Palmer Square Capital BDC(PSBD) - 2025 Q1 - Quarterly Results

First Quarter 2025 Financial Results Announcement Overview and Key Highlights Q1 2025 results show decreased investment income and NAV per share, with a declared Q2 base dividend and expected supplemental dividend - Palmer Square Capital BDC Inc. announced its financial results for the first quarter ended March 31, 2025, and declared a second quarter 2025 base dividend of $0.36 per share[1] Key Financial Highlights | Metric | Q1 2025 | Q1 2024 | Change (YoY) | | :-------------------------------- | :-------- | :-------- | :----------- | | Total Investment Income | $31.2M | $34.8M | -$3.6M | | Net Investment Income | $12.9M | $16.3M | -$3.4M | | Net Investment Income Per Share | $0.40 | $0.52 | -$0.12 | | Net Asset Value Per Share (as of period end) | $15.85 (Mar 31, 2025) | $16.50 (Dec 31, 2024) | -$0.65 (QoQ) | | Total Net Realized & Unrealized | -$21.3M | $6.6M | -$27.9M | | Total Assets (as of period end) | $1.4B | N/A | N/A | | Total Net Assets (as of period end) | $515.8M | N/A | N/A | | Debt-to-Equity (as of period end) | 1.50x | 1.50x (Dec 31, 2024) | Unchanged | | Cash Distributions Paid (Q1 2025) | $0.39/share | N/A | N/A | | Declared Q2 Base Dividend | $0.36/share | N/A | N/A | | PIK Income (% of Total Inv. Income) | 1.63% | N/A | N/A | CEO Commentary CEO Christopher D. Long highlighted the company's flexible investment strategy and shareholder alignment, seeing value in the current NAV discount - CEO Christopher D. Long stated that Palmer Square Capital BDC's investment strategy, rooted in liquid credit opportunities and senior-secured private credit, demonstrated strength and flexibility in Q1 2025, particularly during macro uncertainty[3] - The company was established with a focus on shareholder alignment, offering a differentiated fee structure and prioritizing transparency in monthly NAV and quarterly portfolio disclosure[3] - The CEO believes the current discount to NAV provides great value and that the investment team continues to find opportunities that preserve credit quality, deliver attractive yield, and create long-term shareholder value[3] Detailed Financial Performance Per Common Share Operating Performance Q1 2025 saw declines in Net Investment Income and NAV per share, with negative total return and decreased net assets Per Common Share Operating Metrics | Metric | Q1 2025 | Q4 2024 | Q1 2024 | Change (QoQ) | Change (YoY) | | :------------------------------------ | :-------- | :-------- | :-------- | :----------- | :----------- | | Net Investment Income Per Share | $0.40 | $0.45 | $0.52 | -$0.05 | -$0.12 | | NAV Per Share (End of Period) | $15.85 | $16.50 | $17.16 | -$0.65 | -$1.31 | | Dividends Earned Per Share | $0.39 | $0.48 | $0.49 | -$0.09 | -$0.10 | | Net Realized & Unrealized Gain (Loss) per Share | -$0.66 | N/A | $0.09 | N/A | -$0.75 | | Net Increase (Decrease) in Net Assets from Operations per Share | -$0.26 | N/A | $0.61 | N/A | -$0.87 | | Distributions to Common Stockholders per Share | -$0.39 | N/A | -$0.49 | N/A | $0.10 | | Total Return (%) | (1.05)% | 2.36% | 3.70% | -3.41% | -4.75% | | Shares Outstanding (End of Period) (count) | 32,534,040 | 32,600,193 | 32,552,794 | -66,153 | -18,754 | | Net Assets (End of Period) | $515,807,254 | $537,844,969 | $558,537,164 | -$22,037,715 | -$42,729,910 | - The ratio of operating expenses to average net assets with waiver remained stable at 13.72% in Q1 2025 compared to 13.66% in Q1 2024[16] - The ratio of net investment income to average net assets with waiver decreased to 9.68% in Q1 2025 from 12.07% in Q1 2024[16] Consolidated Statement of Assets and Liabilities Total assets and liabilities decreased in Q1 2025, primarily due to reduced non-affiliated investments, leading to lower net assets Consolidated Assets and Liabilities | Asset/Liability | March 31, 2025 | December 31, 2024 | Change (QoQ) | | :------------------------------------------------ | :------------- | :---------------- | :----------- | | Non-controlled, non-affiliated investments (fair value) | $1,334,314,263 | $1,407,130,945 | -$72,816,682 | | Cash and cash equivalents | $2,872,420 | $2,766,409 | $106,011 | | Total Assets | $1,362,929,722 | $1,431,042,759 | -$68,113,037 | | Credit facilities (net) | $472,325,212 | $501,650,602 | -$29,325,390 | | Notes (net) | $302,126,552 | $302,505,057 | -$378,505 | | Payable for investments purchased | $54,828,596 | $67,460,523 | -$12,631,927 | | Distributions payable | $12,691,089 | $15,649,925 | -$2,958,836 | | Total Liabilities | $847,122,468 | $893,197,790 | -$46,075,322 | | Total Net Assets | $515,807,254 | $537,844,969 | -$22,037,715 | | Net Asset Value Per Common Share | $15.85 | $16.50 | -$0.65 | - The company had $20.2 million in unfunded commitments to portfolio companies as of March 31, 2025, a slight decrease from $21.6 million at December 31, 2024[22] Consolidated Statement of Operations Q1 2025 total investment income and net investment income declined, with significant net realized and unrealized losses impacting net assets Consolidated Statement of Operations Summary | Income/Expense Item | Q1 2025 | Q1 2024 | Change (YoY) | | :------------------------------------ | :----------- | :----------- | :----------- | | Interest income | $29,819,663 | $33,259,959 | -$3,440,296 | | Dividend income | $574,336 | $1,254,696 | -$680,360 | | Payment-in-kind interest income | $507,850 | $0 | $507,850 | | Total Investment Income | $31,214,279 | $34,784,943 | -$3,570,664 | | Incentive fees | $1,842,706 | $1,924,752 | -$82,046 | | Interest expense | $12,969,757 | $13,178,830 | -$209,073 | | Management fees | $2,333,675 | $2,416,239 | -$82,564 | | Total Expenses | $18,301,128 | $18,517,225 | -$216,097 | | Net Investment Income (Loss) | $12,913,151 | $16,318,229 | -$3,405,078 | | Net realized gains (losses) | -$5,894,493 | -$1,736,331 | -$4,158,162 | | Net change in unrealized gains (losses) | -$15,407,869 | $8,298,242 | -$23,706,111 | | Total realized and unrealized gains (losses) | -$21,302,362 | $6,561,911 | -$27,864,273 | | Net Increase (Decrease) in Net Assets from Operations | -$8,389,211 | $22,880,140 | -$31,269,351 | | Basic and diluted net investment income per common share | $0.40 | $0.52 | -$0.12 | - The company recorded $507,850 in Payment-in-kind (PIK) interest income in Q1 2025, compared to none in Q1 2024[24] Portfolio and Investment Activity Portfolio Composition and Characteristics The Q1 2025 portfolio, valued at $1.3 billion, comprised 260 investments, mostly floating-rate senior secured debt across 209 companies Portfolio Composition and Key Characteristics | Metric | As of March 31, 2025 | As of December 31, 2024 | As of March 31, 2024 | | :------------------------------------ | :------------------- | :-------------------- | :------------------- | | Total Fair Value of Investments | $1,334,314,000 | $1,407,131,000 | $1,393,192,000 | | Number of Industries | 39 | 38 | 39 | | Number of Portfolio Companies | 209 | 207 | 211 | | Portfolio Yield (%) | 10.37% | 10.65% | 10.11% | | Senior Secured Loan % (%) | 96% | 96% | 96% | | Investments on Non-Accrual % (%) | 0.24% | 0.08% | 0.00% | - As of March 31, 2025, the portfolio's fair value composition included 86.2% first lien senior secured debt, 5.4% second lien senior secured debt, 4.3% short-term investments, 3.3% CLOs mezzanine and equity, 0.3% corporate bonds, and 0.5% equity investments[6] - 98% of long-term investments were at floating rates, and 99.76% of the portfolio at fair value was income producing. The weighted average total yield to maturity of debt and income producing securities at fair value was 10.37%, and at amortized cost was 8.48%[7] Investment Transaction Details Q1 2025 saw $104.3 million in new investments, offset by $144.4 million in sales/repayments, resulting in a net decrease in total investments Investment Transaction Summary | Investment Activity | Q1 2025 | Q1 2024 | Change (YoY) | | :------------------------------------ | :----------- | :----------- | :----------- | | Gross investments funded | $104,323,107 | $346,482,823 | -$242,159,716 | | Investments sold/repaid | $144,369,364 | $69,556,336 | $74,813,028 | | Total new investments (net) | -$40,046,257 | $276,926,487 | -$316,972,744 | | Number of new investment commitments (count) | 23 | 36 | -13 | | Average new investment commitment amount (USD) | $3,855,336 | $4,052,057 | -$196,721 | | Weighted average maturity for new commitments (years) | 5.59 years | 6.18 years | -0.59 years | | % of new debt investments at floating rates (%) | 100.00% | 100.00% | 0.00% | | Weighted average interest rate of new commitments (%) | 8.52% | 10.19% | -1.67% | | Weighted average spread over reference rate of new floating rate commitments (%) | 4.21% | 4.81% | -0.60% | | Weighted average interest rate on long-term investments sold/paid down (%) | 8.33% | 7.99% | 0.34% | - New investments funded in Q1 2025 primarily consisted of $97.4 million in first-lien senior secured debt investments and $6.9 million in common stock[29] - Sales and repayments in Q1 2025 were predominantly from first-lien senior secured debt investments ($138.0 million)[29] Liquidity and Capital Resources As of March 31, 2025, the company held $2.9 million in cash and $229.5 million in available liquidity against $20.2 million in undrawn investment commitments Liquidity and Capital Resources Overview | Metric | As of March 31, 2025 | As of December 31, 2024 | | :------------------------------------ | :------------------- | :-------------------- | | Cash and cash equivalents | $2.9 million | $2.8 million | | Total aggregate principal debt outstanding | $774.5 million | N/A | | Available liquidity (cash + undrawn credit) | $229.5 million | N/A | | Undrawn investment commitments | $20.2 million | $21.6 million | Recent Developments The Board declared a Q2 2025 base dividend of $0.36 per share, payable July 14, 2025, with an additional supplemental dividend expected - On May 07, 2025, PSBD's Board of Directors declared a Q2 2025 regular base dividend of $0.36 per share, payable on July 14, 2025, to shareholders of record as of June 27, 2025[9] - The company expects to announce an additional quarterly supplemental dividend distribution for the second quarter of 2025 in June[9] Additional Information About Palmer Square Capital BDC Inc. PSBD is an externally managed BDC aiming to maximize total return through corporate debt loans in syndicated and direct large-cap private credit - PSBD is an externally managed, non-diversified closed-end management investment company regulated as a BDC[12] - The company's investment objective is to maximize total return, comprising current income and capital appreciation[12] - PSBD primarily invests in corporate debt loans, including large private U.S. companies in the broadly syndicated loan market and direct large-cap private credit market, and to a lesser extent, other debt securities like CLO debt and equity[12] Forward-Looking Statements The press release contains forward-looking statements on future performance and dividends, subject to risks, not guarantees, and not updated unless legally required - The press release includes forward-looking statements about future base and supplemental dividend distributions and the prospects of portfolio companies[13] - These statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially[13] - PSBD undertakes no duty to update any forward-looking statement unless required by law[13] Earnings Conference Call & Contacts An earnings conference call is scheduled for May 07, 2025, at 1:00 pm ET, with online registration and contact details provided - A conference call to review financial performance and conduct a Q&A session will be held on Wednesday, May 07, 2025, at 1:00 pm ET[11] - Participants can register online via the Palmer Square Investor Relations website, and a replay will be available after the event[11] - Contact details for investor relations (Matt Bloomfield and Jeremy Goff) and media (Josh Clarkson of Prosek Partners) are provided[14]