Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Main Street Capital Fourth Quarter Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Friday, March 9, 2012. I would now like to turn the conference over to Ben Burnham with DRG&L. Please go ahead, sir.

Thank you, and good morning, everyone. Thanks for joining us for the Main Street Capital Corporation Fourth Quarter 2011 Earnings Conference Call. Joining me today on the call are Chairman and CEO, Vince Foster; President, Todd Reppert; and Chief Financial Officer, Dwayne Hyzak. Main Street issued a press release yesterday afternoon that details the company's quarterly financial and operating results. This document is available on the Investor Relations section of the company's website at www.mainstreetcapital.com. If you would like to be added to the company's e-mail list to receive press releases, please call (713) 529-6600. A replay of today's call will be available beginning about an hour after the completion of the call and will remain available until March 16. Information on how to access the replay is included in yesterday's press release. We also advise you that this conference call is being broadcast live through an Internet webcast that can be accessed on the company's web page. Please note that information on this call speaks only as of today, March 9, 2012, and therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay listening. Our conference call today contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's estimates, assumptions and projections as of the date of this call and are not 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. During today's call, management will discuss non-GAAP financial measures. Please refer to yesterday's press release, which can be found on the company's website, for reconciliation to the most directly comparable GAAP financial measures. Now with that, I'd like to turn the call over to Vince.

Thanks, Ben, and thank you, all, for joining us today. I will comment on the performance of our investment portfolio, discuss our recent dividend and portfolio company exit announcements and conclude by commenting on the current investing environment. Following my comments, Todd will cover our fourth quarter and calendar 2011 portfolio activity in more detail and our current liquidity position. Then Dwayne will comment on our fourth quarter and calendar 2011 financial results, after which we will take your questions. Our investment portfolio continued to deliver strong performance during the fourth quarter. Our investments appreciated during the quarter by $12.4 million on a net basis, the 38 of our investments appreciating during the quarter and 15 depreciating. And our marketable securities portfolio appreciated by $900,000 during the quarter. We finished the quarter and the year with a net asset value per share of $15.19, a sequential increase of $0.70 a share over the third quarter. Our lower middle market portfolio companies ended the quarter with $56 million in cash on the balance sheets and averaged a very conservative net debt to EBITDA ratio of 2.2:1 through our debt position and 2.6:1 including all debt. Earlier this week, we announced that our board declared an increase in our monthly dividend payout to $0.14 a share beginning with the April dividend. This brings our quarterly dividend payout rate to $0.42 a share, an 8% increase over the second quarter of 2011 payout rate. This is also our second dividend increase within the last 12 months. We've increased our quarterly dividend payout over 27%, $0.33 a quarter at the time of our 2007 IPO, and have never decreased our dividend payout, demonstrating a commitment to sustainability and growth in our dividends. We made a separate announcement earlier this week regarding our 2 portfolio…

Okay, great. Thanks, Vince, and good morning, everyone. We are pleased to report another record quarter for Main Street in terms of our financial and operational results. In total, 2011 was clearly a milestone year for Main Street in many respects. Our fourth quarter 2011 investment activity included investments totaling $81 million within both the lower middle market and private placement components of our portfolio. For the full year of 2011, we closed just over $240 million in total portfolio investments. The ability to invest in both the lower middle market and private placement components of our investment strategy provides us with capital deployment flexibility and diversifies our investment options to address various market conditions. Private placement investments continued to be an attractive and accretive component of our investment strategy and represented approximately 1/4 of the total cost basis for our investment portfolio as of year-end 2011. Our overall portfolio performance remains strong, and the portfolio continues to improve its diversification by issuer, industry, end markets and geography. At year end, we had investments in 81 portfolio companies across both the lower middle market and private placement components of the portfolio. The largest portfolio company investment represents around 3% of our total assets, and the majority of our portfolio investments represent less than 1% of our total assets. This increasing diversity adds structural protection to our portfolio, our income and our cash flow, which translates into structural protection for our shareholders. During 2011, most of our portfolio companies experienced sequential quarterly and annual growth in metrics such as revenues, earnings and backlog, with the level of such growth being highly dependent upon specific factors for each company. To some degree, those operating trends are reflected in the improving portfolio company credit statistics that Vince referenced in his comments. Based on…

Thanks, Todd. As Vince and Todd previously mentioned, we are happy to report significant increases in total investment income, net investment income and net asset value for the fourth quarter and year ended December 31, 2011. Total investment income for the fourth quarter and the year increased by approximately 68% for the quarter and 81% for the year over the same period in 2010 to a total of $19.7 million for the quarter and $66.2 million for the year. These increases were primarily driven by increased amounts of interest income associated with higher levels of portfolio debt investments and interest-bearing marketable securities investments, increased dividend activity from portfolio equity investments and increased fee income due to higher levels of transaction activity. The increase in investment income in the fourth quarter also included an increase of approximately $1.1 million of investment income associated with higher levels of accelerated prepayment and repricing activity for certain debt investments. Fourth quarter 2011 operating expenses, excluding non-cash share-based compensation expense, increased by $2.5 million over prior year to a total of $7.2 million. The operating expense increase was primarily due to higher interest expense as a result of the issuance of $40 million of additional SBIC debentures since December 31, 2010 and increased borrowing activity under our credit facility. The increase also included higher accrued compensation and other operating expenses related to significant increase in investment income and portfolio investment activity compared to the fourth quarter of 2010 and the expenses associated with certain strategic initiatives. Distributable net investment income for the fourth quarter of 2011 increased by 79% to $12.5 million or $0.48 per share, in comparison to $7 million or $0.36 per share for the same period in the prior year. Our distributable net investment income for the quarter and the year exceeded…

[Operator Instructions] And our first question comes from the line of Robert Dodd with Morgan Keegan.

2 quick ones if I could and then a more detailed one, well, for the book. You covered on units some emergence on this M&A activity, and maybe that can lead in some unrealized gains into realized. Can you give a bit more color? I mean, are portfolio companies in active discussions or is that just a perception of how you think the market is heating up at this point?

We have -- kind of for the first time in 2011, it allows of kind of regular way of private equity firms contact us -- contact us about their having an interest in some of our companies, not really as merely add-ons but as platform companies. And when you go back, Robert, to our statistic about having, in effect, share, control 34% average ownership. It really isn't our unilateral decision, and so we kind of leave it up to the management team when we talk about it. But we do -- having said all that, we know a lot of activity that we really haven't seen before, and we do have active discussions underway.

Great. And then, yes, in terms of -- yes, you said 38 companies appreciated, 15 depreciated. Was there anything, any particular theme among those companies that did the way you did lower valuation, depreciate some of the value in the fourth quarter? Is it economic? Is it all company-specific? Any particular theme you can give us?

No, it's really EBITDA volatility with no particular trend in mind. I mean, we take a pretty disciplined approach on valuation, and we take kind of the trailing -- in general, the trailing 12-months EBITDA. And so if we're -- as we add another quarter, so, for example, for the fourth quarter, as you add Q4 2011 and you drop off Q4 2010, you might have had a real nice maybe abberationally high Q4 quarter that you're dropping off and you're adding a new one. It could be impacted by weather, I mean, higher fuel prices. It just -- we don't get too worried about it, we don't really go to the math with our valuation consultants trying to keep the values more stable. We could just kind of let the math fall out as it is. And that's why you see kind of some of that fall. So as you can see, it's all fairly minor.

Yes. Yes, yes, absolutely. Absolutely. Great. Last one from me, kind of more detailed. Can you give us any kind of -- obviously, you've got a deal now on the third-party kind of investment adviser, where you mainly function as the adviser to potentially quite large funds. I mean, can you give us any color on expenses that you guys are going to have to incur ahead of revenue for that? And also, a bigger question, how are you going to go about deal allocation between a fund that potentially could have a lot of available capital? So if you pro rata it on available capital, I mean, is there a risk that a disproportionate number size of the deals are going to get allocated to your advisee rather than the in-house portfolios. Can you give us any color there?

Sure. A good question. Todd, why don't you take that?

Okay. So, Robert, what you're referencing is the HMS income fund that we filed arrangement statement on. So the short answer is, we really don't have any costs related to that right now other than just some minor travel and some administrative costs. We had a little bit of that in the fourth quarter because it's when we started to file our registration statement. Our partner in that has agreed to cover a certain amount of the costs up to a certain level, and then we would start splitting. But I really feel like the cost side of things is going to be relatively limited. And the allocation question is a good one, and it's one that we've been -- obviously have considered heavily relative to doing this. The short answer is, for more syndicated-like debt investments, we feel like we could pretty easily solve both sides of the equation, what we need from a diversification standpoint and what they need from a diversification standpoint without much effort. So it really comes down to the lower middle market investments. And really, that will take SEC exemptive relief, probably similar to what you've heard from other people for those types of investments. And that will be kind of a long process. In the SEC, we'll somewhat take out the allocation works. But in general, we would view it as the independent members of both boards are likely going to have some say on the relative allocation, and it will not be solely based on relative available capital. It will take into account a lot of different things. And our expectation is that Main Street would continue to get its fair share and probably in most cases, a majority of all those activities even if we do share some with HMS.

Yes, Robert, I guess what I would -- just to be a little bit more specific, the -- I think we told our board to be thinking about maybe our maximum exposure about pockets in around $0.01 a share range. As I recall, Todd, something like that.

I think that's right.

And the allocation investment opportunities, as it relates to lower middle market, it's more a 2013, 2014 and beyond phenomena. And right now, as we invest, we have to go out and find for about a 1/3 of our deals co-investors [indiscernible] too big for us. And it magnifies the difficulty of making sure you have the right co-investor, making sure they show up and close. So there really is some upside in the lower middle market side of the equation with having a captive co-investor. So it just makes things much more efficient on our side.

And our next question comes from the line of Vernon Plack with BB&T Capital Markets.

I know that the portfolio is well-diversified across many different industries, but I wanted to -- given the -- given all of the experience and expertise that you have in this particular industry, just some thoughts in terms of the opportunities that you're seeing and how you feel about the energy and energy-related businesses at this point.

Well, we certainly see a lot of that activity given where we are. And what's interesting is that activity is -- it really isn't a geographically focused as it used to be, I mean -- or just as easy it is -- or just as easy to see someone coming here that's focused on the Marcellus in Pennsylvania, the Bakken, the Eagle Ford or some of these other emerging plays. And so they're kind of all over the U.S. And I think what we have a bias towards is the companies that are able to generate recurring revenue that -- where their income stream is not really commodity price-dependent, it's not really hydrocarbon type-dependent gas versus oil, versus liquids. Kind of a pipeline integrity inspection, that type of thing we're pretty attracted to as opposed to the opposite end of spectrum project financed to build a pipeline or to drill a well or something like that. That's about something really we've ever considered doing, so -- but we are mindful of because I would say, Dwayne, you're probably on the ground as much as anyone else. It is a high proportionate opportunities we're seeing. Do you have any comments on that?

Yes. Vince covered a lot of it, but clearly, there's a lot of interest in the space and the exit we had in the first quarter of -- a part of our investment in drilling in, though, was directly in that space and the market that the other had tremendous amount of interest. And it just shows the amount of interest that the investment community have in that space.

Okay. And looking at how the portfolios diversified [indiscernible] from a geographic standpoint, there's obviously a large concentration in your headquarters area and surrounding area, as you lay out in your presentations, and to a less degree, the upper Midwest in the Northeast and the Southeast. Can we expect a shift over time to a more balanced mix? Or should we continue to expect the bias that the current portfolio shows?

Well, we really kind of placed a priority over the quality of the company and the quality of the management team, and geography is kind of secondary. But where we really have a competitive advantage is where there's a [indiscernible] country with very little generalist capital that's interested in basic industry type of investment. And that's why in the Pacific Northwest, for example, we found a particular need, whereas in and around the Chicago area, it's more competitive, there's other sources of financing. There's very limited pools of financing down here in our area, around the Gulf Coast. You go to Dallas, however, and there's probably more. And so it's -- in the pools of capital come and go, right, there could be some that launches of fund that got a 2 or 3 investment activity where it's going be very active. It's happened in Houston a couple of times. They come and they spend a lot of money, and they go away. It's the returns or something happened to their funds. So it's just a very dynamic scenario, but we're bound to be geographically concentrated in and around here because of our reputation and because of the relative lack of competitors down here.

[Operator Instructions] And our next question comes from the line of Mickey Schleien with Ladenburg Thalmann & Co.

I wanted to follow up on the asset allocation question. The tone of your comments seem pretty upbeat with respect to 2012, and I was curious whether that may allow you to perhaps rotate into some different sectors, where, in the past, you may have had underexposure with potentially more tolerance for risk on a go-forward basis.

Yes, I don't really think that we would be -- if we saw an equity opportunity that did not involve debt and had not really interested us in the past, I think will continue to not interest us. I think, really, our investment criteria is pretty stable. It was really pretty stable through the last economic cycle and as we're emerging. And one reason for that is it's important that we have a consistent message out there to the intermediaries and other representatives that are out in a fact-finding opportunities for us. If we were to continue to change what we were looking at or change our focus geographically in the industry or what have you, so these individuals would have a hard time and probably would not continue to choose us as a favorite in terms of someone that can complete a transaction, provide the depth, provide the equity necessary to complete it. It doesn't really have a financing contingency. So we really hesitate, I think, to change that message. So we've really been pretty consistent. I imagine we're going to continue to be. So it's worked -- it's worked pretty well for us.

Mickey, I think what we were commenting on was more on the healthy M&A market for some of our equity positions. I mean, obviously, in '08 and '09, we had some of the same equity positions we have now as we would not be sellers, nor would there be really a lot of qualified buyers back either. So it's really just more looking at the cycles relative to harvesting some of the embedded gains on the equity versus changing the underlying strategy of what we're investing in.

Fair enough. Dwayne, a couple of housekeeping questions. When can we expect you to file the K?

Yes, the 10-K will be filed immediately after the conference call, so you'll have it here in a few minutes.

Okay. And to the [indiscernible] of that, what percentage of the investment portfolio is in equity or equity derivatives on a fair value basis?

Not sure I have that number at my fingertips, Mickey, but I can certainly see if we can find it. I'll try and give you that information before the call is over.

[Operator Instructions] And I'm showing no further audio questions at this time. I will now turn the call back to management for any closing remarks you may have.

Okay. Well, I think we'll get back to you, Mickey, with that figure. And thank you, everyone, for joining us and look forward to seeing you, I guess, in about another 60 days. Bye.

Ladies and gentlemen, that does conclude our conference call for today. If you'd like to listen to a replay of today's conference call, please dial 1 (800) -- I'm sorry, please dial 1 (303) 590-3030, using the access code 4515791. We'd like to thank all of you for your participation, and you may now disconnect.