Hello, everyone. Thank you for joining us and welcome to the SoundPoint Meridian Capital, Inc. first fiscal quarter ended June 30th, 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Julie Smith, Head of Investor Relations. Julie, please go ahead.

Ladies and gentlemen, thank you for standing by. SoundPoint Meridian Capital refers participants on this call to the investor webpage at www.soundpointmeridiancap.com for the press release, investor information and filings with the Securities and Exchange Commission, and for a discussion of the risks that can affect the business. Sound Point Meridian Capital specifically refers participants to the presentation furnished today on the Form 8K with the SEC, and to remind listeners that some of the comments today may contain forward-looking statements, and as such will be subject to risks and uncertainties which, if they materialize, could materially affect results. References made to the section titled Forward-Looking Statements in the Company's Earnings Press Release for the Latest Quarter End, which is incorporated herein by reference. We note forward-looking statements, whether written or oral, include but are not limited to SoundPoint Meridian Capital's expectation or prediction of financial and business performance and conditions, as well as its competitive and industry outlook. Forward-looking statements are subject to risks, uncertainties, and assumptions which, if they materialize, could materially affect results. And such forward-looking statements do not guarantee performance, and SoundPoint Meridian Capital gives no such assurances. Sound Point Meridian Capital is under no obligation and expressly disclaims any obligation to update, alter, or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. In addition, historical data pertaining to the operating results and other performance indicators applicable to Sound Point Meridian Capital are not necessarily indicative of results to be achieved in succeeding periods. I will now turn the call over to Ujjaval Desai, Chief Executive Officer of SoundPoint Meridian Capital.

Thank you to everyone joining us today and welcome to the SoundPoint Meridian Capital earnings call for the first fiscal quarter ended June 30th, 2026. We'd like to invite you to download our investor presentation from our website, which provides additional information about the company and our portfolio. With me today is our Chief Financial Officer, Dan Fabian, and after our prepared remarks, we'll open the call to your questions. For the first fiscal quarter ended June 30th, 2026, we generated net investment income or NII of $5 million or 24 cents a share and paid distributions of 60 cents per share during the quarter. Despite the successful refinancing of CLO transactions in the portfolio over the past quarter, NII remained below common distributions due to spread tightening and higher model loss reserves for AI impacted software loans within our CLO collateral portfolios. Net asset value or NAV per share ended the quarter at $9.88 up from $9.63 as of March 31st, 2026. The NAV increase was primarily driven by net unrealized appreciation in the fair value of our CLO equity investments partially offset by distributions paid in excess of NII. As of quarter end, our CLO equity portfolio's weighted average gap yield was 9.8% versus 9.1% in the prior quarter. Our portfolio remains highly diversified with investments across 108 CLOs managed by 31 different managers, providing exposure to over 1,500 underlying loans spanning more than 30 industries on a look-through basis. In an environment characterized by increasing dispersion across sectors, We believe this level of diversification remains an important component of our risk management approach. Subsequent to quarter end, we announced monthly distributions for calendar Q4 2026 of 13 cents per share, down from our previously announced Q3 2026 monthly distribution of 20 cents per share. In setting the revised distribution level, the board considered a range of factors, including current and expected portfolio yield, the importance of maintaining balance sheet flexibility and our objective of supporting net asset value over time while earning a distribution through net investment income. Subsequent to quarter end, SoundPoint as the advisor for SPMC proposed a base management and incentive fee waiver for the six month period beginning July 1st, 2026 and ending on December 31st, 2026. The fee waiver will reduce the annual base management fee from 1.75% to 1.5% and will reduce the annual incentive fee from 20% to 15% of pre-incentive net investment income. In recognition of the unprecedented income compression faced by the CLO equity asset class, the advisor proposed this fee waiver to help reduce the expense burden on the company while we work to increase our income through loan spread improvement, refinancing of our liabilities, and active trading of our investments. I'll now turn the call over to Dan for a more detailed review of our financial highlights for the quarter before I share thoughts on the overall market.

Thanks Ujjaval and welcome everyone. As Ujjaval mentioned, for the quarter ended June 30th, 2026, we delivered net investment income of $5 million or 24 cents per share. During the quarter, we purchased 13 equity investments in the secondary market with a cost of $16.1 million and a weighted average yield of 20.2%. In addition, we sold seven equity investments, generating $23.3 million in cash proceeds with a weighted average yield of 8.5%. We refinanced the liabilities of 13 CLO equity investments, resulting in a weighted average debt cost savings of 37 basis points. For the quarter ended June 30th, 2026, we recorded a net realized loss of $12.8 million and an unrealized gain on investments of $25.2 million. Total expenses during the quarter were $7.4 million. The gap net income for the quarter was $17.5 million or 83 cents per share. Moving to our balance sheet, as of June 30th, 2026, total assets were $384.7 million. Net assets were $208.1 million on our net asset value stood at $9.88 per share. The fair value of our investment portfolio stood at $363.2 million, while available liquidity, which consisted of cash, was approximately $21 million at the end of the quarter. As of June 30, 2026, the company's leverage ratio was 45.7% of total assets. During the quarter, we declared monthly cash distributions of 20 cents per share, payable at the end of July, August, and September. Based on our share price as of June 30th, 2026, this represents an annualized distribution rate of 24.2%. As of July 31st, 2026, our estimated range of the net asset value per common share was between $9.56 and $9.66. I will now turn it back to Ujjaval.

Thanks, Dan. Before we move into Q&A, I wanted to take a moment to touch on the recent market backdrop for corporate loans and CLO equity. The second quarter of 2026 saw the bifurcation across US credit markets become more pronounced. Coming into the quarter, we had expected some continuation of the pickup in M&A related issuance that began to build up in the first quarter, but that expectation was tempered by a federal reserve that has shelved trade cuts and energy-driven inflation shock tied to the conflict in the Middle East and continuing concerns around the AI-driven disruption in the software sector. Against that backdrop, the new issue leveraged loan market proved more resilient than the macro headlines would suggest, as corporate borrowers stepped in to fill the void left by the pullback in sponsor-backed activity. U.S. institutional leveraged loan activity totaled about $224 billion in the second quarter, down 7% from the first quarter, but still running 17% above the five-year quarterly average. Most of that decline was driven by a slowdown in private equity dealmaking, with overall P.E. deal volume down 38% quarter over quarter, the lowest level in two and a half years. Sponsors, for their part, remain focused on balance sheet defense, with nearly 75% of first-half primary market deals related to extend and amend transactions as sponsors turned their attention to the 2028 maturity wall. Market technicals also remained challenged during the quarter. Investor demand fell to the weakest reading since the fourth quarter of 2023, driven almost entirely by broader pullback in CLO issuance, which loan funds flows were insufficient to offset. As a result, the market was left in a rough supply-demand equilibrium with a modest $2 billion surplus. While this marks a dramatic improvement from the nearly $60 billion supply shortage in Q1, net new supply is still heavily skewed towards the higher-rated, lower-yielding credits. This compresses the spread differential and makes the arbitrage CLO equity investors require difficult to attain. Against this backdrop, spreads widened meaningfully at the bottom of the credit spectrum, while remaining largely unchanged higher up. In the broadly syndicated loan market, B minus spreads widened by 55 basis points since the fourth quarter of 2025 to 409 basis points or so far, while double B minus spreads and B minus spreads moved by five basis points or less. Loan prices told a similar story. The average bid on performing software loan flipped to 85.62 by quarter end down more than two points from March levels, while the broader loan index moved into positive territory up 1.29% year-to-date. The divergence reflects continued concerns around AI-driven disruption in the software sector, which has reduced new software issuance to just 8.8% of broadly syndicated volume year-to-date, the lowest share since 2013. CLO issuance slowed further during the quarter with managers pricing $33.3 billion across 72 transactions, the lowest quarterly volume since the fourth quarter of 2023 and roughly 20% behind last year's space. Issuance dropped at $6.2 billion in April before rebounding to $16.8 billion in May and holding through June. Refinancing and reset activity, by contrast, remained a bright spot. with combined volume of $93.7 billion, well above the $56.2 billion in the first quarter, as managers increasingly rolled maturing deals into refinancing and reset trades rather than fully liquidating structures. Looking ahead, the direction of credit markets in the second half of 2026 will likely depend on a recovery in private equity dealmaking, which remains the primary engine of net new loan supply. as well as on how interest rates, geopolitical developments, and AI-driven disruption concerns evolve from here. Both quarter and energy markets have begun to stabilize, with a tentative U.S.-Iran peace deal bringing oil prices back below $80 a barrel. However, a lasting resolution to the conflict has yet to be reached. Although pricing around the software space has not meaningfully improved from the beginning of the quarter, We believe that certain CLO managers and portfolios are better positioned than others to manage the risks presented by the increasing impact of AI. On loans with shorter maturities, we are beginning to see positive signs of amend and extend activity, which has the potential to increase yield in underlying CLO collateral portfolios and to improve the arbitrage available to CLO equity. Companies have begun tapping both public and private markets to fund artificial intelligence spending, which we believe will increase loan supply for CLO portfolios in the second half of 2026 and beyond. On the other side of the CLO balance sheet, funding costs remain broadly stable during the quarter with average AAA coupons around 124 basis points or so far, though top tier managers continue to price meaningfully inside bottom tier managers. We believe this continues to support the refinancing and reset optionality across our portfolio as we move through the remainder of 2026. From a portfolio management perspective, we continue to sell CLO equity with limited near-term optionality and greater downside risk while adding better quality secondary investments. This portfolio rotation is expected to increase our risk-adjusted yield. The secondary equity market continues to offer much better investment opportunities than in primary due to compressed arbitrage in that market. We feel the arbitrage for primary equity will improve over time and we remain ready to participate in that space given our strength in sourcing, structuring and credit underwriting. While we expect the volatility to continue in our space, we are seeing some improvement in market sentiment around CLO equity with prospects for increased cash flow from loan spread improvement and liability refinancing. With that, we thank you for your time today and will now open the call up to questions. Operator.

We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Gaurav Mehta with Alliance Global Partners. Your line is open. Please go ahead.

Thank you. Good morning. I wanted to ask you on the new dividend rate of 13 cents per month. When you got to that number, I guess, what kind of factors you consider given that that number is still higher than the NII that you guys reported for this quarter?

Hi, Gaurav. So yes, in terms of the distribution rate of 13 cents per share, obviously a lot of factors go into that. As I mentioned in my remarks, some of the factors that are quite important there include the portfolio mix today, kind of our expected yields going forward. as well as portfolio rotation that we are doing in the portfolio already. So just to give you the different components of that, as I mentioned, we're seeing some signs of loan spreads improving, which is very helpful because that obviously goes straight to the bottom line for CO2 equity. Also, we continue to do resets and refis of our portfolio. As I mentioned, we've done 13 transactions in this last quarter. and we have a table in our presentation that you've seen which outlines the existing mix of our portfolio in terms of how many deals can be reset, refinanced over the next few quarters. And there's a substantial portion of the portfolio can be refinanced tighter. That also helps improve the portfolio yield going forward. and lastly, the trading activity we mentioned. Just to put some numbers around that, we have traded year-to-date in this SPMC portfolio. We've sold around 50 million, sorry, we have sold about 35 million and purchased around 50 million of secondary positions and that rotation has being very creative. We have added about 100 basis points of yield through that rotation. So, you know, those are the three components that we considered in figuring out what the go-forward portfolio yield would be. You've already seen some uptick in the portfolio yield. As we reported, we had about 9.1% in the previous quarter, the yield is now 9.8%. And then for July, we're seeing current go forward yields around 10.1% of the portfolio. So there is some improvement in the yield, which over time we think will result in higher NII for the portfolio. And that is what we considered in coming up with a number. Obviously, there are a lot of variables that go into that, but those are some of the key variables we looked at.

All right. Thanks for those details. Second question, can you maybe provide some color on how much exposure do you guys have to software sector that's impacted by AI, and how do you plan to manage that exposure?

Yeah, so that's obviously a very topical question, and we have been very focused on AI exposure since the concerns came up earlier this year. Roughly, I would say about 10% to 12% of the portfolio is going to be exposed to sort of software credits. This is on the look-through basis. But the reality is that not all these credits are the same. you have to really go into and look at the underlying portfolio, the underlying credits and try to figure out which subsector they're in. We mentioned in our previous on our previous call, you know, we have conducted extensive analysis sort of credit by credit re underwriting of our portfolio to identify which names are likely to be impacted going forward. And we have used that sort of credit underwriting results to then make trade to the portfolio to try to reduce risk to the most impacted AI names. So as sort of overall sector at the sector level, you know, we're more concerned about the individual names, not the sector exposure itself. So the sector exposure might still stay in that 10 to 12% range, but the goal has been to reduce the tougher names within that sector so that we have less tail risk in the portfolio going forward.

All right, thanks for those details. That's all I had. Thanks.

Your next question comes from Eric Zwick with Lucid Capital Markets. Your line is open. Please go ahead.

Thank you. Good morning. Maybe first I'll just start with a bit of a follow-up on Gaurav's question on software. Ujjaval, you mentioned in your comments that I think here year to date for new CLO issuance, the share of software was, I think, 8.8% if I got that number down right, 8.8% lowest level since 2013. Just to put that into context, what was that percentage over the past two or three years? How much higher was that?

Hi, Eric. I will have to get that number for you. in the previous year. So I'll follow up with that answer. But it's obviously significantly lower. I mean, just looking at the typical portfolios, 10% to 15% software exposure. So my guess is the new issue market was probably in that 15% to 20% range, but we'll have to get back to you with the exact number.

Yeah, that makes sense. Yeah, that ballpark is good. Thank you. and just thinking about your priorities going forward, you mentioned the secondary market continues to offer some opportunities, although volume is a little bit lower. Your cash position has built up a little bit. I think 21 million at the end of the quarter. So how are you just thinking about the opportunity between new investments and additional CEOs for relative value opportunities versus maybe paying down the revolver? a little bit, just kind of curious how you're thinking about capital deployment here in the near term.

Yeah, I think that's a great question. We are very much focused on this rotation trade, trying to reduce risk in the portfolio and also boost yields going forward. So the first leg of that is obviously doing the actual sales of deals that we want to sell out of the portfolio. And then we line up purchases that make sense. So there's usually a delay in deploying that capital. We want to be careful around the deployment, so we will take the time needed to do that. And you're right, we have about 21 million of cash, and depending on market opportunity going forward, we will deploy that in better quality, higher yielding investments. And we're seeing plenty of opportunities in the secondary market right now at sort of mid to high teens type of yields. These are sort of good, strong, equity positions, tier one managers, managers we like. And so there's plenty available and we are being very careful, but we're looking at the market every day to try to find the best opportunities there. I think the focus again has been exclusively on secondary investments. primary equity returns are still not that great because the arbitrage doesn't look very healthy in new-issue equity. We think new-issue equity returns are probably in the kind of high single-digit level, sort of 8%, 9% type of returns, while secondary equity, as I mentioned, can be kind of high teens. And so there's a significant pickup in secondary versus primary. And so that's really the focus. In terms of your question on liability management, We're obviously watching that very carefully and we will evaluate sort of how much leverage we can sustain. And as you know, we have this revolver at the top, which can be paid down and then reused, drawn when we need to. And so we are carefully managing that.

Thank you. I appreciate all the detail there. And just last question for me, you know, looking at that, the realized losses in the quarter, and I think you mentioned the investments that you chose to sell had, I guess, you know, lower optionality kind of going forward and less attractive. You know, maybe kind of just describe those that, you know, the reinvestment periods were kind of nearing their end, or were there other factors? Maybe just probably a little bit more color there would be helpful.

Yeah, sure. No, so as you know, if you look at our weighted average reinvestment period in our portfolios, it's pretty long. It's, you know, among the longest in the market. So we don't have too many investments that are nearing the end of the reinvestment period. You know, these are still deals that have, you know, three years or so left in their reinvestment period. So that wasn't a concern. it's really just the it's not two types of deals it's going to be either deals that we think you know are too tight from your perspective you know based on the cash flow generation on a go-forward basis if we feel that you know the price at which we can sell it is is pretty strong then we would we would do that and rotate into you know higher yielding investments The second type of trade would be deals where we're concerned about the portfolio quality deteriorating from here. And that could be a combination of reasons. It could be manager underperformance. We very carefully evaluate managers on a monthly basis. And so if you start to get concerned, it could be that. It could be our view on the underlying credits. Maybe it's some of the software names. And if we have a negative view on some of them, and if that has a material impact on future cash flows, then certainly that's another reason why we'd want to sell some business. So those are the two reasons. And on the flip side, when we're looking to buy something, Again, we're trying to find the best quality candidates we can get. And in almost all cases, we're able to pick up on the base yield in our base case scenario, but significantly protect in the downside scenario in case and others, defaults pick up. What we are buying now is going to do extreme development compared to the stuff we are selling. And that rotation, that pickup of value in sort of the tail scenarios is also very important consideration as we think about the relative value trades here.

Very helpful. That's all for me. Thanks for taking my questions.

Of course. Thanks, Eric.

Your next question comes from the line of Timothy D'Agostino with B. Reilly Securities. Your line is open. Please go ahead.

Yeah, thanks for taking the questions. Helpful commentary on, you know, primary versus secondary market and then, you know, on software. It seems that you're going to keep the industry exposure to like 10 to 12 percent and just trim exposure to individual names. I guess Stepping away from software and just looking at other underlying industries, is there anything you're leaning into or you see value that's worth going after?

Yes. You know, I think, you know, we certainly prefer defensive sectors, right? Sort of less cyclical sectors where there is better kind of value going forward. So I think when we look at that, you know, we talk to all our managers and try to identify those sectors and that sort of the sector makes changes all the time. So, you know, things like, you know, sort of, you know, if it's like cable or healthcare, things like that, those tend to do quite well. You know, the tougher sectors being the cyclical ones, you know, retail, It's going to be, you know, oil and gas is a concern these days. And then, you know, you've got the software sector as well. So there's some consumer sectors as well we're trying to stay away from. But I think, again, at the end of the day, you know, it's really, you know, for us, you know, talking to all these managers that we invested with, keeping track of kind of where they're seeing value and where they're seeing concerns, and then managing our portfolio according to that. So that's really the approach we take.

Okay, understood. And just a second one from my end. Regarding the fee waiver, you know, in the press release talked about it going to the end of calendar year 2026. I guess, you know, looking at 27, is there a possibility of that agreement to be extended? Or is it really just for that set period? Thank you.

Well, yeah, I mean, obviously we can't predict where things are going to be. I think the main thing here is the reason for that fee waiver, right? It's really us being proactive in trying to signal to our investors that, look, we are fully aligned. We appreciate that, you know, the market has been very difficult over the last year, year and a half. Probably the worst it's been for CLO equity, you know, as far as I can remember, away from real credit and many other cycles like the 08-09 financial crisis. And so we recognize that there is spread compression, which has resulted in significantly lower cash flows on CLO equity. And as a result, our income has gone down as well. is really on reducing expenses in the structure while we work to improve the income of the portfolio. And so as we do that, we thought the best way to get ourselves in a stronger position would be to cut our fees for the six-month period. We think that's how long it would take for us to finish our rotation, obviously market conditions permitting. and if we can do that and we can sort of get to, the goal is to get to a position where we can earn our dividend, right? So the NII of the portfolio kind of needs to get to that 13 cents type of level, which is what we're trying to do. And so that's why we have set this timeframe for the waiver. We'll review it at the end of the year and see where we go from there. But I think that's just, again, trying to be proactive and we're not just focused on There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.