Workflow
Carlyle Secured Lending(CGBD) - 2024 Q3 - Earnings Call Transcript
CGBDCarlyle Secured Lending(CGBD)2024-11-06 18:39
Filings
Slide

Financial Data and Key Metrics Changes - In Q3 2024, the company generated net investment income of 0.47pershareandadjustednetinvestmentincomeof0.47 per share and adjusted net investment income of 0.49 per share, reflecting a stable credit performance and a higher base rate environment [8][14] - The net asset value (NAV) as of September 30 was 16.85pershare,showingamodestdeclinefromthepreviousquarter[9]−Totalinvestmentincomeforthequarterwas16.85 per share, showing a modest decline from the previous quarter [9] - Total investment income for the quarter was 56 million, slightly lower than the prior quarter due to a lower average portfolio balance and lower weighted average yields [13] Business Line Data and Key Metrics Changes - The company reported a significant year-over-year increase in originations during Q3, with a growing pipeline expected to remain strong into 2025 [10] - The portfolio consisted of 175 investments in 128 companies across more than 25 industries, with 94% of investments in senior secured loans [11] Market Data and Key Metrics Changes - The company noted that new issue spreads stabilized in Q3 despite increased competition and cross-market refinancings [10] - The median EBITDA across the core portfolio at quarter end was 85million,indicatingstrongunderlyingperformance[12]CompanyStrategyandDevelopmentDirection−Thecompanyisfocusedonmaintainingahighlydiversifiedportfoliowhileincreasingoriginationactivity,withatargetleverageof1.1timesatmergerclose[21][28]−ThemergerwithCarlyleSecuredLendingIIIisexpectedtoclosebytheendofQ12025,whichwillenhancescale,liquidity,andoperationalefficiencies[22][23]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceintheabilitytomeetandexceedthe85 million, indicating strong underlying performance [12] Company Strategy and Development Direction - The company is focused on maintaining a highly diversified portfolio while increasing origination activity, with a target leverage of 1.1 times at merger close [21][28] - The merger with Carlyle Secured Lending III is expected to close by the end of Q1 2025, which will enhance scale, liquidity, and operational efficiencies [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to meet and exceed the 0.40 base dividend, although some contraction in earnings is expected due to lower base rates and tighter new issue spreads [16] - The overall credit quality remains stable, with non-accruals decreasing to 0.6% of total investments at fair value [18] Other Important Information - The company declared a total fourth quarter dividend of 0.45pershare,consistingofabasedividendof0.45 per share, consisting of a base dividend of 0.40 and a supplemental dividend of 0.05[9][15]−Thecompanysuccessfullyissued0.05 [9][15] - The company successfully issued 300 million of unsecured notes with a fixed rate of 6.75%, diversifying financing sources [20] Q&A Session Summary Question: Outlook on portfolio and balance sheet leverage - Management is optimistic about the pipeline and expects M&A activity to increase in Q4 and Q1 next year, with a current leverage of 0.9 times [27][28] Question: Repayment volume and origination dynamics - Management anticipates a reversal in repayment volume this quarter, with higher overall volume on the new deal side [31] Question: Trends in revenue growth and EBITDA - Management noted strong fundamentals with companies in the portfolio continuing to grow revenue and EBITDA, with growth rates stabilizing in the mid-single digits [36][40]