Crescent Capital BDC(US:CCAP)2024-11-12 11:09PART I FINANCIAL INFORMATION Item 1. Financial Statements Presents unaudited consolidated financial statements for Crescent Capital BDC, Inc. as of September 30, 2024, including assets, operations, cash flows, and investment schedule with notes Consolidated Statements of Assets and Liabilities Total assets increased to $1.645 billion, with net assets growing to $748.8 million, raising NAV per share to $20.20 Consolidated Statements of Assets and Liabilities Highlights (in thousands) | Financial Metric | As of Sep 30, 2024 (Unaudited) | As of Dec 31, 2023 | | :--- | :--- | :--- | | Total Investments, at fair value | $1,591,433 | $1,582,075 | | Total Assets | $1,645,049 | $1,627,379 | | Total Debt (net) | $857,236 | $844,783 | | Total Liabilities | $896,242 | $884,785 | | Total Net Assets | $748,807 | $742,594 | | Net Asset Value per share | $20.20 | $20.04 | Consolidated Statements of Operations Q3 2024 total investment income was $51.6 million, yielding $23.5 million ($0.64 per share) net investment income, despite unrealized losses Key Operational Data (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Investment Income | $51,632 | $48,152 | $150,945 | $134,176 | | Net Expenses | $27,437 | $26,079 | $80,930 | $73,497 | | Net Investment Income | $23,540 | $21,723 | $68,560 | $59,789 | | Net Realized & Unrealized Gains (Losses) | ($8,216) | $975 | ($5,366) | ($7,540) | | Net Increase (Decrease) in Net Assets | $15,268 | $22,621 | $63,658 | $52,979 | | Net Investment Income Per Share | $0.64 | $0.59 | $1.85 | $1.68 | | Net Increase (Decrease) in Net Assets Per Share | $0.41 | $0.61 | $1.72 | $1.49 | Consolidated Statements of Changes in Net Assets Net assets increased by $6.2 million to $748.8 million, driven by net investment income, partially offset by distributions and investment losses Reconciliation of Net Assets for the Nine Months Ended Sep 30, 2024 (in thousands) | Description | Amount | | :--- | :--- | | Balance at December 31, 2023 | $742,594 | | Net Investment Income | $68,560 | | Net Realized Loss on Investments | ($463) | | Net Change in Unrealized Depreciation | ($4,903) | | Distributions from Distributable Earnings | ($57,445) | | Total Increase in Net Assets | $6,213 | | Balance at September 30, 2024 | $748,807 | Consolidated Statements of Cash Flows Operating activities provided $61.8 million in cash, while financing used $48.4 million, leading to a $13.4 million net increase in cash Cash Flow Summary for the Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $61,796 | $57,696 | | Net Cash from Financing Activities | ($48,438) | ($52,000) | | Net Increase in Cash | $13,367 | $5,688 | | Cash, beginning of period | $24,470 | $17,067 | | Cash, end of period | $37,837 | $22,755 | Consolidated Schedule of Investments The investment portfolio totaled $1.591 billion across 183 companies, primarily debt (96.3%), concentrated in senior secured and unitranche first lien loans - The total investment portfolio at fair value was $1,591.4 million as of September 30, 2024, compared to $1,582.1 million as of December 31, 2023232 Portfolio Composition by Investment Type (at Fair Value) | Investment Type | Fair Value (in millions) | Percentage of Portfolio | | :--- | :--- | :--- | | Senior Secured First Lien | $401.7 | 25.2% | | Unitranche First Lien | $1,023.7 | 64.4% | | Senior Secured Second Lien | $41.8 | 2.6% | | Equity & Other | $99.7 | 6.2% | | Unsecured Debt | $18.7 | 1.2% | | Total | $1,591.4 | 100.0% | Top 5 Industry Concentrations (at Fair Value) | Industry | Fair Value (in millions) | Percentage of Portfolio | | :--- | :--- | :--- | | Health Care Equipment & Services | $442.1 | 27.8% | | Software & Services | $343.1 | 21.6% | | Commercial & Professional Services | $208.7 | 13.0% | | Consumer Services | $154.1 | 9.7% | | Diversified Financials | $94.0 | 5.9% | Notes to Consolidated Financial Statements Detailed notes explain accounting policies, BDC/RIC status, investment valuation, debt facilities, unfunded commitments, dividends, and subsequent events - The Company is an externally managed BDC that has elected to be treated as a RIC for U.S. federal income tax purposes, aiming to maximize total return through debt and related equity investments in private U.S. middle-market companies99100 - As of September 30, 2024, the company had fourteen investments across five portfolio companies on non-accrual status, representing 1.7% of total debt investments at cost and 0.9% at fair value125 - The Board of Directors declared a regular Q4 2024 cash dividend of $0.42 per share and a supplemental cash dividend of $0.07 per share subsequent to the quarter's end213 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q3 2024 financial performance, with net investment income rising to $23.5 million, portfolio fair value at $1.59 billion, and strong liquidity Results of Operations Highlights (in millions) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total investment income | $51.6 | $48.2 | $150.9 | $134.2 | | Total net expenses | $28.1 | $26.4 | $82.4 | $74.4 | | Net investment income | $23.5 | $21.8 | $68.5 | $59.8 | - As of September 30, 2024, the company had $37.8 million in cash and cash equivalents and $317.0 million of undrawn capacity on its credit facilities, exceeding its $200.1 million in unfunded commitments258277 - The asset coverage ratio was 186% as of September 30, 2024, compliant with the 150% minimum requirement for BDCs276 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces valuation, interest rate, and currency risks; a 100 bps rate hike could increase net interest income by $9.8 million annually - The company's primary market risks are valuation risk for illiquid private securities, interest rate risk due to its floating-rate assets and liabilities, and currency risk from foreign-denominated investments280 Annualized Impact of Hypothetical Interest Rate Changes (in millions) | Basis Point Change | Interest Income | Interest Expense | Net Interest Income | | :--- | :--- | :--- | :--- | | Up 100 basis points | $15.5 | $5.7 | $9.8 | | Down 100 basis points | ($15.5) | ($5.7) | ($9.8) | Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of September 30, 2024, with no material changes to internal control - The principal executive officer and principal financial officer concluded that as of September 30, 2024, the company's disclosure controls and procedures were effective286 - There were no material changes in internal control over financial reporting during the quarter ended September 30, 2024287 PART II OTHER INFORMATION Item 1. Legal Proceedings Ongoing legal proceedings are not expected to materially affect the company's financial condition or results of operations - The company does not expect any ongoing legal proceedings to materially affect its business, financial condition, or results of operations288 Item 1A. Risk Factors No material changes to risk factors previously disclosed in the Annual Report on Form 10-K for FY2023 - The report refers to the risk factors discussed in the Annual Report on Form 10-K for the year ended December 31, 2023, indicating no material updates in this filing289 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Sun Life completed its $20.0 million share purchase program, acquiring 382,542 shares for $7.4 million during the quarter - Sun Life completed its $20.0 million share purchase program, buying 382,542 shares for $7.4 million during the quarter ended September 30, 2024291 Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None292 Item 4. Mine Safety Disclosures This section is not applicable to the company - Not applicable292 Item 5. Other Information No director or Section 16 officer adopted or terminated a Rule 10b5-1 trading arrangement during the nine months ended September 30, 2024 - No director or Section 16 officer adopted or terminated a Rule 10b5-1 trading arrangement during the nine months ended September 30, 2024293 Item 6. Exhibits Lists all exhibits filed with the quarterly report, including CEO and CFO Sarbanes-Oxley certifications - The report includes a list of all exhibits filed, such as merger agreements, bylaws, advisory agreements, debt agreements, and Sarbanes-Oxley certifications295296