Crescent Capital BDC(US:CCAP)2026-02-26 18:02Financial Data and Key Metrics Changes - For the fourth quarter, the company reported net investment income of $0.45 per share, a slight decrease from $0.46 in the prior quarter [3][16] - Net asset value (NAV) per share declined to $19.10 as of December 31, down from $19.28 at the end of the third quarter, primarily due to unrealized losses from certain portfolio companies [3][16] - The company ended the year with a net debt to equity ratio of 1.20 times, below the upper end of the target range of 1.30 times, preserving flexibility for portfolio growth [5] Business Line Data and Key Metrics Changes - The investment portfolio at fair value totaled approximately $1.6 billion across 184 companies, with an average investment size of about 0.6% of the total portfolio [9] - The weighted average yield on income-producing securities at cost decreased by 40 basis points quarter-over-quarter, ending the year at 10% [12] - Non-accruals increased from 3.3% and 1.6% as of September 30 to 4.1% and 2% as of December 31, driven by two new non-accrual investments [14] Market Data and Key Metrics Changes - The private credit market remains competitive, with strong capital formation and a growing number of lenders competing for high-quality transactions, resulting in tighter spreads [7][8] - The company noted subdued exit activity in private equity over the past three years, with sponsors favoring recapitalizations and dividend transactions [8] Company Strategy and Development Direction - The company emphasizes capital preservation and is actively managing the portfolio to maintain long-term NAV stability [4] - The focus remains on disciplined underwriting, diversified positioning, and investing in senior secured sponsor-backed companies [4][20] - The management team is evaluating options to enhance earnings durability and align with shareholder interests, including a review of the fee structure and dividend levels [26][27] Management's Comments on Operating Environment and Future Outlook - The management expressed optimism about the long-term outlook for private credit, emphasizing the importance of disciplined underwriting and active portfolio management [9] - The company is navigating a dynamic environment with expectations of lower base rates impacting yields, but remains well-positioned for stability [20] - Management acknowledged the earnings headwinds facing the BDC space due to forward base rate expectations and is reviewing strategies to ensure durable earnings [7][20] Other Important Information - The company declared a quarterly cash dividend of $0.42 per share for the first quarter of 2026, payable on April 15, 2026 [3][18] - The company has a buyback program in place and continues to evaluate the attractiveness of new investments relative to share repurchases [39] Q&A Session Summary Question: Discussion on long-term positioning and dividend structure - Management indicated that the review focuses on long-term earnings durability and alignment with shareholders, including evaluation of the fee structure and base dividend level [26][27] Question: Details on non-accrual exit and sale - One non-accrual investment was realized at close to the mark [29] Question: Future earnings and spread expectations - Management noted that spreads have stabilized for high-quality assets and observed an increase in deal activity, indicating potential for capturing excess spread [31][32] Question: Main drivers of realized gains and unrealized losses - Realized gains were driven by an investment sold during the quarter, while unrealized losses were primarily from two investments placed on non-accrual [35][36] Question: Rationale for reinvesting proceeds instead of buybacks - The company is balancing investments in private credit with share repurchases, focusing on durable income for shareholders [39][40] Question: Status of the supplemental dividend policy - The supplemental dividend policy remains in place, but no supplemental dividend will be paid for Q4 earnings due to NAV constraints [41][42]