Palmer Square Capital BDC Inc. Q3 FY2025 earnings call

• Deployed $138.7 million of capital in the third quarter. • Generated total investment income of $31.7 million and net investment income of $13.6 million. • Delivered net investment income of $0.43 per share, covering dividends. • Announced September NAV per share of $15.39, a unique monthly disclosure. • Market outlook: Early signs of improving deal flow, though M&A volumes still subdued. • Portfolio highlights: Total investment portfolio fair value $1.26 billion, 42 industries represented; non-accruals low; first lien borrowers have strong EBITDA, leverage, and interest coverage. • Balance sheet: Total assets $1.3 billion, total net assets $490.4 million, debt-to-equity ratio 1.53x.

During the third quarter, Palmer Square Capital BDC deployed $138.7 million of capital and generated total investment income of $31.7 million and net investment income of $13.6 million (or $0.43 per share). The total investment portfolio had a fair value of approximately $1.26 billion as of September 30, 2025, down 1.6% from the second quarter. Net investment income well covered the base dividend of $0.36 per share and total dividend of $0.42 per share. NAV per share was $15.39 as of September.

• Anticipates potential rate cuts in 2026 due to softening labor market, which could benefit borrowers and M&A. • Cautiously optimistic about improving deal flow in coming quarters. • Board approved additional $5 million of open market share repurchases. • Declared fourth quarter 2025 base dividend of $0.36 per share, with supplemental dividend to be announced in December.

• Uncertainties surrounding interest rates, economic conditions, and inflation/tariffs affecting Fed's dual mandate. • Specific portfolio risks: Complex situations with First Brands and others requiring time to work through, though non-accruals remain low overall.

Q: Talk about the current outlook for the path to recovery of First Brands and why the decision to hold versus sell.

A: It's a complex situation working through bankruptcy courts. Part of a debtor in possession financing that benefits existing position, and sees tangible brand value. Will be patient and work through process.

Q: Clarify total repurchase capacity in light of $5 million approval.

A: Existing 10b5-1 plan has capacity, additional $5 million is an open market purchase plan for additional firepower. Reevaluate go-forward.

Q: Explain interest coverage pickup and its drivers.

A: Mix of EBITDA growth in portfolio and borrowers refinancing to lower interest costs, leading to increased interest coverage.