Carlyle Secured Lending Inc. (NASDAQ:CGBD) Q2 2023 Results Conference Call August 9, 2023 10:00 AM ET

Company Participants

Daniel Hahn - IR

Aren LeeKong - Chief Executive Officer

Tom Hennigan - Chief Financial Officer

Conference Call Participants

Bryce Rowe - B. Riley

Arren Cyganovich - Citi

Operator

Good day, everyone, and thank you for standing by. Welcome to the Carlyle Secured Lending, Inc. Second Quarter 2023 Earnings Call [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Daniel Hahn. Please go ahead.

Daniel Hahn

Good morning. And welcome to Carlyle Secured Lending second quarter 2023 earnings call. With me on the call this morning is Aren LeeKong, our Chief Executive Officer; and Tom Hennigan, our Chief Financial Officer. Last night, we filed our Form 10-Q and issued a press release with a presentation of our results, which are available on the Investor Relations section of our Web site. Following our remarks today, we will hold a question-and-answer session for analysts and institutional investors. This call is being webcast and a replay will be available on our Web site. Any forward-looking statements made today do not guarantee future performance and any undue reliance should not be placed on them. These statements are based on current management expectations and involve inherent risks and uncertainties, including those identified in the Risk Factors section of our annual report on Form 10-K. These risks and uncertainties could cause actual results to differ materially from those indicated. Carlyle Secured Lending assumes no obligation to update any forward-looking statements at any time.

With that, I'll turn the call over to Aren.

Aren LeeKong

Thanks, Dan. Good morning, everyone, and thank you all for joining. I will focus my remarks on three topics for today's call. I'll start with an overview of our second quarter results. Next, I'll touch on the current market environment. And finally, I'll conclude with a few thoughts on our investment activity and current positioning. Starting off with earnings. We continue to see the benefit of higher base rates and attractive pricing on new investments, generating total net investment income of $0.52 per share for the quarter, which is up 30% year-on-year. Our net asset value at June 30th was $16.73 per share as compared to $17.09 for Q1. As Tom will detail later, the change in NAV for the quarter was primarily driven by a markdown on one of our healthcare services investments that was partially offset by earning NII in excess of the dividend. We declared total Q3 dividends of $0.44, consisting of our $0.37 base dividend plus a $0.07 supplemental, both of which were in line with the prior quarter. Although we are pleased with the quarter's earnings, we remain focused on the credit performance of the overall portfolio. The credit fundamentals of our portfolio, in the aggregate, have continued to perform well with revenues up more than 30% and EBITDA margins largely flat year-over-year despite inflationary pressures to the economy. And importantly, our borrowers have reported consistent quality results as we have not seen a meaningful increase in noncash addbacks and interest coverage remained stable. This gives us comfort in the strength of our portfolio.