CCAP - Earnings call transcript Q1 2024 | Crescent Capital BDC, Inc.

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Operator

Good day, everyone and welcome to today's Crescent Capital BDC, Inc.

First Quarter Earnings Call. [Operator Instructions]. Please note this call is being recorded.

my Investor turn Relations. now to call is McMahon, Dan it pleasure today's to over And Please ahead. go

Daniel McMahon

Good morning. Call. And referred company First Crescent Quarter throughout welcome BDC, to to Crescent March Capital BDC XXXX, Capital as XX, the CCAP, Earnings or may call. Conference Inc. Please Crescent that ended note be BDC the Inc.'s

differ that results risks such webcast The statements. update Before and actual its are of this course first performance a March closed, the information is note of future those after made those press over the we begin, forward-looking with also to earnings the the quarter and XX, the company's I'll The its statements start XXXX, market past release the with not call statements yesterday Form uncertainties. materially with filed results. Yesterday and and for may section forward-looking filings. could from in XX-Q ended listed reviewed should expressed company market of for and the posted guarantee company SEC some subject including obligation at to Please such company's forward-looking conjunction to SEC. a in IR important assumes no Presentation be crescentbdc.com. its any reminders. Comments reason, any presentation issued contain in website conference

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

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

Jason Breaux

strong $X.XX from share, pleased to NII, of record Dan. investment the us for and We're Thank earnings credit last very per joining was portfolio. across quarter Hello, or Net you all $X.XX another performance income, everyone, up quarter. you, with continued thank report today.

quarters, NII increased the quarter. fifth the each consecutive has X in past in NII resulting record for of Our

dividend of has an of return declared per of regular yield coupled dividend, equates annualized earnings on in first Board a excess XX.X%. share our regular This to of dividend $X.XX which, for the NAV. earnings previously the declared XX, dividend quarter our when share, NII well XXXX, into equity annualized a quarter's per $X.XX on supplemental translated March with our With XX.X%

view a the continued in are per higher of in ability regular environment We've of in its track over dividend This strong that additional continue our conviction our base the with to announce is share our its we regular and In pipeline, to base origination the $X.XX approved our a demonstrated in underpins earning several bullish to CCAP's upside CCAP's in impact policy credit to first the excess base consecutive increased dividend, the XXXX of our supplemental been meaningful $X.XX has distributions. stockholders earnings and pleased we that our base Board of of $X.XX quarter we our in rate dividend recently dividend. it second form are increase light our both the opportunities firsthand of and response, portfolio, longer-term last regular longer-term credit record NII the the dividend performance increase paid cut story. dividend CCAP's We've in dividend quarter our this reviewed Having CCAP's we in the the never power. implemented of earnings was share. What increasing quarters. on sustainability in Refecting on earnings earning of confidence for the always our key current quarters. of portfolio XX private part a a of dividend

positive our that as First that believe Eagle acquired portfolio the to is to since which now longer-term year-over-year valuation our over the annual XXXX. Net for we that $XX.XX will earnings ROE of was assets and The continue per the earnings highest strength per X.X% managing quarter rotate and attractive quarter the to has monitoring value, from share, momentum and X.X% expect that we be also as first our CCAP's loans We in to corresponding and the from been we earnings the loans profile. increased led in of share net growth asset the to a $X.XX current also from note in which for an income in XX.X%. have it into June BDC benefited the year well

$X.X approximately at diversified ended portfolio X.X% gears. approximately average investment shift presentation, of Please total across of XX of companies of to which quarter size of portfolio. turn the portfolio. certain XX the value Slides investments XXX with the fair Let's our and We highlights billion with of highly characteristics a an

We protection on downside fair greater maintained representing lower of focus lien positioned portfolio compared primarily deliberately secured This second unitranche quarter. lien debt subordinated portfolios senior continued end, greater maintaining collectively of portfolio investment prior at portfolio exposure. defensively at value first of that first the loans, the loss to speaks a up modestly and and with to have from consists and risk XX% our with lien quarter

focused have noncyclical on across broad diversified characteristics efforts flow free XX well industries industry our investing with We remain high and cash categorizations.

of the ratings well-capitalized pleased as in indicated portfolio, performance equity end. quarter with by supported portfolio our companies nonaccrual entirely fundamental almost are and of debt our of sponsors sponsor-backed XX% levels. private our investments as by been We've Our with performance

X.X at year-end. for remained fair improvement you weighted Slide of from value, percentage And receive companies average an quarter-over-quarter. ratings and the will XX, our can of rated X X of accounted at XX% stable investments, XX% portfolio the highest on risk grade the portfolio that portfolio see Our

to portfolio nonaccrual total end, as X.X% nonaccrual in cost of cost had X.X% As total compares investment portfolio representing of This respectively. fair X.X% X and companies companies debt at representing investments year-end. stats, quarter on we on X status, investments our of value, of debt at and

status. Integra realized cost our was and Eagle a First name, acquired nonaccrual position in above basis our As from removed Matilda Jane, was

pleased share supplemental $X.XX June a noted, of per on declare dividend previously the we to for quarter, first As payable XXth. are

the Our XX, Henry dividend QX a our turn market, discuss quarter Board share on activity declared XXXX. I'd to the to per second to payable for and now $X.XX over it investment like Henry? the has July also regular portfolio. of

Henry Chung

Jason. Thanks,

LBO quarter was and activity of lending their lower middle in the In first highest quarter, down XX% level quarter, mid-market M&A volume first total. however, were syndicated arrangers much broadly direct was transactions. March in refinancings, double activity. which and February's by from focused upper terms from market for for loan overall and direct the the of primarily lenders of volumes, LBO at competed nearly market, November represented the almost which The fourth since majority driven activity XX% upper of came

and activity. of XX of bespoke the in remains direct the credit direct capital lending LBO the the private and [indiscernible], of As market a momentum, to structures. Please for the uncertainty result a pickup volume a Slide transactions where the believe stable like that are lending year. remainder a flexibility open, lower will economy, syndicated market ability by including and given middle core a benefits speed expertise of are recent backlog to significant around managers of Crescent, execution sponsors this And markets through craft highlight a market optimistic choice while in our offered that we strong market the we turn see we we of the

left-hand in the first which first gross in on see can million, totaled XX% side quarter unitranche the senior lien of was $XX you the secured and deployment page, of As investments.

in M&A. $XX was via During opportunities quarter platform approximately sulfur investments overall million set borrower existing a of incremental our QX levels aggregate existing our activity of compared we spread investments for ongoing first with as repayments. Incremental the approximately make deployment investments coming million $XX seen companies. were private The in from add-on provides the existing seeking sales pursuit within to elevated of with in grow fees an opportunity average XXX incremental compares loans a to This universe. the us closed remaining weighted to $XX to equity-backed basis attractive investments investments as of in X quarters points. we've and and quarter, new million companies refinancing gross new floors, companies to exits, recent and during million, the totaling well-performing accretive $XX in portfolio higher opportunistic percentage

continue borrowers significant and cushions of weighted value to XX%. equity the back loan We average was our with to new the quarter well-capitalized investments for

portfolio. flip Slide broader Please XX. to the to back Turning

that yield You line at quarter-over-quarter top the flat for can this of that noting the see first at the XX.X% period our of income dark as consistency. that portfolio. by investment equity XX WhiteHawk. from the in figures basis remained yield producing the up income updated the venture average impact at provides dividends retroactively chart comprehensive joint includes time, GACP weighted II represented been our It blue of update investments. metric view income-producing This worth well Logan We is cost from a interest is near-term Prior points expected and year-over-year. and securities of the as more have believe this CCAP's for partnership includes

in of companies. drawn X.Xx average As compares debt coverage were on investments our continued based points, on and monitor rate revenue floors. well value year-over-year our interest with at closely floating to year-end weighted with improved to investment portfolio with as our end. to average quarter costs companies of of Overall, fair liability average at the X% basis of borrowing weighted perform rate growth. portfolio have impact we of December said, being XX% structure XX to XXst, our at from XX% weighted rising a That debt end portfolio floor which investment continues quarter the EBITDA of our The floating strong X.Xx

based as As base latest respective of a is quarter. annualized reminder, each this calculation the rate on

how We our charges. also continue to fixed are monitor companies portfolio managing closely

well liquidity. fixed flows companies balance in and address positioned available operating cash aggregate that our the demonstrates analysis sheet Our are to charges with portfolio

firms of note quarter expected, is than and XX%. With weighted of right large relationships at I the our loan-to-value private revolver is first equity it have have across in now benefit amount approximately and Gerhard. of timeline the continues by well-established available equity over with will modest As approximately the of multiple the as in to portfolio companies, XX% portfolio saw end, we substantial portfolio invested it that, most aggregate which we partnered transactions a ample average whom more strength long-standing capacity in turn from applied the is with our to utilization in with revolver we quarter and that increase during view. The in aggregate our of

Gerhard Lombard

and Henry, Thanks, everyone. hello,

income, total PIK PIK for continues environment. What of nonrecurring to realizations at to of a highly of to investment and fee share first income compares investment of common per XX% compares BDC income increased represent the the we income we've $X.X income of and quarter. $X.XX $X.XX Recurring $XX.X primarily since per quarter's million the from sensitive which structuring quarter-over-quarter $XX.X revenue to $X.X prior portion a investment million for favorably X first investment quarter of which approximately million income, the of large for investment the million, the and in reported quarter net peer dividends longer for $X.X our XXXX. Total to XXXX $X.XX driven quarter, group. for per consider accounted modest million of for share in related consists amortization, share and We remain stock Our quarterly the approximately quarter increase inception quarter-over-quarter at first yield rate for flat fees. highest particularly this accelerated figure $XX.X income, higher income by to primarily compared was X% total income. prior million

While income in some over X high, nonrecurring investment quarters. we the was transactional of expect or quarter, unusually of X level investment exceeding million quarters last each those our each income $X nonrecurring

first and This $X.XX. GAAP quarter share share of of earnings net result XXXX the income supplemental per unrealized for dividends with of was was depreciation. $X.XX or the net regular investment coupled the net Our outpacing primarily per income

$XXX XXst, net March was per resulting as in of or As share last $XX.XX asset per value $XX.XX equity share million, our $XXX of million compared to stockholders' quarter.

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

mentality. a sheet liquidity maintain the conservative leverage, to mindset balance BDC a maintaining both full with economic continue company and cycle to We

it underwriting liquidity. our capitalization how also CCAP's with investment starts of and we manage new this While applies opportunities, to

XX, the was quarter. prior ratio March of X.XXx As our X.XXx, down debt-to-equity from in

leverage, are quarter to million interest of rate total liquidity we've strong quarter of other weighted was as capacity maturities end. base and cash on restrictions position $XX until on Our end. The with cash side stated million and of equivalents there average as highlighted subject remains right-hand $XXX of undrawn in and slide, as And our the X.XX% debt borrowings the no XXXX. borrowing

to per noted, for XXXX, Jason well to second As cover our we increased positioned $X.XX are dividend the of the over regular share, term. our quarter which board longer

to a distributions. With dividends by for continue back supplemental Board that, point will approval to of closing stockholder we the it subject and I'd to like As remarks. enhance declare quarterly clarification, Jason to pay to turn

Jason Breaux

are strong continued Thanks, portfolio. NAV to quarter's with the increase Gerhard. coverage conviction investment profile in maintain announced this We've our our and with and our positioned pleased a closing, in base stable earnings dividend defensively of power. consistent delivers a we In financial long-term performance highlights portfolio results CCAP's dividend, the that

risk-adjusted over remain confident of look strong we track CCAP's the we As our to forward the portfolio are remainder stockholders. returns to and of XXXX, continued we performance deliver attractive believe in on

we in can with inaugural We Investor line June Analyst many our and on forward with you be the And over just hosting Finally, XXth, of then. month for a questions. open speaking will to operator, we Day. that, look

Operator

our first question And Paul from KBW. comes Johnson with [Operator Instructions]

Paul Johnson

Weighted this kind the obviously just wondering if and quarter average was your market of the in the stable in you're spread. A in speak was to of market? good you could what pretty seeing yield I portfolio was kind quarter. that as of kind

Jason Breaux

Thanks it's Jason. for the Paul, question.

we're price arrangers opportunities which tighter to presence Henry able has new been volumes, four here think the pretty would generally largely that competition bit had in 'XX. we're we've certainly as lower talked upper 'XX about of the deal credit mid-market, they're the well BSL deals size. active characterize on seeing with environment, in been little this a billion competing some that with the here in We've which as pricing market, of focused it excess in has driven been deals. of private I we where pleased in where again, as in the larger $X certainly That's

would some I deal to down which to quarters, it, I'd in XXX uni sort deal come a of generally Crescent, in if a and XXX. I or in about the on side, type think points, the to period we, a spread has say upper lower market, say bps of then to I And mid-market, is probably generally at the XXX pricing cases, even in that last XXX about XXX core from time to of think from couple from come the XX middle the XX and basis pricing XXX where is pricing XXX were probably XX over deal. same focus, a over

Paul Johnson

kind quarter, marks And the nicely. NAV That's of is then really the good up color. just on for

like just that of general was kind across Or or kind that is Just driving broadly marks like of [indiscernible] book? portfolio your anything that anything specific that? resolutions

Gerhard Lombard

tightening Yes. This I what take in spreads. increase to is March There's that. minute a said We'd ago, can nothing a individually material. that is Jason of which link Gerhard. really

Jason Breaux

me. Got it. for And one last then

we guess get over Just by million should think about your the comment would Is not kind factored quarters going nonrecurring quarter? you for is how on going that of so. average that bit expect $X kind income? forward? a of X And your -- the of to higher million last incoming that about not weighted really calculation on little $X kind that the yield I kind or forward, basically of nonrecurring to another so just into basically or

Gerhard Lombard

I'll Thanks,. nonrecurring part. income reverse do maybe take in Yes. calculation. the yield in those our not the include We second generally

including the yield would be that recurring only, OID. calculation income So

will obviously quarter-over-quarter. inherent income uncertainty fee OID is to volatility accelerated is XX-plus recurring. of of And the numbers difficult your highest say because that drivers total I income. an X are it Regarding first percent or in part just transactional of level the revenue question, project those it's our nonrecurring and

prepared as QX in nonrecurring $XXX,XXX million, $X last been while provide of don't which we has don't as in we high expect Our quite over and heard at and as nonrecurring of be QX on so while level look the will between guidance believe some of you forward-looking we historical it of NII, 'XX remarks, year. QX about range income, we today,

Paul Johnson

helpful. That's that. Appreciate me. it. all Got for That's

Operator

time, this I'm to the for I'll in turn now queue. it any At over no showing closing Instructions] questions [Operator back remarks. currently management

Jason Breaux

support We Thanks Investor We Thank in with Analyst forward and CCAP. time you interim. and the appreciate to much, also Day look and and you. everyone. quarter next attention at of your very speaking the

Operator

today's for Thank conclude participation. does This program. your you

You may disconnect. now

Crescent Capital BDC (CCAP) 9 May 242024 Q1 Earnings call transcript