CCAP - Earnings call transcript Q3 2021 | Crescent Capital BDC, Inc.

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Operator

Thank you for standing by, and welcome to the Crescent Capital BDC Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program may be recorded. I would now like to introduce your host for today's program, Dan McMahon, Head of Investor Relations. ahead. go Please

Dan McMahon

CCAP, welcome Ended and note Capital Inc.'s to BDC Crescent throughout the Good call. the XX, to XXXX Quarter as referred maybe September BDC Please BDC, Earnings Third or Capital company morning, Inc. Crescent Crescent Conference that, Call.

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

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

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

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

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

Jason Breaux

and us. for joining you, Good appreciate everyone, continued morning, Thank in Dan. your thank CCAP. interest you We

today, our results some call and touch more this portfolio, our in from positioning, detail. highlights provide on review on it financial thoughts investing to review our updates I'll a more activity, current a over quarter's and For turning provide our before to Gerhard few quarterly few results,

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

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

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

primarily Gerhard through unrealized driven change will net key share asset for up increased walk Turning a quarter, sixth quarter to CCAP's $XX.XX, in increase more inception. value by the our consecutive QX X% in results, value detail, our the COVID, highest in since per early XXXX, the back NAV portfolio outpacing this drivers net we've but approximately to per dividend our which the onset of XX.X%. the income with per grown return change economic from dividends listing investment to generated companies, plus perspective, in share. appreciation Since NAV has coupled is a specific cumulative share net paid X.X%. in And to the certain total our was prior

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

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

XX at as across in portfolio first debt was activity in equity-backed outlined as private diversified XXX% quarter well XX, XX% by shortly. was driven to are which the on lien QX of end primarily in compared and companies. portfolio Slide of on lend I'll of fair companies quarter industries value our XX% our touch We sponsor-backed the and as to origination

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

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

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

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

equity-backed active left-hand and all an or XX% XX secured lien basis Nearly, X.XX%. and activity XX the the investments follow-ons between at totaling was in with coming delayed senior with spreads All deployment. the $XX loans investments. private activity. X% and new million on we to of of first of respectively revolver and gross we million were and told XXX loan in $XXX or draw remaining investments XX OIDs million had $XXX.X page, from the million approximately $XX Focusing unitranche XXX closed term quarter All new on point side the

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

respectively. private or equity-backed on investments new characteristics investments. $XX to comparable with unitranche six spreads each first totaling follow-on For four and six the and the million are loans October, month lien we investments new closed $XX of QX million and other aforementioned The

pipeline end remainder of a the portfolio the growth quarter of few net origination of expectation with lower robust. QX up driving I the as for end for our more we As range. strongest year, updates, continued to our we here sit in further think an before A approach investment increase QX a target deployment slowdown turn in being and Gerhard. over debt-to-equity profile Coupled we today, may the is prepayment our activity, it

completed Alcentra First, in a XX. which Capital Corp, we our on quick reminder Slide a of to acquisition Please QX turn update of XXXX. as

September with this or our pleased been acquired the this XX% realization stockholders. in performance Overall, could a our activity has been level realized been total of CCAP through outcome Almost assets of the end. to see translates cost XX% $XX of XX. generating slide As million remaining quarter on healthy CCAP's to has in and acquired with and the portfolio you all of IRR basis strong X% value are we investment approximately as far of fair has thus which about portfolio a accretive

first dividend to million CCAP's plan has Life plan. having demonstrating CCAP particularly coverage stock defensively-constructed pursuant waivers in plan to compelling XXXX. acquired of comparable completed we has purchase a shares that introduce view that discount XXbX-X size advised the on second alignment as lien-focused stockholders. XX us mid-October an incentive Sun believe in its of a acquire stock's as-needed BDC increasingly XXbX-X to stock basis committed our Second, opportunity it to Sun that Life to with an via program first its what a seeks through well-diversified ensuring XXX% We current represents

Finally close of the declared payable per XX, $X.XX a quarterly December January cash of as share on record quarter fourth on dividend Board of the of business XXXX, our XXXX for XX. to stockholders

also a dividends Our Board cash quarterly $X.XX has this approved quarter. series four beginning special of consecutive share per of

basis. provides some of approximately this balance As income an serves our grown $X.XX in capital per of half approximately modest dividend on ROE our we've has payment to of annualized on by the tax end. drag of our spillover to of form efficiency the special eliminating uplift share as The quarter our which enhance historically for a dividends income excise over-earned base spillover

that first close of to over been cash And December specials on already again, and 'XX I'll on the our respectively. it December these for With the stockholders turn business to XX-Q record on release. dates is have Board $X.XX third have June all these details of dividend the The paid the now Gerhard? Directors. will payments on earnings special record our additional to in disclosed of XXth fourth X. second, The And be March, of and payable September XX as of cover Gerhard of been and by quarter. approved

Gerhard Lombard

Jason. Thanks

with of $X.XX $X.XX third quarter the for prior $X.XX investment the quarter XXXX net share Our for for of adjusted third of compares income and the XXXX. quarter per

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

a related $XXX income accretion of $XX.XX Our XX, interest paydown equity sizable see to result to or stockholders' earnings equity asset net base by activity. per $X.XX, per last a outpaced appreciation share $XX.XX million the continued an our I'd September realized growth resulting quarter on XX, recurring our $XXX increasing was an share in with per over-earn page investment as million our our asset value of coupled dividend per additional addition you in relates share share quarter strong XXXX. Kinesis. note elevated growing overall were September $X.XX the from The was that of at Slide XX. At investment and can of of middle driven $XXX third during investment third our net value monetization in $XX.XX from share adjusted million contributing our portfolio per in income the in out in portfolio. or the the primarily quarter of OID increase net the accelerated and dividend level Net of the to dividend gain

recall, largest depreciation industry biopharmaceutical mark-to-market in may the a services to portfolio the you communication strategic unrealized was medical of Kinesis last As our provider of driver quarter.

in a in billion unrealized mark. net resulted also value the billion from fair realization quarter at reversal of increased quarter's X% million approximately in $X.XXX that driven this by So previously Investments $X.XXX deployment. $XX to

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

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

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

senior outstanding of million subject perspective, of From after end, On September of from new XX, extending to and liquidity restrictions. million maturity no capital we we August to a maturing of significant credit XXXX. upsizing for maturity undrawn and facility quarter XXX%. a swapping an compared while times, XXX% facility at regulatory principal to of L+XXX by our resulting $XXX.X entered XXXX. October cushion debt leverage out up maturities base and to XX, continues remain L+XXX.X had June October near-term revolving was June times X.XX with prior XX, attractive debt base simultaneously the into to million capacity $XXX other facility, as coverage the continued $XXX an secured in of asset SMBC, our facility amount The to XXXX a from debt-to-equity as of profile borrowing As ratio our with X.XX the

back the is Our of in to walked quarter Directors for regular Board closing through be augmented declared with by dividend quarterly it of earlier. dividends paid a consistent cash And This Jason which with the will that, of that Jason fourth per third I'd share quarter. the series remarks. special turn like dividend $X.XX to

Jason Breaux

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

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

continue we companies year for portfolio returned the remainder our our to rebounds. positive of majority for and the as overall our of borrowers perform overwhelming to maintain the well. earlier, noted further As economy outlook operating of have normalized Most demand levels the

pipeline months questions. shareholders. continued As open returns would all for attractive previously of you deployment we're us the for operator, deliver with thank line noted, to allow coming and the constructive continue in We on which for the to like risk-adjusted will that, our your And support. please confidence to

Operator

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

Your question please.

Robert Dodd

or one. Hi, I guys. there new bps. versus And in you've color the may is shrank have the some was a the mean like and the give spread XX floor quarter, interest actually on I delta originations pressure between floors more Looks have LIBOR quarter. this QX portfolio, on mix? you LIBOR been you there or weighted Can got have any on pressure average in I about that than incremental again, think what this the it average us portfolio the is said just that, QX rate

Jason Breaux

Hey, Thanks we've and XXX to I on further Jason. than lending Robert, and it LIBOR it that what is in negotiation the our But dropped has generally syndicated there down in call call more end seen for pressure depending it's bps, side, on the to of certainly markets been on private LIBOR, bps market the syndicated are so would the some generally floors XX XX speaking. say market. it's question. the bps

-- a generally getting and historical of little for So X% us. seeking to I kind of say seeking relative pressure would bit

Robert Dodd

Perfect. you. Okay. Thank

Great you Another -- performer focusing again, has for the been of American a on lot asset mean, on dividends. It's I a great winding side paying down. obviously

ramp committed -- give investment same start you vehicle the on GACP-type control it. which that expect on you're obviously that WhiteHawk is in have when to capital fast levels, I And can WhiteHawk paying you how of us to to the not dividend that dividends? the up behind maybe Any now side. in You could realize or the people vehicle color

Jason Breaux

question good a Robert. That's Yeah.

out Fund think as would our Fund. investor Great American we were deployment have in to expected, sort deployment I of an comparable WhiteHawk are just I in the of American Fund the we the Great kind is years. two II, and years if same fully given of team about I called of X.X had guess, I And deployment to same it's the deployment sort the strategy. that probably to to think

Robert Dodd

just congratulations then hidden on if And side, to improvement. revolver improved you. and ROE new liability for I Thank it. can Got there the terms flipping the improved but more spread

of today, probably where now make the the it's actually On one-third? market that plans but pay that you of -- take the the X/X debt know above whole two has components if be currently about the stack the I replace are a it borrow where unsecured maybe little heard component on -- before. to might the None tapped And well out right kind two and institutional sorry and -- that might you XXXXs about cheaper? this notes of just is unsecured you them I'm one, there have could your half been something there are above coupon there be with generous substantially any contemplation up to take -- them

Gerhard Lombard

we we have Robert secured capital focused today can in Hi, just is we the question. on effectively. debt obviously allow structure. to take And our especially Yeah. very lines the borrow you're prepared this correct. very with on I are The that And place us remarks refinancing, Gerhard. mentioned

as feel kind and feel little portfolio lines to the we X% back which Circling very question we ramp average your of we to a kind about. good we especially borrow you're keeping of cost good cost to secured expect utilize average weighted unsecured continue about to notes we're dip XXXX those. our more correct those about an which on So our the below weighted eye

are able in of penalty those to prepay without We January XXXX.

probably next months XX objective And think kind easy about -- for of the the we of focused of so are kind on. kind we capital structure the that -- -- that's near-term planning, as one our

Robert Dodd

you it. very a congratulations and quarter. Got good on Thank

Jason Breaux

you. Thank

Operator

does of Jason conclude program. program Instructions] this I'd Breaux [Operator to the remarks. the question-and-answer further you. back to like for hand And session any Thank today's

Jason Breaux

for in Okay. time interest your Thanks CCAP. Jonathan. Thank and you

As next with And speaking to appreciate always, forward you quarter. we look it. we

Operator

participation for ladies program. does the you, conclude in Thank today's and gentlemen, This your conference.

disconnect. now day. may Good You

Crescent Capital BDC (CCAP) 11 Nov 212021 Q3 Earnings call transcript