Earnings call transcript Q4 2022

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Operator

Good day, and thank you for standing by. Welcome to Carlyle Secured Lending's Fourth Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. After this speaker presentation there will be a question and answer session. Please be advised that today's conference is being recorded.

to Hahn. call like speaker to now Daniel today, would hand over the your I ahead. go Please

Daniel Hahn

Good morning, call Officer. Chief to Board Chief call. Linda and Executive welcome the of With XXXX fourth Pace, Tom our me earnings Directors; quarter Officer; Aren on newly of and Financial the Chair this LeeKong, is Carlyle morning our Secured appointed Lending's our Hennigan,

available a our we night, filed are the Last results, release of a presentation XX-K section issued our Relations with press and which of on Investor website. Form our

we Following our is hold remarks replay our for session analysts and webcast, institutional today, will call will This a available on website. question-and-answer investors. be a and being

not annual made and Any from These today on actual Form management are update those section them. do on current forward-looking based reliance XX-K. statements at of Factors the any in and indicated. forward-looking Carlyle including risks those and and statements to our uncertainties, results no should risks Secured Lending placed statements These involve be obligation Risk time. assumes cause identified inherent expectations future to report differ on could guarantee performance, any not uncertainties any materially undue

the to call that, With turn I'll Linda Pace. over

Linda Pace

I'll investment our quarter fourth on with second, activity; my morning, focus Thank remarks XXXX few conclude fourth our comment us I'll environment to on quarter you topics you, year discuss the finally, a Dan. of overview full everyone, results; an will with all three Good today's our results. XXXX performance. and and thank and for current I'll on call. start market and thoughts I joining full for year

$X.XX We consecutive base quarter an increased plus quarter. X% of benefit from per income fourth a the the consisting base increase new earnings third for as higher the declared the period generated $X.XX our we dividend core to of dividends which This total investment share continued supplemental. QX first $X.XX, of in We of portfolio in from net of $X.XX, have rates. was

dividend total three quarters is and level. rate the share have $X.XX at increased We our by base back per almost XX% over now that IPO of our a to the are highlight pleased now last

the decreased primarily per value $XX.XX value due in of by during to impact asset to an million common share. X% accretion yields. widening net We in the asset net of resulting fourth stock the quarter our to Our quarter, share, additional $X.X $X.XX of our repurchased per market

the environment more capital not the lender-friendly, recessionary to macro participants Turning market. selectively perspective, a now increased velocity which hikes, expected. current deploy we From occurred into much attractive continues rate have opportunities. of the economy, The quickly despite contraction be to most us still U.S. Fed in to than market allowing a seen

reduction uncertainty level around inflation of in levels. We've seen rates reduction and a in the a interest

terms. However, fixed and capital This primarily capital private and continue economics formation see activity, across remain deploying and investment markets. with by at to and liquidity debt better first yields informed income our credit less on backdrop attractive lien volatility, the focused we driven

We funded value. $XX with we total at of $XXX quarter, million fourth saw and sales fair of the investments ended During million. and repayments billion $X approximately XXXX

of year. share XXXX XX% like full minutes Tom, prior compared generated dividends our things an I'd XXX%. dividend of total to results. income was on of to share per the We which year, $X.XX per to turning resulting a coverage of investment Before $X.XX declared the spend over year in net during few We increase

an provided of that shares accretion the during to repurchased additional also $X.XX year. NAV We

commitment of credit due performance. our not they as and environment. at the our pleased to of long-term only believe fundamental market to Our QX shareholder demonstrate net the share, asset up year strong value results also regardless with $XX.XX of creating value ended per extremely power $XX.XX We're XXXX these platform, the but from

to our Tom CFO, like call I'd Hennigan. to hand that, over With the

Tom Hennigan

begin with discussion sheet our our earnings. conclude Linda. of and provide Today, with Thank a fourth positioning, you, performance. review of further I'll I'll portfolio on detail a quarter Then our balance I'll

had partially was another strong dividend average on higher rates, we an Total income driven in after income in the QX. front. from the million, was fourth earnings investment quarter a the increase reviewed, of This prior direct lower As quarter increase our travel accretion increase This and OID the balance fee quarter by into account was and taking $XX impact benchmark offset investment by JVs. for income. higher onetime

million, XXXX. $X.XX from quarter million the of share, investment earnings first in $X.XX rising substantially of versus from our net $XX or about result this earnings X% QX. $XX per $X.XX per up share total on in income share of for was rates to above increased core is higher quarter fourth core $XX our quarter the to each The due financing in million half expenses primarily Furthermore, of the Total per base interest expense facilities.

of dividend $X.XX Board share. supplemental, up business of of at on is a the level prior a from That's base at total per $X.XX of declared Our dividend, close Directors level which of a plus the March comprised XX. of XXXX of to first quarter record $X.XX $X.XX payable for our the shareholders new

higher rest in new forward for on on throughout rate the the economics the of combination the earnings, based the see latest further and upside we for on with NII quarter, of curves. investments, rates first attractive continued outlook of XXXX benchmark terms based In growth

So base as dividend at this base And continue remain meet supplemental quarter. $X.XX in to pleased out the back confident be we each dividends mentioned, we're was very our $X.XX and IPO the and Linda ability comfortably at to paying level. highly and exceed dividend new

unrealized $XX decrease was valuations, On unrealized aggregate widening net from primarily for losses market our realized and quarter. total the This driven million was by loss yields.

on facilities financing touch our I'll leverage. and Next,

times. about X.X We times and was the X.XX leverage positioned our on continue the to ended be leverage Statutory side balance net of well financial quarter at right sheet.

to yields for available target leverage within effectively our up new comfortably our to investments quarter, remains while in This terms modestly given prior range. current allows the market. and positioning So the us capital deploy compared attractive

a review of activity. with related finish the and portfolio I'll

continue see total book. flat quality to X, We credit due some to management. of PPT The quarter. Total overall since X we increased this across addition and X.X% value the fair indicating rated downgrade fair the transactions the on was level of to stability from based risk of investment value made nonaccruals to X.X% credit

investment further months, will we developments expect for to in However, restoring the which in status. result the accrual coming that

dermatology upside any current the credit and from addition, headwinds buffered on will travel positions. associates direct anticipate the In macroeconomic be softness by we further

turn Linda. I'll to back that, With it

Linda Pace

stockholders. the generated view the year for We almost return company, Tom. as for price. solid double-digit of return return our shareholders, total we the into performance publicly $XXX million year. in represented of price included strong best dividend over total XX% We a Thanks, believe experience stock very This XXXX traded of which of for a yield all a BDCs performance with excellent which shareholders our and for appreciation our for translated market capitalization

performance. they hard for to were entire to their we take Carlyle a team all would I to this thank the able are reason top-tier and deliver moment work, the like

Lastly, CEO, newly before LeeKong. to introduce up appointed for Aren I'd our opening questions, the like call

Aren LeeKong

I actually to would like to Linda. take moment this publicly Thanks, thank you.

a XX-plus years. building instrumental credit an in the platform last best-in-class over played You've role

the invaluable. forms success has a my and have working the the number over of Your worked part pleasure with of an the of of to platform been few secured It with years. last the role are decades. Board of credit Directors time team as absolute over members also senior contributions impressive you I've the the on part in global a two been of and various previous Carlyle's platform spend the to lending my better

that been Carlyle come lending the platform. couple end that across exists broader confidence I relationships deep of deliver results the and bench not to have continue every be the to have in the to and their this fortunate shareholders the more our impressed. of I've year team I expect. spend ability within to Finally, direct in this Carlyle could XXXX with of and months solidifying of first talent

So with please all that questions. operator, said, joining. thank for call for you open the And

Operator

Cyganovich from of first Our question Aaron Citi. Instructions] [Operator comes of the line

Arren Cyganovich

how a any kind bit the you like and equity not Maybe whether just opportunities increase you little or right deal could sponsors in about market feel enter private thinking we about an are year? now, environment of the be there's talk as to going the

Linda Pace

start let It's the Linda. and team Sure. I'll in. chime

activity. seeing and the the is not So we there's a like good, the I easy, that others have yes, activity. we're but from given you Group. inside folks pretty to the pullback of we're Carlyle market part of in what And can big benefit sources lending traditional view is environment I deal is And guess really ourselves the private credit still tell that unique a

So really and the CLO have been high-yield active. the the banks market, market that not

when do get They equity do in flex of term incredible language that private they certainty get sponsors, be to private Carlyle they the and on sheets credit have to they're the execution. this, So that anything little environment, not paying -- they in because going don't mix will just a as want terms, can super deal not They're the they're they're maybe getting can out maybe and deem this terms have can for onerous getting bit a give banks more, either. loose they not. they're And but abnormal.

beneficiaries like ourselves, that. are markets, a So of of, of the the credit BDCs obviously private are which part

So picking. to in to we're -- expect but can that what enough continue be we not flow, highly deal see selective we

Is anybody else?

Aren LeeKong

Arren. LeeKong. to Nice it's Yes, Aren meet you,

literally we So to that has obviously, speak, I'd That XXX first are higher. deals be portfolio. already in transactions Tom a close rates new over. our impact to we're have, about the at going is spoken And it the to quarter, say going are positive to Spreads a closer today lot and and pipeline I'm seeing points to continue. as we is base the continue basis looking

XXX maturity spread transactions points If going is plus are going coming two. basis sort are what about with of the think up or to to XXX to year next for replaced, basis XXX over spread transactions. be XXX point transactions are which to replaced be Those being you

is provide positive to going that momentum. to continue So

are We're There's transactions large wider the the we to, capital tighter doesn't liquid Linda pipe bit of quite covenants. attractive seeing, in effectively. are market a as new just levels leverage that historical on because alluded have period seeing nothing in little dearth is Because documents and rockier, world spreads. our our the of to

new Arren, positive quite I what's think view So to, transactions. it you And is is portfolio we in our as alluded a market for attractive.

So to sponsors attractive those keep to taking the credits opportunity and on They very our work companies at more -- hours for of our out will spend in to this with how for transactions. knowing also lots our them figure close be we're to shareholders. rates portfolio

we're we seeing advantage what of right now. sort and taking frankly, we're So the selective ability And have to that. that's be quite do full of

Arren Cyganovich

second was I question on had PBT the The nonaccrual.

accrual. you as the expect had you add I go think to situation. any in would what to potentially that that back don't know remarks, I improve if that commentary you prepared can mentioned to

Tom Hennigan

what a Arren, guarded because has say, next through, a we little probably for quarter. it's that active deal underperformed of business. -- can it's say, situation our I'd typical new we in capital that on working that say a for investment. outcome I'd positive structure Tom. position And bit through, anticipate an process We're would in terms We're a and working credit what your amendment an

Operator

the like Pace back remarks. closing now conference would to I to turn Linda for

Madam?

Linda Pace

look for everyone, a forward quarter. you, joining today, thank and to we speaking day. next Have with and you, great you Thank

Operator

call. concludes today's Thank you for conference participating. This

disconnect. now may You

Carlyle Secured Lending (CGBD) 28 Feb 232022 Q4 Earnings call transcript