Crescent Capital BDC(US:CCAP)2023-05-11 20:23Financial Data and Key Metrics Changes - The adjusted net investment income per share increased by 10% to $0.54 for Q1 2023 from $0.49 in the prior quarter, driven primarily by rising base rates and higher spreads [102] - Total investment income for Q1 was $39.3 million, up approximately 14% from $34.5 million in the previous quarter, largely due to rising base rates and contributions from the First Eagle acquisition [8][102] - The net asset value per share decreased by 2.3% to $19.38 compared to the previous quarter, attributed to transaction costs from the First Eagle acquisition and unrealized losses from wider credit spreads [113] Business Line Data and Key Metrics Changes - The portfolio remains primarily composed of senior secured first lien and unitranche first lien loans, representing 89% of the total portfolio at fair value, with a slight decrease from 90% at year-end [103] - The weighted average yield of income-producing securities at cost increased from 10.8% to 11.4% quarter-over-quarter, reflecting the impact of the Federal Reserve's interest rate hikes [122] Market Data and Key Metrics Changes - The company has not observed broad-based revenue pressure at the portfolio or sector level, with declines being company-specific, particularly among those that benefited from COVID-19 [4] - The weighted average loan-to-value in the portfolio at the time of underwriting was approximately 41%, providing a margin of safety [83] Company Strategy and Development Direction - The company is focused on providing conventional cash flow-based leverage financing to mature sponsor-backed companies, avoiding loans based on free cash flow or annual recurring revenue [2] - The acquisition of First Eagle BDC is expected to enhance funding flexibility and improve the unsecured debt mix, with plans to proactively explore refinancing options as maturities approach [16][42] Management's Comments on Operating Environment and Future Outlook - Management believes the company is well-positioned to navigate potential economic challenges in 2023 and beyond, leveraging its experience through multiple market cycles [13][84] - There is a focus on managing the impact of rising wages and interest rates, with revenue growth outpacing EBITDA growth, particularly in the healthcare sector [124] Other Important Information - The company declared a quarterly cash dividend of $0.41 per share for Q2 2023, to be paid on July 17, 2023 [30][119] - Approximately 70% of aggregate revolving capacity was available across the portfolio, indicating a manageable liquidity position [12] Q&A Session All Questions and Answers Question: How much of your total investment income or your NII was from the accretion from the FCRD acquisition? - The impact from the acquisition was limited to the last three weeks of the quarter, with approximately just over 10% of total revenue coming from First Eagle [92] Question: Can you provide the full quarter topline revenue and interest expense pro forma for First Eagle? - Total revenue for the quarter was about $39 million, with the acquisition contributing a limited lift due to its timing [92] Question: What industries are experiencing tailwinds or headwinds in the current environment? - The healthcare sector is facing wage pressures, while other sectors are generally stable to growing, with revenue growth outpacing EBITDA growth [93][55]