Carlyle Secured Lending(US:CGBD)2022-02-21 16:00Part I Item 1. Business TCG BDC is an externally managed specialty finance company investing in U.S. middle-market secured debt, aiming for income and capital appreciation - TCG BDC, Inc. is an externally managed specialty finance company, regulated as a BDC and RIC, which began investment operations in May 2013 and IPO'd in June 201710 - The investment objective is to generate current income and capital appreciation through secured debt investments in U.S. middle-market companies with $25 million to $100 million EBITDA11 - Primary revenue sources include interest income from debt, dividends on equity, capital gains, and various loan origination fees14 - Investment activities are managed by Carlyle Global Credit Investment Management L.L.C., leveraging Carlyle's Global Credit segment with $73.4 billion in assets under management as of December 31, 2021172627 Portfolio Composition by Type (as of December 31, 2021 and 2020) | Type | 2021 (% of Fair Value) | 2020 (% of Fair Value) | | :--------------- | :--------------------- | :--------------------- | | First Lien Debt | 64.4 % | 67.0 % | | Second Lien Debt | 17.9 | 15.6 | | Equity Investments | 4.0 | 1.9 | | Investment Funds | 13.7 | 15.5 | | Total | 100.0 % | 100.0 % | First and Second Lien Debt Composition by Rate Type (as of December 31, 2021 and 2020) | Type | 2021 (% of Fair Value) | 2020 (% of Fair Value) | | :---------- | :--------------------- | :--------------------- | | Floating Rate | 98.4 % | 99.1 % | | Fixed Rate | 1.6 | 0.9 | | Total | 100.0 % | 100.0 % | Geographical Composition of Investments (as of December 31, 2021 and 2020) | Geography | 2021 (% of Fair Value) | 2020 (% of Fair Value) | | :------------- | :--------------------- | :--------------------- | | United States | 89.8 % | 91.7 % | | United Kingdom | 5.0 | 4.9 | | Canada | 2.5 | 1.4 | | Luxembourg | 2.0 | 1.6 | | Cyprus | 0.4 | 0.4 | | Italy | 0.3 | — | | Total | 100.0 % | 100.0 % | Top 3 Industry Concentrations (as of December 31, 2021) | Industry | % of Fair Value | | :------------------------- | :-------------- | | Investment Funds | 13.7 % | | Healthcare & Pharmaceuticals | 12.0 % | | Aerospace & Defense | 8.7 % | Item 1A. Risk Factors The company faces risks from market disruptions, economic uncertainty, adviser dependence, regulatory constraints, illiquid investments, and stock price volatility - The company operates amidst capital market disruption and economic uncertainty, with potential adverse effects from COVID-19, supply chain issues, and inflation141142145 - High dependence on the Investment Adviser creates significant potential conflicts of interest due to management of other funds and accounts149182184 - As a BDC and RIC, the company is subject to regulatory constraints like asset diversification and distribution requirements, limiting operating flexibility and investment choices155200 - Investments are risky, speculative, and generally illiquid, making valuation subjective, and many portfolio companies are highly leveraged, increasing default risk241245253 - Borrowing magnifies potential for gain or loss, and the 150% minimum asset coverage ratio can restrict dividends and capital raising, while interest rate changes may increase borrowing costs157174177 - The common stock market price may fluctuate significantly and has historically traded at a discount to NAV, with future sales below NAV potentially diluting existing stockholders294299304 Item 1B. Unresolved Staff Comments The company has no unresolved staff comments from the SEC - There are no unresolved staff comments314 Item 2. Properties The company's principal executive office is located at One Vanderbilt Avenue, Suite 3400, New York, NY 10017, and it does not own any real estate - The company's principal executive office is located at One Vanderbilt Avenue, Suite 3400, New York, NY 10017315 - The company does not own any real estate315 Item 3. Legal Proceedings The company is not currently subject to any material legal proceedings, nor is any material legal proceeding threatened against it - The Company is not currently subject to any material legal proceedings, nor is any material legal proceeding threatened against it316 Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable318 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities TCG BDC's common stock trades on Nasdaq under 'CGBD,' historically at a NAV discount, with quarterly dividends and a $150 million stock repurchase program - The company's common stock trades on The Nasdaq Global Select Market under 'CGBD' and has historically traded both above and below its NAV per share320 - As of February 18, 2022, the common stock closing price was $13.75 per share, representing an 18.7% discount to the NAV per share as of December 31, 2021320 - The company intends to distribute quarterly dividends, primarily from taxable earnings, to maintain its RIC qualification322323 - An 'opt-out' dividend reinvestment plan automatically reinvests cash dividends into additional common stock shares for non-electing stockholders325327 - A $150 million stock repurchase program was authorized until November 5, 2022, with $125.3 million repurchased as of December 31, 2021332 Common Stock Repurchases (Q4 2021) | Period | Total Number of Shares Purchased | Average Price Paid Per Share ($) | | :--------------------------------------- | :------------------------------- | :------------------------------- | | October 1, 2021 through October 31, 2021 | 158,751 | $13.83 | | November 1, 2021 through November 30, 2021 | 114,098 | $14.03 | | December 1, 2021 through December 31, 2021 | 299,141 | $13.86 | | Total | 571,990 | | Item 6. [Reserved] This item is reserved and contains no content - This item is reserved333 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes TCG BDC's financial condition, operations, and portfolio performance, including investment income, expenses, gains/losses, joint ventures, liquidity, and capital resources - The investment objective is to generate current income and capital appreciation through secured debt investments in U.