Owl Rock(US:OBDC)2025-08-06 20:05PART I FINANCIAL INFORMATION Financial Statements For the six months ended June 30, 2025, Blue Owl Capital Corporation reported total assets of $17.4 billion and net assets of $7.7 billion, with total investment income reaching $950.5 million, leading to a net increase in net assets from operations of $380.1 million, and the company's investment portfolio, valued at $16.9 billion, remains heavily concentrated in first-lien senior secured debt, with Net Asset Value (NAV) per share at $15.03 as of June 30, 2025 Consolidated Statements of Assets and Liabilities As of June 30, 2025, total assets increased to $17.4 billion from $13.9 billion at year-end 2024, driven by investment portfolio growth, while total liabilities rose to $9.7 billion from $7.9 billion due to increased debt, leading to total net assets growing to $7.7 billion from $6.0 billion, though Net Asset Value (NAV) per share slightly decreased to $15.03 from $15.26 Consolidated Statements of Assets and Liabilities Highlights (in thousands) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total investments at fair value | $16,868,782 | $13,194,545 | | Total Assets | $17,398,476 | $13,865,564 | | Total Debt (net) | $9,225,817 | $7,457,702 | | Total Liabilities | $9,716,079 | $7,912,723 | | Total Net Assets | $7,682,397 | $5,952,841 | | Net Asset Value Per Share | $15.03 | $15.26 | Consolidated Statements of Operations For the six months ended June 30, 2025, total investment income grew to $950.5 million from $796.3 million year-over-year, driven by higher interest income, with net investment income after taxes increasing to $418.0 million from $371.9 million, and the net increase in net assets from operations reaching $380.1 million, compared to $304.7 million in the prior year period, with earnings per share at $0.76 versus $0.78 Statement of Operations Summary (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total Investment Income | $950,489 | $796,337 | | Total Operating Expenses | $526,447 | $416,788 | | Net Investment Income After Taxes | $418,010 | $371,899 | | Total Net Realized and Change in Unrealized Gain (Loss) | $(37,873) | $(67,162) | | Net Increase in Net Assets from Operations | $380,137 | $304,737 | | Earnings Per Share - Basic and Diluted | $0.76 | $0.78 | Consolidated Schedules of Investments As of June 30, 2025, the company's total investment portfolio was valued at $16.87 billion, up from $13.19 billion at year-end 2024, primarily composed of debt investments in non-controlled/non-affiliated companies valued at $14.73 billion, with controlled/affiliated investments, including joint ventures, totaling $2.05 billion Portfolio Composition by Investment Type (June 30, 2025, Fair Value in thousands) | Investment Category | Fair Value | | :--- | :--- | | Non-controlled/non-affiliated investments | $14,726,112 | | Non-controlled/affiliated investments | $91,866 | | Controlled/affiliated investments | $2,050,804 | | Total Investments | $16,868,782 | - As of June 30, 2025, non-qualifying assets under the 1940 Act represented 13.0% of total assets, which is within the regulatory limit of 30%85 Consolidated Statements of Changes in Net Assets For the six months ended June 30, 2025, net assets increased by $1.73 billion, from $5.95 billion to $7.68 billion, primarily driven by a $1.76 billion increase from capital share transactions, largely due to the merger with OBDE, and a $380.1 million increase from operations, partially offset by $408.8 million in distributions to shareholders Changes in Net Assets (Six Months Ended June 30, 2025, in thousands) | Description | Amount | | :--- | :--- | | Net Assets, beginning of period | $5,952,841 | | Net Increase from Operations | $380,137 | | Distributions Declared | $(408,832) | | Net Increase from Capital Share Transactions | $1,758,251 | | Net Assets, end of period | $7,682,397 | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, the company generated $1.05 billion in cash from operating activities, a significant improvement from the $282.2 million used in the same period of 2024, while financing activities used $1.20 billion, mainly for net debt repayments and shareholder distributions, ending the period with a cash and restricted cash balance of $360.2 million Cash Flow Summary (Six Months Ended June 30, in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $1,049,576 | $(282,210) | | Net cash provided by (used in) financing activities | $(1,203,543) | $2,536 | | Net increase (decrease) in cash | $(153,967) | $(279,674) | Notes to Consolidated Financial Statements The notes provide detailed explanations of the company's accounting policies, related-party transactions, and financial instruments, with key disclosures including the company's status as a BDC and RIC, fair value methodology for illiquid investments, specifics of debt facilities and CLOs, and the accounting treatment of its January 2025 merger with Blue Owl Capital Corporation III (OBDE), which was treated as an asset acquisition resulting in an $82.9 million purchase discount - The company is regulated as a Business Development Company (BDC) under the 1940 Act and is treated as a Regulated Investment Company (RIC) for tax purposes177 - The merger with Blue Owl Capital Corporation III (OBDE) on January 13, 2025, was accounted for as an asset acquisition, resulting in a purchase discount of $82.9 million, which was allocated to the cost basis of the acquired investments513514518 - As of June 30, 2025, the company's asset coverage ratio was 181%, above the required minimum of 150%273 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's investment strategy, focusing on directly originated senior secured loans to U.S. middle-market companies, highlighting the impact of the OBDE merger which significantly increased portfolio size and debt obligations, while noting consistent portfolio credit quality with a focus on non-cyclical, recession-resistant industries, and deeming current liquidity sufficient for near-term obligations and unfunded commitments, with the portfolio valued at $16.87 billion and a net leverage ratio of 1.17x as of June 30, 2025 Overview Blue Owl Capital Corporation (OBDC) is a BDC and RIC managed by Blue Owl Credit Advisors LLC, aiming to generate current income and capital appreciation by investing in U.S. middle-market companies, and completed its merger with Blue Owl Capital Corporation III (OBDE) on January 13, 2025, with OBDC as the surviving company - The company's investment strategy focuses on originating loans and making debt/equity investments in U.S. middle-market companies526 - On January 13, 2025, the company consummated its merger with Blue Owl Capital Corporation III (OBDE)536 Portfolio and Investment Activity As of June 30, 2025, the portfolio was valued at $16.87 billion across 233 companies, with 75.8% in first-lien senior secured debt, a weighted average total yield of 10.1%, and net leverage of 1.17x, demonstrating high diversification with 83.6% of investments rated '2' (performing as expected), while five portfolio companies were on non-accrual status, representing 1.8% of the debt portfolio's amortized cost Portfolio Snapshot (as of June 30, 2025) | Metric | Value | | :--- | :--- | | Total Investments (Fair Value) | $16.87 billion | | Number of Portfolio Companies | 233 | | Weighted Average Total Yield | 10.1% | | Net Leverage (Debt-to-Equity) | 1.17x | Investment Rating Composition (June 30, 2025) | Rating | Description | % of Portfolio (Fair Value) | | :--- | :--- | :--- | | 1 | Performing above expectations | 7.8% | | 2 | Performing as expected | 83.6% | | 3 | Performing below expectations | 7.8% | | 4 | Materially below expectations | 0.2% | | 5 | Substantially below expectations | 0.6% | - As of June 30, 2025, investments on non-accrual status represented 1.8% of the total debt portfolio at amortized cost592 Results of Operations For the six months ended June 30, 2025, total investment income increased to $950.4 million from $796.3 million year-over-year, driven by a larger portfolio post-merger, while total operating expenses rose to $526.4 million from $416.8 million, mainly due to higher interest, management, and incentive fees, resulting in net investment income after taxes of $418.0 million and a net increase in net assets from operations of $380.2 million Operating Results Comparison (Six Months Ended June 30) | ($ in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Total Investment Income | $950.4 | $796.3 | | Total Operating Expenses | $526.4 | $416.8 | | Net Investment Income After Taxes | $418.0 | $371.8 | | Net Increase in Net Assets | $380.2 | $304.7 | - The increase in investment income and expenses for the six months ended June 30, 2025, was primarily due to the larger portfolio and increased borrowings resulting from the acquisition of OBDE610614 Financial Condition, Liquidity and Capital Resources The company's liquidity is sourced from investment cash flows, credit facilities, and debt issuances, with $360.2 million in cash and restricted cash and $3.74 billion available under its credit facilities as of June 30, 2025, maintaining an asset coverage ratio of 181% (above the 150% regulatory requirement), and management believes current liquidity is sufficient for near-term investing activities and operational needs - As of June 30, 2025, the company had $3.74 billion available under its credit facilities and an asset coverage ratio of 181%644645 - The company's target leverage ratio is 0.90x-1.25x556 - During the six months ended June 30, 2025, the company issued 200,603 shares for net proceeds of $3.1 million through its "at the market" offering program490650 Recent Developments Subsequent to the quarter-end, on August 5, 2025, the Board declared a third-quarter dividend of $0.37 per share and a supplemental dividend of $0.02 per share, while the company also repaid its July 2025 Notes, redeemed its CLO II debt, and upsized its revolving credit facility commitment to $3.825 billion - A third-quarter dividend of $0.37 per share and a supplemental dividend of $0.02 per share were declared on August 5, 2025863 - The company repaid its July 2025 Notes on July 22, 2025, and redeemed all classes of its CLO II debt on July 7, 2025864865 - On July 15, 2025, the revolving credit facility commitments were increased to $3.825 billion866 Quantitative and Qualitative Disclosures About Market Risk The company is exposed to several market risks, including valuation, interest rate, currency, credit, and inflation risk, with 97.6% of debt investments at floating rates to mitigate interest rate risk, and a sensitivity analysis indicating a 100 basis point increase in base rates would increase annual net income by approximately $81.6 million before income-based fees - The company's primary market risks are valuation, interest rate, currency, credit, and inflation867 - As of June 30, 2025, 97.6% of the company's debt investments by fair value had floating interest rates, which helps mitigate the impact of rising interest rates871 Annualized Impact of Interest Rate Changes on Net Income (as of June 30, 2025, in millions) | Basis Point Change | Impact on Net Income | | :--- | :--- | | +300 | $244.9 | | +200 | $163.2 | | +100 | $81.6 | | -100 | $(81.6) | | -200 | $(163.2) | | -300 | $(244.6) | Controls and Procedures The company's management, including the CEO and CFO, concluded that the disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of the end of the period covered by the report878 - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025879 PART II OTHER INFORMATION Legal Proceedings The company is not currently subject to any material legal proceedings, nor is it aware of any material legal proceedings being threatened against it - As of the report date, neither the company nor its Adviser is subject to any material legal proceedings881 Risk Factors This section directs readers to the comprehensive risk factors detailed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, for information on risks that could materially affect the business - The report refers to the Risk Factors section of the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, for a detailed discussion of potential risks882 Unregistered Sales of Equity Securities and Use of Proceeds For the quarter ended June 30, 2025, the company purchased 1,024,155 shares of its common stock in the open market at a weighted average price of $13.38 per share to satisfy its dividend reinvestment plan for shareholders who did not opt to receive cash dividends - During the quarter ended June 30, 2025, the company purchased 1,024,155 shares in the open market at an average price of $13.38 per share to fulfill obligations under its dividend reinvestment plan884 Defaults Upon Senior Securities There were no defaults upon senior securities during the reporting period - None885 Other Information During the fiscal quarter ended June 30, 2025, none of the company's directors or executive officers adopted or terminated any Rule 10b5-1 trading plans for the purchase or sale of company securities - No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the quarter887 Exhibits This section lists all exhibits filed with the Form 10-Q, including amendments to corporate bylaws, supplemental indentures for debt offerings, amendments to credit agreements, and required officer certifications - The report includes several exhibits, such as amendments to credit agreements, supplemental indentures, and certifications by the Principal Executive Officer and Principal Financial Officer887