Advertisement
Singapore markets closed

  • Straits Times Index

    3,314.05
    +0.57 (+0.02%)
     

  • S&P 500

    5,303.27
    +6.17 (+0.12%)
     

  • Dow

    40,003.59
    +134.19 (+0.34%)
     

  • Nasdaq

    16,685.97
    -12.33 (-0.07%)
     

  • Bitcoin USD

    66,939.87
    -61.06 (-0.09%)
     

  • CMC Crypto 200

    1,367.23
    +12.82 (+0.95%)
     

  • FTSE 100

    8,428.61
    +8.35 (+0.10%)
     

  • Gold

    2,422.10
    +4.70 (+0.19%)
     

  • Crude Oil

    79.54
    -0.52 (-0.65%)
     

  • 10-Yr Bond

    4.4370
    +0.0170 (+0.38%)
     

  • Nikkei

    39,069.68
    +282.30 (+0.73%)
     

  • Hang Seng

    19,636.22
    +82.61 (+0.42%)
     

  • FTSE Bursa Malaysia

    1,627.50
    +10.88 (+0.67%)
     

  • Jakarta Composite Index

    7,266.69
    -50.55 (-0.69%)
     

  • PSE Index

    6,682.78
    +64.09 (+0.97%)
     

Carlyle Secured Lending Inc (CGBD) (Q1 2024) Earnings Call Transcript Highlights: Strong ...

GuruFocus Research
·4-min read

  • Net Investment Income: $0.54 per share, annualized yield nearly 13%

  • Dividend: Total Q2 dividend $0.47 per share, including $0.40 base and $0.07 supplemental

  • Net Asset Value (NAV): $17.7 per share as of March 31, up $0.08 or approximately 0.5% from December 31

  • Total Investment Income: $62 million for Q1 2024

  • Total Expenses: $34 million, flat versus prior quarter

  • Net Investment Income: $28 million for Q1 2024

  • Dividend Coverage: Base dividend coverage 135% for the quarter

  • Nonaccruals: Fell to only 0.2% of total investments at fair value and amortized cost

  • Leverage: Statutory leverage about 1.13 times; net financial leverage ended the quarter at 0.95 times

Release Date: May 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Carlyle Secured Lending Inc reported a net investment income of $0.54 per share, reflecting a strong earnings performance.

  • The company declared a second quarter dividend of $0.47 per share, indicating a robust return to shareholders.

  • Carlyle Secured Lending Inc's net asset value increased to $17.7 per share, up from the previous quarter, showing asset growth.

  • Investment origination activity increased by over 30% year-over-year, demonstrating aggressive market engagement and growth in business operations.

  • Significant improvement in nonaccruals, showcasing enhanced credit performance and effective risk management strategies.

Negative Points

  • A slight decrease in total investment income from the previous quarter, with a noted reduction in prepayment and amendment fees.

  • Despite strong performance, net investment income per share decreased by $0.02 from the previous all-time high.

  • Exposure to market fluctuations and interest rate risks as noted in the forward-looking statements, which could impact future performance.

  • Operational changes with the resignation of a key executive, which could lead to transitional challenges within the company.

  • The competitive environment has led to tighter pricing pressures, which could affect future profitability and investment opportunities.

Q & A Highlights

Q: Can you talk about your appetite for taking part in the market activity and how you're thinking about pricing today versus what's in the portfolio? A: Justin Plouffe, CEO of Carlyle Secured Lending, noted that the company is actively participating in the market with a strong pipeline. Despite tighter pricing influenced by the broadly syndicated market, Carlyle continues to make attractive senior secured loans with returns that historically resemble equity-like returns. The focus remains on deploying capital through cycles and maintaining attractive investment conditions.

ADVERTISEMENT

Q: Are there still opportunities within the portfolio to take advantage of your incumbency position? A: Justin Plouffe highlighted the benefits of incumbency, which have positively impacted the past quarter and are expected to continue providing origination opportunities throughout the year. This strategy not only applies to individual companies but also extends across relationships with sponsors throughout the portfolio.

Q: With debt maturing at the end of this year, what are your plans regarding this maturity? A: Thomas Hennigan, CFO, mentioned that Carlyle is in discussions for a potential index-eligible deal later in the year or early next year. Additionally, considering the attractive pricing of AAA notes in their CLO, they are actively looking at resetting this vehicle to optimize the capital structure for the long term.

Q: Given the healthy dividend coverage, is there a possibility of increasing the dividend further? A: Thomas Hennigan explained that while they feel comfortable with the current $0.40 base dividend and a variable supplemental dividend policy, the possibility of increasing the dividend is reviewed quarterly. For now, they maintain a conservative stance but acknowledge the potential for future adjustments based on performance.

Q: How does Carlyle Secured Lending view the risk-reward of investments today compared to historical levels? A: Justin Plouffe emphasized that despite some tightening in pricing, the current environment still offers the potential for returns that are comparable to historical equity-like returns. Carlyle remains active and sees this as an attractive environment to be very active in making investments.

Q: Can you provide insights into the strategic moves regarding your financing facilities and leverage? A: Thomas Hennigan discussed the strategic adjustments in their financing, particularly focusing on the upcoming maturity of bonds and the resetting of their CLO to better position Carlyle for the future. These moves are intended to maintain flexibility and optimize the companys capital structure amid evolving market conditions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.