[Management View]
Crescent Capital BDC (CCAP) reported stable net investment income of $0.46 per share for Q2 2025, with a slight increase to $0.48 per share excluding a one-time amortization cost. The company maintained consistent dividend coverage and emphasized a diversified portfolio with a focus on first lien loans and sponsor-backed companies.

[Outlook]
Management expects to continue focusing on disciplined credit underwriting and maintaining a diversified portfolio. The reduction of the SPV asset facility is anticipated to lower future borrowing costs. The company declared a $0.42 per share regular dividend for Q3 2025 and the final $0.05 per share special dividend to be paid in September 2025.

[Financial Performance]
Net investment income was $0.46 per share, up from $0.45 in the prior quarter. Net asset value (NAV) per share decreased slightly to $19.55 from $19.62, primarily due to a special dividend payout. The portfolio's weighted average interest coverage improved to 2.1x, and the debt-to-equity ratio decreased to 1.23x from 1.25x.

[Q&A Highlights]
Question 1: Hi, guys, and congratulations on essentially the NAV stability this quarter, but I just want to focus on credit quality a little bit again. As Henry said, right, so the watch list is at 14%, but I believe it was, like, 12 or 13 last quarter. So it does seem like it's ticked up just a tiny bit. And also on the internally rated fours and fives, which are the lowest categories, that ticked up this quarter as well. So in that, with the fours and fives, 3% of the portfolio. (Line breaks here)
Answer: With respect to the watch list, more generally, what I would say is that our view, and we alluded to this in prepared remarks, is that we want to be preemptive with how we designate investments on the watch list. So we have always relied on the fundamental operating performance and the near-term outlook to guide us to whether or not we are placing an investment on the watch list. And it's not going to be purely driven by if there's a credit event pending. So from that perspective, we just want to make sure that we are both being forward-looking and also being transparent around what the nearest turnout looks like for our portfolio companies. With respect to the fours and fives, what I would say there is that those are all investments that are certainly most challenged with respect to potential near-term outlook in terms of recovery. However, what I will also say there is that what we have our expect what we do want to make sure that we factor in, and this is both in terms of the rating as well in terms of the mark, is first, where we think the recovery is going to look like on a near-term basis just given that existing outlook of the company today? And secondly, even if there is a longer path to recovery, we want to make sure that not being too shortsighted around near-term challenges that companies are facing. So what I would say is if you are in that category, it's certainly kind of the largest variance in terms of potential outcomes with respect to ultimate recovery here, but what I will say is that when I look back at our track record, at our loss rate, and our ability to create recovery even in situations that are kind of, you know, higher risk, I would say that we certainly have the capabilities and the track records to back that. And what I would also say there is that it's really kind of more of an earlier forward look as opposed to demonstrating a leg down and, like, further portfolio weakness.

Question 2: Got it. Got it. Let me sorry, Robert. It's Jason. I just want to add two points. On the first point on the watch list, I think it's also important to point out that as a lower and core middle market investor, three out of four companies in the portfolio have financial covenants. And so, that might be high relative to some of our peers who focus on the upper end of the market. And the nice thing about having covenants is it really enables frequency of dialogue and interaction with the management teams and sponsorship. (Line breaks here)
Answer: And so I think from an insight standpoint, and a dialogue standpoint, we may be in closer contact with folks given the covenants that we have in place, which might give us more real-time visibility and outlook. The other point that I just wanted to make is that while our nonaccrual rate, I think, is let's say, generally in line with the broader industry, it is certainly not something we are pleased with. It's not representative of how we think of our portfolio or our underwriting process. Or, frankly, consistent with our historical metrics, and that's something that we are looking forward to seeing some progress on in terms of bringing that down.

Question 3: I appreciate all that color. Kinda sorta related. As you said, right, the cover with all the tabs, etcetera, and those the outlook on tariffs, seems to change day by day. Have you seen anything and to your point, you've been in contact with a lot of these portfolio companies more frequently than the upper market might be. Have you seen any change in thoughts from portfolio companies about how manageable the tariff exposure is? Obviously, you know, it keeps changing, so they might have to keep changing plans. But any thoughts on how the portfolio companies think they'll be able to manage this volatile period? (Line breaks here)
Answer: Yeah. I'd say I'd start off by commenting on, you know, when we were sharing with the market, our initial review of the direct impact on our portfolio to tariffs, it was a relative minority in our book. It was kind of low single digits where we viewed our as having direct impact. And this was the kind of the highest level of kind of tariffs post-liberation day that we were doing our assessment around. But what we've seen since is, you know, we've done a refresh of that and reviewed and really first to check how close we were in terms of the impact and our assessment around potential tariff impact. And secondly, to determine how the companies, to your question, how the companies are able to respond. I'd say on the first conclusion from that refreshment analysis, I'd say our analysis still holds. We haven't seen that direct tariff impact population expand in any meaningful way, and nor contract, you know, the companies that we thought were going to be impacted directly by tariffs are certainly ones that are still navigating that environment. On the latter point, there's a I'd say there's a few ways that we've seen companies address the upcoming changes in tariffs. The first is, you know, we've always looked to invest in companies that have high pricing power, and the ability to demonstrate the ability to pass through prices. You know, we had a good lens into that in the 2023, 2024 time frame when we saw a pretty marked increase in wage inflation. And given that we invest primarily in services, does businesses, that's going to typically be the largest component of the cost structure for the vast majority of our borrowers. And being able to see that dynamic play out on the price side with respect to input costs as well in the context of tariffs. That's certainly the primary lever that we've seen management teams employ in this current environment. On the second side, which is for those that are sourcing directly from, I'd say, of higher up the list, tariff impacted, geographies. What we've seen management teams do is take a proactive approach to looking at alternative sourcing mechanisms. And there's a lot of work that companies that we invest in that do have some sort of supply chain procurement abroad coming into the US. We saw that's that's that's an approach and diligence that was done after the first wave of tariffs during the first Trump residency, and we're seeing that kind of repositioning happen real-time now as well. I think, in terms of seeing it play out of the numbers, it's probably going to be back half of this year when we really start to see the benefits of those actions as well as the impact of the tariff actually show up in the borrower financials. But, I'd say, you know, kind of summarize here. First, the direct tariff impact in our portfolio is just a small percentage to begin with. And secondly, given the dialogue, the access that we have to management, we've been able to see them kind of address this upfront both on the price side as well as on the supply chain side.

Question 4: Got it. Thank you for that color. One more question if I can, unrelated to all those issues. So you are not putting it right basically right back in the middle of your target leverage range. So I think you said that you do not expect a lot of net portfolio growth going forward. But would you like you know, if market activity does pick up and, obviously, the platform as a whole, is still, you know, very active, which obviously, in principle, if you get some new payments at the BDC, you know, it gives you relatively quick opportunities to redeploy the capital. (Line breaks here)
Answer: But is there anything you'd like to modify in the mix, you know, within that, you know, while maintaining kind of, you know, midpoint of the leverage range maybe. Would you like to rotate out of any sectors and into different ones? Or shrink average position sizes or things like that, all of which can go on while the portfolio net growing. So any thoughts on any repositioning relatively speaking, that you'd like to do while you're at kind of target leverage? Henry Chung: Yeah. I mean, it's a great question. Go ahead, Henry. I'll follow-up. Yeah. That's a great question. I'd say, on a couple of points, the first is, in terms of rotation from an industry perspective, I'd say we feel good about where we are in terms of our industry focus. You know, we're very focused on investing in high free cash flow generating, nontypical industry with defensible revenue streams. And, you know, we've started that positioning from the very beginning of CCAP and to maintain that. So I wouldn't say that they're specifically any industry concentrations that we're looking to reduce in the near term or on the other side of that augment as well. You know, our focus is always going to be on those industries. I'd say the same for the average position size as well. We have 187 obligors in our portfolio. The average position size is 60 basis points. So we really from the beginning, have also really sought to maintain a diversified book. And given we have the added luxury, if you'll call it that, of being attached to a platform that, you know, even though the CCAP on a net basis during the quarter, the portfolio shrink, you know, we've seen $1.3 billion of new deployment come through the platform in the quarter alone. So we're able to pick our spots in terms of what is accretive to us, just from a pure yield perspective as well as we want to be in terms of industry, without having to sacrifice diversification at all. I'd say on that piece, we're in a good position. You know, we are focused on rotating is, and we've mentioned this in prior commentary is the acquired assets. We are a little over halfway through the rotation of the acquired First Eagle assets, and we're almost entirely through the rotation of the Alcentra assets. But that's really, I'd say, where the heaviest focus is in terms of our rotation efforts, because we have the ability to reallocate and re those investments into Crescent directly originated opportunities. It's just a matter of rotating the acquired assets at levels that we find attractive.

Question 5: Got it. Thank you. Before going to the next question, again, if you would like to ask a question, please press 1 on your telephone keypad. Your next question comes from the line of Mickey Schleien with Clear Street. Your line is open. Yes. Hello, everyone. Jason, just one question from me today. I think investors and analysts really appreciate your transparency about the breakdown of your portfolio by the type of security. And I see that less than 2% is in unitranche last out investments. As you know, that structure can help boost portfolio yield without giving up much control over an investment. So how are you evaluating the opportunity to increase that to help offset potential declines and so forth? (Line breaks here)
Answer: Hey, Mickey. Thank you for the question. It's Jason. That segment of the portfolio has always been relatively small for us. And I'd call out a couple of things. First off, I think we've always been in the unitranche segment of the market. In fact, Crescent's heritage is really also as a junior debt lender. So we've historically been quite comfortable lending deeper into a capital stack of middle market companies. The last out opportunity is not so voluminous, I would say, these days. You know, as direct lending managers have more capital to put to work. That's certainly the case for Crescent too. I would say we are opportunistic in those pursuits. Generally, only getting comfortable if it's a very small amount of first out leverage ahead of us where we feel quite comfortable that we could take control of that first out if needed. But it's often driven by the portfolio company having a banking relationship and wanting to bring a relationship into a first out piece of a capital structure. But otherwise, I would just say it's not all that frequent of an opportunity for us today.

Question 6: I understand. Thank you for taking my question. Your next question comes from the line of Nolan with Ladenburg Thalmann. Your line is open. Hi. Just following up on Robert's question from a different angle. Are you given the decline in energy prices, and your company's do you see your companies having increased operating leverage where if energy inputs go down, your profit margins go up and so forth? (Line breaks here)
Answer: Yeah. Thanks for the question, Chris. This is Henry. I'd say that fuel input costs are really not a large component of the cost of goods sold for the vast majority of our borrowers. You know, it's something that we really seek to avoid in underwriting where there's a lot of exposure to potential material cost inputs, both as a reduction in margins as well as a way to potentially augment margins. So I wouldn't say that would be necessarily a material driver of operating leverage within our portfolio as a whole. Generally, I would say what you'll see given our service orientation, our portfolio is that the largest component of cost of goods sold, and the vast majority of our portfolio companies' cost structures is going to be human capital as opposed to pure kind of fuel input cost. However, I would certainly expect to see some benefit. I just don't expect it to be a material driver of portfolio performance, if that makes sense.

Question 7: Yep. And then the follow-up question, I see that the balance of second lien loans has gone down year to date. I know it's a small part of the portfolio, but is this something which you sort of opt hop into more cyclically when the economy starts going up and the price on second liens are attractive? Then we should start seeing those increase perspective to have conviction around coming in behind five, six, sometimes seven turns of first lien leverage. Without getting appropriate risk premia. If that changes, then it's certainly something that we'll look at, but we'll always be selectively deploying to second lien. (Line breaks here)
Answer: I don't I would never expect it to be a large component of the portfolio given our focus here is to continue to our portfolio towards first lien.

[Sentiment Analysis]
The tone of the analysts was generally positive, with a focus on credit quality and portfolio management. Management maintained a confident and transparent approach, addressing concerns about credit quality, tariff impacts, and portfolio composition.

[Quarterly Comparison]
| Key Metrics | Q2 2025 | Q1 2025 |
|----------------------------|---------------|---------------|
| Net Investment Income | $0.46/share | $0.45/share |
| NAV per Share | $19.55 | $19.62 |
| Debt-to-Equity Ratio | 1.23x | 1.25x |
| Weighted Average Interest | 2.1x | 2.0x |
| Nonaccruals | 2.4% | 2.3% |

[Risks and Concerns]
- Slight increase in the watch list and internally rated fours and fives, indicating potential credit quality concerns.
- Ongoing tariff discussions and regulatory uncertainty impacting portfolio companies.
- Nonaccrual rate, while in line with the industry, is not satisfactory to management.

[Final Takeaway]
Crescent Capital BDC (CCAP) demonstrated stable financial performance in Q2 2025, with consistent net investment income and dividend coverage. The company maintained a diversified portfolio with a focus on first lien loans and sponsor-backed companies. Management addressed concerns about credit quality and tariff impacts, emphasizing a proactive and transparent approach. The reduction of the SPV asset facility is expected to lower future borrowing costs, and the company remains well-positioned for long-term stability and growth.