Crescent Capital BDC(US:CCAP)2025-05-15 17:02Financial Data and Key Metrics Changes - The company reported net investment income (NII) of $16.6 million or $0.45 per share for Q1 2025, down from $20.5 million or $0.55 per share in Q4 2024, primarily due to lower base rates, the roll-off of one-time items, and reduced dividend income from the Logan JV [5][23][24] - The increase in loans on non-accrual rose to 3.5% of debt investments at cost and fair value, with four new names added, representing less than 1.2% of the total portfolio at fair value [6][12] Business Line Data and Key Metrics Changes - Gross deployment in Q1 totaled $105 million, with 98% in first lien investments, compared to approximately $78 million in exits, resulting in a net deployment of approximately $27 million [17] - The weighted average yield of income-producing securities at cost decreased by 50 basis points quarter over quarter to 10.4% [20] Market Data and Key Metrics Changes - The company noted a slowdown in M&A activity due to tariff announcements, leading to a backlog of deal activity [8] - The overall direct material exposure of the portfolio to tariffs is modest at 4%, with a focus on service businesses with low material costs [18] Company Strategy and Development Direction - The company continues to focus on first lien loans, which represent 91% of the portfolio at fair value, and aims to invest in non-cyclical industries [11] - The management emphasized a disciplined credit underwriting approach and capital preservation, particularly in light of market volatility [30] Management's Comments on Operating Environment and Future Outlook - Management expressed that the current earnings reflect a near-term baseline, with potential tailwinds from asset-based facility repricing and rightsizing completed at the beginning of the quarter [6][7] - The company remains optimistic about its ability to weather potential volatility due to its diversified portfolio and strong relationships with private equity sponsors [20] Other Important Information - The company declared a regular dividend of $0.42 per share for Q2 2025, along with a special dividend related to undistributed taxable income [12][29] - The stockholders' equity was reported at $727 million, resulting in a net asset value per share of $19.62 [26] Q&A Session Summary Question: Regarding the new accruals this quarter, specifically New Era of Technology - Management clarified that the mark reflects the latest view on earnings outlook and that the company has not yet restructured [34][36] Question: What is Crescent's approach to resolving non-accrual situations? - Management stated that the primary goal is to preserve capital, and they consider various options including restructuring or selling the company [42][44] Question: Can you explain the significant decline in the Logan dividend? - Management explained that the decline was due to timing mismatches in cash distributions and the impact of overcollateralization tests within the CLO structure [50][56] Question: What percentage of the portfolio consists of Crescent-led deals? - Management indicated that about 8% of the total fair value consists of acquired assets, while 92% are loans originated by Crescent [46] Question: What is the sentiment towards the overall market and outlook for spreads? - Management noted significant inflows into non-traded BDCs, which are putting pressure on spreads, but they remain selective in their investment approach [78][82]