Financial Data and Key Metrics Changes - Blue Owl Capital Corporation reported adjusted net investment income (NII) per share of $0.36, down from $0.40 in the previous quarter, reflecting lower non-recurring income [5][19] - The net asset value (NAV) per share was $14.89, a decline of $0.14 from the prior quarter, but has increased over 4% since inception [6][19] - Total portfolio investments exceeded $17 billion, with total net assets nearing $8 billion and outstanding debt approximately $9.5 billion [19] Business Line Data and Key Metrics Changes - The company saw originations of $1.3 billion and fundings of $1.1 billion during the quarter, with repayments at $797 million, resulting in a net leverage of 1.22 times [11][19] - Approximately 40% of the originations were add-ons, indicating strong support for existing borrowers [11] - The average hold size for new direct lending deals increased from $200 million in 2021 to roughly $350 million in 2025 [12] Market Data and Key Metrics Changes - The average revenue and EBITDA of portfolio companies grew to over $1 billion and $229 million, respectively, nearly double the levels from four years ago [14] - The non-accrual rate remained low at 1.3%, consistent with historical averages, despite a slight increase due to the addition of a watchlist position [13] Company Strategy and Development Direction - The merger with OBDC II is expected to create significant value for shareholders, adding nearly $1 billion in net assets and enhancing the portfolio's scale and diversity [10][17] - The company focuses on direct lending, primarily making senior-secured loans, which allows for better control and transparency in credit assessments [9] - The strategy emphasizes larger, recession-resistant businesses, avoiding more cyclical sectors like energy and retail [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's strength, citing solid fundamentals and disciplined underwriting practices [25] - The company anticipates that earnings and dividends will adjust in response to declining base rates, but remains focused on maintaining a sustainable dividend policy [24][39] - There are expectations for a potential normalization of spreads in the direct lending market, which could enhance returns [72] Other Important Information - The board declared a fourth-quarter base dividend of $0.37, to be paid on January 15, 2026 [19] - The company has a robust liquidity position with over $3 billion in cash and capacity on facilities, exceeding unfunded commitments [20] Q&A Session Summary Question: What is driving the higher non-accruals in OBDC II? - Management explained that the higher non-accrual rates are due to larger names in OBDC II, which operates under lower leverage constraints, but the impact on overall credit statistics is minimal [27][28] Question: What steps are being taken to improve stock valuation? - Management highlighted ongoing efforts to simplify the BDC portfolio and noted that the stock is yielding over 11%, which is not aligned with performance [31][33] Question: What are the expectations for rate cuts and their impact on dividends? - Management indicated that they do not predict rates but will adjust dividends based on the portfolio's earnings power in a lower rate environment [38][39] Question: How will the merger affect ROE accretion? - Management expects to achieve most operational synergies quickly post-merger, with capital structure-related synergies anticipated in 2026 [86] Question: What is the outlook for originations and M&A activity? - Management noted a significant pickup in activity levels, particularly in sell-side M&A opportunities, which typically yield greater upfront fees [47]

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Financial Performance - The net asset value per share decreased to $14.89, compared to $15.03 as of June 30, 2025[2] - Adjusted net investment income per share was $0.36, down from $0.40 as of June 30, 2025[2] - The company declared a Q3 2025 regular dividend of $0.37 per share, resulting in an annualized dividend yield of 9.9%[2] - A new $200 million repurchase program was implemented, replacing the existing $150 million program[2] Portfolio Composition and Activity - The total portfolio at fair value reached $17.1 billion, compared to $16.9 billion as of June 30, 2025, comprising 238 portfolio companies, up from 233[2] - New investment commitments (net of sell downs) amounted to $1.3 billion, with net fundings of $0.2 billion[2] - Investments on non-accrual represented 2.7% of the total portfolio at cost and 1.3% at fair value[2] - First-lien debt investments accounted for 74% of the portfolio[4] - Floating rate debt investments made up 97% of the portfolio[4] Balance Sheet and Liquidity - The company had $3.2 billion in liquidity, including cash and undrawn debt[2] - Debt to equity ratio increased to 1.22x, up from 1.17x as of June 30, 2025[2] - Unsecured debt comprised 52% of the debt funding mix[2]

Core Insights - Blue Owl Capital Corporation reported $453.07 million in revenue for Q3 2025, marking an 11.6% year-over-year increase, but fell short of the Zacks Consensus Estimate by 1.84% [1] - The company's EPS for the same quarter was $0.36, down from $0.47 a year ago, representing a surprise of -7.69% compared to the consensus estimate of $0.39 [1] Financial Performance Metrics - Investment income from non-controlled, non-affiliated investments showed a total of $403.35 million, a 9.7% increase year-over-year, but below the average estimate of $412.83 million [4] - Interest income from non-controlled, non-affiliated investments was reported at $349.05 million, reflecting a 16.5% year-over-year increase, yet it was lower than the average estimate of $356.5 million [4] - Total investment income from controlled, affiliated investments reached $48.4 million, exceeding the average estimate of $42.95 million, with a year-over-year change of 28.2% [4] - Dividend income from controlled, affiliated investments was reported at $37.92 million, surpassing the average estimate of $33.13 million, with a year-over-year increase of 28% [4] - The stock of Blue Owl Capital Corporation has returned +3% over the past month, outperforming the Zacks S&P 500 composite's +1% change [3]

Core Insights - Blue Owl Capital Corporation reported quarterly earnings of $0.36 per share, missing the Zacks Consensus Estimate of $0.39 per share, and down from $0.47 per share a year ago, representing an earnings surprise of -7.69% [1] - The company posted revenues of $453.07 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 1.84%, but up from $406.03 million year-over-year [2] - The stock has underperformed the market, losing about 14.6% since the beginning of the year compared to the S&P 500's gain of 15.1% [3] Earnings Outlook - The current consensus EPS estimate for the coming quarter is $0.38 on revenues of $454.33 million, and for the current fiscal year, it is $1.58 on revenues of $1.87 billion [7] - The estimate revisions trend for Blue Owl Capital Corporation was unfavorable ahead of the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Financial - Miscellaneous Services industry, to which Blue Owl Capital Corporation belongs, is currently in the top 31% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Third quarter GAAP net investment income ("NII") per share was $0.37, down from $0.42 in the previous quarter[9] - Total investment income for the three months ended September 30, 2025, was $453.1 million, compared to $485.8 million in the previous quarter and $406.0 million in the same quarter last year[34] - Net investment income for the same period was $190.1 million, down from $216.7 million in the previous quarter but up from $184.9 million year-over-year[34] - Total investment income for Q3 2025 was $453 million, down 6.8% from $486 million in Q2 2025, but up 10.5% from $406 million in Q3 2024[43] - Adjusted net investment income for Q3 2025 was $183 million, a decrease of 11.2% from $206 million in Q2 2025, and unchanged from $185 million in Q3 2024[43] - The net increase in net assets resulting from operations for Q3 2025 was $128 million, a decrease from $138 million in Q2 2025 and down from $135 million in Q3 2024[43] Investment Commitments and Portfolio - New investment commitments for the third quarter totaled $1.3 billion, an increase from $1.1 billion in the prior quarter[15] - The weighted average interest rate of new investment commitments was 9.0% for the third quarter[17] - Total investments at fair value reached $17.1 billion, compared to $16.9 billion as of June 30, 2025[11] - The fair value of investments increased to $17.1 billion as of September 30, 2025, up from $16.9 billion in the previous quarter and $13.4 billion year-over-year[34] - Investments on non-accrual represented 1.3% of the portfolio at fair value, up from 0.7% in the previous quarter[9] Dividends and Shareholder Returns - The company declared a fourth quarter 2025 regular dividend of $0.37 per share, representing an annualized dividend yield of 9.9%[9] - The company declared a base dividend of $0.37 per share, consistent with the previous quarters, while supplemental dividends were $0.00, $0.02, and $0.05 for the last three quarters respectively[34] Expenses and Liabilities - Total expenses decreased to $260.0 million for the third quarter, down from $266.8 million in the previous quarter[21] - The company incurred total operating expenses of $259.89 million for the three months ended September 30, 2025, compared to $217.56 million in 2024, reflecting an increase of approximately 19.5%[38] - Total liabilities rose to $9.99 billion as of September 30, 2025, from $7.91 billion as of December 31, 2024, indicating an increase of around 26%[36] Asset and Debt Management - As of September 30, 2025, the company had $321.3 million in cash and restricted cash, with total debt outstanding of $9.6 billion, including $2.9 billion of undrawn capacity on credit facilities[22] - The company’s debt increased to $9.53 billion as of September 30, 2025, from $7.46 billion as of December 31, 2024, marking a rise of about 28%[36] - The company is in compliance with all financial covenants under its credit facilities as of September 30, 2025, indicating strong liquidity and capital resources[22] Mergers and Corporate Actions - The company announced a definitive merger agreement with OBDC II, expected to enhance long-term shareholder value[4] - OBDC's board approved a new repurchase program allowing for the repurchase of up to $200 million of common stock[6] - The company plans to file a proxy statement and registration statement with the SEC in connection with the upcoming mergers, which will include important information about the companies involved[30] Shareholder Metrics - The net asset value ("NAV") per share decreased to $14.89 from $15.03 in the previous quarter[9] - The net asset value per share decreased to $14.89 as of September 30, 2025, from $15.26 as of December 31, 2024[36] - The company’s weighted average shares outstanding increased to 511,048,237 for the three months ended September 30, 2025, compared to 390,217,304 in the same period of 2024[38]

Core Insights - Blue Owl Capital Corporation (OBDC) reported strong performance in Q3 2025, highlighting solid credit quality and fundamentals in its portfolio, alongside announcing a merger with OBDC II to enhance long-term shareholder value [2][8]. Financial Performance - Q3 2025 net investment income per share was $0.37, down from $0.42 in Q2 2025 and $0.47 in Q3 2024 [7][30]. - Total investment income decreased to $453.1 million in Q3 2025 from $485.8 million in Q2 2025, primarily due to a decline in prepayment-related income and interest income from debt investments [19][30]. - Total expenses decreased to $260.0 million in Q3 2025 from $266.8 million in Q2 2025, mainly due to lower management and incentive fees [20][30]. Dividend and Shareholder Returns - The Board declared a regular dividend of $0.37 per share for Q4 2025, maintaining the same level as the previous quarter, representing an annualized dividend yield of 9.9% [3][8]. - A new repurchase program was approved, allowing for the repurchase of up to $200 million of common stock over the next 18 months [4][30]. Investment Activity - New investment commitments totaled $1.3 billion in Q3 2025, an increase from $1.1 billion in Q2 2025, with sales and repayments amounting to $797 million [13][14]. - The portfolio consisted of 238 companies with a total fair value of $17.1 billion, with first-lien senior secured debt investments making up 74.4% of the portfolio [11][12]. Portfolio Composition - As of September 30, 2025, the portfolio included 97.4% of debt investments at floating rates, with a weighted average yield of accruing debt and income-producing securities at fair value of 10.3% [12][30]. - Investments on non-accrual represented 1.3% of the portfolio at fair value, up from 0.7% in the previous quarter [8][12]. Merger Announcement - OBDC and OBDC II entered into a definitive merger agreement, with OBDC as the surviving entity, pending shareholder approvals [2][8].

Investment Strategy and Portfolio - As of September 30, 2025, Blue Owl Capital Corporation has originated $174.72 billion in aggregate principal amount of investments, with $170.63 billion retained by the company or its affiliates [531]. - The average debt investment size in portfolio companies was approximately $66.5 million based on fair value, with 94.4% of the total debt portfolio having a weighted average annual revenue of $1.02 billion and a weighted average annual EBITDA of $229 million [536]. - The company focuses on investing in upper middle market businesses, defined as those generating over $50 million in EBITDA annually [532]. - The investment strategy includes direct origination of loans to institutionally-backed companies, with a target loan-to-value ratio of 50% or below [532]. - Blue Owl Capital Corporation's portfolio companies had an average interest coverage of 1.9x and an average net loan-to-value of 42% as of September 30, 2025 [536]. - The company has a diversified investment strategy that includes senior secured loans, subordinated loans, and equity-related securities [531]. - The investment portfolio is expected to be predominantly composed of directly originated debt and income-producing securities [533]. - The company focuses on investing in upper middle-market businesses in non-cyclical industries, including healthcare, business services, technology, and insurance brokerage [562]. - The average investment size in the portfolio is less than 0.5%, with the top ten investments representing less than 25% of the total portfolio [563]. - Approximately 97.4% of debt investments bear interest at a floating rate, which is expected to benefit earnings in a prolonged higher rate environment [541]. Financial Performance - The net investment income after taxes for the three months ended September 30, 2025, was $190.1 million, compared to $184.9 million for the same period in 2024 [592]. - The total investment income for the nine months ended September 30, 2025, was $1,403.5 million, up from $1,202.4 million in 2024 [592]. - Total investment income increased to $453.1 million for the three months ended September 30, 2025, compared to $406.0 million for the same period in 2024, primarily due to higher interest income [597]. - Interest income from investments rose to $359.9 million for the three months ended September 30, 2025, up from $307.7 million in the prior year [596]. - The net change in unrealized gains (losses) for the three months ended September 30, 2025, was a loss of $65.6 million, compared to a gain of $5.8 million in the prior year [608]. - Adjusted, non-GAAP net increase in net assets from operations was $128.2 million for the three months ended September 30, 2025 [595]. Debt and Leverage - The current target leverage ratio is set at 0.90x-1.25x, with net leverage reported at 1.22x debt-to-equity [561]. - The weighted average total cost of debt as of September 30, 2025, was 6.2% [630]. - The total debt of the company amounted to $12,864.6 million, with outstanding principal of $9,627.3 million and net carrying value of $9,528.5 million [648]. - The company’s revolving credit facility has an aggregate principal of $3,900 million, with $1,222 million outstanding as of September 30, 2025 [648]. - The average daily borrowings for the nine months ended September 30, 2025, were $9,920.2 million, compared to $7,509.1 million in 2024, indicating a 32.2% increase [649]. - The company may seek to retire, repurchase, or exchange debt securities depending on market conditions and liquidity [630]. Investment Commitments and Returns - Total new investment commitments for the three months ended September 30, 2025, reached $1,338,001 thousand, compared to $1,151,667 thousand in 2024 [568]. - The principal amount of new investments funded totaled $963,441 thousand in 2025, down from $1,080,803 thousand in 2024 [568]. - The realized gross internal rate of return (IRR) on exited investments since 2016 is approximately 10%, based on total capital invested of $20.27 billion and total proceeds of $24.84 billion [621]. - The company generated undistributed taxable earnings "spillover" of approximately $0.31 per share as of September 30, 2025 [603]. Shareholder Distributions and Stock Activity - For the nine months ended September 30, 2025, the company declared a total distribution of $0.37 per share for three separate dividends, with supplemental dividends of $0.02, $0.01, and $0.05 [639]. - The company repurchased 4,090,138 shares of common stock for approximately $50.0 million under the 2022 Stock Repurchase Program, which ended on May 2, 2024 [645]. - The company distributed a total of 998,642 shares as part of the dividend reinvestment plan for the dividend declared on February 18, 2025 [644]. - The supplemental dividend declared on August 5, 2025, resulted in the issuance of 51,572 shares [644]. - The company’s distributions may exceed earnings, indicating a potential return of capital to shareholders [639]. Regulatory and Management Structure - The company is managed by Blue Owl Credit Advisors LLC, which oversees day-to-day operations and investment management [520]. - Blue Owl Capital Corporation is regulated as a Business Development Company (BDC) and is required to invest at least 70% of its assets in qualifying assets [529]. - The company has received exemptive relief from the SEC to co-invest with affiliates under certain conditions, enhancing its investment flexibility [526]. Market Environment and Opportunities - The middle market lending environment is seen as providing opportunities for attractive risk-adjusted returns, with approximately 200,000 U.S. middle market companies identified [551]. - The weighted average spread of total floating rate debt investments was reported at 5.7% [560]. - The weighted average EBITDA of borrowers increased to approximately $229 million in 2025, up from $115 million in 2021 [564]. - Average revenue of borrowers rose to approximately $1 billion in 2025, compared to $500 million in 2021 [564]. - The average hold size of new investments in Blue Owl's direct lending strategy is approximately $350 million, up from $200 million in 2021 [564].

Core Viewpoint - The merger between Blue Owl Capital Corporation (OBDC) and Blue Owl Capital Corporation II (OBDC II) aims to create a stronger, more efficient business development company (BDC) with enhanced scale and cost efficiencies, positioning OBDC as the second largest publicly traded BDC by total assets [1][2]. Transaction Details - The merger agreement has been unanimously approved by the boards of both companies and is subject to shareholder approvals and customary closing conditions [1][9]. - Shareholders of OBDC II will receive newly issued shares of OBDC based on a predetermined exchange ratio, with no fractional shares issued [3][4]. - The merger is expected to close in the first quarter of 2026, pending necessary approvals [9]. Financial Impact - The pro forma investment portfolio of OBDC is projected to increase by $1.7 billion to approximately $18.9 billion across 239 portfolio companies [6]. - The combined company will maintain 80% of senior secured investments, with only 1.3% of pro forma investments at fair value on non-accrual [6]. - The merger is anticipated to generate approximately $5 million in operational cost savings in the first year, enhancing overall financial performance [6]. Strategic Benefits - The merger simplifies Blue Owl's BDC structure and enhances liquidity for shareholders, potentially attracting a broader investor base [6]. - The transaction is expected to improve the cost of debt and financing terms over time, benefiting shareholders through lower expenses and higher asset yields [6]. Management and Governance - The combined entity will continue to be externally managed by Blue Owl Credit Advisors LLC, with all current OBDC officers and directors retaining their roles [8]. - A new stock repurchase program has been approved, allowing OBDC to repurchase up to $200 million of its common stock over the next 18 months [8].

Core Viewpoint - The market anticipates a year-over-year decline in earnings for Blue Owl Capital Corporation despite an increase in revenues, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - Blue Owl Capital Corporation is expected to report quarterly earnings of $0.39 per share, reflecting a year-over-year decrease of 17% [3]. - Revenues are projected to be $461.57 million, which is an increase of 13.7% compared to the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised down by 0.52% over the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for Blue Owl Capital is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -3.85% [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive or negative reading indicates the likelihood of actual earnings deviating from consensus estimates, with positive readings being more predictive of earnings beats [9][10]. - Blue Owl Capital's current Zacks Rank is 4, which complicates the prediction of an earnings beat [12]. Historical Performance - In the last reported quarter, Blue Owl Capital was expected to post earnings of $0.39 per share but actually reported $0.40, resulting in a surprise of +2.56% [13]. - Over the past four quarters, the company has only surpassed consensus EPS estimates once [14]. Industry Comparison - Oportun Financial Corporation, another player in the financial services industry, is expected to report earnings of $0.26 per share, indicating no change year-over-year, with revenues expected to decline by 4.5% [19]. - Oportun Financial's consensus EPS estimate has been revised down by 3% in the last 30 days, leading to an Earnings ESP of -13.73% [20].