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Carlyle Secured Lending (CGBD) 6 Nov 24 2024 Q3 Earnings call transcript

AInvestThursday, Nov 7, 2024 4:33 am ET
1min read

Carlyle's Secured Lending, Inc. (CGBD) recently held its third quarter 2024 earnings conference call, providing insights into the company's financial performance and strategic outlook. The call was led by Nishil Mehta, Head of Shareholder Relations, alongside CEO Justin Plouffe and CFO Thomas Hennigan.

Financial Performance and Portfolio Positioning

During the quarter, CGBD reported net investment income of $0.47 per share and adjusted net investment income of $0.49 per share, representing an annualized yield of nearly 12%. The company's net asset value remained relatively flat at $16.85 per share, although deal activity has continued to strengthen in the second half of 2024. CGBD's portfolio is highly diversified, with 175 investments across 128 companies and an average exposure to any single portfolio company below 1%.

Earnings and Dividends

The company's financial performance has been driven by stable credit performance and a higher base rate environment. CGBD's Board of Directors declared a total fourth quarter dividend of $0.45 per share, consisting of a base dividend of $0.40 and a $0.05 supplemental dividend. The company remains confident in its ability to meet and exceed its $0.40 base dividend while maintaining a disciplined approach to credit performance.

Market Outlook and Investment Activity

Looking ahead, CGBD expects volumes to remain strong in 2025 as the M&A pipeline expands. Despite downward pressure on spreads, the company is focused on deploying into great credits. The market remains constructive, with a solid pipeline of new deals and a constructive outlook for the future. CGBD's target leverage at merger close is 1.1 across the combined entities, indicating a strong position for future growth.

Credit Performance and Balance Sheet Positioning

The company's credit performance has remained stable, with nonaccruals decreasing to only 0.6% of total investments. The portfolio's median EBITDA at quarter end was $85 million, highlighting the strength of the company's investment strategy. CGBD has also made significant strides in improving its balance sheet positioning, including the successful reset of a CLO and the issuance of $300 million in unsecured notes.

Conclusion

Overall, CGBD's third quarter earnings call provided a positive outlook for the company's future performance. With a strong financial foundation, a disciplined approach to credit performance, and a constructive market outlook, CGBD is well-positioned to capitalize on the opportunities ahead. As the company prepares for the merger with Carlyle Secured Lending III, investors can look forward to continued growth and a resilient, stable cash flow stream.

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