Nuveen Churchill Direct Lending (NCDL) Q3 2024 earnings summary

Executive summary

• Net investment income per share rose to $0.58 in Q3 2024, fully covering both regular and special dividends, with net asset value per share increasing to $18.15 from $18.03 sequentially.

• Annualized ROE on net investment income was 12.6%, and on net income was 14.7% for Q3 2024.

• Portfolio grew to $2.05 billion at fair value, diversified across 202 companies and 26 industries, with 90.1% first lien debt.

• Three portfolio companies were on non-accrual, representing 1.4% of total investments at amortized cost, with a stable weighted average internal risk rating of 4.2.

• Strong deal activity, portfolio rotation into traditional middle market loans, and successful IPO and CLO issuance contributed to growth and positive outlook.

Financial highlights

• Net investment income for Q3 2024 was $31.5 million, or $0.58 per share, up from $0.57 in Q2; total investment income rose to $60.3 million, up 9% quarter-over-quarter and year-over-year.

• Net asset value per share increased to $18.15 from $18.03 at June 30, 2024.

• GAAP net income was $0.67 per share, up from $0.37 in Q2, aided by $0.09 per share in net realized and unrealized gains.

• Paid a total dividend of $0.55 per share (regular $0.45, special $0.10), equating to a 12.1% annualized yield on NAV.

• Portfolio fair value grew to $2.05 billion from $1.99 billion in Q2, driven by $226 million in new originations.

Outlook and guidance

• Management anticipates increased M&A activity in 2025, driven by a potential rate reduction cycle and robust deal flow.

• Declared a regular dividend of $0.45 per share for Q4 2024 and a special dividend of $0.10 per share payable in January 2025.

• Plan to continue rotating into traditional middle market loans and modestly increase leverage within the 1-1.25x target range.

• Focus remains on disciplined investment in private equity-backed U.S. middle market companies and defensive, cash-generative businesses.

• Expect further improvement in portfolio metrics as rates decline.