Flow Capital Corp Q2 2022 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ed Silva - Spartan - Analyst : Great quarter, Alex. Have you, guys, given any thought to, given the improved balance sheet, to return of capital options, given -- with the tremendous growth in book value, it seems like one of the -- I like buying quarters for $0.10. So if you could put some of that capital into your own shares, that would be a great deal, it seems to me.

Question: Ed Silva - Spartan - Analyst : Hi. No, it's been -- you're welcome. It's not like buying quarters for dime too. So that's what I think of the shares. And I don't know if you can talk maybe about -- if you will think about your funnel, there's certain areas that seem to be more like, I don't know, software, whatever. There's certain areas that you see more opportunity versus other areas. I know, generally, you're tech-focused, but is there anything in terms of subsectors, maybe, that would give us some insight?

Question: Ed Silva - Spartan - Analyst : Okay. But I noticed, I think you like the SaaS companies because they have recurring revenues, which helps pay back the loans, right?

Question: Ed Silva - Spartan - Analyst : Is that a simple way to think of it? And --

Question: Ed Silva - Spartan - Analyst : And so on that January growth -- because I always think of it more as tech, but growth is really the -- so if I had like a growing pizza chain, could I go to Flow and look for a loan?

Question: Ed Silva - Spartan - Analyst : Okay.

Question: Ed Silva - Spartan - Analyst : Okay. Well, thanks for the insight into your lending process. Last question. So just in the macroenvironment. It's getting tighter with rising rates and stuff. So in terms of your hurdle rates, as interest rates climb, does your hurdle rate climb? Are you still happy with what it was?

Question: Ed Silva - Spartan - Analyst : No. But I'm just -- I guess the question was, say, if you have a 10% hurdle rate, generally. And then if the 10-year climb -- like we've seen the 10-year climb go from 1% to 3%, right? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 17, 2022 / 1:00PM, FW.V - Q2 2022 Flow Capital Corp Earnings Call

Question: Ed Silva - Spartan - Analyst : So would your hurdle rate go from 10% to 12%? Or do you have -- I guess what is your premium over -- what's the risk-free rate? Is that --

Question: Ed Silva - Spartan - Analyst : Is it a fixed premium? Or how do you look at those things?

Question: Ed Silva - Spartan - Analyst : Oh, so you are adding a variable rate (inaudible) to the term sheets. Okay.

Question: Ed Silva - Spartan - Analyst : Okay.

Question: Ed Silva - Spartan - Analyst : Right. Even so, you really don't [borrow] off Flow short term, right?

Question: Ed Silva - Spartan - Analyst : Exactly.

Question: Ed Silva - Spartan - Analyst : Okay. Okay. Well, fantastic. Fantastic quarter and thanks for the insight.