CCAP - Earnings call transcript Q2 2021 | Crescent Capital BDC, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and thank you for standing by. Welcome to the Second Quarter 2021 Crescent Capital BDC Earnings Conference Call. [Operator Instructions] I’d now like to hand the call over to Dan McMahon, Head of Investor Relations for CCAP.

Dan McMahon

Good morning and welcome to Crescent Capital BDC Inc.’s second quarter ended June 30, 2021 earnings conference call. Please note that Crescent Capital BDC Inc. a BDC to throughout the referred call. the be CCAP, or Crescent company may

I’ll some differ and start made begin, company’s subject we Before also with uncertainties. including and those course no in forward-looking such forward-looking and note The this expressed to company contain risks over its results important assumes of conference obligation from SEC may market not update call in past could webcast actual information statements are statements. materially the Comments forward-looking statements future a that Please those for or performance guarantee filings. listed any results. such to reason, any is The reminders. of

adjusted operations. certain measures useful NII may this or and performance, by this believes uses net per we to net share. per During company the one directly for The as per investors adjusted to share, in share measure be the the as because presentation investment provides investment non-GAAP comparable investment found of measure share of call, it’s NII per slide accompanying to method income can company most financial condition income SEC adjusted net financial discuss financial defined regarding that information income GAAP call. such results Regulation G, A its reconciliation

the yesterday company’s the be filed press for with Yesterday, earnings in addition, market In website www.crescentbdc.com. should at presentation XX-Q release be XXXX, also reviewed SEC. XX, its quarter and closed, the with The a its Investor a reconciliation of the Relations of after to section the posted conjunction presentation Form release. earnings company may in our ended this found measure the June issued second

for is As being replay reminder, a call purposes. this recorded

it will Chief Officer turn on be CCAP now to Gerhard Executive CCAP. and Breaux, Jason. Lombard, of like of With Financial to I’d over Jason today’s Chief that, Officer call Speaking

Jason Breaux

in everyone, your We thank continued for CCAP. us. you appreciate Thanks, Dan. joining and Hello, interest

positioning highlights few more to review to we from provide open it before a call Q&A. on investing provide activity, thoughts I’ll today, then in call some review financial our and results, over this our to results detail For and portfolio turn quarter’s quarterly current our the Gerhard our

Please approximately for summary results. cap where not strong with Slide X, which and gains gains a adjusted the begin. of quarter let’s investment $X.XX Similar turn expense, to the in our financial a fee second prior We per we non-cash see to losses. is realized you’ll So net quarter, accrued reported incentive income paid of related and share. was to expense quarter. share changes $X.XX This per payable, was and net not unrealized results

investment inclusive respectively. QX $X.XX, the per based incentive accrued expense, Our of share, fee net was gains capital income

receive on we a fiscal of based hypothetically XX, of If reminder, the June the $X.XX the fee would realized accrued to is share the end of be incentive for eligible must year in As investment only agreement. the fee. each fees end gains end were advisory at since capital payable payable order gains us cumulative our as to gains the we at per year be not quarter paid had be that or to capital

more the through Turning the for inception. highlights a NAV and our we to increased quarter, in specific drivers unrealized share detail, consecutive asset up our back primarily results, where change net but CCAP’s fifth companies to QX will walk approximately value to Gerard our the historical dividends since turn certain to net $XX.XX, X.X% Slide value appreciation, per this key X, in highest in since quarter driven inception. which trajectory the equity. portfolio Please by cumulative increase hold was

payment represent quality the this generated quarter of in in business was base by year. of another net of carried given pandemic. quarterly our returns we’re cost From over paid, in growth which all the a the total is of our volatility XX% This as pleased time experienced side Focusing XXX% the change we’ve since the performance, ended onset portfolio investment page, with remain driven which Overall, perspective, since the March cumulatively dividends, the our and by X.X% we XXXX, comforted XX.X%. with particularly performed just to total our last economic prior XXX% plus up at of through value right-hand and has outcome frame, versus end COVID-XX. its portfolio share, at asset our and that the on quarter, well year we’ve dividends NAV of per last

to Let’s the than now ended investments current quarter of of a the X% and value across portfolio billion $X.X with XXX snapshot an less portfolio. fair of provide which presentation, gears at the the with average turn portfolio. about companies of We XX shift investment Slides and XX size total of

unitranche and portfolio loans. to investment primarily Our senior first secured of continues first lien lien consist

primarily quarters, value industries diversified private of of with line QX. in the lend companies our lien, are was in XX% portfolio end, quarter first and at to XX% with across and consistent companies. portfolio well prior We of debt XX sponsor-backed was equity-backed as fair

debt approximately debt dollar investment XX% PIK more of For at made positive X% investment interest are the just full QX. and trends an the ratings on portfolio income strong outlined interest investment principal of second XX, and of Slide total mark our debt represented our payments, under quarter, of credit out with today of performance portfolio fair companies, XXX over total scheduled is levels. marked above representing investments XX%. XX% on and Two non-accrual continued average in XXX value, $X.XX

the last as quarter. modestly risk receive, ratings rated And at portfolio of to and to portfolio highest X X unchanged portfolio as X.X was XX.X% the compared Our companies investments, quarter. percentage to weighted the can fair our of compared grade of value last XX.X% average increased

total of investments cost As quarter value, X.X% companies two portfolio and had we at X.X% our of debt end, representing status, fair non-accrual and in investments on respectively.

Slide to activity, our please to Moving investment XX. turn

we and loan in $XXX $XX million, XXX-basis investments which from the unitranche activity nearly OIDs All quarter. in as X% backdrop, see for quarter positive scaled partner demand in the are, solutions. totaled the CCAP’s an pressure first increase ours, long-standing during large we draw on XXX given LIBOR partnership XX we view, our floor continue private Crescent’s while capital new from some direct seen a our all long-term investments. deployment or have preference financing million, between All or point with respectively, lending totaling and lien market which the in second In were approximately solutions new XX% our from our surety terms focus term ability of firms the broader of on lien strong given and a with investments follow-ons, This flexibility reliable in spreads, and alike million to lens, community. resulted reputation and first growth is with solutions. the like has competition, XX XX equity-backed lien company the particularly revolver was delayed to and unitranche XX secured offer coming to benefit closed continue teams we of and to in on each and Sponsors remaining sponsor capital $XX spreads, told, approach of at loans and of and first a gross to X%. portfolio management senior exhibiting for

these across XX% of represented only for XX% compares of commitments averaging has aforementioned strong. committed the in highlighting exits, been in total in repayments Crescent, size gross In third that addition, also our to transactions. check CCAP’s quarter. It’s million total in the $XXX Activity for The new sales loan-to-value $XXX.X remain deals deals new levels aggregate attractive, and these platform. XX the million approximately highlighting the deployment $XXX breadth worth million the over quarter to

month are over lien $XX The the new turn we LIBOR Two on before closed or unitranche For Gerhard. the comparable more it spreads, QX X with to first investments floors July, to each and loans, I characteristics investments private of updates investments. new other million. aforementioned totaling equity-backed,

has June dividend aggregate approximately for approved I’ll $XX with on for And make quarter. cash share The until or been purchases finally, of cover third the entered it record stock expended. program close and of XX. a open XX our turn First, to effect Gerhard will $X.XX now to amount its With unless our the May common an amount quarterly will be payable details of that, purchase per Board on of program as million months market the the September of over XXXX, of has Sun to announced XX. Life quarter in in declared extended stockholders share commencing Gerhard? additional business previously aggregate on shares CCAP to of XX October in on up stock purchase purchases

Gerhard Lombard

Jason. Thanks,

quarter of compared share per $X.XX of income of second and to second XXXX. quarter both investment for for net adjusted quarter Our prior $X.XX XXXX the

from or share second the per second which share $X.XX earnings and of per first net for per net GAAP share of $X Our $X.XX, to increase the assets quarter compares the operations for was of quarter quarter XXXX resulting XXXX in XXXX. for

Conisus, highlighted as stockholders’ positions, value which by in net June investment last compared a related million as of largely on XXXX. share adjusted The and addition mark. in of our during majority in The increase driven mark-to-market addition net acquired At net interest the million million, at our we unrealized share asset value $XX.XX generated gains a of primarily recurring in elevated and we $X.XXX appreciation activity the of per was share we our Our to accretion realized equity the $XXX by increased to quarter, transaction. fair connection with and pay-down June at second second $X.XXX second consistent value million gains were level per in $X.XX $XX in million in the at XX, driven approximately net by Investments driven our increase quarter net $XXX $XXX or or appreciation. quarter common driven of Slide our Alcentra from an driven of investments Conisus resulting share. gains, the portfolio was our In in unrealized by earnings strong per of from income on growing investment OID quarter unrealized exited fully to across per in were July, quarter. in deployment dividend accelerated by to portfolio, net XX, X.X% had per the during value with equity billion, or quarter to equity $XX.XX certain asset share XX, our $X.XX $XX.XX, $XX

and Slide rate summarizes the debt securities over spread on investments. to average yield Turning LIBOR on income-producing XX, weighted this our graph floating

have securities in the X.X% on X-month to XX.X% a as investments LIBOR June weighted XXXX, at of points, approximately our compared current XX amortized cost which the rate. floor average and bear LIBOR prior is XX, floating As debt basis yield today’s of average well our weighted interest was at quarter. rates X.X% income-producing of above

and to XX. liquidity. Slide Now let’s shift capitalization on our I’m

of June subject June XXXX As June maturity Asset liquidity to Fargo, modestly attractive date debt-to-equity On principal with we maturing of was in we of our X.XXx, X.XXx capacity maturity up after June basis from as perspective, rate capital had our and $XXX remain amount base points a which of base from our of SPV amended borrowing From at XXXX. our XXXX. end, reduced of near-term XX, cushion continues the March coverage debt restrictions. maturities regulatory to XX by leverage, XX, asset no significant ratio annual XX, and with and The continued debt XXX%. the other undrawn of XXX% to Wells March million resulting Facility quarter to interest profile the outstanding extended

third the per $X.XX As to for quarter closing like Board to cash Jason the consistent remarks. dividend is quarterly second our it a quarter. with with share, of back that, of paid turn in regular And regular Directors mentioned, dividend which I’d Jason declared

Jason Breaux

Thanks, we results our with pleased are quarter. Overall, Gerhard. this financial

a increasingly our credit profile. have Additionally, believe diverse increasing an attractive remains scale, defensive we by and performance and of strong, we very financing supported built portfolio

to returned overwhelming of our portfolio companies majority operating Most the levels. to earlier, well. our noted borrowers As continue normalized have of perform

COVID the economy the and to borrowers, shareholders. overall developments, demand as positive full to to for further monitoring for half to to forward will for results advantages continued thank We second continue competitive closely a year good for the deliver confidence rebounds. we outlook all drive are look our open platform line our that, leveraging we our please attractive like of And Crescent with believe we the returns and While have to continue continue of operator, in risk-adjusted We would this you for questions. support. your and the

Operator

from comes line question of James. the Our Instructions] Raymond Robert [Operator first Dodd with

Robert Dodd

Congratulations Hi, guys. the on Good morning. quarter.

maybe like $X distribution tax and can, excise not The Gerhard. had tax one, income if was obviously, expense And tax $XXX,XXX probably Southern that looks think just quarter. First, million a income, Q. then you this Technical a dividend the I from the housekeeping for paid a I

So offset. kind will distributions, be tax Technical Or is Southern a expect that pay that is of tax basically we a offset those those What – continue should expense? thing? by but one-time to they’ll

Gerhard Lombard

as is that sheet. dividend And will perform. Look, difficult is are think seen Robert, for be tax the – is generated But how kind in that the totality. there Thanks is there so to to correct, question. well taxable that a on income Gerhard. for quarter, extent the this distribution, perform offset will there there that I is balance by investment of continues Hi, the that company, manage portfolio a distribution our you be this very it’s predict to help exposure. in a corresponding being tax investment absolutely will that to expectation we’ve And and that

Robert Dodd

like messages like strong, hearing a generally, Got then say, you it anything carve the the repayment mean, just front. deployments been deployments. elevated that, the this say of probably rest that On more I here it. We’ve expectations? appreciate what – anything market sounds also going very and has picture, or but been And over, good you. and year, activity not I of should is repayments mixed I’m bigger so this to month let’s next are kind of less on thank instead. But expect that, your

What’s nice what of by ex-Conisus, bigger expect would same what of repayment then course – your big on through ex you be So the kind feel are your to a there, thematically? smaller? of year-end, portfolio the maybe you’ve year expectations And size, the got where that? kind that

Jason Breaux

Jason. volumes today. just opportunity set issuance, of are of that a big for volumes the in it’s quarter terms Thank I which seeing loan quite we’re in question. in up. speaking, you Hi, are Robert, we’re ours. the Unitranche focus is think Generally Sponsored volumes the market middle on the constructive up. hit second a Certainly, record

healthy in growth work mentioned very of in hope to to higher that’s to real a repayments provided credit think our quarter repayment see on in respect repayment private execution in remarks, QX. good. I favor in terms of continuing the of volumes that think of a a I’d QX. a QX, We’ve net sponsors is that as in deployment back half well. are far but with than I pipeline higher couple certainly certainly attractive. slower execution do as QX, quarter and healthy the value One are With here seasonably certainty overall of and to new our some going so is the are the be year. speed I repayments, in seen prepared things been QX has to expect the And

of more line, that’s getting supply the So in think. I of sort demand kind

And some to kind this private space, of result pre-COVID tightening side we’ve the as getting in the than still there I always first are will markets, to for to where it’s lien But premium imagine is think tighter spreads today. hard syndicated a relative of some on we The competition piece levels continued is finally that spread touched we the see which be. point. other while at a much me there

buyers the the issuance on a some the in new CLOs lot the At I some reach know, And really market more recently syndicated has we that think BX fill syndicated all in are to issuance bound of as point, CLOs. going names. are of BX-rated where in is exposure. their been the really by big market,

would the think feeling, I and kind a repayments. got we’d see that slow if influence natural you will side, of I will, we’ve hope certainly So on spread which the down

Robert Dodd

really I kind And question. the it. into which color Got Jason. is that, of that next appreciate tied

where are OID there Your portfolio, pretty floors X%, about looks deployments they healthy. floor. of XXX, X% which on LIBOR this everything, looking your through to is a quarter,

down, like other the coming other here, the are look return spread, case be think of quite going have Do but terms the seem to hold those extremely components the have of doesn’t to pricing the the those do heard from front? the other BDCs you of floors been of mixed commentating the anymore. to just here messages some held while spread here. out or that’s So competitive, the spread, But total they about where you’re think well. leveling is up We’ve on next thing you give maybe in LIBOR kind

Jason Breaux

Robert. We haven’t much, seen it

return up, what experience trying our other drive off been said. think I we’re that held the of of components you to have as has

some perhaps bps down where situations. bps in hold are I seeing we’re I down flex we having to we’re the to those able have on at experience for certain to But But line the consistent historical floors, in cases, been with part, upfront, on the the pressure think predominantly think on experience. XXX most occasion, XX. XX

Robert Dodd

my answered And but Okay, about already monetizing was question thank last you you. Conisus, it.

congratulations quarter lot. a the that and So, as on Thanks well. front

Jason Breaux

you, Robert. Thank

Operator

[Operator no questions queue further turn for this Instructions] showing in the to Jason time. I’m back like call at I’d remarks. closing Breaux to

Jason Breaux

thank again We Once for and in Liz. and I’d you, interest next attention time support speaking everyone your Thank look continued quarter. CCAP. like to forward and today your with you Okay. to again,

Operator

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

You may now disconnect.

Crescent Capital BDC (CCAP) 13 Aug 212021 Q2 Earnings call transcript