Investment Growth - Total investments increased from $1,293,592,000 in June 30, 2023 to $2,023,384,000 by June 30, 2024, representing a growth of approximately 56.5%[220] - The number of portfolio companies increased from 161 at the end of June 30, 2023 to 198 by June 30, 2024, indicating a growth of 22.9%[220] - The company funded 11 new portfolio companies in the three months ended June 30, 2024, compared to 9 in the same period of 2023, reflecting a 22.2% increase[220] - The total number of investments increased from 329 to 434 from June 30, 2023 to June 30, 2024, representing a growth of 32%[220] - The portfolio size grew to $2.0 billion as of June 30, 2024, compared to $1.4 billion as of June 30, 2023[242] Financial Performance - The company generated a net realized gain of $1,017,000 on investments for the three months ended June 30, 2024, compared to a gain of $218,000 in the same period of 2023[220] - Total investment income increased to $55.1 million for the three months ended June 30, 2024, up from $37.1 million for the same period in 2023, primarily due to increased investment activity[242] - Net investment income for the three months ended June 30, 2024, was $31.0 million, up from $18.7 million for the same period in 2023[240] - The company recorded a net realized gain on investments of $1.0 million for the three months ended June 30, 2024, compared to a net realized gain of $218 thousand for the same period in 2023[247] Debt and Financing - The weighted average reported annual EBITDA of the debt portfolio was $76.5 million as of June 30, 2024[222] - Approximately 83% of the company's debt investments have financial covenants, indicating a strong risk management approach[222] - The company reported a weighted average interest coverage ratio of 2.2x for its first lien term loans, indicating solid earnings relative to interest obligations[222] - Interest and debt financing expenses increased to $18.7 million for the three months ended June 30, 2024, from $14.3 million for the same period in 2023, driven by higher average daily borrowings[244] - Average daily borrowings for the three months ended June 30, 2024, were $939.0 million, compared to $774.4 million for the same period in 2023[244] - Total debt obligations as of June 30, 2024, amount to $1,028,750, with $772,000 due in more than 5 years[302] Market Conditions and Risks - The company is focusing on investing in defensive businesses with low cyclicality and strong free cash flow generation amid macroeconomic challenges[231] - The company has seen a tightening of spreads in newly originated investments, attributed to increased competition in the loan market[229] - The ongoing geopolitical conflicts and inflationary pressures have introduced significant volatility in the financial markets, impacting the company's market risks[324] - The company's net investment income may be adversely affected by significant changes in market interest rates[325] Shareholder Returns and Distributions - The company intends to make quarterly distributions to common shareholders based on taxable earnings, with a dividend of $0.45 declared for May 1, 2024[257] - The Board declared a third quarter regular dividend of $0.45 per share, payable on or around October 28, 2024[322] - The company intends to distribute between 90% and 100% of its annual taxable income to shareholders, although it cannot assure that distributions will be made at a specific level[274] IPO and Capital Raising - The company closed its initial public offering (IPO) on January 29, 2024, with its common stock trading on the NYSE under the symbol "NCDL" starting January 25, 2024[213] - The company closed its IPO on January 29, 2024, issuing 5,500,000 shares at a price of $18.05 per share, raising total cash proceeds of $99.3 million[254] - Total shares issued from inception through June 30, 2024, include 7,888,094 shares for $142.4 million on January 5, 2024, and 5,497,609 shares for $100 million on November 3, 2023[256] Liquidity and Cash Management - Cash and cash equivalents increased by $3.6 million for the six months ended June 30, 2024, with $266.9 million used in operating activities[253] - The company regularly evaluates its liquidity position due to uncertain economic outlook and market volatility[250] - The primary uses of cash include investment purchases, operational costs, debt service, and shareholder distributions[250] Valuation and Interest Rate Sensitivity - The company has engaged independent third-party valuation firms to assist in determining the fair value of its illiquid debt and equity securities[324] - The company's net investment income is sensitive to fluctuations in interest rates, particularly due to the difference between investment and borrowing rates[325] - A 300 basis point increase in interest rates could result in a net income increase of $12,705,000, while a 300 basis point decrease could lead to a net income decrease of $12,705,000[330] Related-Party Transactions and Governance - The Company has entered into several related-party transactions, including Advisory and Sub-Advisory Agreements[305] - The Company is permitted to co-invest with affiliates under certain conditions as per the SEC's exemptive order[306] - The annual retainer for Independent Directors will increase from $100,000 to $120,000 effective January 1, 2025[323] - The annual retainer for the Chair of the Audit Committee will increase from $10,000 to $12,000 effective January 1, 2025[323] - The Lead Independent Director will receive an annual retainer of $12,000 effective January 1, 2025[323]
Nuveen Churchill Direct Lending(NCDL) - 2024 Q2 - Quarterly Report