Carlyle Secured Lending, Inc. Q2 FY2025 earnings call

• Q2 results: Generated $0.39 per share of net investment income, Board declared $0.40 per share dividend for Q3. Net asset value as of June 30 was $16.43 per share. • Investment activity: Carlyle Direct Lending had $2 billion in originations closed in Q2, CGBD funded $376 million of investments, highest since IPO in 2017. • Portfolio positioning: Pipeline rebuilding expected for end of year, selective underwriting for quality credits at top of capital structure, portfolio diversified with 202 investments, 148 companies across over 25 industries. • Credit performance: Overall stability in credit quality, one name added to nonaccrual during quarter, Maverick restructuring completed reducing nonaccruals. • New leadership: Alex Chi to join as Partner, Deputy Chief Investment Officer for Global Credit and Head of Direct Lending in early 2026.

Total investment income for the second quarter was $67 million. Total expenses were $39 million. Net investment income for the second quarter was $28 million or $0.39 per share on both a GAAP basis and after adjusting for asset acquisition accounting. The portfolio was comprised of 202 investments and 148 companies across more than 25 industries. 94% of investments were in senior secured loans and the median EBITDA across the portfolio was $92 million. Revenue contribution details weren't explicitly broken down by product segment beyond the overall portfolio info.

• Q3 origination activity expected to be slower due to seasonal summer slowdown and market uncertainty from April. • Optimistic for pipeline rebuilding to a busier end of the year and Q4. • Focus on selective underwriting of quality credits at top of capital structure, maintaining portfolio diversification and target leverage. • Board declared $0.40 per share dividend for Q3.

• Historically tight market spreads may present headwind to near-term earnings. • Uncertainties related to trade policy and potential impact on portfolio. • Risks associated with achieving expected synergies from merger, including those identified in Risk Factors sections of 10-K and 10-Qs which could cause actual results to differ materially from expectations.

Q: What's driven tighter spreads over the past year or so and if they'll persist?

A: Deal activity not as robust in first half, optimistic for increased deal activity in second half and 2026. Spreads likely to normalize with normal deal activity.

Q: Any pause or concern about U.S. economic environment?

A: Certainty is preferred, but happy with companies invested in, focusing on investing in great companies.

Q: Color on unrealized losses?

A: Mostly idiosyncratic, company-specific credit situations with underperformance, engaged in workouts.

Q: Thoughts on buyback authorization?

A: Still focused on growth, in dialogue with Board, considering buybacks but no imminent plan.

Q: Mid-teens ROE for credit fund?

A: Indicates $4.5 million to $5.5 million dividend range when utilizing full equity commitments, focused on potential other JVs.

Q: Concern about style drift with Alex joining?

A: No change to strategy, focused on core middle market investing in U.S.

Q: Optimism for deployment in second half?

A: 3Q muted due to summer, but pipelines looking good for new deal activity.

Q: Earnings power offset from lower rates and dividend?

A: Various factors like leverage, nonaccruals, JVs, but rates a headwind.

Q: Time line for fully utilizing credit fund equity?

A: Next 2-3 quarters for additional JV, but actual economic benefit likely 2026.

Q: Characterization of deal flow quality?

A: Quality of companies in pipeline and investments remains strong, no material change in quality.