Ed Ross: Sure. I think one of the key points is our average leverage, I think, is less than €“ most of our peers leverage is at four times. And that’s excluding just a couple of extremely large companies and kind of out of the ordinary companies that we have in our portfolio. So we feel like €“ and the other thing is we’ve obviously added some pretty low leverage situations that have very high interest coverage. And then lastly, the calculation you’re referencing is an LTM calculation. So when you look at the first two quarters of last year, interest levels were much lower. They really started to rise in July. And so it’s not €“ the LTM numbers have not really come into the equation yet. So we would expect for interest coverage to come down some.
But again, given the leverage levels that I just referenced at four times, we think that €“ absent any significant operating issues, we think our portfolio is very well positioned as we sit here today to cover interest and other cash needs, if you will. So I think the leverage point is the key one, which really helps.
Erik Zwick: Thanks, Ed. I appreciate the color there. And then just last one for me. Looking at the industry mix of the portfolio, you’ve got the retail at 3.9%. And obviously, the kind of trajectory and outcome for the economy is still out for kind of debate. We’ll see where that goes, but I think there are some better things €“ we do enter a recession, could be a consumer-led one and retail could be impacted. So wondering if you could just provide a little detail into the types of companies you have in there in terms of the market segments they address, whether it’s higher end or middle market and then how that could potentially be impacted if we do go into a recession?
Ed Ross: Sure. You’re talking about retail in general or overall?
Erik Zwick: Retail, I guess, just what makes up that 3.9% of that segment. I’m looking at Slide 18.
Ed Ross: Sure. So 3.9% is probably on a cost basis. We’re €“ there’s two companies that really fall in that category. Unfortunately, one of them is a company called EbLens. It’s been in our portfolio since 2011, and it focuses on kind of the low-income consumer up in the Northeast. It’s been hit by three or four things, some vendor issues, obviously, the COVID period was difficult, and then quite frankly, higher gas prices and then just overall inflation. We believe folks are just spending money on necessities as opposed to discretionary items. All those issues have impacted that company today. Those €“ our investment securities in that company are written down actually to zero at this point. And so that is reflected on our balance sheet, and it’s a company that’s continuing to encounter a pretty tough difficult operating environment from our perspective.
The other companies, a company called Ecothrift, it’s more of in the thrift space, well diversified and performing very well. It’s growing in today’s market and generating a high level of cash. So it’s €“ that company is performing quite well. So I think it’s a tale of two cities there. And €“ but the €“ overall, we feel good about the portfolio, but you did hit on a point that I think is very real today that certain segments of the economy are tougher than others, and you hit on one of the tougher ones.
Erik Zwick: I appreciate the details. Thanks for taking my questions today.
Ed Ross: Absolutely. Good talking to you Erik.
Operator: I would now like to turn the call over to Edward Ross for closing remarks.
Ed Ross: Thank you, Mandeep and thank you everyone, for joining us this morning. We look forward to speaking with you on our first quarter call in early May 2023. Have a great day and a great weekend.
Operator: Thank you, ladies and gentlemen. This does conclude today’s call. Thank you for your participation. You may now disconnect.
