Carlyle Secured Lending (CGBD) Q3 2024 earnings summary

Executive summary

• Net investment income for Q3 2024 was $24.0 million, or $0.47 per share; adjusted NII was $0.49 per share, reflecting one-time CLO reset costs.

• Net asset value per share as of September 30, 2024, was $16.85, down slightly from the prior quarter.

• Portfolio comprised 175 investments in 128 companies across 25+ industries, with a fair value of $1.71 billion and 94% in senior secured loans.

• Board declared a Q4 2024 dividend of $0.40 per share plus a $0.05 supplemental dividend, payable January 17, 2025.

• Merger with Carlyle Secured Lending III is on track to close by end of Q1 2025, with preferred stock to be exchanged for common stock at NAV.

Financial highlights

• Total investment income for Q3 2024 was $56 million, slightly lower than prior quarter due to lower average portfolio balance and yields.

• Net investment income was $24 million ($0.47/share); adjusted NII was $25 million ($0.49/share).

• Aggregate realized and unrealized net loss was about $5 million for the quarter.

• Dividend coverage at 118% for the quarter; annualized dividend yield was 10.7% on Q3 NAV.

• Basic EPS for Q3 2024 was $0.37; for the nine months ended September 30, 2024, basic EPS was $1.28.

Outlook and guidance

• Confident in ability to meet/exceed $0.40 base dividend, but expect some earnings contraction due to lower base rates and tighter spreads.

• Merger with CSL III expected to close in Q1 2025, subject to approvals.

• M&A pipeline expanding; originations expected to remain strong into 2025.

• Target leverage at merger close is 1.1x; currently at 0.95x, expected to be above 1.0x by quarter-end.

• Focus remains on direct origination of secured debt to U.S. middle market companies.