OBDE - Earnings call transcript Q1 2024 | Blue Owl Capital Corp III

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Operator

Good morning, and welcome to the First Quarter 2024 Earnings Call for Blue Owl Capital Corporation III. This call is being recorded. [Operator Instructions].

I would like to remind listeners that remarks made during today's call may contain forward-looking statements.

Forward-looking statements are not guarantees of future performance or results and involve a number of risks and uncertainties that are outside of the company's control. the materially the in those to number the filings differ a statements described update may Commission. The company's of Exchange result of with any results forward-looking from no forward-looking those as in company statements. Actual assumes and obligation Securities factors, including company's not companies, information from was Certain the third-party on been information including sources call this materials, discussed has independently derived verified. related in and and earnings to portfolio to such The or representations this company respect information. with no makes warranties

are Owl first Blue issued This earnings March Yesterday, filed SEC. in Corporation at Capital The its XX-Q Capital with Craig Blue earnings available company's XXXX. of Form Corporation will reviewed Investors blueowlcapitalcorporationiii.com. I Packer, yesterday of press III an earnings call website the section posted Chief press the conjunction presentation release the release, company's with over XX-Q presentation XX, quarter and should Owl turn III. be and on the now Officer to for the the Executive ended earnings presentation

Craig Packer

we in before Chief our operator. first results to since investing new I XXXX our Thank will will value detail our first shareholders. Today, for asset over Exchange and of our record Officer. on consecutive very will results us and pleased the you highlighting I'd share our joining report asset everyone, Jonathan welcome per our on first an an the quarter fourth strong entire with it share. environment. To the up on quarter provide representing perspective another Stock our to from net per $X.XX quarter. joined and Lamm, value. the $X.XX thank January on is I some York call income more our begin, and behalf of per to dividend Net team, the was Logan to market share start and to $X.XX on current Net financing Blue for Owl quarter. overview like provide and covered are quarter, for update President; handing Jonathan of our morning, fifth then our I'm more share This activities, close Nicholson, Logan earnings by $XX.XX, today quarter by first our increased call. investment quarter earnings Good also of New per Financial listing activities you, than

quarter the income As share. post reminder, full excluding was completed January would for investment a listing structure on onetime listing listing, been impact net XX. have $X.XX our with associated our primarily Adjusted fee and per of a costs

Our financial repayment results that reflect the dividend $X.XX our quarter, a our combined income. In in activity listing. pickup the strong the higher the line in first quarter share, per consistent credit with a environment and we and the related of second refinancing benefit our Board level declared of at performance, regular rate drove set

committed $X.XX in reminder, June. per dividends, formally to be previously company, in a an the by conjunction special the with will distributions share, Board per Altogether, As first which paid the which shareholders. have of provide $X.XX declared also in special share will to of dividends these the our X additional been listing,

of These designed the second and of framework through declared of distributions dividends investors dividend on lien predominantly dividend of special comprised Our value expected net $X.XX of to this first into a This our equate dividend. believe first especially $XX.XX. attractive for regular asset annualized a visibility quarter dividend previously XX.X% portfolio is loans. to $X.XX profile dividend We is clear was quarter based an yield a yield XXXX. give

better middle while lending investment market I unchanged we and want direct are We We sponsor-backed since solutions adapt which philosophy believe durable our inception. significant diversification the larger to that reiterate new environments. update prefer upper market an those on and is to company's provides Before different middle for activity, our to companies to companies provide borrower because more Logan U.S. investment OBDE, operating emphasizing the with histories equipped upper sector. to by economic

Owl exclusively weighted borrowers managing of and team which EBITDA more is cash $XXX equity borrowers. last Our benefit portfolio capital benefits on the the as this of substantial This believe the of flow close year and our financial them management. a investment market, of of team and companies, our adjusting and has of This have our and working private over the and upper leading scale revenues oversight comprised average The with serve by lending backed a manages their capital have than middle complemented is display interest elevated on prefer professionals. a offer XXX of experienced sponsors $XX and borrowers pool and by important. origination, investment it's navigated significant billion portfolio over we in underwriting capital their Blue as focused relationships because cost sponsors growing borrowers a where over of direct scale understanding credit needed been platform team is all million very large structures, AUM firms. We by profitability. To rates and expertise deep

the equity in For sponsors underpinning significant loan our of often example, is average by indicative investments to less portfolio the XX%, made loans. our value than

deliver points. our quality X account our currently to of maintain credit inception loss at remains at ability just for attractive to an has basis our is date fair low exceptional. OBDE's inception excellent core since only and Non-accruals debt portfolio quality philosophy X.X% return. And investment net risk-adjusted value. been Our credit rate to

Now investment to our activity call I'd discuss Logan quarter. turn the to like in the to

Logan Nicholson

great to today. be you It's with Craig. Thanks,

were many commit first more opportunities $XXX even as to approximately investments. We they primarily been like markets rigorous the accounted were the active deployed find continue investments, public the capital were lien sales the which standards by we activity. quarter, in to This point, of we our progress focus Originations XX% in have second on of quarter this metrics emphasize repayments. Repayments million In attractive offset value in repayment towards our demonstrating million in second quarter's making and leverage. was than enterprise most which to focus our for approximately first on in place have double third lien average I active new and commitments. our quarter resulted for lien our originations, scale, substantial is $XXX increasing for credit for an On roughly that investments. in We first borrowers businesses strong second and would with lien quarters. has

the on lien X.X we second these quarter, and delevered at companies approximately EBITDA this that turns loans. roughly investments Looking by refinanced the period XX% held average by were grew during

improved, credit investments they would of look profile it was these natural refinance. to the As

of Secondly, portfolio our repayment from as first lien quarter end. exposure a investments, of meaningful activity in resulted grew to increase XX% which XX% in the to

us percentage provide of to portfolio. financial towards further investment. progress around number The to the with been risks addition reduces size important to the total it it our because portfolio I'll to us detail XXX diversify leverage in In investment increased target to point. Diversification range, to our decreased beginning the Jonathan making since X.X over turn allowed average more to single and With our originations on our quarter active net companies has of associated the results. that, any

Jonathan Lamm

net ended portfolio with of We assets of $X.X debt the billion, billion. $X total and investments of $X.X outstanding quarter Logan. total Thanks, billion

to fourth driven portfolio to listing. was increasing share We our January a by in target across gains we our X.Xx range the quarter priority up net leverage which value and equity, finishing quarter $XX.XX, within quarter, per dividend. A the from asset end, this made quarter X.XXx overearn at $X.XX debt leverage, a highlighted first with fourth primarily increase of ability quarter unrealized was our and well key on focus Our progress to X.XXx this to first the X.XXx. the was from significant our quarter

in investment income Turning to our the net dividend. earned $X.XX statement. the first of regular $X.XX income above share quarter, We per

of of earnings mentioned, Adjusted we management strong Craig NAV would incurred quarter annualized normalized result a earned costs our we for continued listing equity XX.X%. a return that associated and As fees. have full $X.XX NII, incentive of on with and as this and another changes quarter's an those accounting for to added growth, onetime

increase from to higher investment target forward, also our Looking the range. we end progress to of benefit expect income net to leverage our

ended quarter. at of the much debt-to-equity activity range, of of with half quarter that we this the midpoint second the was While in the

not have we result, benefit of the a full investments. those realized As earnings

XX. remains while limited. Earlier Board of incremental per spreads this expect regular We lien activity or record our by this and more dividend income of shareholders will first partially our $X.XX investments portfolio week, be second weighted before June payable M&A of on as share to as towards quarter XX, a declared heavily July offset tighter is

with in $X.XX declared share inception. the dividend regular special dividends to is accumulated Our of special listing $X.XX be we share will per with which These in spillover X totaling accumulated have addition dividends funded income per our in since January. conjunction

SPV and choose our notes. We including also This our flexibility our CLOs manage us our reliant our we facilities, provides ensures present access a on to asset revolver, continue sources and and our us for as proactively of liability are structure, range Diversification extending unsecured wide specific financing the source to solution cost-effective while maturities themselves. to financing financing funding allows position most single any not liquidity increasing opportunities of overly diversifying solutions, needs.

agencies January, to by quarter, further of will the OBDE's highest continue investment BDC differentiation the positive the first the our differentiation outlook revised X We this stable. agencies Moody's sector recognizing In in quality hope we in in the maintained we various Additionally, Since grade from rating ratings. credit near the from future. listing saw trend towards issuers.

total to our quarter, first by increasing size $XXX $XX the million, During the credit million. revolving we upsized facilities facility

facility. $XXX upsizing to closed we addition our credit drop-down revolving million facility, SPV another In

a available is million the in our $XXX believe liquidity, of maturities only of well million As million, in total of XXXX, with ended approximately in quarter balance shape. commitments great sheet unfunded we result, approximately excess in $XXX OBDE with $XXX

each X-month remaining Craig back remarks. in listing is were listing. tranches will of a tradable position lockup Those time of as of XX. with Finally, January, July released on our the equal in at that, our turn Board Each approximately at X% shares reminder, first position. investor's to in With the connection it freely the investor's the which be waived closing intervals, I'll X for

Craig Packer

is positioned Thank I'd of Jonathan. the the to like you, for remainder how on XXXX. and OBDE spend market close, minute environment a To

direct only strengths This A large XXXX. the point market in were in significantly key the borrowers which credit historically challenging of COVID, that invest vintage. a an during provided economic started weathered more very of have to post significant when fund markets public than market is of deployed this portion XXXX. The conditions One was the inflection accessing the had accessed they companies been lending public unique recently opportunity solutions. successfully active in its

represents compared in dynamic this market this a return really is shift a the more last While just market to year, normal to conditions.

Despite now. direct was lending quarter, capital over We experiencing the up expect private we will platform, we're at activity. Notably, deployed private billion see step be we environment, a as of market primary a this at And quarter will third and full back, times, active origination markets activity is what to have our we which other balanced serve the public level public in row. pull times, active, $X Owl the across will more second the the this provider. quarter the most for markets lower in that and Blue more will credit

commitments across by differentiated in million up capital size, platform funds. capital commit evidenced we our is by ability provided $XXX to recent to our transactions where Our

We and advantage our believe to the provides size Owl all the significant continue funds. platform a to of Blue scale of broader that

strong ample acquisitions. breadth to for The of finance mind look of environment, the and and our predictable focus and that shareholders. top the our dividends deliver platform strategic we keep Regardless remains on our what powder dry sponsors earnings protection our drives borrowers performance unwavering of and market to selection the credit our founding. as Credit we since is large and they same us maintain excellent,

one of was streamlined OBDE this to credit whole. with Finally, and The and as our brought for New quarter Stock way, Exchange extremely the important simple pleased and our as largest York platform milestone BDCs been an since. reception the public market markets the OBDE the listing on we've listing a

Relations first quarter and For visit interested we and August. we those providing out you our forward you joining invite Investor reach in website, team. Thank or second to to our blueowlcapitalcorporationiii.com to for call, us who company for our more, learning to our look earnings are in our new update

Operator

Ladies gentlemen, and event. today's this concludes

lines your or the and disconnect may at rest the this off log You your of day. enjoy webcast time

Blue Owl Capital Corp III (OBDE) 9 May 242024 Q1 Earnings call transcript