DATE

Wednesday, May 6, 2026 at 1 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Christopher D. Long
• President — Angie Kartzman Long
• Chief Financial Officer and Treasurer — Jeremy P. Goff
• Chief Investment Officer — Matthew R. Bloomfield
• Chief Accounting Officer — Jeffrey Fox

TAKEAWAYS

• Total Investment Income — $26.2 million, reflecting a 16% decrease compared to $31.2 million in the same period last year.
• Net Investment Income — $11 million, or $0.35 per share, compared to $12.9 million, or $0.40 per share, in the prior-year period.
• Total Dividend Declared — $0.37 per share, consisting of a base dividend plus a $0.01 supplemental distribution, including approximately $0.02 of spillover income.
• Dividend Yield on NAV — 11.1%, with a 13.5% yield on stock price as of April 30.
• Net Asset Value (NAV) per Share — $13.30 at period end, down from $14.85 at December 31, 2025.
• Total Net Realized and Unrealized Losses — $48.3 million, including $52.8 million in net unrealized depreciation on existing investments and $15.2 million in net unrealized appreciation on exited investments.
• Investment Portfolio Fair Value — $1.15 billion across 44 industries, compared to $1.2 billion at year-end 2025 (decrease of approximately 4.1%).
• First Quarter Capital Deployment — $109.4 million invested, with 42 new commitments averaging approximately $2.1 million each.
• Senior Secured Focus — 96% of the portfolio is senior secured, and 10 largest investments comprise only 10.64% of the overall portfolio.
• Leverage Ratio (Debt-to-Equity) — 1.7 times at March 31, up from 1.54 times at December 31, 2025, reflecting changes in NAV and share repurchases.
• Available Liquidity — $325.3 million (cash and undrawn credit capacity), up from $311.3 million at the end of 2025.
• Weighted Average Total Yield to Maturity — 11.73% at fair value on debt and income-producing securities, and 8.26% at amortized cost.
• Portfolio Credit Quality — Average internal loan rating of 3.6 (value-based scoring), first lien borrowers’ average EBITDA of $452 million, leverage of 5.5x, and interest coverage of 2.4x.
• Nonaccruals — Less than 1 basis point at fair value, and 90 basis points at cost; PIK income is 1.64% of total investment income.
• Share Repurchases — 140,149 shares repurchased for approximately $1.6 million during the quarter; manager purchased an additional 67,875 shares for $800 thousand; remaining repurchase authorization of approximately $4.2 million.
• Declared Q2 Base Dividend — $0.36 per share, in line with policy, with supplemental to be announced in the normal course.
• CLO Noncall Period Expiry — The 2024-issued CLO exits its noncall period in July 2026, with refinancing options under consideration in Q2.
• Third-Party Loan Valuations — CEO Bloomfield said, “It is completely driven by third-party marks” for both broadly syndicated and private credit loans.
• Software Sector Activity — AI application adoption reached 40% at one ERP company (over 7,000 customers), with management expecting more than 75% by year-end 2026.
• April Portfolio Activity — Bloomfield indicated a modest rebound in NAV and market prices, with leverage expected to come down; monthly NAV update to be disclosed in May.

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RISKS

• Net Unrealized Losses — $52.8 million in net unrealized depreciation on portfolio investments signal material market impact.
• NAV Decline — NAV per share fell to $13.30 from $14.85 at year-end due to sector-wide market volatility and unrealized losses.
• Income Downtrend — Total investment income decreased 16% from prior-year period, and net investment income per share fell to $0.35 from $0.40.
• Sector Dislocation — Bloomfield stated, “undoubtedly software was the most disrupted sector in the first quarter, and that is predominantly responsible for the unrealized mark-to-market move in NAV.”

SUMMARY

Palmer Square Capital BDC (PSBD 1.88%) reported significant unrealized portfolio losses and a sequential decline in NAV per share, directly tied to software sector dislocation and overall market volatility. Portfolio diversification was emphasized, with exposure across 44 industries and 96% in senior secured debt, while nonaccruals and PIK income remained minimal relative to industry norms. The company deployed over $109 million of capital in new investments, executed substantial share repurchases, and maintained considerable liquidity. Management confirmed a continued focus on transparency, with third-party portfolio valuations and planned monthly NAV disclosures. Strategic positioning leverages spread widening and emerging opportunities, particularly in technology, AI, and cyclical sectors affected by macro events.

• Management expects further acceleration in AI adoption, highlighted by rising end-customer penetration rates in portfolio companies.
• The firm is closely monitoring credit trends and proactively managing exposure to volatile segments such as software and chemicals, seizing tactical investments when justified by valuation and risk.
• CLO refinancing is under review, which could alter funding costs and structure following the July 2026 noncall period expiration.
• Dividend policy remains tied to realized earnings and market conditions, with the Q2 base dividend reaffirmed and a supplemental distribution anticipated.
• Improvements in lending terms and documentation have been observed in the current market, resulting in a more lender-friendly environment, according to management commentary.
• April trends indicate stabilization and partial reversal of negative marks in major sectors, implying potential near-term recovery in NAV and leverage metrics.

INDUSTRY GLOSSARY

• PIK Income: Payment-In-Kind income; non-cash interest that accrues and compounds rather than being paid out in cash, accruing additional risk.
• CLO: Collateralized Loan Obligation; a structured credit product backed by a pool of corporate loans.
• First Lien Loan: A loan that holds primary claim on collateral in the event of borrower default, ranking above other secured creditors.
• Nonaccrual: Loans for which interest is no longer being accrued due to borrower financial distress or expected credit losses.

Full Conference Call Transcript

Jeremy Goff: Welcome to Palmer Square Capital BDC Inc.’s First Quarter 2026 Earnings Call. Joining me this afternoon are Christopher Long, Angie Long, Matthew Bloomfield, and Jeffrey Fox. Palmer Square Capital BDC Inc.’s first quarter 2026 financial results were released earlier today and can also be accessed on our Investor Relations website at palmersquarebdc.com. We have also arranged for a replay of today’s event that can be accessed on our website. During this call, I want to remind you that the forward-looking statements we make are based on current expectations. The statements on this call that are not purely historical are forward-looking statements.

These forward-looking statements are not a guarantee of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward-looking statements, including, without limitation, market conditions caused by uncertainty surrounding interest rates, changing economic conditions, and other factors we identified in our filings with the SEC. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions can prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions can be incorrect. You should not place undue reliance on these forward-looking statements.

The forward-looking statements made during this call are made as of the date hereof, and Palmer Square Capital BDC Inc. assumes no obligation to update the forward-looking statements unless required by law. To obtain copies of SEC-related filings, please visit our website at palmersquarebdc.com. With that, I will now turn the call over to Christopher Long.

Christopher Long: Good afternoon, everyone. Thank you for joining us today for Palmer Square Capital BDC Inc.’s first quarter 2026 conference call. On today’s call, I will provide an overview of our first quarter results, touch on our market outlook and competitive positioning, and then turn the call to the team to discuss the current industry dynamics at play, our portfolio activity, and financial results. During the first quarter, our team deployed $109.4 million of capital and generated total and net investment income of $26.2 million and $11 million, respectively.

We delivered net investment income of $0.35 per share and paid a $0.37 per share total dividend, which includes a $0.01 supplemental distribution above our base dividend and included approximately $0.02 of spillover income. Consistent with the sector, our earnings profile is reflective of monetary policy tightening over the last several quarters, in addition to experiencing a slowdown in new deal and refinancing activity given the macro backdrop. With this in mind, our dividend payout still represents an 11.1% yield on NAV and a 13.5% yield on the stock price as of April 30, which we believe is a compelling value proposition for investors.

We also believe we are beginning to experience a pickup in activity in April, which we are hopeful continues for the remainder of the second quarter. As such, our Board has confirmed our second quarter base dividend of $0.36, with the supplemental to follow in normal course. We will continue to prioritize, to the extent possible, a distribution strategy that maximizes cash returns to investors. Our March NAV per share was $13.30. This mark is based on real actionable prices in the market and underscores our intentional commitments to transparency and accountability regardless of the day’s market condition. This level of transparency is especially relevant in today’s environment.

With heightened scrutiny around BDC portfolio company valuation, we believe our monthly NAV disclosure delivers an added layer of confidence in the underlying value of Palmer Square Capital BDC Inc.’s portfolio while highlighting the uniqueness of our portfolio’s positioning in liquid senior secured debt. We are pleased with the increased amount of positive feedback we have been receiving in this regard. 2026 presented another episode of volatility, induced by the software sell-off and credit cycle concerns in general, factors we discussed on our fourth quarter earnings call in February. These issues have continued to drive headlines in the months since, in addition to concerns and economic impacts resulting from the Iran war.

As I did last quarter, I would like to spend a moment reiterating our philosophy around software and technology investments as it remains very topical. We continue to prefer deeply embedded mission critical software in areas such as cybersecurity, IT infrastructure, and ERP systems, which we believe will ultimately be net beneficiaries of AI advancements. Within these subsectors, we lend to large, highly scaled providers that have meaningful profitability and cash flow. We have found that these large enterprise platforms tend to be backed by sophisticated private equity sponsors and believe their capital structures provide meaningful equity cushion below our senior secured loans. In our experience, these providers also frequently benefit from significant incumbency advantages.

We believe another advantage is the breadth and depth of their data collected across industries. This data positions incumbents to develop more effective AI and infrastructure than their more nascent peers, as data quality remains a foundational element of model performance and inference. To that end, we believe our portfolio companies are already realizing the benefits of AI advancements. Examples include one data analytics business that has over 60% of its top 50 customers using at least one AI-native product, while one of our large ERP software companies’ AI application has seen adoption by 40% of its over 7 thousand customers. In the latter example, management expects that adoption to be over 75% by year-end 2026.

Beginning in April, we started to observe a stabilization and, in some cases, a reversal of the mark-to-market prices on software and other AI-impacted loans, which we believe reflects the market’s growing realization of the advantages incumbent providers hold amid the AI-driven disruption. To echo recent commentary from a large private equity sponsor, these incumbents are well positioned to win, but that position is not guaranteed. We believe that advantage is predicated on their long-term customer relationships, their ownership of critical data that underpins the day-to-day functions of their clients, and their ability to incorporate AI into existing software systems to improve services. With that, I will hand the call over to Angie.

Angie Long: Thank you, Chris. Through the first quarter, Palmer Square Capital BDC Inc.’s portfolio faced many macro headwinds, but we believe it performed respectably given the degree of volatility across asset classes. Importantly, given this backdrop, we continue to see stability in our underlying credits, continued earnings growth in our software exposure, and minimal fundamental impacts from the Iran war. As the broader market begins to regain its footing, we believe Palmer Square Capital BDC Inc.’s portfolio will perform steadily as we look to capitalize on an improving opportunity set in what we believe should be better risk-adjusted spreads going forward.

Stepping back, the first quarter was defined by significant macro volatility driven by the sell-off in software and technology credit, persistent headlines around redemptions in evergreen vehicles, and geopolitical uncertainty, most notably the situation in Iran. Within that context, our views on software remain unchanged. As Chris alluded to earlier, we continue to believe that deeply embedded mission critical platforms are well positioned to be net beneficiaries of AI advancements. As we are already seeing across parts of the market, these businesses are beginning to incorporate AI into their existing systems, leveraging long-standing customer relationships and differentiated data sets to enhance their offerings. Across the broader market, the dislocation has started to create more attractive entry points.

In the secondary loan market in particular, we are seeing pricing that, in certain cases, reflects macro concerns more than company-specific performance. That shift is beginning to create a much better risk-reward dynamic than we have seen over the past several quarters. From an activity standpoint, M&A volumes slowed during the quarter as sponsors paused in response to the macro backdrop. However, with improving visibility, we are beginning to see activity return, including increased refinancing activity and select new opportunities across both the broadly syndicated and private credit markets. Importantly, spreads are now beginning to move wider across both markets. We are cautiously optimistic and believe the extended period of spread tightening is likely behind us.

Finally, we must acknowledge that geopolitical developments remain a key variable. A timely resolution in Iran would likely be supportive of market conditions, particularly given the potential for elevated oil prices to have broader inflationary impacts across the economy. While the environment remains fluid, we believe the combination of more attractive pricing and a disciplined approach positions us well for the periods ahead. At the portfolio level, underlying credit performance continues to remain solid, and capital markets remain open for high-quality borrowers. We have experienced increased volatility in NAV, which is not unexpected given the market dynamics we have discussed thus far and the overall liquid nature of our underlying loans.

We view this as a function of an efficient market attempting to price in perceived risks, rather than a reflection of any meaningful deterioration in underlying credit quality. To reiterate Chris’ earlier comments, our monthly NAV is based on real, actionable market prices, providing more frequent transparency into how the portfolio is valued and eliminating perceived questions around the true NAV of the BDC. In terms of our balance sheet, we continue to believe the flexibility of our financing facilities is a core benefit of the BDC. The CLO that we issued in 2024 will exit its noncall period in July 2026, and we will likely be looking at potential refinancing options for that during the second quarter.

During the first quarter, we remained active and disciplined with our share repurchase program. We bought back 140 thousand 149 shares for approximately $1.6 million and have remaining availability of approximately $4.2 million. In addition, Palmer Square Capital Management, our manager, purchased an additional 67 thousand 875 shares for approximately $800 thousand via its program. The Board will continue to evaluate share repurchases in the second quarter and beyond, given the attractive trading levels of our stock relative to NAV, and will consider future upsizes to the program if deemed appropriate. For added context, Palmer Square Capital BDC Inc. shares were yielding 13.5% as of 04/30/2026, a significant premium to the 11.1% yield on NAV.

We believe this presents a compelling value proposition in the current environment, especially when taking into account the quality and conservative position of Palmer Square Capital BDC Inc.’s portfolio. As we look ahead to the remainder of 2026, we are constructive on the emerging opportunity set and believe the depth of our platform combined with Palmer Square Capital BDC Inc.’s flexibility to nimbly allocate across both public and private markets will continue to serve as a strong advantage in positioning the portfolio to capitalize on attractive risk-adjusted opportunities as they emerge. I will now turn the call over to Matthew to discuss our portfolio and investment activity in more detail.

Matthew Bloomfield: Thank you, Angie. As Angie mentioned, Palmer Square Capital BDC Inc. navigated 2026 well despite heightened volatility facing the sector and broader markets. Relative to the fourth quarter, our net investment income per share decreased to $0.35 per share in the first quarter 2026, predominantly due to a combination of lower base rates as well as slower prepayment activity and the shortest quarter of the year. I would like to note that the full impact of lower base rates was felt more in 2026 than in 2025, due to how our borrower contracts are structured, and we believe the second quarter should represent a more normalized environment assuming no additional rate cuts in the near term.

In recent weeks, we are beginning to observe increased new-issue activity and refinancings. While prepayment activity is difficult to predict, we believe it could reaccelerate as we move through the year. In addition, to reiterate Chris and Angie’s comments, we also believe we are in a more reasonable spread environment today versus the past several quarters and are optimistic about the opportunity to reinvest paydowns into a higher-spread environment in the near term. Our total investment portfolio as of 03/31/2026 had a fair value of approximately $1.15 billion, diversified across 44 industries that demonstrate strong credit quality, industry and company-specific tailwinds, and a variety of end markets.

This compares to a fair value of $1.2 billion at the end of 2025, reflecting a decrease of approximately 4.1%. In the first quarter, we invested $1.094 billion of capital, which included 42 new investment commitments at an average value of approximately $2.1 million. During the same period, we realized approximately $79.9 million through repayments and sales. Importantly, we remain focused on diversification as we allocate new capital across the portfolio, as we believe the recent market turbulence has refocused investors on the importance of risk management through diversification.

To recap key portfolio highlights, at the end of the first quarter, our weighted average total yield to maturity of debt and income-producing securities at fair value was 11.73%, and our weighted average total yield to maturity of debt and income-producing securities at amortized cost was 8.26%. We believe our focus on first lien loans combined with diversification across industries and company size contributes to a strong credit profile, with exposure to 44 different industries. Further, our 10 largest investments account for just 10.64% of the overall portfolio, and our portfolio is 96% senior secured, with an average hold size of approximately $4.4 million. We view this as a key risk management tool for Palmer Square Capital BDC Inc.

On a fair value-weighted basis, our first lien borrowers have a weighted average EBITDA of $452 million, senior secured leverage of 5.5 times, and interest coverage of 2.4 times. Additionally, new private credit loans comprised 22.3% of overall new investments at a weighted average spread of 486 basis points over the reference rate. While credit quality remains an industry-wide concern, nonaccruals continue to be low at Palmer Square Capital BDC Inc. On a fair value basis, nonaccruals represent less than one basis point, and on an at-cost basis, only 90 basis points. Our PIK income represents approximately 1.64% of total investment income, well below our peers and the industry average.

We have maintained an average internal rating of 3.6 on a fair value-weighted basis for all loan investments. Our rating is derived from a unique relative value-based scoring system. We believe credit performance across the portfolio remains strong, continue to experience stable leverage levels and loan-to-value ratios, and our diversification positions us attractively within the dynamic markets we participate in. As we have discussed in the past, we believe larger borrowers are better positioned to deliver favorable credit outcomes over the long term, a dynamic we expect to continue as AI is advantageous to companies with the scale to invest in and leverage these technologies.

As Angie described, in conjunction with the Board, we continue to evaluate share repurchases as a means of driving shareholder value given the discounts in the market. We will continue to evaluate share repurchases on a go-forward basis and will look to balance attractive investment opportunities in conjunction with those potential repurchases. Earlier in the call, we mentioned dislocations in the secondary market creating a better risk-reward dynamic than we have seen over the past several quarters. While we are actively evaluating new investments, we plan to approach these opportunities with balance.

We are managing leverage carefully given movements in NAV, which Jeffrey will discuss in more detail, and we will be discerning in weighing the return profile of any new investments against that available through share repurchases to ensure we are making the most accretive capital allocation decisions on behalf of our shareholders. Now I would like to turn the call over to Jeffrey, who will review our first quarter 2026 financial results.

Jeffrey Fox: Thank you, Matthew. Total investment income was $26.2 million for 2026, down 16% from $31.2 million for the comparable period last year. Income generation during the quarter reflected a mix of contractual interest income, paydown-related income, and select fee income from new deal activity. Total net expenses for the first quarter were $15.2 million compared to $18.3 million in the prior-year period. Net investment income for 2026 was $11 million, or $0.35 per share, compared to $12.9 million, or $0.40 per share, for the comparable period last year. During 2026, the company had total net realized and unrealized losses of $48.3 million compared to total net realized and unrealized losses of $21.3 million in 2025.

This consisted of net unrealized depreciation of $52.8 million related to existing portfolio investments and net unrealized appreciation of $15.2 million related to exited portfolio investments. At the end of the first quarter, NAV per share was $13.30 compared to $14.85 at the end of 2025. Moving to our balance sheet, total assets were $1.2 billion and total net assets were $413.8 million as of 03/31/2026. At the end of the first quarter, our debt-to-equity ratio was 1.7 times compared to 1.54 times at the end of 2025. This difference is predominantly due to the change in NAV as well as the modest impact from share repurchases.

Available liquidity, consisting of cash and undrawn capacity on our credit facilities, was approximately $325.3 million. This compares to approximately $311.3 million at the end of 2025. Finally, on May 6, the Board of Directors declared a second quarter 2026 base dividend of $0.36 per share in line with our dividend policy. Furthermore, our policy continues to be distributing excess earnings in the form of a quarterly supplemental distribution. And with that, I would now like to open up the call for questions.

Operator: We will now open the call for questions. To ask a question, press star then the number one on your telephone keypad. Please pick up your handset and ensure that your phone is not on mute when asking your question. Our first question will come from the line of Kenneth Lee with RBC Capital Markets. Please go ahead.

Kenneth Lee: Hey, good afternoon, and thanks for taking my question. Just one on the NAV. It sounds like a lot of the marks are driven by market and actionable pricing there. Could you remind us again how much input does Palmer Square have in terms of the loan valuations within the book? Or is it completely driven by what you are seeing on the secondary markets there? Thanks.

Matthew Bloomfield: Ken, it is Matthew. Thanks for the question. It is completely driven by third-party marks. On the broadly syndicated side, those are real quotes, real levels, tradable in the secondary market. Those come from a third-party service provider that aggregates all those daily marks on the syndicated loans. On the private credit side, those are marked from a third-party valuation provider.

Kenneth Lee: Okay. Great. Very helpful there. And one follow-up, if I may. I just want to get your thoughts around dividend coverage just given where NII is leveling out right now. Thanks.

Matthew Bloomfield: It is obviously something we and the Board spend a lot of time on. The first quarter of the year is always the slowest from a prepayment activity standpoint and the shortest day count of the year, and the volatility that transpired predominantly in February and March slowed activity down pretty dramatically. As we moved into April, we do feel incrementally better about what we are seeing from new origination activity and conversations. We have had a couple of recent items that have already hit. So we feel very good about the $0.36 base dividend and the ability to pay a supplemental this quarter. That is the consideration.

Base rates certainly play a big impact in that—obviously out of our control—but we are incrementally feeling better about where those are settling out, at least in the near term. We are not interest rate prognosticators per se, but as we look through things, look through the portfolio, and look through activity in April, we felt increasingly comfortable with where we are at here for the near to intermediate term.

Kenneth Lee: Right. Very helpful there. Thanks again.

Operator: Again, for questions, press star then one on your telephone keypad. Our next question will come from the line of Richard Shane with JPMorgan. Please go ahead.

Richard Shane: Hey, guys. I need to queue in a little faster. Kenneth kind of asked my question, but I am curious as well about cadence of deal flow, both repayments and investments, and you largely addressed that. But any other color you want to add, I would be appreciative.

Matthew Bloomfield: Similar to past years, coming into the end of last year, conversations and activity level felt pretty robust, and it was likely that would continue into the first half of 2026. With what transpired in the software space and then followed by the Iran war, as has been the case for the past several years, M&A conversations can grind to a halt pretty quickly. That being said, specifically outside of software, it feels like conversations have reengaged through April and into early May. That always takes a little bit of time to translate to actual deal activity. From what we are seeing, early looks on the broadly syndicated side have increased the past couple of weeks.

Conversations and term sheets on the private credit side have marginally increased as well. We expect spreads to be wider. There is always a bit of digesting that from the borrower standpoint and from the sponsor community. I do not expect a huge acceleration, but I definitely expect it to pick back up from the very depressed levels we saw in February and March of the first quarter.

Richard Shane: Got it. And then just one follow-up question, and thank you for that. One of the things we are hearing more generally is improved documentation, better covenants associated with deals, and more thoughtful opportunity for due diligence. Is that something, particularly in the BSL market, it is fair to extrapolate as well?

Matthew Bloomfield: Yes, I think it is. Given the bandwidth we have across the firm from a capital deployment standpoint in the broadly syndicated market—outside of the BDC with our global CLO platform and private funds business—we tend to have meaningful relationships with those sponsors, so we get a lot of early access with management teams. The amount of time we are getting to spend has certainly increased. As that flows through to the credit documentation, in times of volatility and wider spreads it becomes a more lender-friendly environment, which we certainly welcome. It has been quite some time since we have been able to say that.

We will use that to get as good documentation and as favorable levels as we can from a lender standpoint, and that has certainly come to our favor recently.

Richard Shane: Got it. And then last question, and I apologize for so many, but we have asked most of the management teams in the space. When you think about where we are in the continuum in terms of structure and pricing, is it fair to say we are back to the middle? We have gone from tight, but we are not at distressed-type markets. It is more in the normal range right now.

Matthew Bloomfield: The way we look at it—and we have been pretty vocal over the past year plus—is that spreads had been very tight relative to risk across corporate credit, structured credit, investment grade, and high yield. In a lot of ways, I would have expected spreads to be considerably wider given everything going on from a macro sentiment standpoint. We did see spread widening. I think spreads will stay a little bit wider. The markets we participate in feel more like fair value—certainly not cheap and not super wide to stress or distress levels.

You are being better compensated than we have been in quite some time, but we view it as fair compensation relative to what we have seen over the past twenty-plus years.

Richard Shane: Sounds good. I appreciate it very much, guys. Thank you.

Operator: Our next question will come from the line of Derek Hewitt with Bank of America. Please go ahead.

Derek Hewitt: Good afternoon. Could you provide some color on pro forma leverage as of April, since we have seen some recovery in the BSL market? And then secondly, are there certain sectors that have been significantly dislocated earlier this year, maybe even software, that you might lean into from a new investment perspective?

Matthew Bloomfield: Hi, Derek. Appreciate the question. From April’s standpoint, we should be posting the updated NAV later next week. To your point, we have seen a modest rebound in prices in April, so we expect leverage to come back down, but we will disclose the updated NAV for April by the end of next week, which gives good directionality to where things are headed. Given the underlying collateral and credit facilities we have, we are able to manage leverage quickly. We even paid down about $14 million in total on the credit facilities in the first quarter to maintain appropriate leverage levels that we were comfortable with.

There were a lot of moving pieces in the quarter, but that is something we have good control over and can manage effectively on a daily basis. To the second part of your question, undoubtedly software was the most disrupted sector in the first quarter, and that is predominantly responsible for the unrealized mark-to-market move in NAV as the whole sector traded off considerably. Our opinion is we want to be prudent in how we think about overall exposure there, but there are some really great companies trading at real discounts to par. When we have conviction, we will certainly look to take advantage where it makes sense.

Outside of that, with the Iran situation, there have been interesting opportunities in the chemical space. That has been a very tough sector for the past two-plus years given supply-demand dynamics and the effective dumping by Chinese producers in some pan-European markets. With the closure of the Strait for the past couple of months, that has led to meaningful earnings tailwinds for some petrochemical producers. We have been able to see some benefit from a couple of tactical positions there. Over the last several quarters, there has not been as much interesting to do from a total return standpoint given how tight spreads had gotten. That dynamic has certainly changed with the moves across software and the geopolitical tensions.

That said, we want to be prudent and make sure we have dry powder to the extent there are further dislocations, but we are certainly seeing more that is interesting to us now than we have in quite some time. Thank you.

Operator: And this concludes our question and answer session. I will turn the call back over to Jeremy for any closing comments.

Jeremy Goff: Thank you, operator, and thank you, everyone, for your time and all the thoughtful questions. We look forward to updating everyone on second quarter 2026 financial results in August. Thank you again.

Operator: That concludes our call today. Thank you all for joining. You may now disconnect.

One of the strongest: a company’s legacy is measured by its impact on the world, not its financial returns.

“Making a profit is the lifeblood of a business,” he told me in Las Vegas, backstage at the Great Place to Work For All Summit. “But the success of the business is not just measured in how much money you make — it’s in the impact that you make.”

Burke said he couldn’t speak for other companies, since he’s “been playing for the same team for 42 years,” but when he looks out at corporate America, he said, “there’s been a decay in the purpose of companies over the last 25 years.” And then he got historically minded. “If you go back, an economist once said that making a profit is the only responsibility of a company … and that’s not Trek.”

(The actual quote was published in a New York Times op-ed in 1970 as the great University of Chicago economist Milton Friedman wrote: “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”)

Just consider, Burke said, what Trek has done for women’s cycling.

The women’s cycling moment

In 2018, he recalled, someone walked into his office and told him how women’s professional cycling teams were actually treated: flown in the night before races, competing on secondhand bikes, earning almost nothing. Burke vowed to add a full-scale women’s team from that day onward.

From that day onward, Burke said, Trek treated its women athletes the same as its men — same bikes, same resources, same investment. The team won nearly everything for three years running. And then, Burke said, something bigger happened: every other major team in professional cycling followed suit. “No Trek, no change in women’s cycling,” he said flatly. “Milton Friedman wouldn’t have approved that decision. If he was on the board, he would not have approved it.”

It’s the kind of story Burke returns to when people ask what Trek’s 50th anniversary is really about. The company is marking the occasion with a coffee-table book cataloging 50 ways it has changed the world and a 43-minute documentary premiering June 18 at the Orpheum Theatre in Madison, Wisconsin, with author Jim Collins in attendance. “What I’m most proud of at Trek is how we’ve changed the world, not what the financial results have been. When I’m gone, I don’t think anyone’s gonna make note of that.”

Riding through the bust

Trek’s current headwinds are real. After a COVID-era demand explosion that strained supply chains and pushed bikes off shelves faster than they could be built, the market reversed sharply — and Trek has been working through excess inventory and restructuring pressure ever since. The company, which generates roughly $2 billion in annual revenue and employs more than 5,000 people globally, has faced layoffs and product line reductions as it recalibrates.

But even in the downturn, Trek has been rapidly moving up the Fortune 100 Best Companies to Work For list — No. 42 in 2026, up from its first appearance at No. 94 in 2023. (It was actually No. 4 on the best places to work in retail.)

Burke said he sees the two things as connected rather than contradictory. The survey, he told Great Place to Work CEO Michael C. Bush, “is the centerpiece of how we run HR.” And the best time to take its temperature, he argued, is when things aren’t going well.

Gen Z doesn’t exist

Burke’s contrarianism extends well beyond corporate purpose. When asked what advice he would give to Gen Z workers, he nearly exploded. Burke is a no-nonsense Midwesterner, and he insisted that work has always been work, just like when he got his first job, diving ponds at a Wisconsin golf course to pick balls up off the soggy bottom.

“There’s no such thing as Gen Z,” he told me. “All this generational stuff is overblown. If you go back and study the last 100 years of what’s made successful people, it’s all the same.” He recalled being in Germany in the late 1980s as the Berlin Wall fell, listening to older Germans lament that the younger generation was lazy. “That’s what they’re saying today in America, is Gen Z doesn’t work. It’s like, that’s true. People want to be successful at work.”

“Every generation has probably had its quirks,” he allowed, but people have always had to work hard to get ahead, and that has never changed. “That doesn’t work today and it didn’t work 20 years ago. It didn’t work 50 years ago.”

A late convert to AI

On artificial intelligence, Burke said he arrived late — but he’s convinced it’s not hype. For most of the past few years, it felt abstract. His IT director kept telling him something big was coming, but the tangible applications weren’t obvious. Then, about six months ago, something clicked.

“Holy shit,” is how Burke describes the moment. “Look at what can actually be done.”

He said he thinks AI’s adoption curve will make the internet and the iPhone look gradual. “The internet affected business like this,” he said, gesturing slowly. “The iPhone, maybe a little steeper.” Then his hand shot up. “AI — I don’t know if society’s ready. But we’re going to find out, because it’s unleashed. And you’re going to know here pretty quick.”

Trek, by Burke’s own accounting, is not ready. He placed the company at 13 out of 100 for AI readiness relative to its peers, but his eyes bugged out when I told him that didn’t sound like a good rating. “Thirteen is good! It’s a great rating,” Burke said. “One of the things we do best as a company is take a concept and spread it throughout the company.” He said he’s tried to build a culture at Trek that “confronts the brutal facts,” moves fast, and always seeks to learn. When people tell him he’s wrong, he said, he gets curious. “I’m more interested in how we improve. I’m not interested in proving that we’re right.”

Burke said his office has two massive whiteboards and he spends his day framing puzzles for himself and his staff, “and getting the smartest people in the company to solve the puzzles. That’s how I spend my time.”

The phone is the problem

Burke’s embrace of AI exists in sharp tension with a deep, personal hostility toward smartphones. His conversion on that front came from an unlikely source: a chance meeting with Dr. Richard Davidson, the University of Wisconsin-Madison neuroscientist and founder of the Healthy Minds Center, who has spent decades studying mental health and the meaning of happiness. Burke said he was ashamed because he tried to postpone the meeting, thinking he was too busy. His assistant overruled him. “She goes, ‘You know, that meeting with Dr. Richie is Wednesday, and you will be there.’”

As he got to know Davidson, he learned of a remarkable life story: graduating from high school at 14, then NYU at 16, then a PhD from Harvard by 21 years old, and a later meeting with the Dalai Lama, who told him, “Richie, your mission in life is to bring joy to the world.”

“Now I’m kind of slithering under the table as I blew this guy off,” Burke told me in his typically blunt fashion. But he had a question for Davidson: he asked where mental health in America stood today, on a scale of 100, relative to 1984. Davidson’s answer: 23, down from 100 in 1984. “It’s in the toilet. Unbelievable.” The culprit, Davidson said, was the phone.

Consider the Masters golf tournament, Burke said, one of the last major public events where phones are banned from the grounds. “What’s everybody doing? They have a smile on their face. Nobody’s trying to take a picture of somebody else. No selfies. They’re talking to each other.” He estimated the happiness level is three times what it is at a comparable phone-permitted event. “It’s the greatest experiment in the world.”

‘We’ve Pissed Off Just About Everybody’

Burke is not a politician and does not want to be one. He served on the President’s Council on Physical Fitness under George W. Bush and has written three books about American civic life, but describes himself as neither Republican nor Democrat. What he is, unmistakably, is frustrated.

The $39 trillion national debt strikes him as a moral failure as much as a fiscal one. “Somebody’s all proud they just came out with a $1.5 trillion defense budget,” he said. “You shouldn’t be proud. You should be embarrassed. We can’t afford a $1.5 trillion [budget]. Why not make it two-and-a-half [trillion dollars]? Well, you can’t make it two-and-a-half because you can’t afford it … the answer is no. We’re 5% of the world’s population, and we spend 38% of the world’s defense dollars. It makes no sense.”

On trade and geopolitics, Burke was equally unsparing. Trek manufactures globally and has navigated years of tariff disruptions, but it framed America’s current isolation as something deeper than a supply chain headache. “To accomplish things in life, you need to have friends. To accomplish things as a country, you need to have friends. And we’ve pissed off just about everybody.” He ticked through the list: Canada, Europe, Japan, South Korea, Australia. “I can’t tell you why we’re pissed off at Canada,” he said. “I genuinely cannot tell you.”

The root problem, in his view, is a leadership class that has confused self-preservation with public service. “We elect leaders whose primary motivation is not the success of the United States — it’s to perpetuate their own jobs. And it’s embarrassing. It is absolutely embarrassing.”

52 books, 1,100 lessons

Burke said he reads 52 books a year, almost exclusively nonfiction. His reading system, refined over the past four years, is rigorous. He reads the first sentence of every paragraph. If it grabs him, he reads the rest. If it doesn’t, he moves on. “I’ve never read a bad sentence to start a paragraph which turns into a good paragraph,” he said. “Doesn’t happen.” (While this might imply that he’s a skimmer or speed reader, this method suggests that he starts roughly 100 books a year, and only finished around 50.)

When he finishes a book, he goes back through his underlines and enters only the lessons he wants to carry for the rest of his life into a personal spreadsheet — now more than 1,100 entries deep. The system was inspired by Jim Collins, who visited Trek in 2018 and suggested writing down one lesson per book. Burke took it further. The impetus was a bike ride with his wife, during which she asked him to summarize the lessons from one of his favorite books, Simon Sinek’s The Infinite Game. His answer, he recalled, was “lame. Really bad retention.” He went home, reread the book, underlined it, and built the spreadsheet.

Current reading: The Algorithm, about a former Elon Musk lieutenant now on the board of General Motors, focused on simplification and speed — themes Burke is applying directly to Trek’s supply chain overhaul, which benchmarks Toyota and aims to triple the company’s operational efficiency score by 2028.

Still learning, still moving

For all his impatience with American institutions — corporate, political, technological — Burke’s worldview is ultimately an optimistic one, grounded less in ideology than in a belief that self-improvement is always available to anyone willing to do the work.

At Trek, he said, the lesson applies to the company as much as any individual in it: focus on what you can control, confront the brutal facts, and keep moving. “85% of the opportunities in the business,” he said, citing The Founder’s Mentality, “are within their four walls. And sometimes you get a lot of people who want to look out the window instead of looking in the mirror, 85% of the opportunities in the business are looking in the mirror.”