PEARL DIVER CREDIT COMPANY INC.(PDCC) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q1 2025, the company reported investment income of $6 million or$0.89 per share, an increase of $600,000 or$0.08 per share from the prior quarter [13] - Total expenses for the quarter were $2.6 million or$0.38 per share, an increase of $600,000 or$0.08 per share, primarily due to interest expense on term preferred shares [13] - The net investment income was $3.4 million or$0.50 per share, while the net unrealized loss on investments was $9.6 million or$1.41 per share, leading to a net loss of $6.1 million or$0.90 per share [13][14] - As of March 31, 2025, total assets were $173.7 million and total net assets were$124.6 million, resulting in a net asset value per share of $18.33 [14] Business Line Data and Key Metrics Changes - The portfolio consists of 50 unique CLO positions managed by 33 distinct CLO managers, with approximately 1,700 unique loans across over 30 industry sectors [6] - The weighted average GAAP yield on the portfolio was 15.57$30.8 million in primary CLOs during Q1 2025, and approximately 9% of the portfolio was refinanced or reset [9] Market Data and Key Metrics Changes - In Q1 2025, $40.56 billion in new US CLOs were issued, and$96 billion in CLOs were refinanced [9] - The LSTA indexes trailing twelve-month default rate ended the first quarter at 82 basis points, 11 basis points lower than at the end of 2024 [10] - The company noted that CLO portfolios experienced credit stresses at roughly half the default rate of the broader market [10] Company Strategy and Development Direction - The company aims to maximize total return while generating high current income through investments primarily in equity and junior debt tranches of CLOs [5] - The investment strategy focuses on maintaining a sustainable distribution policy and protecting net asset value (NAV) [5] - The company plans to utilize leverage opportunistically when attractive investment opportunities arise [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the CLO market's resilience despite tariff uncertainties and believes CLOs provide an efficient way to access senior secured corporate loans [16] - The company anticipates a slowdown in CLO primary issuance and refinancing activity but expects CLOs to capitalize on any loan market volatility [9][10] - Management noted that early signs show CLO managers have proactively reduced exposure to tariff-sensitive issuers [11] Other Important Information - The company distributed dividends of $0.22 per common share in January, February, and March, with plans to continue this distribution in April [14] - The annualized dividend yield based on the share price at the end of March was 13.9% [15] Q&A Session Summary - No specific questions or answers were documented in the provided content, as the Q&A session concluded without detailed interactions [17][18]