Carlyle Secured Lending(US:CGBD)2021-11-03 20:34Financial Data and Key Metrics Changes - The company reported a net asset value (NAV) per share of $16.65, an increase of $0.51 or 3.2% from the previous quarter's $16.14, and above the NAV reported in Q4 2019 [6] - Net investment income for the quarter was $21 million or $0.39 per common share, exceeding recent performance and guidance [29] - The total investment income for Q3 was $44 million, up from $43 million in the prior quarter, driven by an increase in core interest income [28] Business Line Data and Key Metrics Changes - The portfolio stands at just under $2 billion, with $270 million of new investments funded during the quarter [9] - The company repurchased $6.8 million of its common stock, resulting in $0.02 of accretion to NAV [7] - Total dividend income from joint ventures was $7.5 million, consistent with the last two quarters, yielding about 11% [31] Market Data and Key Metrics Changes - The company noted a robust activity in corporate transactional markets, with the third quarter being one of the busiest in its history [17] - The U.S. labor force participation rate remains approximately 2% below its pre-pandemic peak, impacting certain sectors [16] Company Strategy and Development Direction - The company aims to leverage the Carlyle platform to enhance its investment process, focusing on origination, credit, and portfolio management [12] - The strategy includes maintaining a high degree of investment selectivity and identifying conviction investments while ensuring a defensive approach to portfolio construction [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a complicated macro environment due to the COVID-19 Delta variant and global supply chain disruptions, but noted that borrowers are generally able to pass through cost increases [15][16] - The company expects continued positive fundamental performance and sees opportunities for improvements in non-accrual investments in 2022 [10] Other Important Information - The Board of Directors reapproved a stock repurchase authorization for $150 million, indicating ongoing confidence in the stock's valuation [8] - The company has maintained a stable non-accrual rate at 3.5% based on fair value, with no new non-accruals reported for five consecutive quarters [37] Q&A Session Summary Question: Impact of supply chain shortages and inflation on industry focus - Management indicated that while supply chain issues influence due diligence, they do not significantly change the industries targeted for new capital deployment [44][45] Question: Expectations for portfolio activity in Q4 - Management expects robust activity levels to continue into Q4, with typical seasonality affecting transaction timing [48][50] Question: Share repurchase strategy heading into 2022 - The company plans to continue steady repurchases, adjusting based on the discount to NAV [62] Question: Interest rate sensitivity and inflation impact - The portfolio primarily consists of floating-rate loans with LIBOR floors, which could affect earnings as interest rates rise [68]