Crescent Capital BDC(US:CCAP)2023-02-23 20:44Financial Data and Key Metrics Changes - The net asset value per share at year-end was $19.83, a decrease of 1.6% from the prior quarter, primarily due to unrealized losses reflecting wider credit spreads in the market [2][61] - Adjusted net investment income per share for Q4 2022 was $0.49, up 17% from $0.42 in Q3 2022, driven by rising base rates and higher spreads [24][19] - Total investment income for Q4 reached $34.6 million, the highest quarterly figure since inception, representing a 19% increase from $29 million in the prior quarter [19][52] Business Line Data and Key Metrics Changes - The weighted average yield of income-producing securities at cost increased from 9.5% to 10.8% quarter-over-quarter, reflecting the impact of Federal Reserve interest rate hikes [33] - Over 99% of total debt investments at fair value made full scheduled principal and interest payments during the quarter [26] - The portfolio consisted primarily of senior secured first lien and unitranche loans, representing 90% of the portfolio at fair value, up from 89% in the prior quarter [59] Market Data and Key Metrics Changes - The debt-to-equity ratio was managed down to 1.08x from 1.11x at the end of Q3 2022 [53] - The weighted average interest rate on total borrowings was 6.23% as of year-end [53] - The company had $225 million of undrawn capacity and $17 million in cash and cash equivalents as of year-end [62] Company Strategy and Development Direction - The company is targeting the closing of a merger with First Eagle BDC, which is expected to enhance scale and position [27][54] - A proactive approach has been taken to bolster liquidity in select situations, indicating a focus on capital preservation [3][18] - The company remains well-positioned to navigate economic and market uncertainties, anticipating further market volatility [54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the health of the overall portfolio, noting that companies continue to grow on both the top and bottom lines despite inflationary pressures [46] - The company expects to generate high-quality top-line revenue primarily from recurring scheduled interest income [31] - Management acknowledged the potential for stress in the portfolio due to a slower U.S. economy correlated with higher interest rates [29] Other Important Information - The company declared a quarterly cash dividend of $0.41 per share for Q1 2023, payable on April 17, 2023 [16][62] - The total investment portfolio held steady at approximately $1.3 billion as of December 31, 2022, down about $30 million quarter-over-quarter [52] Q&A Session Summary Question: Expectations on combined leverage post-acquisition - Management indicated that they intentionally delevered in Q4 in anticipation of the merger and expect to end up in the middle of their target leverage range of 1.1 to 1.4 on a pro forma basis [40] Question: Performance trends of portfolio companies - Management noted that overall portfolio health remains strong, with revenue growth outpacing EBITDA growth, attributed to inflationary pressures and labor market tightness [46]