Investment Overview - Total investments as of June 30, 2025, amounted to $3,831,207,000, with a fair value of $3,785,496,000, representing 100% of total investments [344]. - First lien debt constituted 96.4% of total investments at fair value, totaling $3,650,847,000 [344]. - Second lien debt represented 1.9% of total investments at fair value, amounting to $71,721,000 [344]. - Other debt investments accounted for 0.3% of total investments at fair value, totaling $9,773,000 [344]. - Equity investments made up 1.4% of total investments at fair value, amounting to $53,155,000 [344]. - As of June 30, 2025, the number of portfolio companies increased to 214 from 208 as of December 31, 2024 [346]. - The distribution of investments by risk rating showed that 96.0% were rated as Risk Rating 2 as of June 30, 2025 [352]. - The average position size of investments decreased to $17.7 million as of June 30, 2025, from $18.2 million as of December 31, 2024 [346]. Revenue and Income - The company primarily generates revenue through interest income from debt investments, with additional income from dividends, capital gains, and various fees [336]. - Total investment income for the three months ended June 30, 2025, was $99,508, a decrease from $104,188 for the same period in 2024 [353]. - Net investment income after taxes for the six months ended June 30, 2025, was $89,885, compared to $110,772 for the same period in 2024 [353]. - The weighted average yield on debt and income-producing investments at cost decreased to 10.1% as of June 30, 2025, down from 10.4% as of December 31, 2024 [346]. Expenses and Financial Performance - The company expects its general and administrative expenses to remain stable or decline as a percentage of total assets during periods of asset growth [342]. - Total expenses for the three months ended June 30, 2025, were $55,651, compared to $47,567 for the same period in 2024 [356]. - Interest and other financing expenses increased to $34,707 for Q2 2025 from $29,302 in Q2 2024, primarily due to higher average borrowings [357]. - Average borrowings outstanding for Q2 2025 were $2,046,092, up from $1,578,492 in Q2 2024, while the average interest rate decreased from 6.57% to 6.02% [357]. - Base management fees rose to $9,624 for Q2 2025 from $6,479 in Q2 2024, attributed to an increase in average gross assets [358]. Debt and Leverage - As of June 30, 2025, total outstanding debt obligations were $3,175,000, with $2,054,188 outstanding principal [375]. - The weighted average net leverage through tranche increased to 5.9x as of June 30, 2025, from 5.8x as of December 31, 2024 [346]. - Approximately 99.6% of the company's debt investments were at floating rates as of June 30, 2025 [392]. Shareholder Actions and Distributions - Total distributions declared for the first half of 2025 amounted to $1.00 per share, with 839,047 shares involved, compared to 1,066,157 shares in the same period of 2024 [371]. - The company repurchased a total of 1,548,459 shares under its 10b5-1 Plan during the first half of 2025 [373]. - The Board declared a distribution of $0.50 per share, payable on or around October 24, 2025, to shareholders of record as of September 30, 2025 [378]. Management and Governance - On July 24, 2025, Michael Occi was appointed as CEO, succeeding Jeffrey Levin, who resigned [378]. - The Investment Committee currently comprises nine individuals, including newly appointed members Jon Spivak and Rebecca Shaoul [380]. Market and Regulatory Environment - The company is regulated as a Business Development Company (BDC) under the Investment Company Act of 1940 [333]. - The company has the ability to enter into negotiated co-investment transactions alongside certain Regulated Funds, subject to compliance with SEC regulations [337]. - The CLO transaction is anticipated to close on or about September 17, 2025, and is subject to overall asset coverage requirements under the Investment Company Act of 1940 [384]. - The company considers the valuation of investments as its most significant critical estimate, which is influenced by market yields and discount rates [385]. - The company is subject to financial market risks, including valuation risk, market risk, and interest rate risk, which could materially affect its operations [387]. Future Projections - The Issuer expects to issue approximately $401.2 million in aggregate principal amount of notes, including $182 million in Class A-1 Senior Secured Floating Rate Notes due 2037 [383]. - A hypothetical increase of 300 basis points in interest rates would result in a net income of $64.38 million, while a decrease of 300 basis points would lead to a net loss of $64.38 million [392]. - The company did not engage in interest rate hedging activities during the periods covered by this report [393].

Company Performance - Medallion Financial reported quarterly earnings of $0.46 per share, exceeding the Zacks Consensus Estimate of $0.3 per share, and showing an increase from $0.3 per share a year ago, resulting in an earnings surprise of +53.33% [1] - The company achieved revenues of $62.58 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 16.82% and up from $50.97 million year-over-year [2] - Over the last four quarters, Medallion Financial has consistently surpassed consensus EPS estimates [2] Future Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and future earnings expectations [3] - Current consensus EPS estimate for the upcoming quarter is $0.36 on revenues of $56.94 million, and for the current fiscal year, it is $1.59 on revenues of $229.99 million [7] - The estimate revisions trend for Medallion Financial was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Financial - SBIC & Commercial Industry, to which Medallion Financial belongs, is currently ranked in the bottom 37% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Medallion Financial's performance [5]

Group 1 - Roberts Berzins has over a decade of experience in financial management, assisting top-tier corporates in shaping financial strategies and executing large-scale financings [1] - Significant efforts have been made to institutionalize the REIT framework in Latvia to enhance the liquidity of pan-Baltic capital markets [1] - Development of national SOE financing guidelines and frameworks for channeling private capital into affordable housing stock has been a focus [1] Group 2 - Roberts Berzins is a CFA Charterholder and holds an ESG investing certificate, indicating a strong background in finance and sustainable investing [1] - Active involvement in "thought-leadership" activities supports the development of pan-Baltic capital markets [1]

[Company Announcement & Quarterly Highlights](index=1&type=section&id=Company%20Announcement%20%26%20Quarterly%20Highlights) This section provides an overview of Morgan Stanley Direct Lending Fund's first-quarter financial results, dividend declaration, and key operational metrics [Announcement](index=1&type=section&id=1.1%20Announcement) Morgan Stanley Direct Lending Fund (MSDL) announced its first-quarter financial results for March 31, 2025, and declared a regular dividend of $0.50 per share for Q2 2025 - Morgan Stanley Direct Lending Fund (MSDL) announced its first-quarter financial results for **March 31, 2025**[1](index=1&type=chunk)[2](index=2&type=chunk) - The company's Board of Directors declared a regular dividend of **$0.50 per share** for the second quarter of 2025[1](index=1&type=chunk)[7](index=7&type=chunk) [Quarterly Financial Highlights](index=1&type=section&id=1.2%20Quarterly%20Financial%20Highlights) The company reported key financial metrics for the first quarter ended March 31, 2025, including per share net investment income, earnings, dividends, and balance sheet data Key Financial Metrics | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Per Share Information** | | | | Net Investment Income per share | **$0.52** | **$0.57** | | Net Realized and Unrealized Gain (Loss) per share | **($0.18)** | **$0.01** | | Earnings per share | **$0.34** | **$0.58** | | Regular Dividend per share | **$0.50** | **$0.50** | | Special Dividend per share | — | **$0.10** | | **Balance Sheet Information (in thousands)** | | | | Investments (at fair value) | **$3,788,178** | **$3,791,494** | | Total Debt (at principal) | **$2,013,588** | **$1,983,401** | | Net Assets | **$1,817,807** | **$1,842,156** | | Net Asset Value per share | **$20.65** | **$20.81** | | Debt to Equity Ratio | **1.11x** | **1.08x** | | Net Debt to Equity Ratio | **1.07x** | **1.04x** | [Key Operational Highlights](index=1&type=section&id=1.3%20Key%20Operational%20Highlights) This quarter saw a decrease in net investment income and NAV per share, a slight increase in the debt-to-equity ratio, new investment commitments, and the establishment of an ATM offering program - Net investment income was **$46.2 million**, or **$0.52 per share**, down from **$50.7 million** or **$0.57 per share** in the prior quarter[7](index=7&type=chunk) - Net asset value per share was **$20.65**, a decrease from **$20.81** as of December 31, 2024[7](index=7&type=chunk) - The debt-to-equity ratio was **1.11x**, up from **1.08x** as of December 31, 2024[7](index=7&type=chunk) - New investment commitments totaled **$233.4 million**, fundings were **$205.6 million**, and sales and repayments were **$201.8 million**, resulting in **$3.8 million** of net capital deployed[7](index=7&type=chunk) - The company established an At-The-Market (ATM) offering program to sell common stock with an aggregate offering price of up to **$300 million**[7](index=7&type=chunk) [Detailed Financial Results](index=1&type=section&id=Detailed%20Financial%20Results) This section presents a comprehensive review of the company's operating performance, investment portfolio, and capital and liquidity position for the reporting period [Results of Operations](index=1&type=section&id=2.1%20Results%20of%20Operations) Total investment income slightly decreased this quarter due to lower benchmark rates, partially offset by higher repayment-related income, while total net expenses increased primarily from higher management and incentive fees [Investment Income and Expenses](index=1&type=section&id=2.1.1%20Investment%20Income%20and%20Expenses) Total investment income for the quarter decreased slightly due to lower benchmark rates, while total net expenses increased primarily from the end of fee waiver periods - Total investment income for the quarter ended March 31, 2025, was **$101.5 million**, down from **$103.0 million** for the quarter ended December 31, 2024, primarily due to lower benchmark rates, partially offset by higher repayment-related income[6](index=6&type=chunk) - Total net expenses for the quarter ended March 31, 2025, were **$55.2 million**, up from **$52.3 million** for the quarter ended December 31, 2024, mainly due to increased management and incentive fees after the expiration of fee waivers[7](index=7&type=chunk) [Net Investment Income and Earnings](index=2&type=section&id=2.1.2%20Net%20Investment%20Income%20and%20Earnings) Net investment income and earnings per share decreased this quarter, primarily due to a net unrealized depreciation in investments, partially offset by net realized gains Net Investment Income and Earnings (in millions) | Metric | Quarter Ended March 31, 2025 | Quarter Ended December 31, 2024 | | :--- | :--- | :--- | | Net Investment Income | **$46.2** | **$50.7** | | Net Investment Income per share | **$0.52** | **$0.57** | | Net Realized Gains | **$0.5** | — | | Net Unrealized Depreciation | **$17.1** | — | - Net unrealized depreciation on investments for the quarter ended March 31, 2025, was **$17.1 million**, partially offset by **$0.5 million** in net realized gains[9](index=9&type=chunk) [Portfolio and Investment Activity](index=2&type=section&id=2.2%20Portfolio%20and%20Investment%20Activity) As of March 31, 2025, the company's investment portfolio fair value was approximately $3.8 billion, predominantly composed of first lien debt, with increased new investment commitments and fundings, and a slight decrease in weighted average yield - As of March 31, 2025, the company's investment portfolio had a fair value of approximately **$3.8 billion**, comprising **210 portfolio companies** across **34 industries**, with an average investment size of **$18 million**[10](index=10&type=chunk) Investment Type Distribution | Investment Type | March 31, 2025 (% of Total) | December 31, 2024 (% of Total) | | :--- | :--- | :--- | | First Lien Debt | **96.3%** | **96.5%** | | Second Lien Debt | **1.9%** | **1.8%** | | Other Debt Investments | **0.3%** | **0.2%** | | Equity | **1.5%** | **1.5%** | | **Total** | **100.0%** | **100.0%** | Investment Activity (in thousands) | Investment Activity | Three Months Ended March 31, 2025 | Three Months Ended December 31, 2024 | | :--- | :--- | :--- | | New Investment Commitments (at par) | **$233,368** | **$188,269** | | Investment Fundings | **$205,647** | **$187,324** | | Number of New Portfolio Companies | **9** | **10** | | Number of Companies Exited or Fully Repaid | **7** | **2** | - The weighted average yield on debt securities at amortized cost and fair value was **10.2%** and **10.3%** respectively as of March 31, 2025, down from **10.4%** and **10.5%** as of December 31, 2024[10](index=10&type=chunk) - Floating rate debt investments constituted **99.6%** of the total portfolio at fair value as of March 31, 2025, consistent with the prior quarter, with certain investments in two portfolio companies on non-accrual status, representing **0.2%** of total investments at amortized cost[10](index=10&type=chunk) [Capital and Liquidity](index=2&type=section&id=2.3%20Capital%20and%20Liquidity) As of March 31, 2025, the company's total debt principal was $2.0136 billion, with a revised Truist credit facility extending maturity and increasing the total commitment, ensuring ample liquidity - As of March 31, 2025, the company's total debt principal was **$2.0136 billion**[11](index=11&type=chunk) - On February 25, 2025, the company amended its Truist credit facility, extending the maturity to **February 2030**, increasing the total commitment to **$1.45 billion**, and reducing the spread to **1.775%**[11](index=11&type=chunk) - The weighted average interest rate on debt was **6.11%** as of March 31, 2025[11](index=11&type=chunk) - As of March 31, 2025, the company had **$1.0841 billion** available under its credit facilities and **$65.6 million** in unrestricted cash[11](index=11&type=chunk) Debt to Equity Ratio | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Debt to Equity Ratio | **1.11x** | **1.08x** | [Shareholder & Corporate Actions](index=3&type=section&id=Shareholder%20%26%20Corporate%20Actions) This section details the company's share repurchase program, the establishment of an At-The-Market offering plan, and the latest dividend declaration [Share Repurchase Program](index=3&type=section&id=3.1%20Share%20Repurchase%20Program) The Board of Directors approved a revised $100 million share repurchase program, and the company repurchased a portion of its shares during the quarter - On February 27, 2025, the Board of Directors approved an amended and restated share repurchase program for up to **$100 million** (excluding prior repurchases)[13](index=13&type=chunk) - For the three months ended March 31, 2025, the company repurchased **491,332 shares** at an average price of **$20.38 per share**[13](index=13&type=chunk) [At-The-Market (ATM) Offering](index=3&type=section&id=3.2%20At-The-Market%20(ATM)%20Offering) The company established an ATM offering program for up to $300 million in common stock but did not issue any shares through this program in Q1 2025 - On March 28, 2025, the company entered into an equity distribution agreement to sell common stock with an aggregate offering price of up to **$300 million**[14](index=14&type=chunk) - No shares were issued under the ATM offering program for the three months ended March 31, 2025[15](index=15&type=chunk) [Dividend Declaration](index=3&type=section&id=3.3%20Dividend%20Declaration) The Board of Directors declared a regular dividend of $0.50 per share on May 8, 2025, payable on July 25, 2025, to shareholders of record as of June 30, 2025 - On May 8, 2025, the Board of Directors declared a regular dividend of **$0.50 per share**[16](index=16&type=chunk) - This dividend is payable on **July 25, 2025**, to shareholders of record as of **June 30, 2025**[16](index=16&type=chunk) [Additional Information](index=3&type=section&id=Additional%20Information) This section provides background on Morgan Stanley Direct Lending Fund, details for the upcoming conference call, forward-looking statement disclaimers, and contact information [About Morgan Stanley Direct Lending Fund](index=3&type=section&id=4.1%20About%20Morgan%20Stanley%20Direct%20Lending%20Fund) Morgan Stanley Direct Lending Fund (MSDL) is a non-diversified, externally managed specialty finance company focused on lending to middle-market companies, regulated as a business development company - MSDL is a non-diversified, externally managed specialty finance company focused on providing loans to **middle-market companies**[18](index=18&type=chunk) - MSDL has elected to be regulated as a Business Development Company (BDC) under the Investment Company Act of 1940, as amended[18](index=18&type=chunk) - MSDL is externally managed by MS Capital Partners Adviser Inc., an indirect wholly-owned subsidiary of Morgan Stanley[18](index=18&type=chunk) [Conference Call Information](index=3&type=section&id=4.2%20Conference%20Call%20Information) The company will host a conference call on May 9, 2025, to discuss financial results and conduct a Q&A session, offering both dial-in and webcast options - Morgan Stanley Direct Lending Fund will host a conference call on **May 9, 2025, at 10:00 AM ET**, to review its financial results and conduct a question-and-answer session[17](index=17&type=chunk) - Participants can join via an audio webcast or by dialing domestic/international numbers (**Domestic: 323-994-2093, International: 888-254-3590, Passcode: 221038**)[17](index=17&type=chunk)[20](index=20&type=chunk) [Forward-Looking Statements](index=3&type=section&id=4.3%20Forward-Looking%20Statements) The report contains forward-looking statements regarding future events or MSDL's performance and financial condition, which are subject to various risks and uncertainties - Statements in the report may constitute "forward-looking statements" concerning future events or MSDL's future performance or financial condition[19](index=19&type=chunk) - These statements are not guarantees of future performance, condition, or results and involve a number of risks and uncertainties[19](index=19&type=chunk) - MSDL undertakes no obligation to update any forward-looking statements[19](index=19&type=chunk) [Contacts](index=4&type=section&id=4.4%20Contacts) Investor and media contact information is provided for inquiries - Investor Contact: **Sanna Johnson (msdl@morganstanley.com)**[22](index=22&type=chunk) - Media Contact: **Alyson Barnes (212-762-0514, alyson.barnes@morganstanley.com)**[22](index=22&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's consolidated balance sheets and statements of operations, providing a detailed view of its financial position and performance [Consolidated Statements of Assets and Liabilities](index=5&type=section&id=5.1%20Consolidated%20Statements%20of%20Assets%20and%20Liabilities) The consolidated balance sheet as of March 31, 2025, and December 31, 2024, details the company's assets, liabilities, and net assets, including investments, cash, debt, and equity Consolidated Statements of Assets and Liabilities (in thousands) | Item | March 31, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | **Assets** | | | | Total Investments (at fair value) | **$3,788,178** | **$3,791,494** | | Cash and Cash Equivalents | **$69,400** | **$72,372** | | Deferred Financing Costs | **$19,847** | **$16,498** | | Interest and Dividends Receivable | **$26,934** | **$30,554** | | Other Assets | **$7,812** | **$1,100** | | **Total Assets** | **$3,912,171** | **$3,912,018** | | **Liabilities** | | | | Debt (net of unamortized issuance costs) | **$2,008,946** | **$1,973,479** | | Payables for Investments | **$2,096** | **$192** | | Due to Affiliates | **$11** | **$29** | | Dividends Payable | **$44,103** | **$53,229** | | Management Fees Payable | **$8,977** | **$7,042** | | Incentive Fees Payable | **$9,468** | **$8,956** | | Payable for Repurchased Shares | **$392** | — | | Interest Payable | **$16,366** | **$21,205** | | Other Liabilities | **$4,005** | **$5,730** | | **Total Liabilities** | **$2,094,364** | **$2,069,862** | | **Net Assets** | | | | Common Stock | **$88** | **$89** | | Paid-in Capital in Excess of Par | **$1,802,435** | **$1,812,443** | | Total Distributable Earnings (Loss) | **$15,284** | **$29,624** | | **Total Net Assets** | **$1,817,807** | **$1,842,156** | | **Net Asset Value per share** | **$20.65** | **$20.81** | [Consolidated Statements of Operations](index=6&type=section&id=5.2%20Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2025, total investment income slightly increased, but higher expenses and net unrealized depreciation led to lower net investment income and net asset increase from operations compared to the prior year Consolidated Statements of Operations (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Investment Income** | | | | Total Investment Income | **$101,458** | **$99,101** | | **Expenses** | | | | Interest and Other Financing Expenses | **$34,179** | **$27,260** | | Management Fees | **$9,618** | **$8,230** | | Incentive Fees | **$9,843** | **$11,336** | | Fee Waivers | **($1,016)** | **($4,308)** | | **Net Expenses** | **$54,603** | **$44,014** | | **Net Investment Income (Loss) Before Taxes** | **$46,855** | **$55,087** | | Excise Tax Expense | **$627** | **$436** | | **Net Investment Income (Loss) After Taxes** | **$46,228** | **$54,651** | | **Net Realized and Unrealized Gain (Loss)** | | | | Net Realized Gain (Loss) | **$549** | **($5,625)** | | Net Unrealized Appreciation (Depreciation) | **($17,107)** | **$2,658** | | **Total Net Realized and Unrealized Gain (Loss)** | **($16,558)** | **($2,967)** | | **Net Increase (Decrease) in Net Assets Resulting from Operations** | **$29,670** | **$51,684** | | **Net Investment Income per share** | **$0.52** | **$0.63** | | **Earnings per share** | **$0.34** | **$0.59** | | **Weighted Average Shares Outstanding** | **88,413,652** | **87,358,527** | - Total investment income for the three months ended March 31, 2025, was **$101.5 million**, an increase from **$99.1 million** in the prior year period[26](index=26&type=chunk) - Net expenses increased to **$54.6 million** from **$44.0 million** in the prior year period, primarily due to higher interest and other financing expenses, increased management fees, and reduced fee waivers[26](index=26&type=chunk) - Net investment income after taxes was **$46.2 million**, lower than **$54.7 million** in the prior year period[26](index=26&type=chunk) - Net unrealized depreciation for the quarter was **$17.1 million**, compared to net unrealized appreciation of **$2.7 million** in the prior year period, resulting in a total net realized and unrealized loss of **$16.6 million**[26](index=26&type=chunk)

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) Details the filing of Morgan Stanley Direct Lending Fund's Quarterly Report on Form 10-Q for Q1 2025, including key registrant information - Morgan Stanley Direct Lending Fund filed its Quarterly Report on Form 10-Q for the period ended March 31, 2025[1](index=1&type=chunk)[2](index=2&type=chunk) Table: Registrant Information | Indicator | Value | | :--- | :--- | | Registrant Name | Morgan Stanley Direct Lending Fund | | State of Incorporation | Delaware | | Commission File Number | 814-01332 | | Trading Symbol | MSDL | | Exchange | The New York Stock Exchange | | Filer Status | Accelerated filer | | Common Stock Outstanding (May 7, 2025) | 87,146,275 shares | [TABLE OF CONTENTS](index=2&type=section&id=TABLE%20OF%20CONTENTS) Outlines the report's structure into financial and other information, covering statements, analysis, risks, and controls - The report is structured into two main parts: Part I (Financial Information) and Part II (Other Information), detailing the company's financial statements, management's discussion and analysis, market risks, controls, legal proceedings, risk factors, equity sales, defaults, and exhibits[6](index=6&type=chunk) [Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) Presents the company's unaudited consolidated financial statements and management's discussion and analysis for the reporting period [Item 1. Consolidated Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents the unaudited consolidated financial statements for Morgan Stanley Direct Lending Fund, including statements of assets and liabilities, operations, changes in net assets, cash flows, schedules of investments, and comprehensive notes, providing a detailed financial overview for the quarter ended March 31, 2025, compared to prior periods [Consolidated Statements of Assets and Liabilities](index=3&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) Details the company's financial position, including total investments, assets, liabilities, and net assets, as of March 31, 2025, and December 31, 2024 Table: Consolidated Statements of Assets and Liabilities (in thousands) | Metric (in thousands) | March 31, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Total investments, at fair value | $3,788,178 | $3,791,494 | | Cash and cash equivalents | $69,400 | $72,372 | | Total assets | $3,912,171 | $3,912,018 | | Debt (net) | $2,008,946 | $1,973,479 | | Total liabilities | $2,094,364 | $2,069,862 | | Total net assets | $1,817,807 | $1,842,156 | | Net asset value per share | $20.65 | $20.81 | - Total net assets decreased by **$24.3 million** from December 31, 2024, to March 31, 2025, primarily due to a decrease in distributable earnings and common stock repurchases[9](index=9&type=chunk)[15](index=15&type=chunk) [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Presents the company's revenues, expenses, and net income from operations for the three months ended March 31, 2025, and 2024 Table: Consolidated Statements of Operations (in thousands) | Metric (in thousands) | For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total investment income | $101,458 | $99,101 | | Total expenses | $55,619 | $48,322 | | Management fees waiver | $(641) | $(3,098) | | Incentive fees waiver | $(375) | $(1,210) | | Net expenses | $54,603 | $44,014 | | Net investment income (loss) after taxes | $46,228 | $54,651 | | Net realized gain (loss) | $549 | $(5,625) | | Net change in unrealized appreciation (depreciation) | $(17,107) | $2,658 | | Net increase (decrease) in net assets from operations | $29,670 | $51,684 | | Net investment income (loss) per share | $0.52 | $0.63 | | Earnings per share | $0.34 | $0.59 | - Net investment income after taxes decreased by **$8.4 million** year-over-year, primarily due to higher net expenses and lower incentive fee waivers, despite an increase in total investment income[13](index=13&type=chunk)[332](index=332&type=chunk)[334](index=334&type=chunk) - The company experienced a net change in unrealized depreciation of **$17.1 million** in Q1 2025, a significant shift from the **$2.7 million** appreciation in Q1 2024, contributing to a lower net increase in net assets from operations[13](index=13&type=chunk)[341](index=341&type=chunk) [Consolidated Statements of Changes in Net Assets](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) Outlines the changes in the company's net assets, including operational results, distributions, and stock transactions, for the periods presented Table: Consolidated Statements of Changes in Net Assets (in thousands) | Metric (in thousands) | For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net assets at beginning of period | $1,842,156 | $1,721,151 | | Net increase in net assets from operations | $29,670 | $51,684 | | Total distributions to stockholders | $(44,010) | $(44,447) | | Repurchase of common stock | $(10,009) | — | | Issuance of common stock, net | — | $95,847 | | Reinvestment of dividends | — | $12,792 | | Total increase (decrease) in net assets | $(24,349) | $115,876 | | Net assets at end of period | $1,817,807 | $1,837,027 | | Dividends per share | $0.50 | $0.50 | - Net assets decreased by **$24.3 million** in Q1 2025, primarily due to distributions to stockholders and common stock repurchases, contrasting with a significant increase in Q1 2024 driven by common stock issuance and dividend reinvestment[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2025, and 2024 Table: Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $34,104 | $(53,655) | | Net cash provided by (used in) financing activities | $(37,062) | $48,712 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(2,958) | $(4,943) | | Cash, cash equivalents and restricted cash, end of period | $69,400 | $64,762 | | Excise tax paid | $2,567 | $1,457 | | Interest expense paid | $36,946 | $35,558 | | Reinvestment of dividends | — | $12,792 | - Operating activities generated **$34.1 million** in cash in Q1 2025, a significant improvement from a net cash outflow of **$53.7 million** in Q1 2024, primarily driven by higher proceeds from investment sales and principal repayments[17](index=17&type=chunk) - Financing activities resulted in a net cash outflow of **$37.1 million** in Q1 2025, a reversal from a net inflow of **$48.7 million** in Q1 2024, mainly due to common stock repurchases and no new stock issuance[17](index=17&type=chunk) [Consolidated Schedules of Investments](index=9&type=section&id=Consolidated%20Schedules%20of%20Investments) Provides a detailed breakdown of the company's investment portfolio by type, industry, geography, and risk characteristics as of March 31, 2025 Table: Investments by Type (Fair Value in thousands) | Investment Type | March 31, 2025 (Fair Value) | December 31, 2024 (Fair Value) | | :--- | :--- | :--- | | First Lien Debt | $3,652,320 | $3,654,538 | | Second Lien Debt | $71,190 | $69,367 | | Other Debt Investments | $9,603 | $9,198 | | Equity | $55,065 | $58,391 | | Total Investments | $3,788,178 | $3,791,494 | Table: Investments by Industry (% of Total Investments at Fair Value) | Industry | March 31, 2025 (% of Total Investments at Fair Value) | December 31, 2024 (% of Total Investments at Fair Value) | | :--- | :--- | :--- | | Software | 19.5% | 18.9% | | Insurance Services | 12.0% | 12.0% | | IT Services | 8.0% | 8.9% | | Commercial Services & Supplies | 8.6% | 9.1% | | Diversified Consumer Services | 4.9% | 4.7% | | Real Estate Management & Development | 4.1% | 3.6% | | Automobile Components | 3.1% | 3.0% | | Automobiles | 3.6% | 3.6% | | Financial Services | 2.6% | 2.5% | | Interactive Media & Services | 2.6% | 2.6% | | Construction & Engineering | 2.1% | 2.0% | | Electronic Equipment, Instruments & Components | 2.1% | 2.1% | | Food Products | 1.9% | 2.0% | | Health Care Technology | 1.7% | 1.6% | | Health Care Providers & Services | 4.9% | 5.0% | | Industrial Conglomerates | 1.3% | 1.2% | | Containers & Packaging | 1.2% | 1.2% | | Machinery | 1.0% | 0.9% | | Ground Transportation | 0.7% | 0.6% | | Consumer Staples Distribution & Retail | 0.7% | 0.7% | | Biotechnology | 0.7% | 0.7% | | Multi-Utilities | 0.6% | 0.6% | | Chemicals | 0.5% | 0.5% | | Air Freight & Logistics | 0.4% | 0.3% | | Building Products | 0.4% | 0.4% | | Aerospace & Defense | 2.2% | 2.2% | | Life Sciences Tools & Services | 0.3% | 0.3% | | Pharmaceuticals | 0.3% | 0.3% | | Wireless Telecommunication Services | 0.2% | 0.1% | | Electrical Equipment | 0.1% | 0.1% | | Beverages | 0.1% | — | | Total | 100.0% | 100.0% | Table: Geographic Composition of Investments (% of Total Investments at Fair Value) | Geographic Composition | March 31, 2025 (% of Total Investments at Fair Value) | December 31, 2024 (% of Total Investments at Fair Value) | | :--- | :--- | :--- | | United States | 95.2% | 95.4% | | Canada | 4.3% | 4.1% | | United Kingdom | 0.3% | 0.3% | | Australia | 0.2% | 0.2% | | Total | 100.0% | 100.0% | Table: Investment Characteristics | Investment Characteristic | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Number of portfolio companies | 210 | 208 | | Number of new investment commitments | 9 | 60 | | Number of portfolio companies exited or fully repaid | 7 | 24 | | Percentage of performing debt bearing a floating rate, at fair value | 99.6% | 99.6% | | Weighted average yield on debt and income producing investments, at cost | 10.2% | 10.4% | | Weighted average net leverage through tranche | 5.8x | 5.8x | | Weighted average interest coverage | 1.7x | 1.6x | | Weighted average loan to value | 39.7% | 39.7% | | Percentage of debt investments with one or more financial covenants | 62.5% | 64.6% | | Percentage of our debt investments that are sponsor backed | 99.1% | 99.7% | | Percentage of loans and other debt in support of LBOs and acquisitions | 71.8% | 69.2% | | Average position size of our investments | $18.0 million | $18.2 million | Table: Investment Risk Ratings (Fair Value in thousands) | Risk Rating | March 31, 2025 (Fair Value) | December 31, 2024 (Fair Value) | | :--- | :--- | :--- | | Risk rating 1 | $40,513 (1.1%) | $62,631 (1.7%) | | Risk rating 2 | $3,678,978 (97.1%) | $3,662,337 (96.6%) | | Risk rating 3 | $65,253 (1.7%) | $61,597 (1.6%) | | Risk rating 4 | $3,434 (0.1%) | $4,929 (0.1%) | | Total | $3,788,178 (100.0%) | $3,791,494 (100.0%) | Table: Investment Status (Amortized Cost in thousands) | Investment Status | March 31, 2025 (Amortized Cost) | December 31, 2024 (Amortized Cost) | | :--- | :--- | :--- | | Performing | $3,818,816 (99.8%) | $3,805,010 (99.8%) | | Non-accrual | $7,915 (0.2%) | $8,117 (0.2%) | | Total | $3,826,731 (100.0%) | $3,813,127 (100.0%) | [Notes to the Consolidated Financial Statements](index=88&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the consolidated financial statements, covering accounting policies, agreements, and investment specifics [(1) ORGANIZATION](index=88&type=section&id=(1)%20ORGANIZATION) Describes Morgan Stanley Direct Lending Fund as an externally managed BDC focused on U.S. middle-market lending, including its IPO details - Morgan Stanley Direct Lending Fund is a non-diversified, externally managed Business Development Company (BDC) focused on lending to U.S. middle-market companies, aiming for attractive risk-adjusted returns primarily through senior secured term loans[165](index=165&type=chunk)[167](index=167&type=chunk) - The company commenced investment operations in January 2020 and completed its initial public offering (IPO) on January 26, 2024, listing its common stock on the NYSE under the symbol 'MSDL'[166](index=166&type=chunk)[169](index=169&type=chunk) [(2) SIGNIFICANT ACCOUNTING POLICIES](index=89&type=section&id=(2)%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Outlines the key accounting principles and practices used in preparing the financial statements, including investment valuation and tax policies - The financial statements are prepared in accordance with U.S. GAAP for interim financial information and ASC Topic 946, Financial Services – Investment Companies[171](index=171&type=chunk) - Investments are generally placed on non-accrual status when there is reasonable doubt of full principal or interest collection, with accrued interest reversed and original issue discount/market discount accretion ceased[186](index=186&type=chunk) Table: Non-Accrual Investments (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Investments on non-accrual status (number of portfolio companies) | 2 | 2 | | Amortized cost of non-accrual investments (in thousands) | $7,915 | $8,117 | - The company evaluates tax positions to determine if they are 'more likely than not' to be sustained by tax authorities and accrues a **4%** nondeductible federal excise tax on undistributed income if distribution requirements are not met[193](index=193&type=chunk)[194](index=194&type=chunk) [(3) SIGNIFICANT AGREEMENTS AND RELATED PARTY TRANSACTIONS](index=93&type=section&id=(3)%20SIGNIFICANT%20AGREEMENTS%20AND%20RELATED%20PARTY%20TRANSACTIONS) Details agreements with the Investment Adviser, including fee structures and waivers, and outlines other transactions with affiliated entities - The company pays its Investment Adviser (MS Capital Partners Adviser Inc.) a Base Management Fee and an Incentive Fee, with certain waivers in effect for the period from January 24, 2024, to January 24, 2025[201](index=201&type=chunk)[203](index=203&type=chunk)[214](index=214&type=chunk) Table: Investment Advisory Fees (in thousands) | Fee Type (in thousands) | For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Base Management Fees (net of waiver) | $8,977 | $5,132 | | Income based incentive fees (net of waiver) | $9,468 | $10,126 | | Management fees payable (as of period end) | $8,977 | $7,042 | | Income based incentive fees payable (as of period end) | $9,468 | $8,956 | - MS Credit Partners Holdings, Inc., an affiliate of the Investment Adviser, holds approximately **11.1%** of the Company's outstanding common stock as of March 31, 2025[225](index=225&type=chunk) - Morgan Stanley & Co. LLC, an affiliate, served as an underwriter for the IPO and co-agent for private placements of notes, receiving fees for these services[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk) [(4) INVESTMENTS](index=97&type=section&id=(4)%20INVESTMENTS) Provides a detailed breakdown of the company's investment portfolio by type, cost, and fair value for the reporting periods Table: Investments by Type (Cost and Fair Value in thousands) - March 31, 2025 | Investment Type | March 31, 2025 (Cost) | March 31, 2025 (Fair Value) | % of Total Investments at Fair Value | | :--- | :--- | :--- | :--- | | First Lien Debt | $3,679,424 | $3,652,320 | 96.3% | | Second Lien Debt | $82,134 | $71,190 | 1.9% | | Other Debt Investments | $11,008 | $9,603 | 0.3% | | Equity | $54,165 | $55,065 | 1.5% | | Total | $3,826,731 | $3,788,178 | 100.0% | Table: Investments by Type (Cost and Fair Value in thousands) - December 31, 2024 | Investment Type | December 31, 2024 (Cost) | December 31, 2024 (Fair Value) | % of Total Investments at Fair Value | | :--- | :--- | :--- | :--- | | First Lien Debt | $3,669,886 | $3,654,538 | 96.5% | | Second Lien Debt | $78,803 | $69,367 | 1.8% | | Other Debt Investments | $9,755 | $9,198 | 0.2% | | Equity | $54,683 | $58,391 | 1.5% | | Total | $3,813,127 | $3,791,494 | 100.0% | - The portfolio remains heavily concentrated in First Lien Debt, accounting for over **96%** of total investments at fair value for both periods[230](index=230&type=chunk) [(5) FAIR VALUE MEASUREMENTS](index=99&type=section&id=(5)%20FAIR%20VALUE%20MEASUREMENTS) Explains the methodology for valuing investments, including the three-level hierarchy and the significant use of unobservable inputs - The company values investments using a three-level hierarchy based on input observability, with Level 3 inputs requiring significant management judgment for illiquid securities[235](index=235&type=chunk)[236](index=236&type=chunk) Table: Fair Value Hierarchy of Investments (in thousands) | Investment Category (Fair Value in thousands) | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | **March 31, 2025** | | | | | | First Lien Debt | $— | $20,641 | $3,631,679 | $3,652,320 | | Second Lien Debt | $— | $21,978 | $49,212 | $71,190 | | Other Debt Investments | $— | $— | $9,603 | $9,603 | | Equity | $— | $— | $37,872 | $37,872 | | Subtotal | $— | $42,619 | $3,728,366 | $3,770,985 | | Investment measured at net asset value | | | | $17,193 | | Total Investments | | | | $3,788,178 | | **December 31, 2024** | | | | | | First Lien Debt | $— | $51,329 | $3,603,209 | $3,654,538 | | Second Lien Debt | $— | $36,016 | $33,351 | $69,367 | | Other Debt Investments | $— | $— | $9,198 | $9,198 | | Equity | $— | $— | $41,198 | $41,198 | | Subtotal | $— | $87,345 | $3,686,956 | $3,774,301 | | Investment measured at net asset value | | | | $17,193 | | Total Investments | | | | $3,791,494 | - The vast majority of investments (over **98%**) are classified as Level 3, indicating reliance on unobservable inputs and significant management judgment for fair value determination[243](index=243&type=chunk) Table: Level 3 Investments - Valuation Techniques and Unobservable Inputs (March 31, 2025) | Asset Category (Level 3, March 31, 2025) | Fair Value (in thousands) | Valuation Technique | Significant Unobservable Input | Weighted Average | | :--- | :--- | :--- | :--- | :--- | | Investments in first lien debt | $3,628,634 | Yield Analysis | Discount Rate | 10.20% | | Investments in second lien debt | $46,149 | Yield Analysis | Discount Rate | 18.14% | | Other debt | $8,475 | Yield Analysis | Discount Rate | 14.77% | | Preferred equity | $18,930 | Income Approach | Discount Rate | 12.84% | | Common equity | $11,705 | Market Approach | EBITDA Multiple | 12.17x | [(6) DEBT](index=103&type=section&id=(6)%20DEBT) Details the company's debt obligations, including credit facilities and unsecured notes, along with associated interest rates and compliance Table: Debt Obligations (Outstanding Principal in thousands) | Debt Obligation (in thousands) | March 31, 2025 (Outstanding Principal) | December 31, 2024 (Outstanding Principal) | | :--- | :--- | :--- | | BNP Funding Facility | $316,000 | $316,000 | | Truist Credit Facility | $647,588 | $617,401 | | 2027 Notes | $425,000 | $425,000 | | 2025 Notes | $275,000 | $275,000 | | 2029 Notes | $350,000 | $350,000 | | Total | $2,013,588 | $1,983,401 | Table: Debt Interest Rates and Outstanding Amounts | Debt Metric | For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Combined weighted average interest rate | 6.11% | 6.69% | | Combined weighted average effective interest rate | 6.52% | 7.12% | | Combined weighted average debt outstanding (in thousands) | $2,030,967 | $1,462,796 | - The company was in compliance with all covenants and requirements of its credit facilities and unsecured notes as of March 31, 2025, and December 31, 2024[263](index=263&type=chunk) - The 2029 Notes include an interest rate swap agreement where the company receives a fixed rate of **6.413%** and pays a floating rate of SOFR + **2.37%** on **$350 million**, with a fair value of **$4.6 million** as of March 31, 2025[280](index=280&type=chunk) [(7) COMMITMENTS AND CONTINGENCIES](index=108&type=section&id=(7)%20COMMITMENTS%20AND%20CONTINGENCIES) Outlines the company's unfunded commitments for debt investments and other potential liabilities Table: Unfunded Commitments (in thousands) | Commitment Type (in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Unfunded commitments to fund delayed draw and revolving senior secured loans | $584,877 | $564,839 | - The company has unfunded commitments for debt investments, which are in the form of lines of credit or delayed draw commitments, requiring funding upon request by portfolio companies[284](index=284&type=chunk) [(8) NET ASSETS](index=108&type=section&id=(8)%20NET%20ASSETS) Details the components of net assets, including distributable earnings, equity issuance, and share repurchase activities Table: Distributable Earnings (Loss) (in thousands) | Distributable Earnings (Loss) (in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total distributable earnings (loss), beginning of period | $29,624 | $8,459 | | Net investment income (loss) after taxes | $46,228 | $220,235 | | Net realized gain (loss) | $549 | $(16,467) | | Net unrealized appreciation (depreciation) | $(17,107) | $11,796 | | Dividends declared | $(44,010) | $(195,729) | | Total distributable earnings (loss), end of period | $15,284 | $29,624 | - The company entered into Equity Distribution Agreements on March 28, 2025, to issue and sell up to **$300 million** of common stock through Sales Agents, with commissions up to **1.5%** of gross sales[287](index=287&type=chunk)[288](index=288&type=chunk) - The company adopted an 'opt out' Dividend Reinvestment Plan (DRIP) on January 26, 2024, allowing stockholders to reinvest cash dividends into additional common stock[290](index=290&type=chunk) Table: Share Repurchase Activity (January 1 - March 31, 2025) | Share Repurchase Activity (in thousands, except per share) | January 1 - March 31, 2025 | | :--- | :--- | | Total Number of Shares Purchased | 491,332 | | Average Price Paid per Share | $20.35 | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | 491,332 | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions) | $90.2 | [(9) EARNINGS (LOSS) PER SHARE](index=110&type=section&id=(9)%20EARNINGS%20(LOSS)%20PER%20SHARE) Presents the basic and diluted earnings per share, reflecting the net increase or decrease in net assets from operations Table: Earnings (Loss) Per Share (in thousands, except per share) | Metric | For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net increase/(decrease) in net assets resulting from operations (in thousands) | $29,670 | $51,684 | | Weighted average shares outstanding | 88,413,652 | 87,358,527 | | Basic and diluted earnings (loss) per share | $0.34 | $0.59 | - Earnings per share decreased from **$0.59** in Q1 2024 to **$0.34** in Q1 2025, reflecting a lower net increase in net assets from operations[295](index=295&type=chunk) [(10) CONSOLIDATED FINANCIAL HIGHLIGHTS](index=111&type=section&id=(10)%20CONSOLIDATED%20FINANCIAL%20HIGHLIGHTS) Summarizes key financial performance indicators, including net asset value, total return, and expense ratios, for the reporting periods Table: Consolidated Financial Highlights | Metric | For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net asset value, beginning of period | $20.81 | $20.67 | | Net investment income (loss) per share | $0.52 | $0.63 | | Net unrealized and realized gain (loss) per share | $(0.18) | $(0.05) | | Net increase (decrease) in net assets from operations per share | $0.34 | $0.58 | | Dividends declared per share | $(0.50) | $(0.50) | | Net asset value, end of period | $20.65 | $20.67 | | Per share market value, end of period | $19.96 | $21.55 | | Total return based on net asset value | 1.78% | 2.42% | | Total return based on market value | (0.90)% | 6.78% | | Ratio of net expenses to average net assets | 10.52% | 8.10% | | Ratio of net investment income to average net assets | 11.67% | 13.69% | | Asset coverage ratio | 190.00% | 223.00% | | Portfolio turnover rate | 5.46% | 2.21% | - The asset coverage ratio decreased from **223.00%** in Q1 2024 to **190.00%** in Q1 2025, while the ratio of net expenses to average net assets increased from **8.10%** to **10.52%**[296](index=296&type=chunk) [(11) SENIOR SECURITIES](index=112&type=section&id=(11)%20SENIOR%20SECURITIES) Provides details on the company's senior securities, including outstanding amounts and asset coverage per unit Table: Senior Securities Outstanding (in thousands) | Senior Security Class | March 31, 2025 (Total Amount Outstanding, in thousands) | December 31, 2024 (Total Amount Outstanding, in thousands) | | :--- | :--- | :--- | | 2025 Notes | $275,000 | $275,000 | | 2027 Notes | $425,000 | $425,000 | | 2029 Notes | $350,000 | $350,000 | | Truist Credit Facility | $647,588 | $617,401 | | BNP Funding Facility | $316,000 | $316,000 | | Asset Coverage per Unit (March 31, 2025) | $1,900 | $1,930 | | Asset Coverage per Unit (December 31, 2024) | $1,930 | $1,930 | - The asset coverage per unit for all senior securities was **$1,900** as of March 31, 2025, indicating the company's ability to cover its indebtedness[302](index=302&type=chunk)[303](index=303&type=chunk) [(12) SUBSEQUENT EVENTS](index=112&type=section&id=(12)%20SUBSEQUENT%20EVENTS) Reports significant events occurring after the reporting period, including the declaration of a dividend - On May 8, 2025, the Board declared a distribution of **$0.50** per share, payable on or around July 25, 2025, to shareholders of record as of June 30, 2025[305](index=305&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=113&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, and liquidity for the quarter ended March 31, 2025. It includes an overview of the business, key components of operating results, portfolio and investment activity, and a discussion of financial condition, liquidity, and capital resources, along with recent developments and critical accounting estimates [Overview](index=114&type=section&id=Overview) Introduces the company's business model as an externally managed BDC focused on U.S. middle-market senior secured term loans - Morgan Stanley Direct Lending Fund is a non-diversified, externally managed BDC focused on originating senior secured term loans for U.S. middle-market companies, primarily those with private equity sponsors[310](index=310&type=chunk)[311](index=311&type=chunk) - The company's investment objective is to achieve attractive risk-adjusted returns through current income and capital appreciation, with debt investments typically bearing floating interest rates and having a term of five to eight years[311](index=311&type=chunk)[312](index=312&type=chunk) - The company has exemptive relief from the SEC to co-invest with affiliates, subject to certain conditions and board approvals, and has applied for new exemptive relief[314](index=314&type=chunk)[315](index=315&type=chunk) [Key Components of Our Results of Operations](index=114&type=section&id=Key%20Components%20of%20Our%20Results%20of%20Operations) Explains the primary drivers of the company's financial performance, including investment income and operating expenses - Investment activity levels fluctuate based on factors like debt availability, economic conditions, and competitive environment[316](index=316&type=chunk) - Revenue is primarily generated from interest income on debt investments, with additional income from dividends, capital gains, and various loan-related fees[317](index=317&type=chunk)[318](index=318&type=chunk) - Primary operating expenses include investment advisory fees (base management and incentive fees), administrative service fees, and other general and administrative costs, which are expected to be relatively stable or decline as a percentage of total assets during growth periods[319](index=319&type=chunk)[320](index=320&type=chunk) [Portfolio and Investment Activity](index=116&type=section&id=Portfolio%20and%20Investment%20Activity) Reviews the composition and changes in the investment portfolio, including new investments, sales, and risk ratings Table: Investments by Type (Fair Value in thousands) | Investment Type | March 31, 2025 (Fair Value) | December 31, 2024 (Fair Value) | | :--- | :--- | :--- | | First Lien Debt | $3,652,320 | $3,654,538 | | Second Lien Debt | $71,190 | $69,367 | | Other Debt Investments | $9,603 | $9,198 | | Equity | $55,065 | $58,391 | | Total | $3,788,178 | $3,791,494 | Table: Investment Activity (Amortized Cost in thousands) | Investment Activity (at amortized cost, in thousands) | For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | New investments committed (Gross principal balance) | $233,368 | $232,120 | | Investments, beginning of period | $3,813,127 | $3,226,776 | | New investments purchased | $205,647 | $168,357 | | Investments sold or repaid | $(201,838) | $(71,681) | | Investments, end of period | $3,826,731 | $3,323,767 | - The Investment Adviser uses an internal risk rating system (**1-4**) to assess the risk profile of debt investments, with Risk Rating **1** being the least risky and Risk Rating **4** indicating substantial loss potential[326](index=326&type=chunk)[327](index=327&type=chunk)[328](index=328&type=chunk)[329](index=329&type=chunk) [Consolidated Results of Operations](index=118&type=section&id=Consolidated%20Results%20of%20Operations) Analyzes the company's financial performance, including investment income, expenses, and net changes in assets, for the reporting periods Table: Consolidated Results of Operations (in thousands) | Operating Result (in thousands) | For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total investment income | $101,458 | $99,101 | | Net expenses | $54,603 | $44,014 | | Net investment income (loss) after taxes | $46,228 | $54,651 | | Net realized gain (loss) | $549 | $(5,625) | | Net change in unrealized appreciation (depreciation) | $(17,107) | $2,658 | | Net increase (decrease) in net assets from operations | $29,670 | $51,684 | - Total investment income increased to **$101.5 million** in Q1 2025 from **$99.1 million** in Q1 2024, driven by capital deployment and an increase in the investment portfolio size, despite a decrease in weighted average yield at cost[332](index=332&type=chunk)[333](index=333&type=chunk) - Net expenses increased to **$54.6 million** in Q1 2025 from **$44.0 million** in Q1 2024, primarily due to higher interest and other financing expenses and increased management fees (net of waiver)[334](index=334&type=chunk)[335](index=335&type=chunk)[336](index=336&type=chunk) - The company recorded net realized gains of **$549 thousand** in Q1 2025, a positive shift from net realized losses of **$5.6 million** in Q1 2024, mainly due to equity position sales/repayments[340](index=340&type=chunk) - Net change in unrealized depreciation was **$17.1 million** in Q1 2025, primarily due to changes in secondary market spreads and financial performance of portfolio companies, contrasting with appreciation in Q1 2024[341](index=341&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=120&type=section&id=Financial%20Condition,%20Liquidity%20and%20Capital%20Resources) Assesses the company's financial health, cash position, available credit, and ability to meet commitments and funding needs - As of March 31, 2025, the company had **$65.6 million** in unrestricted cash and cash equivalents, along with **$284.0 million** and **$800.1 million** available under the BNP Funding Facility and Truist Credit Facility, respectively, deemed sufficient for near-term investing and operations[343](index=343&type=chunk) - The company believes it has adequate financial resources to satisfy **$584.9 million** in unfunded portfolio company commitments as of March 31, 2025[343](index=343&type=chunk) Table: Debt Obligations (Outstanding Principal in thousands) | Debt Obligation (in thousands) | March 31, 2025 (Outstanding Principal) | December 31, 2024 (Outstanding Principal) | | :--- | :--- | :--- | | BNP Funding Facility | $316,000 | $316,000 | | Truist Credit Facility | $647,588 | $617,401 | | 2027 Notes | $425,000 | $425,000 | | 2025 Notes | $275,000 | $275,000 | | 2029 Notes | $350,000 | $350,000 | | Total | $2,013,588 | $1,983,401 | [Recent Developments](index=122&type=section&id=Recent%20Developments) Highlights key events occurring after the reporting period, including bylaw amendments and dividend declarations - On April 23, 2025, the Board adopted the Second Amended and Restated Bylaws, removing sections related to Ratification and Interested Directors[356](index=356&type=chunk) - On May 8, 2025, the Board declared a distribution of **$0.50** per share, payable on or around July 25, 2025, to shareholders of record as of June 30, 2025[356](index=356&type=chunk) [Critical Accounting Estimates](index=122&type=section&id=Critical%20Accounting%20Estimates) Identifies the most significant accounting judgments, particularly the valuation of investments and its sensitivity to discount rates - The most significant critical accounting estimate is the valuation of investments, particularly the discount rate used in yield analysis, where increases in the rate would lead to significantly lower fair value measurements[357](index=357&type=chunk) [Related Party Transactions](index=122&type=section&id=Related%20Party%20Transactions) Describes the company's various business relationships and agreements with affiliated or related parties - The company has various business relationships with affiliated or related parties, including the Investment Advisory Agreement and the Administration Agreement[358](index=358&type=chunk)[363](index=363&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=122&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to financial market risks, including valuation risk, market risk, and interest rate risk, and discusses how these risks are managed or could impact financial performance - The company is subject to valuation risk due to its primary investments in illiquid debt and equity securities, which are valued at fair value by the Board with significant judgment[360](index=360&type=chunk) - Market risk affects the value of securities due to broad economic, political, and industry trends, with global interconnectedness increasing the potential for adverse impacts from various external events[361](index=361&type=chunk)[364](index=364&type=chunk) Table: Annualized Impact of Interest Rate Changes on Net Income (in thousands) | Basis Point Change - Interest Rates | Annualized Impact on Interest Income (in thousands) | Annualized Impact on Interest Expense (in thousands) | Annualized Impact on Net Income (in thousands) | | :--- | :--- | :--- | :--- | | Up 300 basis points | $113,731 | $(39,408) | $74,323 | | Up 200 basis points | $75,821 | $(26,272) | $49,549 | | Up 100 basis points | $37,910 | $(13,136) | $24,774 | | Up 25 basis points | $9,478 | $(3,284) | $6,194 | | Down 25 basis points | $(9,478) | $3,284 | $(6,194) | | Down 100 basis points | $(37,910) | $13,136 | $(24,774) | | Down 200 basis points | $(75,821) | $26,272 | $(49,549) | | Down 300 basis points | $(113,731) | $39,408 | $(74,323) | - As of March 31, 2025, approximately **99.6%** of the company's debt investments were at floating rates, making net investment income sensitive to interest rate changes[365](index=365&type=chunk)[366](index=366&type=chunk) [Item 4. Controls and Procedures](index=123&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal controls over financial reporting for the quarter ended March 31, 2025 - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[368](index=368&type=chunk) - There were no material changes in internal control over financial reporting during the fiscal quarter ended March 31, 2025[369](index=369&type=chunk) [Part II. Other Information](index=124&type=section&id=Part%20II.%20Other%20Information) Covers non-financial disclosures, including legal proceedings, risk factors, equity sales, defaults, and exhibits [Item 1. Legal Proceedings](index=124&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the company, its Adviser, and Administrator are not currently subject to any material legal proceedings, nor are any threatened - The company, its Adviser, and Administrator are not currently involved in any material legal proceedings, nor are any material legal proceedings threatened against them[370](index=370&type=chunk) [Item 1A. Risk Factors](index=124&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the risk factors previously disclosed in the Annual Report on Form 10-K, noting that additional unknown or immaterial risks may also affect the business - Readers should carefully consider the risk factors disclosed in Item 1A of the Annual Report on Form 10-K, as these, along with other unknown or currently immaterial risks, could materially affect the company's business, financial condition, and operating results[371](index=371&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=124&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's share repurchase activities under its 10b5-1 plans for the three months ended March 31, 2025 Table: Share Repurchase Activity (January 1 - March 31, 2025) | Share Repurchase Activity (in thousands, except per share) | January 1 - March 31, 2025 | | :--- | :--- | | Total Number of Shares Purchased | 491,332 | | Average Price Paid per Share | $20.35 | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | 491,332 | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions) | $90.2 | - The company repurchased **491,332** shares of common stock for an average price of **$20.35** per share during the three months ended March 31, 2025, under its Original and Amended and Restated 10b5-1 Plans[374](index=374&type=chunk) [Item 3. Defaults Upon Senior Securities](index=124&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities - There were no defaults upon senior securities during the reporting period[375](index=375&type=chunk) [Item 4. Mine Safety Disclosures](index=124&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[375](index=375&type=chunk) [Item 5. Other Information](index=124&type=section&id=Item%205.%20Other%20Information) This section confirms that none of the company's directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the fiscal quarter ended March 31, 2025 - No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans for the purchase or sale of company securities during the fiscal quarter ended March 31, 2025[376](index=376&type=chunk) [Item 6. Exhibits](index=125&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the report, including corporate governance documents, equity distribution agreements, and certifications - Key exhibits filed include the Certificate of Amendment to Certificate of Incorporation, Second Amended and Restated Bylaws, Form of Equity Distribution Agreement, and various certifications from the Chief Executive Officer and Chief Financial Officer[376](index=376&type=chunk) [SIGNATURES](index=126&type=section&id=SIGNATURES) Confirms the official signing of the report by the company's Chief Executive Officer and Chief Financial Officer - The report was signed on May 8, 2025, by Jeffrey S. Levin, Director and Chief Executive Officer, and David Pessah, Chief Financial Officer[378](index=378&type=chunk)

This quarterly report represents an earnings surprise of 1.56%. A quarter ago, it was expected that this business development company would post earnings of $0.67 per share when it actually produced earnings of $0.66, delivering a surprise of -1.49%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. FS KKR Capital, which belongs to the Zacks Financial - SBIC & Commercial Industry industry, posted revenues of $400 million for the quarter ended March 2025, surpassing ...

Core Viewpoint - Gladstone Investment (GAIN) is anticipated to report a year-over-year decline in earnings despite an increase in revenues for the quarter ending March 2025, with the consensus outlook indicating a potential impact on its near-term stock price [1][2]. Earnings Expectations - The upcoming earnings report is expected to reveal quarterly earnings of $0.23 per share, reflecting a year-over-year decrease of 4.2%, while revenues are projected to be $24.78 million, an increase of 4.8% from the previous year [3]. - The consensus EPS estimate has been revised down by 1.43% over the last 30 days, indicating a bearish sentiment among analysts regarding the company's earnings prospects [4][10]. Earnings Surprise Prediction - The Zacks Earnings ESP model shows a negative Earnings ESP of -1.43%, suggesting that the Most Accurate Estimate is lower than the Zacks Consensus Estimate, complicating predictions of an earnings beat [11][10]. - The company currently holds a Zacks Rank of 3 (Hold), which further indicates uncertainty regarding the likelihood of surpassing the consensus EPS estimate [11]. Historical Performance - In the last reported quarter, Gladstone Investment was expected to post earnings of $0.24 per share but delivered only $0.23, resulting in a surprise of -4.17% [12]. - The company has not exceeded consensus EPS estimates in any of the last four quarters, highlighting a trend of underperformance [13]. Industry Comparison - In comparison, Morgan Stanley Direct Lending Fund (MSDL), another player in the Zacks Financial - SBIC & Commercial Industry, is expected to report earnings of $0.56 per share for the same quarter, reflecting a year-over-year decline of 11.1%, with revenues anticipated at $103.52 million, up 4.5% [17]. - Similar to Gladstone Investment, Morgan Stanley Direct Lending Fund has a negative Earnings ESP of -3.57% and a Zacks Rank of 3, making it difficult to predict an earnings beat [18].

Group 1 - Golub Capital BDC (NASDAQ: GBDC) has maintained a premium to its net asset value for most of 2024, indicating strong market performance [1] - The company is highlighted as a favorite position in the sector, suggesting confidence in its investment potential [1] - The focus on dividend investing is emphasized as a key strategy for achieving financial freedom, reflecting the company's commitment to providing steady income [1] Group 2 - The author has a beneficial long position in GBDC and other related stocks, indicating a personal investment interest that aligns with the analysis presented [2] - The article expresses personal opinions and insights, reinforcing the subjective nature of the analysis [2]

Core Viewpoint - Morgan Stanley Direct Lending Fund (MSDL) is anticipated to report a year-over-year decline in earnings despite an increase in revenues for the quarter ended March 2025, which could significantly influence its stock price depending on the actual results compared to estimates [1][2]. Earnings Expectations - The upcoming earnings report is expected to show quarterly earnings of $0.56 per share, reflecting an 11.1% decrease year-over-year, while revenues are projected to be $103.52 million, representing a 4.5% increase from the previous year [3]. - The consensus EPS estimate has been revised down by 0.88% over the last 30 days, indicating a reassessment by analysts regarding the company's earnings prospects [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate for Morgan Stanley Direct Lending Fund is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -3.57%, which suggests a bearish outlook from analysts [11]. - The stock currently holds a Zacks Rank of 4, making it challenging to predict a positive earnings surprise [11]. Historical Performance - In the last reported quarter, the company was expected to post earnings of $0.63 per share but only achieved $0.57, resulting in a surprise of -9.52% [12]. - Over the past four quarters, the company has only beaten consensus EPS estimates once [13]. Industry Comparison - Another company in the same industry, Palmer Square Capital BDC Inc. (PSBD), is expected to report earnings of $0.44 per share for the same quarter, indicating a year-over-year decline of 15.4%, with revenues projected to decrease by 6.6% to $32.5 million [17]. - Palmer Square Capital BDC Inc. also has a negative Earnings ESP of -1.15% and a Zacks Rank of 3, making it difficult to predict an earnings beat [18].

Core Insights - The establishment of a separate investment account for BDC investments aims to enhance tracking and performance measurement of BDCs [1] Group 1: Investment Strategy - The investment account is designed to share progress and insights regarding BDC investments with stakeholders [1] Group 2: Analyst Background - Roberts Berzins has over a decade of experience in financial management, focusing on corporate financial strategies and large-scale financings [1] - Significant contributions include institutionalizing the REIT framework in Latvia to improve liquidity in pan-Baltic capital markets [1] - Involvement in developing national SOE financing guidelines and frameworks for private capital in affordable housing [1] - Holds a CFA Charter and an ESG investing certificate, with experience from an internship at the Chicago Board of Trade [1] - Actively participates in thought-leadership activities to support the development of pan-Baltic capital markets [1]