Our next question comes from the line of Chris Kotowski from Oppenheimer & Company. Your line is open.

Yes, hi congratulations from me too. It was a nice surprise. Most of mine have been asked, but I’m just wondering expand a little bit on your thought of about being in the second half of the cycle is that just the thought that has been seven years since 2009 or is there activity and stresses or imbalances that you’re seeing in the markets?

Well, I think just the last statement you just made in terms of imbalance, I guess I would use the word volatility in the markets. Clearly there are concerns out there. I think the back to the beginning of your statement, I think we’re really saying it’s been seven years since the last recession and that we’re kind of long in the tooth there. Having said that, when you just look at the portfolio on a holistic basis, I don’t think - we’re continuing to see slow growth as we look at the whole portfolio, but as you know, there are pockets right whether it’s energy for sure, but we don’t have any direct exposure, we have some indirect exposure to steel for instance and steel is obviously down. So there are pockets out there. We are obviously remaining active in the market, but doing so with an eye towards that we are in the second half of an economic cycle and we need to be prepared for a recession if it does come about. But we’re not seeing that in the numbers at this point. It’s more just industry niches that we do participate in a lot of industry niches and each one of those has its own little - each company has its own issues if you will, it has to manage and to hopefully take advantage of as well. So, but we’re not seeing anything holistic at this point.

Okay. All right, that is it from me then. Thank you.

Okay, great. Good talking to you Chris.

Thank you. [Operator Instructions] It looks like we have a questioner from the line of Peter Councill from BB&T Capital Markets. Your line is open.

Hey, good morning. I just had one more question on SBAs, and I just wanted to know in different terms of increasing the commitments under the second item to 150 how you are thinking about meeting your commitments in terms of, would you need to raise equity or would you be able to rotate from the portfolio dropdown to the SBIC, so any color on, what do you did when you were into access [indiscernible]?

Sure, no it’s a great question Peter and good morning. I think, from a holding company I think, it’s a movement we have, call it $13 million that we have invested in our two SBIC funds and in addition to that we have other pent up equity capital in those funds that's been built up. And so when you think about it what we disclose holistically for us is we’re trying to operate the business with a high margin of safety here if you will. The thought process would be to obviously downstream some of the remaining if you will holding company capital into SBIC too. So we can get an increase in that commitment and that’s what quite frankly that our comments to what degree we use it at this point, we do have a fair number of investments of the holding company today, some of those I think will be realized this year, we do have cash at the holding company. And so we’ve got to decided how much we want to put in there. I don’t think we have enough to today comfortably say we’re going to max out there and then invest more in a third license. So we're kind of managing in a prudent manner. I'm still trying to figure out exactly how much ultimately we want to put down there when we apply.

Thanks Ed, good color. Thank you.

Okay, great. Nice talking to you Peter.

[Indiscernible]

[Operator Instructions] And that’s all the questioners that we have in the queue at this time. So I would like to turn the call back over to management for closing remarks.

Thank you, Andrew 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 a great weekend.

Ladies and gentlemen thank you again for your participation in today's conference. This now concludes the program and you may all disconnect your telephone lines at this time. Everyone have a great day.