Carlyle Secured Lending, Inc. Q4 FY2025 earnings call

• Justin Plouffe mentioned assuming CFO role and Alex Chi joining as CEO of CGBD, with Tom Hennigan as President and CFO. - Alex Chi highlighted CGBD's focus on stable, high-quality credits, strong origination efforts, software investment framework insulated from AI, portfolio diversification, and formation of SCP. - Tom Hennigan discussed fourth quarter financial results, credit performance, MMCF JV updates, financing facilities, and leverage.

In the fourth quarter, CGBD had over $400 million of investment fundings, resulting in net investment activity of $193 million after repayments. Total investments at CGBD increased from $2.4 billion to $2.5 billion. The MMCF joint venture's investments increased to over $950 million. CGBD generated $0.33 per share of net investment income on a GAAP basis and $0.36 of adjusted NII per share. The net asset value as of December 31 was $16.26 per share. The portfolio was comprised of 165 companies across over 25 industries, with 94% of investments in senior secured loans. The new joint venture SCP is expected to increase diversification and portfolio yield.

• Expect 2026 to be an active year with increased M&A activity and strong deal flow. - Anticipate earnings trough in first half of 2026 due to base rate cuts, then increase as portfolios of JVs ramp. - Board approved upsizing share repurchase program to $300 million.

Q: Who is CGBD taking market share from and what's the competitive advantage?

A: Taking share from various entities by harnessing Carlyle platform's power, with strong credit culture, team underwriters, and industry vertical expertise.

Q: What's driving borrowing demand and strong pipeline?

A: Middle market and core areas have consistent opportunities, Carlyle returning capital through exits, and rejuvenated origination platform.

Q: Rationale for SCP JV?

A: Leveraging Carlyle network, utilizing nonqualified asset bucket, and expected strong returns with no fee structure.

Q: Near-term opportunities and priorities for CGBD?

A: Focus on rejuvenated origination strategy to take more share by harnessing Carlyle's full power.

Q: Spread trends and software deal flow?

A: Spreads not compressing, some widening in middle market, software deals paused due to enterprise value gaps.

Q: Interest expense impact on borrowers and credit metrics?

A: Interest coverage ratio is getting better with base rate cuts, but not a material difference yet.

Q: Buybacks vs investments?

A: Balanced approach with share repurchases ongoing and JV investments expected to be accretive.