Company overview
Understand the business
As a BDC, Fidus invests primarily in privately held operating companies, using loans and, in some cases, equity investments. Its debt investments generate interest income and fees; equity positions can contribute dividends and realized gains. After financing costs, operating expenses, and other costs, net investment income is the recurring earnings measure most relevant to the company’s ability to fund regular shareholder distributions. Portfolio appreciation and realized gains can add value, but they are generally less predictable than recurring interest income.
Primary earnings measures
Net investment income per share is the key recurring earnings measure for Fidus. It reflects investment income less expenses and is more useful than generic accounting earnings when assessing ongoing distribution support. Fidus’s current annual net investment income measure is ﹩2.12 per share.
How the company supports its distribution
Fidus’s distribution capacity begins with cash interest and fee income from its portfolio companies. The company uses capital from equity and borrowings to make investments, so borrowing costs, portfolio credit performance, repayment activity, and the level of non-income-producing investments all influence the cash available for distributions. Equity gains may supplement results, but sustained distribution support is most credibly assessed through net investment income.