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PennantPark Investment Corporation  (NASDAQ:PNNT)
Q1 2019 Earnings Conference Call
Feb. 08, 2019, 10:00 a.m. ET

Contents:

Prepared Remarks:

Operator

Good morning and welcome to the PennantPark Investment Corporation's First Fiscal Quarter 2019 Earnings Call. Today's conference is being recorded. At this time, all participants have been placed in a listen-only mode. The call will be open for a question-and-answer session following the speakers' remarks. (Operator Instructions).

It is now my pleasure to turn the call over to Mr. Art Penn, Chairman and Chief Executive Officer of PennantPark Investment Corporation. Mr Penn, you may begin your conference.

Arthur Penn -- Chairman and Chief Executive Officer

Thank you and good morning everyone. I'd like to welcome you to PennantPark Investment Corporation's first fiscal quarter 2019 earnings conference call. I'm joined today by Aviv Efrat, our Chief Financial Officer.

Aviv, please start off by disclosing some general conference call information and include a discussion about forward-looking statements.

Aviv Efrat -- Chief Financial Officer and Treasurer

Thank you, Art. I'd like to remind everyone that today's call is being recorded. Please note that this call is a property of PennantPark Investment Corporation, and that any unauthorized broadcast of this call in any form is strictly prohibited. Audio replay of the call will be available by using the telephone numbers and PIN that have been provided in our earnings press release, as well as on our website.

I'd also like to call your attention to the customary Safe Harbor disclosure in our press release, regarding forward-looking information. Today's conference call may also include forward-looking statements and projections and 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 projections. We do not undertake to update our forward-looking statements unless required by law. To obtain copies of our latest SEC filings, please visit our website at www.pennantpark.com or call us at 212-905-1000.

At this time, I'd like to turn the call back to our Chairman and Chief Executive Officer, Art Penn.

Arthur Penn -- Chairman and Chief Executive Officer

Thanks Aviv. I'm going to provide an update on the business, starting with financial highlights, followed by discussion of the overall market, the portfolio, investment activity, the financials and then open it up for Q&A.

For the quarter ended December 31, 2018, we invested $194 million in primarily first lien secured debt, at an average yield of 9.5%. Net investment income was $0.18 per share. We are pleased that our current run rate net investment income covers our dividends. Other income such as prepayment penalties was $0.01 per share for the quarter, although has averaged between $0.02 and $0.03 per share per quarter, and can vary.

We purchased 7.5 million of our common stock, as part of a $30 million stock repurchase program, which was authorized by our Board. Today, we have purchased $23 million. The stock buyback program is accretive to both NAV and income per share. We are looking forward to continuing this program over the coming quarter.

As of September 30, we had taxable spillover of $0.30 per share, which provides further dividend cushion. With a generally stable underlying portfolio and substantial spillover, we believe that PNNT stock should be able to provide investors with an attractive dividend stream, along with potential upside, as our equity investments mature.

As you all know the Small Business Credit Availability Act was signed into law in late March 2018. Our shareholders have just approved the reduction of the asset coverage test from 200% to 150%. In connection with this reduction, we have reduced our base fee from 1.5% to 1% on gross assets that exceed 200% of PNNT's NAV at the beginning of each quarter.

Over time, we're targeting a debt-to-equity ratio of 1.1 to 1.5 times. We will not reach this target overnight. We will continue to carefully invest and it may take us several quarters to reach the new target.

Since our $250 million notes mature in less than a year, we announced that on March 4, 2019, we will prepay the notes at 100% of principal amount, plus accrued in unpaid interest as well as a make-whole premium.

To enhance our liquidity we are in advanced discussions on an additional $250 million credit facility to complement our existing $445 million credit facility and our $150 million of SBIC II financing. We have paid off the remaining $30 million loan from the SBA on our SBIC I. In addition, our SBIC III application is still pending approval with the SBA.

Our primary business of financing middle market sponsors has remained robust. We manage relationships with about 400 private equity sponsors across the country, from our offices in New York, Los Angeles, Chicago, Houston and London, and we have done business with about 180 sponsors. Due to the wide funnel of deal flow that we receive, relative to the size of our vehicles, we can be extremely selective with our investments. In this environment, we have not only been extremely selective, but we have generally moved up the capital structure to more secure investments.

A reminder about our long-term track record, PNNT was in business in 2007, then as now, focused on financing middle market financial sponsors. Our performance through the global financial crisis and recession was solid. Prior to the global financial crisis in September 2008, we initiated investments which ultimately aggregated $480 million.

Average EBITDA on the underlying portfolio companies was down about 7% to the bottom of the recession. According to the Bloomberg North American High Yield Index, the average high yield company EBITDA was down about 40% during that timeframe. As a result, we had few defaults and attractive recoveries on that portfolio. The IRR of those underlying investments was 8%, even though they were done prior to the financial crisis and recession. We are proud of this downside track record.

We've had only 12 companies go non-accrual out of 214 investments since inception, over 11 years ago. Further, we are proud that even when we have had those non-accruals, we've been able to preserve capital for our shareholders. Based on values as of December 31st, today we have recovered about 76% of capital invested on the 12 companies that have been on non-accrual since inception of the firm. We currently have no investments on non-accrual.

Since inception, PNNT has made 214 investments totaling about $5.3 billion and average yield of 12.3%. This compares to an annualized loss ratio, including both realized and unrealized losses of about 30 basis points annually. This strong track record includes both our energy investments, as well as our primarily subordinated debt investments, made prior to the financial crisis.

At this point in time, our underlying portfolio indicates a strong US economy, with no signs of a recession. We remain focused on long-term value and making investments that will perform well over an extended period of time, and can withstand different business cycles. We are a first call for middle market financial sponsors, management teams and intermediaries who want consistent credible capital. As an independent provider, free of conflicts or affiliations, we are a trusted financing partner for our clients.

In general, our overall portfolio is performing well. We have a cash interest coverage ratio of 2.8 times and a debt-to-EBITDA ratio of 5.0 times at cost on our cash flow loans. With regard to our energy related portfolio, we're pleased that we continue to make progress monetizing those investments at reasonable values. We started 2018 with foreign investments in energy, with a stated goal of monetization over time.

We held these investments over the last several years, during the energy downturn, with the goal of maximizing value over the long run. We believe we are starting to see the fruits of that strategy. Last quarter, US Well Services announced the merger with MatlinPatterson Acquisition Corp. That merger closed on November 9, 2019. As a result of the transaction, our loan was refinanced. We hold equity in the public company with a current value of $7 million. As a result of the transaction, the company has significant liquidity to execute its business plan.

With regard to ETX, in the fourth quarter 2018, the company's shareholders provided additional financing to support ETX's Eagle Ford opportunity, and pivot from its historical focus, the results of which have been disappointing. The new funding was in the form of senior preferred equity.

RAM is focusing on its Austin Chalk position in East Texas. The company has commenced a limited drilling program. The early results have been strong on an absolute basis and relative to other operators in the area. We are encouraged by their performance. RAM plans to solely focus on the development of the Austin Chalk asset and monetize all other assets over time.

In terms of new investments, we've known these particular companies for a while, have studied the industries or have a strong relationship with the sponsor. Let's walk through some of the highlights; we purchased $30.5 million of the first lien term loan and $700,000 of the common equity of American Insulated Glass. The company's a fabricator and value-added distributor of glass products. AV Capital is the sponsor.

Confie Seguros is an insurance broker and managing general agent, primarily offering personal non-standard auto insurance products. We purchased $14.2 million of the second lien term loan. Abry is the sponsor.

We purchased $26.4 million in the first lien term loan of ProVation Medical. The company is a provider of clinical productivity software for healthcare professionals. Clearlake Capital is the sponsor.

Turning to the outlook; we believe that 2019 will be active due to growth in M&A driven financings, due to our strong sourcing network and client relationships, we're seeing active deal flow.

Let me now turn the call over to Aviv, our CFO, to take you through the financial results.

Aviv Efrat -- Chief Financial Officer and Treasurer

Thank you, Art. For the quarter ended December 31 2018, net investment income totaled $0.18 per share. We had about $0.01 per share of other income.

Looking at some of the expense categories; management fees totaled $7.1 million. General and administrative expenses totaled $1.1 million; and interest expense totaled $6.3 million. During the quarter ended December 31, unrealized loss from investment was $20 million or $0.29 per share. Unrealized gain on debt instruments was $6 million or $0.09 per share. We had about $9 million or $0.12 per share of realized gains. The accretive effect of our share buyback was $0.02 per share.

Our income -- net investment income rather, covered our dividend. Consequently, NAV per share went from $9.11 per share to $9.05 per share. As a reminder, our entire portfolio, credit facility and senior notes are mark-to-market by our Board of Directors, each quarter using the exit price provided by independent valuation firms, security and exchanges, or independent broker-dealer quotations when active markets are available under ASC 820 and 825. In cases where broker-dealer quotes are inactive, we use independent valuation firms to value the investments. Our overall debt portfolio has a weighted average yield of 10.9%.

On December 31, our portfolio consisted of 56 companies across 26 different industries. That portfolio was invested in 48% first lien senior secured debt, 34% in second lien secured debt, 4% in subordinated debt and 14% in preferred and common equity. 90% of the portfolio has a floating rate.

Now let me turn the call back to Art.

Arthur Penn -- Chairman and Chief Executive Officer

Thanks Aviv. To conclude, we want to reiterate our mission; our goal is to generate attractive risk-adjusted returns through income coupled with long-term preservation of capital. Everything we do is aligned to that goal. We try to find less risky middle market companies, that have high free cash flow conversion. We capture that free cash flow, primarily in debt instruments and we pay out those contractual cash flows in the form of dividends to our shareholders.

In closing, I'd like to thank our extremely talented team of professionals for their commitment and dedication. Thank you all for your time today and for your continued investment and confidence in us.

That concludes our remarks. At this time, I would like to open up the call to questions.

Questions and Answers:

Operator

(Operator Instructions). And first we will hear from Casey Alexander with Compass Point Research Trading.

Casey Alexander -- Compass Point Research -- Analyst

Hi, good morning. I have two questions. One that's a little more specific and then one that is a little more market general. First of all on the specific side, could you take us through the actual puts and takes on the investment gains and losses in the quarter? There is -- it looks like there are some tides going in both directions, and I think it would be helpful both on individual names that had significant moves, as well as how much or to what degree there were marks taken that were directly related to the volatility of the credit markets and commodity markets in the fourth quarter?

Arthur Penn -- Chairman and Chief Executive Officer

Thanks. Thanks Casey. Was that your first question?

Casey Alexander -- Compass Point Research -- Analyst

That's the first question. Yeah.

Arthur Penn -- Chairman and Chief Executive Officer

Okay. So look, overall, about 15% of the portfolio is broker-dealer quoted. Clearly the broker dealer quotes were a little soft as of December 30. December 31 wasn't a lot of training as far as we could tell. I don't have a quick quantification of how much of that was, but it's about 15% of the portfolio.

In terms of substantial unrealized winners and unrealized losers, at least on a mark-to-market basis, I'll just give you some of the names. The winners included RAM Energy, AKW and BlackHawk Industrial, and some of the markdowns included Superior Digital and ETX. I mean those were kind of a handful of five biggest movers up and down over the course of the quarter.

Casey Alexander -- Compass Point Research -- Analyst

Okay, great. That's helpful. Thank you. Secondly, and this is more -- well it's certainly general and specific. Obviously everybody knows that there was a lot of volatility in credit markets during the fourth quarter. Love to hear how it impacted the -- your originations and how you feel it impacts the originations that you're doing? How it may have impacted or changed your pipeline and your thoughts around that, because it clearly was a volatile market, but you guys had a very successful origination quarter.

Arthur Penn -- Chairman and Chief Executive Officer

Yeah. So I'll give you a -- hopefully I do have(ph)much of a long-winded answer, but we think it's important for you and others to understand the -- maybe the differences between the various types of markets. There is the broadly syndicated loan market, which takes its cue from the volatility and ETFs and CLOs, and that was where you saw some mark-to-market -- real movement in December over two, three week time period. That's where deals get financed for companies who generally have over $50 million of EBITDA, to where they generally come to get financed. Investors basically make their investment decisions based on a one-hour bank meeting. There is generally no covenants. These are covenant light deals. Generally, there's more --

leverage they are higher leveraged than the deals we do, and we generally shy away from that end of the market.

We focus today mostly on the self-originated middle market, which generally doesn't really move. It's a much more placid environment. And if a two or three week time period of volatility in the broadly syndicated market did not and does not have an impact on that private, self-originated classic middle-market, where all deals just get done and -- they get done as indicated in and that just motors on.

If we were to have a situation where the broadly syndicated loan market were to be extremely volatile over, let's say, three to six months or longer. All of a sudden, all the new deals would normally have gone to that market, they start to work their way toward people like us. Syndicators of those deals start to test the market and pre-market those deals. People like us spend a lot of time on due diligence. We don't make decisions after one hour meetings. We spend a lot of time on diligence. We negotiate covenants and in all cases, we reduce leverage from where it would ultimately or where it would have happened in a broadly syndicated market. And all of a sudden, if that were to happen, people like us could be financing larger companies than we are, and still doing the type of diligence and getting the covenants that we like to get.

So it did -- there is no real immediate impact over a two, three week time period. Over a three to six month time period, you'd start to see an impact, and that would also ultimately impact the middle market, as the markets kind of mesh together, and as all of a sudden, people like us finance companies with $40 million, $50 million, $60 million of EBITDA in the same manner we'd be financing companies today, that do $20 million to $30 million of EBITDA.

Casey Alexander -- Compass Point Research -- Analyst

That's great. Thank you very much for taking my questions. I appreciate it.

Arthur Penn -- Chairman and Chief Executive Officer

Thanks Casey.

Operator

And moving on, from Ladenburg Thalmann, we have Mickey Schleien.

Mickey Schleien -- Ladenburg Thalmann Financial Services Inc. -- Analyst

Good morning Art and Aviv. Wanted to talk a little bit about portfolio, the weigh, it declined about 30 basis points in a quarter when LIBOR went up, but your portfolio allocation was fairly steady. So I'd like to understand what were the key new investments or exits that affected portfolio weigh and sort of where are you looking to see weigh on a go-forward basis?

Arthur Penn -- Chairman and Chief Executive Officer

So weigh, just I think I understand the question just for everybody's -- weighted average yield?

Mickey Schleien -- Ladenburg Thalmann Financial Services Inc. -- Analyst

Correct.

Arthur Penn -- Chairman and Chief Executive Officer

Yeah, look, we're -- as we continue to pivot to a more senior, more secure portfolio, that can be leveraged more than one to one and we've been -- we've said publicly for eight years as the law was being discussed, that first lien assets, you could leverage prudently more than 1 to 1. Non-first lien you probably wouldn't want to leverage more than 1 to 1, even if you could.

So we are pivoting, we're continuing to pivot to higher in the capital structure, lower risk, lower reward, investments that we could leverage more than 1 to 1. So we -- we today for the first time came out with our target of overall 1.1 to 1.5 times. And we believe that with the enhanced leverage, and even with a lower yield, we can generate a very stable, steady -- and we think growing ROE for our shareholders.

Mickey Schleien -- Ladenburg Thalmann Financial Services Inc. -- Analyst

Art, can you tell us what the yield was on your new investment this quarter?

Arthur Penn -- Chairman and Chief Executive Officer

Yeah, we talked about it in the call, let's get it for you, 9.5%.

Mickey Schleien -- Ladenburg Thalmann Financial Services Inc. -- Analyst

Okay. So that's below certainly where you've been historically. If I understand you correctly, are you lending then to larger companies or are you looking for lower levels of leverage? Can you just give us little insight into what you're looking at, in terms of lower risk assets?

Arthur Penn -- Chairman and Chief Executive Officer

Yeah, so one way to reduce risk is to lend to slightly larger companies. The other way is, what we've been doing a lot of which is moving higher in the capital structure. So moving higher in the capital stack, to more first lien senior secured area of the capital stack.

Mickey Schleien -- Ladenburg Thalmann Financial Services Inc. -- Analyst

Okay. And following up on Casey's question about unrealized depreciation, just conceptually, can you tell us whether some of that has been recuperated so far this quarter, given the rebound in the loan markets?

Arthur Penn -- Chairman and Chief Executive Officer

I mean, certainly the 15% of the book that's broker-dealer quoted, likely to see some ups in that. Again, I don't have, don't have a real number for you. But that should be better. In terms of the names that I enumerated earlier, yeah, I mean those each quarter get valued independently and there -- because most of them are equity securities there, and most of them have idiosyncratic individual reasons, better either good or not so good for their movement. Hard to give a blanket statement. We know US Well equity, for instance, which is publicly traded, is up a couple of million dollars since quarter-end. So that is kind of a more daily mark-to-market kind of thing.

And the rest of the names I enumerated on are private illiquid and every quarter, we go through the independent valuation process and whatever is going on in those underlying companies, will drive the mark.

Mickey Schleien -- Ladenburg Thalmann Financial Services Inc. -- Analyst

And thank you for that. Art, looking at RAM Energy, you marked up the equity, was that related to the strategy that you discussed in your prepared remarks, or was that simply the waterfall effect and movements of cash flows ?

Arthur Penn -- Chairman and Chief Executive Officer

So it's a good question. We mentioned the Austin Chalk formation in East Texas, they've been drilling some very successful wells there, and the early results are promising and we're very encouraged by those results. More work in development are needed, but it is -- they found a very nice -- at 14,000 acres in the Austin Chalk area. They've got some nice JV partners, who are in and around that area, including Magnolia, GeoSouthern and EOG. So they're surrounded by some nice strategic players, who are partners with them in some of the drilling and the initial wells have had good results.

Mickey Schleien -- Ladenburg Thalmann Financial Services Inc. -- Analyst

And with that success Art, is there any insight as to your potential to start to monetize some of this investment, let's say this calendar year?

Arthur Penn -- Chairman and Chief Executive Officer

Yes, it's a good question on timing. We think of these things is long term and and if this can -- if they continue to have nice wells, we may decide to , because those have very good returns on investment, you would continue to maximize the opportunity to continue to operate for a year, for two years, something like that, to really prove out the geography.

So probably 12 months is early, if things are going well. If things are going well, you want to maximize that opportunity. So we'll see where we go, but the early results are very promising and we're hopeful that they will continue to get very nice results there and we'll have an opportunity to get our money back. So that's the goal.

Mickey Schleien -- Ladenburg Thalmann Financial Services Inc. -- Analyst

Okay. Just a few more sort of housekeeping questions if I may? I see you retain the equity in SBIC I, even though there is no debentures in that subsidiary. Is your intent to use that equity to eventually fund SBIC III, is that the point?

Arthur Penn -- Chairman and Chief Executive Officer

It's a good question and you have a sharp eye, but that would be the idea. We're not allowed to undo SBIC I until the SBA gives us permission to do so. So even though we've paid off all the debt, we do not yet have SBA permission to unravel that SBIC. Once we do, we will -- as we look hopefully to get SBIC III going, we will use that equity over at SBIC III.

Mickey Schleien -- Ladenburg Thalmann Financial Services Inc. -- Analyst

Okay. So for the meanwhile, it's sort of trapped, I guess, in that subsidiary?

Arthur Penn -- Chairman and Chief Executive Officer

Yes.

Mickey Schleien -- Ladenburg Thalmann Financial Services Inc. -- Analyst

Couple more. Your other income, as you noted, I think it was about a penny per share, it usually runs higher than that. But you had an active quarter for -- in terms of portfolio velocity. Was there something -- was there a reversal or something unusual in the quarter that caused the decline in other income?

Arthur Penn -- Chairman and Chief Executive Officer

No, I mean -- a lot of that's driven by prepayment penalties and refinancing fee -- refinancing fees, when something gets taken out. That was all -- we just didn't get that kind of income this quarter, whether it was -- we had refinancings, but we didn't get the prepayment. But there were prepayment penalties associated with it. But it was much lower than normal. Typically, it's been $0.02 to $0.03 per share. Sometimes, it's $0.05, sometimes $0.01, but typically it's been $0.02 to $0.03 per share and was just a little light this quarter.

Mickey Schleien -- Ladenburg Thalmann Financial Services Inc. -- Analyst

So you're still comfortable with a sort of $0.02 to $0.03 run rate?

Arthur Penn -- Chairman and Chief Executive Officer

Yeah, yeah. Some quarters maybe higher, some quarters maybe lower. But I think that's a nice mean or median to be thinking about.

Mickey Schleien -- Ladenburg Thalmann Financial Services Inc. -- Analyst

Okay. And lastly, and I appreciate your time; last quarter you estimated the make-whole premium for the redemption of the notes to be $2.5 million to $3 million. Is that still the number you are working with, and are you still expecting to report that above the line, or could it be below the line?

Arthur Penn -- Chairman and Chief Executive Officer

It's a great question and thank you. Well, the exact make-whole on the bonds will be something like $2.1 million. And that will be -- we report when we have these onetime events like this, we report. Obviously we have to reported a GAAP NII, and then we also report a core NII, and the core NII usually excludes one-time fees, in this case of the make-whole of $2.1 million. So we will obviously disclose GAAP NII and we'll disclose a core NII.

One additional other point, just to be clear, I want to be, I want to be totally transparent with people, because we're negotiating another $250 million of credit facility, which will probably happen this quarter, which will have some upfront fees, those upfront fees are likely to be around $2.9 million. So $2.1 million for the make-whole on the bonds, $2.9 million for the new credit facility. Again strategically overall, we're pivoting both our underlying investments -- to higher in the capital structure, as we go to more than 1 to 1 leverage, and we're also pivoting our financing. And so these are all one-time costs that we're incurring, the $2.1 million for the make whole, potentially the $2.9 million for the credit facility that are one-time in nature, as we pivot both the left side and the right side of the balance sheet. So next quarter, again, we will of course disclose GAAP NII and we will disclose core NII, which will exclude those two one-time events.

Mickey Schleien -- Ladenburg Thalmann Financial Services Inc. -- Analyst

And just to confirm, Art, on that point, because you use fair value accounting on your debt liabilities, you're required to take that fee for the origination of the credit facility upfront, right? You can't amortize it?

Arthur Penn -- Chairman and Chief Executive Officer

Yeah. So that's, you know, we can go on to a dissertation of mark-to-market liabilities. We like it due to the matching, and we also like it -- and that once we pay that upfront fee, everyone knows very clearly what the cost of the financing is, everyone can model it. And we also like the matching, which helps in times of turbulence. So we as a -- just as a matter of course, mark-to-market liabilities and we take the upfront fees at inception of these of these loans.

Mickey Schleien -- Ladenburg Thalmann Financial Services Inc. -- Analyst

Okay. That's really helpful. That's it for me. Appreciate all your time this morning. Thank you.

Arthur Penn -- Chairman and Chief Executive Officer

Thanks Mickey.

Operator

(Operator Instructions) Next from Jefferies, we have Kyle Joseph.

Kyle Joseph -- Jefferies Group -- Analyst

Good morning, guys. Thanks for taking my questions. I just want to stick with the balance sheet here and kind of get your thoughts on how the balance sheet is going to get -- look from a longer-term perspective. Obviously, you're terming out the fixed rate debt, but as we progress and look out a few years, can you give us an idea for how your liabilities look, in terms of fixed rate debt, SBA debt versus credit facilities ?

Arthur Penn -- Chairman and Chief Executive Officer

It's a great question Kyle, and we can give you a sense of how we think, because we don't exactly know; and lot of it will take its cue from what's going on, on the left hand side of the balance sheet, like what's our underlying asset composition, how much first lien is it, how much non-first lien is it, and we've already stated that first lien can be prudently leveraged more than 1 to 1, if it's not first lien, we wouldn't do it anyway.

So a lot of it will take its cue on the left hand side of the balance sheet, and where we see the best risk adjusted returns. There may be a time in the next couple of years, where we say, gee, second lien is the place to be, because it's so great for these attributes. We can get really great returns and low risk, and and we may pivot the left hand side of the balance sheet in one direction, which will then have ramifications to the right hand side.

So we gave a fairly wide range of 1.1 times to 1.5 times debt-to-equity, to kind of give a wide range based on a number of different scenarios with what's going on on the left hand side of the balance sheet.

Now to the right hand side of the balance sheet, we have the SunTrust facility, we have SBIC II, and we are negotiating a third credit facility of $250 million as we speak. That will be short-term. We are hopeful that one day we get SBIC III. There is no assurance. It may not happen. But we're hopeful, we certainly have had an excellent track record on SBIC I and SBIC II, and the SBA should be very happy with the performance that we've generated for the government. But there is no assurance we get an SBIC III.

Other options over the long run could include bonds, it could include other credit facilities. But I think kind of in the short term, this new credit facility we're negotiating in a potential SBIC III, should should be fine for now.

Kyle Joseph -- Jefferies Group -- Analyst

Got it. That's helpful. And then I know you guys have no non-accruals, you talked about some portfolio companies getting marked up, some getting marked down. But could you give us a sense in terms of revenue growth trends or EBITDA growth trends that you guys are seeing and whether there has been any sort of change over the last few months?

Arthur Penn -- Chairman and Chief Executive Officer

The US economy still appears to be strong, and as a general proposition, clearly, there are certain pockets of weakness. Labor costs have gone up, and I've heard some companies that have labor -- logistics costs have gone up in some cases. So there are some pockets of weakness. But the US economy is generally strong. I think we're seeing probably mid-single-digit EBITDA growth as a broad and general statement in the portfolio.

Kyle Joseph -- Jefferies Group -- Analyst

All right, great, thanks very much for answering my questions.

Arthur Penn -- Chairman and Chief Executive Officer

Thanks Kyle.

Operator

And moving on from JPMorgan, we have Rick Shane.

Melissa Wedel -- JPMorgan -- Analyst

Hey guys, it's Melissa on for Rick today. I'm wondering if there was any impact of timing of exits or originations during the quarter? Put another way, were exits either sort of front-end loaded or originations back-end loaded?

Arthur Penn -- Chairman and Chief Executive Officer

It was generally -- a good question Melissa, and thanks for calling in. It was generally flat throughout the quarter. You know, we've had some good originations. So I mean I think of a run rate of $0.18, $0.19 is a fine way to model it before you add any other income or anything to it. So kind of --

if that gives you, what you're looking for? Hopefully that does.

Melissa Wedel -- JPMorgan -- Analyst

Sure. Yeah it does, thanks. And then I guess, I'm wondering if the 9.5% average yield on new originations in the December quarter is a good run rate for sort of the new, sort of more senior mix that you're targeting?

Arthur Penn -- Chairman and Chief Executive Officer

It probably is, I guess the weighted average yield on the portfolio overall is upper 10s right now. I think we've said over time, over last year or two, as we've been pivoting more toward senior secured, that weighted average yield is going to come down, and right now it's upper 10s. That may come down to 10.5 to 10 over time, and as we move up capital structure and as we take advantage of the higher leverage.

Melissa Wedel -- JPMorgan -- Analyst

Okay, got it. And if I may, the US Well Services equity stake, is that something that you are sort of locked into for any time period, or is that something you can sort of pull the trigger on at any point, if you decided to?

Arthur Penn -- Chairman and Chief Executive Officer

Yeah, it's a good question. We have a lock-up, probably about half is -- when the deal happened, half was restricted for six months, the other half for 12 months. We're probably three months into it, if that gives you a sense. I don't have the exact dates, but we have three more months -- three months probably on the first piece.

Melissa Wedel -- JPMorgan -- Analyst

Yeah perfect. Thank you.

Arthur Penn -- Chairman and Chief Executive Officer

Thanks, Melissa.

Operator

Next question is from Jim Young with West Family Investments.

Jim Young -- West Family Investments -- Analyst

Hi, a couple of questions. First, could you talk about your share repurchase program? It looks like you bought a 1 million shares in the fourth quarter at $7.5 million, so did you buy all of the stock in early October or can you just share with us a little bit, your thoughts there? And it doesn't appear that you bought any more back in late December ?

Arthur Penn -- Chairman and Chief Executive Officer

Yes, it's a good question. We do the buybacks in our window, which is -- call it a month after earnings. So unfortunately, we did not take advantage of the volatility at the end, but that's kind of how we've done it over the course of time.

Jim Young -- West Family Investments -- Analyst

So in December, were you in a blackout period, then?

Arthur Penn -- Chairman and Chief Executive Officer

Yes.

Jim Young -- West Family Investments -- Analyst

Okay. And then the second question is, can you share with us your great thoughts about the credit cycle, how you've experienced several cycles throughout your career? You alluded a little bit to the underlying strength in the US economy; but can you just share a little more as to how you're thinking about this cycle and how it's unfolding?

Arthur Penn -- Chairman and Chief Executive Officer

Yes, it's a great question and something we think about all the time, and we were very public three or four years ago, saying it's getting long in the tooth, so -- which is why we've been generally moving up capital structure and how we underwrite credit. I mean, we underwrite these days assuming there's going to be a recession next year, and we've been underwriting that for the last three years, assuming there is a recession next year. So if you were to look at our credit memos, you'll see some nice downside cases. EBITDA down 10%, down 20%, down 30%, trying to handicap how these companies are going to perform. We look at what happened in the last recession. We look at customer concentration, supplier concentration, the levers management can pull, should there be weakness, whether it be working capital or CapEx. So we're very aware and cognizant that there might be a recession down the corner. Again we don't see any signs of it today. But we underwrite it as if there will be.

And turn it back to a clock of time to 2007, then we were doing mostly subordinated mezzanine debt, and we did our original IPO in April of 2007. By June of 2007, we starting to see some weakness in the underlying portfolio companies, and we made a conscious decision then to continue to invest, but only invest in companies and industries that we thought were recession resistant. Only in situations where we thought the leverage was very reasonable, where we can get good covenants and good yields. So we raised the bar quite a bit starting September of 2007 proactively. And again, this was mostly second lien of subordinated debt.

And then, it's interesting that the vintage of deals that we did between, let's say June of 2007 and September of 2008, performed very well, because we had proactively raised the bar, even though they were done before September of 2008, when the financial world blew up, and even though there were subordinated debt. In most cases, we had proactively underwritten in a more cautious conservative fashion, sp -- which meant that the EBITDA was down only about 7% on a blended basis of the portfolio, and the average high yield company in America EBITDA was down about 40%. So fast forward to today, we're not seeing any weakness, currently in the economy, and we'd be happy to share that with all of you next quarter or the following quarter whenever that is. But we're not seeing -- that said, we're underwriting assuming there is a recession next year and the vast majority of what we're doing is senior in the capital structure.

So we think we're as well positioned as we could be, at this point in time in the credit cycle, and we still see some attractive risk-adjusted returns and as you could tell, right now, we're OK, giving up a little yield if we feel very good about the credit, and about the ability of the credit to perform well over time. So that's how we're thinking about it.

Jim Young -- West Family Investments -- Analyst

Great, thank you very much.

Operator

And ladies and gentlemen, that does conclude our question and answer session. I'd like to turn the floor back to Art Penn for any additional or closing remarks.

Arthur Penn -- Chairman and Chief Executive Officer

Thanks everybody for being on the call today. Our next quarterly call will be in early May, and we appreciate all your interest in our company. Thank you so much.

Operator

And ladies and gentlemen, that does conclude our conference for today. Thank you again for joining us. You may now disconnect.

Duration: 39 minutes

Call participants:

Arthur Penn -- Chairman and Chief Executive Officer

Aviv Efrat -- Chief Financial Officer and Treasurer

Casey Alexander -- Compass Point Research -- Analyst

Mickey Schleien -- Ladenburg Thalmann Financial Services Inc. -- Analyst

Kyle Joseph -- Jefferies Group -- Analyst

Melissa Wedel -- JPMorgan -- Analyst

Jim Young -- West Family Investments -- Analyst

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