Core Insights - Carlyle Secured Lending (CGBD) reported record origination activity in 2025, attributed to enhancements in origination capabilities and a focus on stable, high-quality credits in the core and upper middle market [1][5][3] - Leadership changes were announced, with Alex Chi appointed as CEO and Thomas Hennigan taking on multiple roles including President and CFO [2][3] - The company anticipates increased M&A-driven activity in 2026, supported by a rejuvenated origination platform [3][21] Financial Performance - CGBD deployed over $1.2 billion in 2025, with total investments rising from $2.4 billion to $2.5 billion during the fourth quarter [5][6] - Net investment income (NII) for Q4 was $24 million, or $0.33 per share, with an adjusted NII of $0.36 per share [4][8] - The company declared a Q1 2026 dividend of $0.40 per share, supported by an estimated $0.74 per share of spillover income [10] Portfolio and Credit Performance - Credit metrics remained stable, with five non-accruals representing approximately 1.2% of fair value [4][14] - The portfolio is diversified across 165 companies in over 25 industries, with 94% of investments in senior secured loans [14][15] - Management found no material near-term AI disruption risks after reviewing the portfolio for potential impacts [16] Joint Ventures and Strategic Initiatives - CGBD expanded joint ventures, including a new Structured Credit Partners (SCP) JV with $600 million in equity commitments [17][19] - The MMCF joint venture is achieving a 15% dividend yield, with equity commitments increased from $175 million to $250 million for each partner [17] - The SCP is designed to be fee-free and aims to manage approximately $6 billion–$7 billion of assets over time [19] Capital Management - The company repurchased $28 million of stock in Q4 and increased its buyback program to $300 million [4][12] - CGBD raised a new five-year $300 million unsecured bond at a swap-adjusted rate of SOFR plus 231, reducing its weighted average cost of borrowing [20] - Statutory leverage was reported at 1.3x at quarter end, with adjustments bringing it to approximately 1.1x [20]

Core Insights - Carlyle Secured Lending, Inc. reported a record year of originations in 2025, deploying over $1.2 billion and closing over $7.0 billion in commitments at the platform level [8][10] - The company generated $0.33 per share of net investment income on a GAAP basis and $0.36 of adjusted net investment income per share for the fourth quarter [10][20] - The Board declared a first quarter 2026 dividend of $0.40 per share, with a net asset value of $16.26 per share as of December 31, down from $16.36 per share as of September 30 [10][20] Financial Performance - Total investment income for the fourth quarter was $67 million, consistent with the prior quarter, while total expenses increased to $43 million due to higher interest expenses [19] - Net investment income for the fourth quarter was $24 million, or $0.33 per share on a GAAP basis, and $0.36 per share after adjustments [20] - The company repurchased $14 million of shares at an average discount of nearly 23% during the fourth quarter, resulting in $0.06 of accretion to NAV per share [21][22] Portfolio and Investment Strategy - The portfolio consisted of 165 companies across more than 25 industries, with 94% of investments in senior secured loans [14] - The company remains focused on stable, high-quality credits in the core and upper middle market, with a strong emphasis on software investments that have shown resilience against AI disruption [11][12][14] - A new joint venture, Structured Credit Partners, was formed to invest in broadly syndicated first-lien senior secured loans, expected to enhance diversification and yield [15][16][24] Market Outlook - The company anticipates 2026 to be an active year for M&A activity, with a strong pipeline for new originations driven by increased market activity [17][29] - There is an expectation of modest spread widening in the middle market, with a focus on sourcing transactions with significant equity cushions and conservative leverage profiles [44][52] - The company is well-positioned to benefit from expected increases in deal volume, leveraging its extensive network and expertise across multiple asset classes [17][41]

Financial Data and Key Metrics Changes - Total investment income for Q4 2025 was $67 million, consistent with the prior quarter, as an increase in average portfolio size was offset by a decrease in total portfolio yields due to lower base rates and spreads [21] - Net investment income for Q4 was $24 million, or $0.33 per share on a GAAP basis, and $0.36 per share after adjustments [22] - The net asset value as of December 31 was $16.26 per share, down from $16.36 per share as of September 30 [12] Business Line Data and Key Metrics Changes - CGBD deployed over $1.2 billion and closed over $7 billion of commitments at the platform level in 2025, with Q4 being a record quarter for CGBD with over $400 million of investment fundings [11] - Total investments at CGBD increased from $2.4 billion to $2.5 billion during the quarter, while total investments at the MMCF joint venture increased to over $950 million [11] Market Data and Key Metrics Changes - The company reported that 94% of investments were in senior secured loans, with a median EBITDA across the portfolio of $97 million [17] - The average exposure to any single portfolio company was less than 1% of total investments, indicating strong diversification [17] Company Strategy and Development Direction - The core investment strategy remains focused on stable, high-quality credits in the core and upper middle market, with an emphasis on enhancing origination capabilities [10] - The formation of a new joint venture, Structured Credit Partners, aims to increase diversification and portfolio yield, focusing on broadly syndicated first lien, senior secured loans [18] Management's Comments on Operating Environment and Future Outlook - Management expects earnings to trough in the first half of 2026 due to base rate cuts, with an anticipated increase in earnings thereafter as portfolios ramp up [23] - The company remains confident in the quality and stability of its portfolio despite market volatility, particularly in the software sector, which has shown exemplary performance with no defaults over the last five years [12][13] Other Important Information - The board declared a first-quarter 2026 dividend of $0.40 per share, with an estimated $0.74 per share of spillover income to support the dividend [22] - The company repurchased $14 million of shares at an average discount of nearly 23% during Q4, resulting in $0.06 of accretion to NAV per share [23] Q&A Session Summary Question: Who will the company take market share from? - The company plans to focus on high-quality companies in the core and upper middle market, leveraging its strong credit culture and industry expertise [33] Question: What is driving borrowing demand and contributing to the strong pipeline flow? - The company is seeing a consistent flow of opportunities in the middle market, with increased activity in sectors like industrials and healthcare [36] Question: What is the rationale for the SCP joint venture? - The SCP joint venture aims to maximize the utilization of non-qualifying asset buckets and leverage the broader Carlyle network for strong expected returns [39] Question: How significant is interest expense in borrowers' overall expense load? - Interest coverage ratios are improving, and borrowers are taking a more conservative approach to leverage, which is beneficial for credit quality [56][58] Question: Is the best incremental dollar the next investment or repurchasing stock? - The company believes in a balanced approach, continuing share repurchases while also investing in joint ventures that are expected to be accretive [61]

Financial Data and Key Metrics Changes - Total investment income for Q4 2025 was $67 million, consistent with the prior quarter, as an increase in average portfolio size was offset by a decrease in total portfolio yields due to lower base rates and spreads [19] - Net investment income for Q4 was $24 million, or $0.33 per share on a GAAP basis, and $0.36 per share after adjustments [20] - The board declared a first-quarter 2026 dividend of $0.40 per share, with an estimated $0.74 per share of spillover income to support the dividend [20][21] - The net asset value as of December 31 was $16.26 per share, down from $16.36 per share as of September 30 [11] Business Line Data and Key Metrics Changes - CGBD deployed over $1.2 billion and closed over $7 billion of commitments at the platform level in 2025, with Q4 being a record quarter for CGBD with over $400 million of investment fundings [10] - Total investments at CGBD increased from $2.4 billion to $2.5 billion during the quarter, while total investments at the MMCF joint venture increased to over $950 million [10] - The median EBITDA across the portfolio was $97 million, with 94% of investments in senior secured loans [14] Market Data and Key Metrics Changes - The company noted that the public markets experienced volatility due to a reset in valuations for companies potentially disintermediated by AI, but expressed confidence in the quality and stability of its portfolio [11] - The software borrowers in the portfolio have grown revenue and EBITDA by approximately 8% and 20% year-over-year, respectively [12] Company Strategy and Development Direction - The core investment strategy remains focused on stable, high-quality credits in the core and upper middle market, with an emphasis on enhancing origination capabilities [9] - The formation of a new joint venture, Structured Credit Partners (SCP), aims to increase diversification and portfolio yield at CGBD, focusing on investing in broadly syndicated first lien, senior secured loans [16][24] - The company expects 2026 to be an active year with increased M&A activity and a strong pipeline for new originations [17] Management's Comments on Operating Environment and Future Outlook - Management anticipates earnings to trough in the first half of 2026 due to base rate cuts, with an expected increase in earnings thereafter as portfolios ramp up [21] - The company has re-underwritten its entire portfolio to evaluate AI disruption risks and found no material near-term risks [14] - Management remains committed to delivering a stable cash flow stream to investors through consistent income and solid credit performance [27] Other Important Information - The company repurchased $14 million of shares at an average discount of nearly 23% during Q4, resulting in $0.06 of accretion to NAV per share [21] - The total aggregate realized and unrealized net loss for the quarter was about $7 million, primarily due to unrealized markdowns on select underperforming investments [22] Q&A Session Summary Question: Who will the company take market share from? - The company plans to focus on high-quality companies in the core and upper middle market, leveraging its strong credit culture and industry expertise to take market share from other private credit funds and banks [30] Question: What is driving borrowing demand? - The company noted a consistent flow of opportunities in the middle market, with increased activity in sectors like industrials, aerospace, and healthcare, contributing to a strong pipeline [33] Question: What is the rationale for the SCP joint venture? - The SCP joint venture aims to maximize the utilization of non-qualifying asset buckets and leverage the broader Carlyle network to produce strong expected returns based on a no-fee structure [36] Question: How significant is interest expense for borrowers? - Interest coverage ratios are improving, and borrowers are taking a more conservative approach to leverage, resulting in better fixed charge coverage ratios [55] Question: Is the best incremental dollar for investment or share repurchase? - The company believes in a balanced approach, continuing share repurchases while also investing in joint ventures that are expected to be accretive [58]

Financial Data and Key Metrics Changes - Total investment income for Q4 2025 was $67 million, consistent with the prior quarter, as an increase in average portfolio size was offset by a decrease in total portfolio yields due to lower base rates and lower spreads [17] - Net investment income for Q4 was $24 million, or $0.33 per share on a GAAP basis, and $0.36 per share after adjustments [18] - The board declared a first-quarter 2026 dividend of $0.40 per share, with an estimated $0.74 per share of spillover income to support the dividend [18] Business Line Data and Key Metrics Changes - CGBD deployed over $1.2 billion and closed over $7 billion of commitments at the platform level in 2025, with Q4 being a record quarter for CGBD with over $400 million of investment fundings [9] - Total investments at CGBD increased from $2.4 billion to $2.5 billion during the quarter, while total investments at the MMCF joint venture increased to over $950 million [9] Market Data and Key Metrics Changes - CGBD's net asset value as of December 31 was $16.26 per share, down from $16.36 per share as of September 30 [10] - The company reported a total aggregate realized and unrealized net loss for the quarter of about $7 million, primarily due to unrealized markdowns on select underperforming investments [20] Company Strategy and Development Direction - The core investment strategy remains focused on stable, high-quality credits in the core and upper middle market, with an emphasis on enhancing origination capabilities [7][8] - The formation of a new joint venture, Structured Credit Partners (SCP), aims to increase diversification and portfolio yield at CGBD, focusing on investing in broadly syndicated first lien, senior secured loans [14][21] Management's Comments on Operating Environment and Future Outlook - Management expects earnings to trough in the first half of 2026 due to base rate cuts, with an anticipated increase in earnings thereafter as portfolios ramp up [19] - The company remains confident in the quality and stability of its portfolio despite market volatility, particularly in the software sector, which has shown strong performance metrics [10][12] Other Important Information - CGBD's software exposure as a percentage of the portfolio is below that of its peer group, with a strong track record of no defaults in software deals over the last five years [11] - The company has nearly exhausted its existing $200 million share repurchase program and has approved an increase to $300 million [19] Q&A Session Summary Question: Who will CGBD take market share from? - CGBD plans to take market share from the BSL market, other private credit funds, and banks, leveraging its strong credit culture and industry expertise [28][29] Question: What is driving borrowing demand? - The middle market provides a consistent flow of opportunities, with increased activity in sectors like industrials, aerospace, and healthcare contributing to strong pipeline flow [32][33] Question: Rationale for the SCP joint venture? - The SCP joint venture aims to maximize non-qualifying asset buckets and leverage the broader Carlyle network for strong expected returns based on a no-fee structure [35][36] Question: How significant is interest expense for borrowers? - Interest coverage ratios are improving, and borrowers are adopting more conservative leverage profiles, which is beneficial for overall credit quality [53][55] Question: Is share repurchase or new investment the best use of capital? - A balanced approach is being taken, with ongoing share repurchases while also investing in joint ventures that are expected to be accretive [58][60]

Carlyle Secured Lending, Inc. Quarterly Earnings Presentation December 31, 2025 1 Disclaimer and Forward-Looking Statement This presentation (the "Presentation") has been prepared by Carlyle Secured Lending, Inc. (together with its consolidated subsidiaries, "we," "us," "our," "CGBD" or the "Company") (NASDAQ: CGBD) and may only be used for informational purposes only. This Presentation should be viewed in conjunction with the earnings conference call of the Company held on February 25, 2026 and the Company ...

Core Viewpoint - Carlyle Secured Lending Inc. (CGBD) is identified as a notable business development company (BDC) that has not met investment expectations, indicating a potential misjudgment in its investment appeal [1] Group 1: Company Overview - Carlyle Secured Lending Inc. (CGBD) is categorized among a select group of BDCs that are considered tactical investment picks [1] Group 2: Analyst Background - Roberts Berzins has over a decade of experience in financial management, focusing on assisting top-tier corporates in shaping financial strategies and executing large-scale financings [1] - Berzins has contributed to institutionalizing the REIT framework in Latvia to enhance the liquidity of pan-Baltic capital markets [1] - His policy-level work includes developing national SOE financing guidelines and frameworks for channeling private capital into affordable housing [1] - Berzins holds a CFA Charter and an ESG investing certificate, and has interned at the Chicago Board of Trade [1] - He is actively involved in thought-leadership activities aimed at supporting the development of pan-Baltic capital markets [1]

Core Viewpoint - Carlyle Secured Lending, Inc. reported quarterly earnings of $0.33 per share, missing the Zacks Consensus Estimate of $0.38 per share, and showing a decline from $0.47 per share a year ago, indicating a negative earnings surprise of -12.23% [1] Financial Performance - The company posted revenues of $41.46 million for the quarter ended December 2025, which was 9.03% below the Zacks Consensus Estimate and an increase from $39.23 million year-over-year [2] - Over the last four quarters, Carlyle Secured Lending has not surpassed consensus EPS estimates and has only topped consensus revenue estimates once [2] Stock Performance - Carlyle Secured Lending shares have declined approximately 11.1% since the beginning of the year, contrasting with the S&P 500's slight decline of 0.1% [3] Future Outlook - The company's earnings outlook will be crucial for determining stock performance, with current consensus EPS estimates at $0.37 for the coming quarter and $1.48 for the current fiscal year, alongside revenues of $45.72 million and $183.66 million respectively [7] - The Zacks Rank for Carlyle Secured Lending is currently 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6] Industry Context - The Financial - SBIC & Commercial Industry, to which Carlyle Secured Lending belongs, is currently ranked in the bottom 44% of over 250 Zacks industries, indicating potential challenges ahead [8]

Core Viewpoint - Carlyle Secured Lending, Inc. reported its financial results for Q4 and full year 2025, highlighting strong performance and strategic growth initiatives under new CEO Alex Chi [1][2]. Financial Performance - For Q4 2025, the company reported a Net Investment Income of $0.33 per common share and an Adjusted Net Investment Income of $0.36 per common share [2]. - For the full year 2025, the company reported a Net Investment Income of $1.48 per common share and an Adjusted Net Investment Income of $1.51 per common share [3]. - The net asset value per common share decreased by 0.6% in Q4 2025, from $16.36 to $16.26 [3]. - The total fair value of investments increased to $2.5 billion as of December 31, 2025 [3]. Dividends - The Board of Directors declared a quarterly common dividend of $0.40 per share, payable on April 16, 2026, to stockholders of record on March 31, 2026 [4]. Company Overview - Carlyle Secured Lending, Inc. is a specialty finance company focused on lending to middle-market companies, managed by Carlyle Global Credit Investment Management L.L.C. [10]. - Since its inception in May 2013, the company has invested approximately $10.7 billion in debt and equity investments [10]. - The company's investment objective is to generate current income and capital appreciation primarily through debt investments in U.S. middle market companies [10]. Strategic Initiatives - The company aims to expand its origination capabilities and leverage the OneCarlyle platform to enhance its market position [2]. - CGBD's core strategy focuses on stable, high-quality credits in the middle market, supported by strategic partnerships to improve return on equity [2].

Financial Projections and Performance - As of December 31, 2025, the company expects total assets of $2,790.2 million and outstanding indebtedness of $1,543.7 million, with a net asset value of $1,167.4 million[167]. - The company anticipates an annual return of approximately 3.33% on its investment portfolio to cover annual interest payments on outstanding debt[167]. - The weighted average effective annual interest rate on outstanding indebtedness is projected to be 6.02%[167]. - Rising interest rates during 2022 and 2023 have increased the incentive fees payable to the Investment Adviser, impacting net investment income positively[172]. - Fluctuations in quarterly results may occur due to various factors, including investment pace, default rates, and economic conditions[174]. Debt and Financing Risks - The company may need to refinance its indebtedness, and there is no assurance that refinancing will be available on commercially reasonable terms[168]. - The Investment Adviser may receive incentive compensation even if the company incurs a loss, based on pre-incentive fee net investment income[175]. - The company must meet specific asset coverage tests related to the 2015-1N Debt, including a requirement that interest received must equal at least 110% of interest payable[216]. - Failure to meet coverage tests may result in proceeds being used to redeem the 2015-1N Debt, impacting distributions to the company[218]. - The company is indirectly liable for certain representations and warranties in connection with the 2015-1R Refinancing, which could lead to financial obligations[219]. Regulatory and Compliance Risks - The company is subject to corporate-level income tax if it fails to maintain its qualification as a RIC under U.S. federal income tax laws[181]. - Changes in laws and regulations could materially affect the business and operations of the company and its portfolio companies[202]. - Compliance with evolving AI regulations may impose burdensome costs and operational restrictions, particularly on smaller portfolio companies[201]. - Increased regulatory scrutiny on the private equity industry may adversely affect the company's ability to implement operating improvements or restructurings[204]. - The potential for new regulations on non-bank credit extension could negatively impact the company's financial condition and operating results[205]. Investment Risks - Investments in below investment grade loans are considered higher risk, with potential for significant losses[222]. - Investment in covenant-lite loans may expose the company to greater liquidity risks and potential losses, impacting net income and net asset value[224]. - The portfolio primarily consists of illiquid debt investments, which may not have readily available market prices, leading to subjective fair value assessments[225]. - The company faces significant competition for investment opportunities, which may limit the availability of attractive investments and adversely affect financial performance[231]. - The company may experience significant losses if a concentrated portfolio company defaults or if there is a downturn in a specific industry[238]. Operational and Cybersecurity Risks - The company is highly dependent on information systems, and failures could disrupt operations and negatively impact stock price and dividends[193]. - Cybersecurity risks are increasing, with potential adverse effects on operations and financial condition due to data breaches or cyber incidents[195]. - The use of artificial intelligence (AI) technologies presents both opportunities and unpredictable risks, including data exposure and competitive disadvantages[197]. - AI technologies rely on large data sets, which may contain inaccuracies, potentially leading to flawed investment decisions[199]. - Due diligence investigations may not reveal all relevant facts necessary for evaluating investment opportunities, potentially impacting investment decisions[244]. Shareholder and Market Risks - The company has authorized a stock repurchase program of up to $300.0 million, which may affect the market price of its common stock[277]. - As of February 23, 2026, the company had 70,676,923 shares of common stock outstanding, and substantial sales of these shares could adversely affect market prices[280]. - The market price of the company's securities may fluctuate significantly due to various factors, including market volatility and changes in interest rates[271]. - The company may struggle to pay required distributions if it recognizes taxable income without receiving cash, potentially leading to asset sales or raising additional capital[286]. - Failure to meet the Annual Distribution Requirement could result in the company losing its RIC status and facing corporate-level U.S. federal income tax[288]. Debt Instruments and Covenants - The indenture for the 2030 and 2031 Notes offers limited protection for holders, allowing the company to incur additional debt and engage in various corporate transactions[291]. - The 2030 and 2031 Notes are unsecured and effectively subordinated to any secured indebtedness, ranking pari passu with all outstanding and future unsecured debt[295]. - The company is not required to guarantee the 2030 and 2031 Notes with any of its subsidiaries, which may limit the availability of assets to satisfy claims[296]. - The company may face difficulties in repaying the 2030 and 2031 Notes if it defaults on other indebtedness, which could lead to bankruptcy or liquidation[297]. - Approximately 99.4% of the company's debt investments bear interest at floating rates, primarily subject to interest rate floors[444].