Core Insights - Business Development Companies (BDCs) are publicly-traded firms that lend to small businesses and are mandated to return at least 90% of taxable income to shareholders as dividends [3][4] - BDCs offer high yields, with some providing returns up to nearly 13% [2] - The article highlights three specific BDCs that are trading below their net asset value (NAV) while offering substantial dividends [3] BDC Overview - BDCs were created by Congress to serve as new lenders to small businesses, similar to Real Estate Investment Trusts (REITs) [3] - They are characterized by their requirement to distribute a significant portion of their income as dividends, making them attractive for income-focused investors [3] High-Yield BDC 1: BlackRock TCP Capital Corp. (TCPC) - TCPC focuses on middle-market companies with enterprise values between $100 million and $1.5 billion and has a diverse portfolio of 146 companies [4] - The investment mix is primarily in first-lien debt (83%), with 94% of its debt being floating-rate [5] - TCPC has faced challenges, including a recent dividend cut and a high level of non-accrual loans at 12.6% [10][9] High-Yield BDC 2: Crescent Capital BDC (CCAP) - CCAP is associated with Crescent Capital Group and invests in 191 portfolio companies, primarily in first-lien debt (91%) [11][12] - The company has a complex dividend history, with recent changes in special dividends and a focus on undistributed taxable income [13][14] - CCAP is currently trading at a 23% discount to NAV, with an 11% yield on the base dividend [16] High-Yield BDC 3: PennantPark Floating Rate Capital (PFLT) - PFLT targets midsized companies with annual EBITDA between $10 million and $50 million and has a portfolio of 190 companies [17][18] - Approximately 90% of PFLT's portfolio consists of floating-rate first-lien debt [19] - The company pays monthly dividends with a yield of nearly 12%, but its dividend coverage is tight, with a 97% payout ratio [21][20]

Group 1 - Roberts Berzins has over a decade of experience in financial management, assisting top-tier corporates in shaping financial strategies and executing large-scale financings [1] - Significant efforts have been made to institutionalize the REIT framework in Latvia to enhance the liquidity of pan-Baltic capital markets [1] - Development of national SOE financing guidelines and frameworks for channeling private capital into affordable housing stock has been a focus area [1] Group 2 - Roberts Berzins is a CFA Charterholder and holds an ESG investing certificate, indicating a strong background in investment analysis and sustainable finance [1] - Active involvement in "thought-leadership" activities supports the development of pan-Baltic capital markets, showcasing a commitment to industry advancement [1]

Group 1 - iREIT+HOYA Capital focuses on income-producing asset classes that provide sustainable portfolio income, diversification, and inflation hedging [1] - The service offers a free two-week trial for potential investors to explore exclusive income-focused portfolios [1] Group 2 - Bargain hunting for income stocks is highlighted as a rewarding strategy, though it comes with inherent risks [2] - Investors are encouraged to assess whether market headwinds are temporary or indicative of structural flaws in the stocks [2] Group 3 - The article emphasizes the importance of due diligence and personal judgment in making investment decisions [4] - It clarifies that past performance does not guarantee future results, and no specific investment recommendations are provided [5]

Group 1 - Crescent Capital BDC, Inc. (CCAP) held its Q1 2025 earnings conference call on May 15, 2025, to discuss financial results and company performance [1][3] - The earnings press release for Q1 2025 was issued after market close on the previous day, along with a presentation available on the company's investor relations website [3] - The call featured key company executives including CEO Jason Breaux, President Henry Chung, and CFO Gerhard Lombard [1][3] Group 2 - The company emphasized the importance of reviewing the earnings presentation in conjunction with the Form 10Q filed with the SEC [3] - The call was recorded for replay purposes, indicating the company's commitment to transparency and investor communication [2][3]

Financial Data and Key Metrics Changes - The company reported net investment income (NII) of $16.6 million or $0.45 per share for Q1 2025, down from $20.5 million or $0.55 per share in Q4 2024, primarily due to lower base rates, the roll-off of one-time items, and reduced dividend income from the Logan JV [5][23][24] - The increase in loans on non-accrual rose to 3.5% of debt investments at cost and fair value, with four new names added, representing less than 1.2% of the total portfolio at fair value [6][12] Business Line Data and Key Metrics Changes - Gross deployment in Q1 totaled $105 million, with 98% in first lien investments, compared to approximately $78 million in exits, resulting in a net deployment of approximately $27 million [17] - The weighted average yield of income-producing securities at cost decreased by 50 basis points quarter over quarter to 10.4% [20] Market Data and Key Metrics Changes - The company noted a slowdown in M&A activity due to tariff announcements, leading to a backlog of deal activity [8] - The overall direct material exposure of the portfolio to tariffs is modest at 4%, with a focus on service businesses with low material costs [18] Company Strategy and Development Direction - The company continues to focus on first lien loans, which represent 91% of the portfolio at fair value, and aims to invest in non-cyclical industries [11] - The management emphasized a disciplined credit underwriting approach and capital preservation, particularly in light of market volatility [30] Management's Comments on Operating Environment and Future Outlook - Management expressed that the current earnings reflect a near-term baseline, with potential tailwinds from asset-based facility repricing and rightsizing completed at the beginning of the quarter [6][7] - The company remains optimistic about its ability to weather potential volatility due to its diversified portfolio and strong relationships with private equity sponsors [20] Other Important Information - The company declared a regular dividend of $0.42 per share for Q2 2025, along with a special dividend related to undistributed taxable income [12][29] - The stockholders' equity was reported at $727 million, resulting in a net asset value per share of $19.62 [26] Q&A Session Summary Question: Regarding the new accruals this quarter, specifically New Era of Technology - Management clarified that the mark reflects the latest view on earnings outlook and that the company has not yet restructured [34][36] Question: What is Crescent's approach to resolving non-accrual situations? - Management stated that the primary goal is to preserve capital, and they consider various options including restructuring or selling the company [42][44] Question: Can you explain the significant decline in the Logan dividend? - Management explained that the decline was due to timing mismatches in cash distributions and the impact of overcollateralization tests within the CLO structure [50][56] Question: What percentage of the portfolio consists of Crescent-led deals? - Management indicated that about 8% of the total fair value consists of acquired assets, while 92% are loans originated by Crescent [46] Question: What is the sentiment towards the overall market and outlook for spreads? - Management noted significant inflows into non-traded BDCs, which are putting pressure on spreads, but they remain selective in their investment approach [78][82]

Financial Data and Key Metrics Changes - The company reported net investment income (NII) of $16.6 million or $0.45 per share for Q1 2025, down from $20.5 million or $0.55 per share in Q4 2024, primarily due to lower base rates, the roll-off of one-time items, and reduced dividend income from the Logan JV [5][23][24] - The weighted average yield of income-producing securities at cost decreased by 50 basis points quarter over quarter to 10.4% [20] - GAAP earnings per share for Q1 2025 was $0.11, with stockholders' equity at $727 million, resulting in a net asset value (NAV) per share of $19.62 [26] Business Line Data and Key Metrics Changes - Gross deployment in Q1 totaled $105 million, with 98% in first lien investments, compared to approximately $78 million in exits, resulting in a net deployment of approximately $27 million [16][17] - The investment portfolio consists primarily of first lien loans, representing 91% of the portfolio at fair value, with a focus on non-cyclical industries [11] Market Data and Key Metrics Changes - The company noted a slowdown in M&A activity due to tariff announcements, leading to a wait-and-see approach from sponsors [7] - The overall direct material exposure of the portfolio to tariffs is modest at 4%, with most businesses serving domestic markets [18] Company Strategy and Development Direction - The company emphasizes a disciplined credit underwriting approach, capital preservation, and strong free cash flow generation to navigate market volatility [30] - The focus remains on high-quality assets and maintaining a stable NAV rather than chasing yield [82] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the market, noting that while there are attractive investment opportunities, the recent tariff announcements have created uncertainty [8][78] - The company anticipates potential near-term tailwinds from asset-based facility repricing and rightsizing completed at the beginning of the quarter [6] Other Important Information - The company declared a regular dividend of $0.42 per share for Q2 2025, along with a special dividend related to undistributed taxable income [12][29] - The weighted average loan-to-value across investments is 39%, indicating a conservative approach to leverage [11] Q&A Session Summary Question: Regarding the new accruals this quarter, does it reflect the restructuring recently announced for that company? - Management clarified that the company has not yet restructured and that the mark reflects the latest view on earnings outlook [34][37] Question: What is Crescent's overall approach to working toward a resolution for non-accruals? - The company prioritizes capital preservation and may consider various options, including restructuring or selling the company, depending on the situation [42][43] Question: How much of the portfolio consists of Crescent-led or originated deals? - Approximately 8% of the total fair value consists of acquired assets, while 92% are loans originated by Crescent [45] Question: Can you explain the significant sequential decline in the Logan dividend? - Management explained that the decline was due to timing mismatches in cash flows and the nature of the equity tranche, which can be volatile during the deleveraging period [48][54] Question: Were there any warning signs for the new non-accruals? - Management indicated that the non-accruals were previously on the watch list, and developments at the respective borrowers warranted the classification [59]

Earnings Performance - Crescent Capital BDC reported quarterly earnings of $0.45 per share, missing the Zacks Consensus Estimate of $0.52 per share, and down from $0.63 per share a year ago, representing an earnings surprise of -13.46% [1] - The company posted revenues of $42.13 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 5.83%, and down from $50.36 million year-over-year [2] Market Performance - Crescent Capital BDC shares have lost about 12.8% since the beginning of the year, while the S&P 500 has gained 0.1% [3] Future Outlook - The current consensus EPS estimate for the coming quarter is $0.51 on revenues of $44.31 million, and for the current fiscal year, it is $2.06 on revenues of $176.89 million [7] - The estimate revisions trend for Crescent Capital BDC is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Financial - SBIC & Commercial Industry, to which Crescent Capital BDC belongs, is currently in the bottom 20% of the Zacks industry rankings, suggesting potential challenges ahead [8]

Financial Performance - Net investment income per share for Q1 2025 was $045, compared to $055 for the prior quarter[19] - Net realized and unrealized losses on investments per share for Q1 2025 were ($034), compared to ($028) for the prior quarter[19] - Net income per share for Q1 2025 was $011, compared to $027 for the prior quarter[19] - NAV per share as of March 31, 2025, was $1962[19] Portfolio Composition - Total portfolio investments were valued at $1621 million as of March 31, 2025[11,19] - 91% of the portfolio comprised of senior secured first lien and unitranche first lien investments by fair value[19,35] - The portfolio consists of 191 portfolio companies across 20 industries[19,35] - Floating rate investments constitute 972% of the portfolio[22] Capital Structure and Liquidity - The company has a strong liquidity profile with $305 million in cash and cash equivalents and restricted cash[19] - Undrawn debt capacity was $3100 million as of March 31, 2025[19] - Total debt outstanding was $912 million with a weighted average interest rate of 636%[21,61] - Debt-to-equity ratio was 125x[11,21]

Core Viewpoint - Crescent Capital BDC, Inc. reported a decrease in net investment income and net asset value for the quarter ended March 31, 2025, indicating potential challenges in its financial performance compared to previous periods [1][3][6]. Financial Performance - Net investment income per share was $0.45 for Q1 2025, down from $0.55 in Q4 2024 and $0.63 in Q1 2024 [3][6]. - Net income per share was reported at $0.11 for Q1 2025, a decrease from $0.27 in Q4 2024 and $0.76 in Q1 2024 [3][6]. - Total investment income decreased to $42.1 million in Q1 2025 from $46.4 million in Q4 2024 [6][7]. - The net asset value (NAV) per share was $19.62 as of March 31, 2025, down from $19.98 at the end of 2024 [1][3]. Dividend Declarations - The Board declared a regular cash dividend of $0.42 per share for Q2 2025, payable on July 15, 2025 [2]. - A special dividend of $0.05 per share will be paid on June 13, 2025, as part of three previously announced special dividends [2]. Investment Activity - As of March 31, 2025, the company had investments in 191 portfolio companies with a fair value of $1,620.7 million, an increase from $1,598.9 million as of December 31, 2024 [4][5]. - The company invested $104.7 million across 10 new portfolio companies during Q1 2025, compared to $127.1 million across 14 new companies in Q4 2024 [5]. Portfolio Composition - The portfolio's fair value included $400.3 million in senior secured first lien investments (24.8% of total) and $1,048.9 million in unitranche first lien investments (64.7% of total) as of March 31, 2025 [4][5]. Liquidity and Capital Resources - As of March 31, 2025, the company had $30.5 million in cash and cash equivalents and $310.0 million of undrawn capacity on its credit facilities [8]. - The debt to equity ratio was reported at 1.25x as of March 31, 2025 [8].

Financial Performance - Crescent Capital BDC reported net investment income of $0.45 per share and net income of $0.11 per share for Q1 2025, compared to $0.55 and $0.27 per share in Q4 2024, respectively[2][4]. - Investment income decreased to $42.1 million in Q1 2025 from $46.4 million in Q4 2024, primarily due to a decline in interest income[6]. - Total investment income for Q1 2025 was $42,129 million, a decrease of 16.4% from $50,361 million in Q1 2024[15]. - Net investment income for Q1 2025 was $16,621 million, down 28.7% from $23,317 million in Q1 2024[15]. - The net increase in net assets resulting from operations was $3,904 million for Q1 2025, significantly lower than $28,005 million in Q1 2024[15]. - Net investment income per share for Q1 2025 was $0.45, a decrease of 28.6% from $0.63 in Q1 2024[15]. - Total expenses for Q1 2025 were $25,059 million, down 6.3% from $26,752 million in Q1 2024[15]. Investment Activity - Total investments at fair value increased to $1,620.7 million as of March 31, 2025, from $1,598.9 million as of December 31, 2024, with investments in 191 portfolio companies[4][5]. - Crescent Capital BDC invested $104.7 million across 10 new portfolio companies in Q1 2025, compared to $127.1 million across 14 new companies in Q4 2024[5]. - The net change in unrealized losses was $(6.2) million for Q1 2025, compared to $(7.3) million in Q4 2024[4]. - Net realized and unrealized losses on investments totaled $12,717 million in Q1 2025, compared to gains of $4,349 million in Q1 2024[15]. Income and Yield - The weighted average yield on income-producing securities decreased to 10.4% in Q1 2025 from 10.9% in Q4 2024[4]. - Interest income from non-controlled non-affiliated investments decreased to $36,978 million in Q1 2025 from $43,564 million in Q1 2024, a decline of 15.1%[15]. Dividends and Cash Position - The company declared a second quarter 2025 regular cash dividend of $0.42 per share, consistent with the previous quarter[3]. - Cash and cash equivalents, along with restricted cash, totaled $30.5 million as of March 31, 2025[8]. Debt and Equity - The company's debt to equity ratio was 1.25x as of March 31, 2025, with total liabilities of $939.4 million[8][13]. - The weighted average shares outstanding remained constant at 37,061,547 for both Q1 2025 and Q1 2024[15]. Company Overview - Crescent BDC is focused on providing capital solutions to middle market companies with strong growth prospects[16]. - Crescent BDC has $46 billion in assets under management, emphasizing its significant market presence[17].