Nuveen Churchill Direct Lending Corp. Q1 FY2026 earnings call

Good morning, Ken started by discussing first quarter results, market conditions, portfolio positioning. Net investment income 41 cents per share, excluding non-recurring items 43 cents per share. Gross originations $83M vs $59M in Q4 2025. Net asset value declined due to spread widening and fair value decrease of some portfolio companies. Current market has volatility, but investment portfolio performance strong. Focus on core traditional middle market, senior secured first lien loans. Investment activity: fundings ~$85M, repayments/sales ~$65M. Portfolio has 236 companies, top 10 ~13% of fair value. Low software exposure. Shai then discussed financial results in detail, net investment income $0.41 per share, total investment income $46.3M vs $50M in Q4 2025. Decline due to lower portfolio yields. Debt-to-equity ratio 1.32 times gross, 1.26 times net. Declared $0.38 per share distribution for Q2. Net realized and unrealized losses in Q1. Investment portfolio fair value $2B, originations/fundings higher than Q4 2025. Credit quality strong with low non-accrual percentage. Refinancing of NCDL CLO2 reduced borrowing costs.

Net investment income was 41 cents per share, impacted by one-time expenses totaling ~2 cents per share. Excluding non-recurring items, net investment income was 43 cents per share. Gross originations totaled ~$83 million. Net asset value was $17.50 per share as of March 31st, down from $17.72 per share at end of 2025. Investment portfolio focused on senior secured first lien loans. Portfolio company performance resilient with weighted average internal risk rating 4.3, watch list ~8.4% of fair value, net leverage 5.1 times, interest coverage 2.3 times.

Board declared $0.38 per share second quarter distribution. Expect to redeploy capital from repayments and maintain leverage towards upper end of target range. Continue to look for ways to optimize debt capital structure. Confident in NCDL's position for remainder of 2026 with experienced team and ability to originate high-quality investments.

Market volatility, AI disruption potential impact on portfolio, retail redemption dynamics affecting other private BDCs, competition in certain areas though Ken noted large cap players pulling back, spread widening impact on valuations.

Q: Generated 9.4% NIIROE, is 9%-9.5% level good for next few quarters and levers to grind higher?

A: Shai said earnings picture stable due to higher for longer rates and spread widening on new origination, but constrained on leverage, will optimize borrowing costs.

Q: Where most attractive deployment opportunities sector-wise and mix shift?

A: Ken said broad-based business services, healthcare, not large-scale software, larger companies opportunities due to retail pullback.

Q: Hearing from institutional LPs on direct lending opportunity and diversification?

A: Ken said institutional sentiment strong, 96% institutional, allocations up, fundamentals good.

Q: Portfolio companies M&A, equity allocations and realizations?

A: Shai said M&A activity picked up, equity allocation modest increase, sponsors active in add-on acquisitions.

Q: Increased competition areas?

A: Ken said large retail-oriented private credit shops pulled back, opposite of competition.

Q: Square pipeline and wider spreads?

A: Ken said pipeline strong after pullback due to retail capital need to deploy quickly, now balanced for traditional lenders.