Blue Owl Capital Declines 5.5% Since Q3 Earnings Miss on High Costs

Core Insights - Blue Owl Capital Corporation (OBDC) shares have declined 5.5% following weaker-than-expected third-quarter results reported on Nov. 5, 2025, primarily due to elevated expenses and lower income from prepayments and debt investments [1][9] - The company has agreed to merge with OBDC II, with OBDC being the surviving entity [1][9] Financial Performance - OBDC reported third-quarter 2025 adjusted earnings per share (EPS) of 36 cents, missing the Zacks Consensus Estimate by 7.7%, and reflecting a year-over-year decrease of 23.4% [2][9] - Total investment income increased by 11.6% year over year to $453.1 million, although it fell short of the consensus mark by 1.8% [2] - Adjusted net investment income was $183.3 million, down 0.9% year over year [3] Investment Activity - New investment commitments totaled $1.3 billion across 13 new portfolio companies and 23 existing ones [3] - As of September 30, 2025, Blue Owl Capital had investments in 238 portfolio companies, with an aggregate fair value of $17.1 billion, resulting in an average investment size of $72 million per company [3] Expense and Asset Management - Total expenses rose by 19.5% year over year to $259.9 million, driven by higher interest expenses and management fees [4] - The adjusted net increase in net assets from operations was $128.2 million, a decrease of 5.3% year over year [4] Cash and Debt Position - As of September 30, 2025, Blue Owl Capital had a cash balance of $317.2 million, down from $505.7 million at the end of 2024 [5] - Total assets increased to $17.6 billion from $13.9 billion at the end of 2024, while debt rose to $9.5 billion from $7.5 billion [5] - The company had $2.9 billion of undrawn capacity under its credit facilities, with a net debt to equity ratio of 1.22X [5] Cash Flow and Dividends - Net operating cash flow for the first nine months of 2025 was $918.6 million, compared to a net cash usage of $285.7 million in the same period of the previous year [6] - The board declared a regular dividend of 37 cents per share for the third quarter of 2025, with no supplemental dividend announced [7] - A new share repurchase program was approved, allowing for the purchase of up to $200 million in shares over the next 18 months [7]