Palmer Square BDC (PSBD) Earnings Transcript

Core Insights - Palmer Square Capital BDC reported a net investment income of $13.6 million or $0.43 per share for Q3 2025, exceeding the base dividend of $0.36 per share and total dividend of $0.42 per share, which includes a supplemental distribution of $0.06 [5][26] - The company deployed $138.7 million in capital during the third quarter and generated total investment income of $31.7 million, down 15.1% from the previous year [26][18] - The NAV per share as of September 30, 2025, was $15.39, a decrease from $15.68 at the end of 2025 [27] Financial Performance - Total investment income for Q3 2025 was $31.7 million, down from $37.3 million in the same period last year [26] - Total net expenses decreased to $18 million from $21.6 million year-over-year [26] - The company experienced total net realized and unrealized losses of $10.3 million, compared to $8.2 million in the prior year [26] Investment Strategy - The company focuses on a distribution strategy that maximizes cash returns to investors, paying out nearly all excess earnings as supplemental dividends [5] - The investment portfolio had a fair value of approximately $1.26 billion across 42 industries, with a weighted average total yield to maturity of 10.07% [18][19] - The portfolio is 95% senior secured, with an average hold size of approximately $5 million, contributing to a strong credit profile [20] Market Outlook - The company noted early signs of improvement in deal activity, with a healthier mix of opportunities in both syndicated and private credit markets [11][12] - The recent $55 billion take-private of Electronic Arts and the $18 billion take-private of Hologic indicate a strong market appetite for high-quality transactions [12] - The company remains cautiously optimistic about the environment, anticipating continued refinancing activity and potential M&A growth [15][16] Shareholder Alignment - The Board approved an additional $5 million for open market share repurchases, complementing the existing stock repurchase plan [25] - The management fee structure is based on net asset value rather than gross assets, aligning the interests of the management team with those of shareholders [24] - The company emphasizes transparency by disclosing NAV on a monthly basis, providing shareholders with regular insights into performance [6]