- Net Investment Income: $0.47 per share, annualized yield over 11% based on 12/31 NAV.
- Dividend: Total fourth quarter dividend of $0.45 per share, including a $0.40 base dividend and a $0.05 supplemental dividend.
- Net Asset Value (NAV): $16.80 per share as of December 31, compared to $16.85 per share as of September 30.
- Total Investment Income: $56 million for the fourth quarter.
- Total Expenses: $31 million, flat versus prior quarter.
- Portfolio Growth: Increased by about $100 million in the fourth quarter.
- Credit Quality: Nonaccruals at 0.6% of total investments at fair value.
- Leverage: Statutory average leverage about 1.2 times, within target range of 0.9 to 1.25 times.
- Investment Portfolio: 189 investments in 135 companies across more than 25 industries.
- Median Portfolio EBITDA: $88 million.
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Release Date: February 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Carlyle Secured Lending Inc (NASDAQ:CGBD) generated a net investment income of $0.47 per share, representing an annualized yield of over 11%.
- The company declared a total fourth quarter dividend of $0.45 per share, which includes a supplemental dividend, reflecting a strong dividend policy.
- CGBD achieved record highs for deployment in both the fourth quarter and the full year of 2024, growing its portfolio by about $100 million.
- The company maintained a high-quality portfolio with 94% of 2024 originations in first lien investments and an average loan-to-value under 40%.
- CGBD obtained investment-grade ratings from both Fitch and Moody's, allowing it to issue its first-ever institutional bond deal, enhancing financial flexibility.
Negative Points
- The net asset value (NAV) per share slightly decreased from $16.85 as of September 30 to $16.80 as of December 31.
- Total aggregate realized and unrealized net loss was about $4 million for the quarter, with markdowns on certain investments.
- Nonaccruals remained flat at 0.6% of total investments at fair value, indicating some ongoing credit challenges.
- The restructuring of Jeg's Automotive remained on nonaccrual status, highlighting ongoing issues with specific investments.
- The weighted average yield on debt investments showed a wider gap compared to income-producing investments, indicating potential yield compression.
Q & A Highlights
Q: Just a question on the JV. I think Tom, you said it will free the unqualified asset bucket capacity. Are you suggesting you might do something else there? A: Thomas Hennigan, CFO: Regarding the two JVs, MMCF II is a static vehicle, and taking those assets back on balance sheet reduces the non-qualifying bucket. For JV one, we plan to ramp up the facility materially in the future. We anticipate a return of capital from both JVs in the first quarter. We have flexibility for future strategic partnerships, but nothing imminent right now.
Q: On the tax line, that dropped a bit in the fourth quarter. Is that sort of a true-up thing? A: Thomas Hennigan, CFO: Yes, it was a year-end true-up based on the audit. We anticipate the tax expense to be in the range of prior quarters, maybe slightly lower.
Q: You guys are doing well, trading well. Any discussion and idea of growth plans for this BDC? A: Justin Plouffe, CEO: Right now, we're focused on putting capital to work and completing the merger process. Once that's done, we'll consider future growth initiatives, but nothing is imminent at the moment.
Q: In the fourth quarter, was there any outsized fee income or prepayment income that we should be aware of? A: Thomas Hennigan, CFO: The combination of fee income and OID acceleration was lower than our historical average by about $0.01 per share. We had an incremental dividend from the JV that runs through the JV income line.
Q: On slide 7, there's usually a tight difference between the weighted average yield on debt investments and income-producing investments. Why was it wider this quarter? A: Justin Plouffe, CEO: The difference relates to the JV extra dividend. The second line item includes JVs, which caused a 30-40 basis point increase. Normally, it should be closer to 11.3%-11.4%, and you should see those numbers closer next quarter.
Q: What was the dollar amount of the incremental dividend related to the joint venture two in anticipation of the wind down? A: Justin Plouffe, CEO: It was about $1.2 million, resulting in a net impact on NII of about $0.02 per share for the quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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