UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 8, 2023
(Exact name of registrant as specified in its charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | |||||||||||||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||||||||||||||
(212 ) 813-4900
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 – Results of Operations and Financial Condition.
On August 8, 2023, Carlyle Secured Lending, Inc. (the “Company”) issued a summary press release and a detailed earnings presentation announcing its second quarter 2023 financial results. Copies of the summary press release and the earnings presentation are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively.
The information disclosed under this Item 2.02, including Exhibits 99.1 and 99.2 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act"), and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933 (the "Securities Act") or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 7.01 – Regulation FD Disclosure.
On August 8, 2023, the Company issued a press release, included herewith as Exhibit 99.1, announcing the declaration of a third quarter 2023 base common dividend of $0.37 per share plus a supplemental common dividend of $0.07 per share, which are payable on October 17, 2023 to stockholders of record as of September 29, 2023.
The information disclosed under this Item 7.01, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, and shall not be deemed incorporated by reference into any filing made under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 9.01 – Financial Statements and Exhibits.
Exhibits 99.1 and 99.2 shall be deemed furnished herewith.
(d)Exhibits:
| Exhibit Number | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CARLYLE SECURED LENDING, INC. | ||||||||||||||
| (Registrant) | ||||||||||||||
| Dated: August 8, 2023 | By: | /s/ Thomas M. Hennigan | ||||||||||||
| Name: Thomas M. Hennigan | ||||||||||||||
| Title: Chief Financial Officer | ||||||||||||||
Exhibit 99.1
For Immediate Release
August 8, 2023
Carlyle Secured Lending, Inc. Announces Second Quarter 2023 Financial Results, Declares Third Quarter 2023 Dividends of $0.44 Per Common Share
New York - Carlyle Secured Lending, Inc. (together with its consolidated subsidiaries, “we,” “us,” “our,” “CSL” or the “Company”) (NASDAQ: CGBD) today announced its financial results for its second quarter ended June 30, 2023. The full detailed presentation of CSL’s second quarter 2023 results can be viewed here.
Aren LeeKong, CSL’s Chief Executive Officer said, “In spite of a complex economic backdrop, our portfolio continues to generate attractive income for our investors and remained stable throughout the second quarter. With traditional deal flow in the market continuing to maintain a sluggish pace, we have focused on leveraging Carlyle relationships for unique deal flow and working with existing borrowers to address their needs, while improving pricing and documentation. This backdrop allows us to be highly selective and committed to disciplined credit underwriting, while capturing attractive terms and pricing.”
Net investment income for the second quarter of 2023 was $0.52 per common share, and net asset value per common share decreased by 2.1% for the second quarter to $16.73 from $17.09 as of March 31, 2023. The total fair value of our investments was $1.9 billion as of June 30, 2023.
Dividends
On August 3, 2023, the Board of Directors declared a base quarterly common dividend of $0.37 plus a supplemental common dividend of $0.07, which are payable on October 17, 2023 to common stockholders of record on September 29, 2023.
On June 27, 2023, the Company declared and paid a cash dividend on the Preferred Stock for the period from April 1, 2023 to June 30, 2023 in the amount of $0.438 per Preferred Share to the holder of record on June 30, 2023.
Conference Call
The Company will host a conference call at 10:00 a.m. EDT on Wednesday, August 9, 2023 to discuss these quarterly financial results. The conference call will be available via public webcast via a link on Carlyle Secured Lending’s website and will also be available on our website soon after the call’s completion.
Carlyle Secured Lending, Inc.
CSL is an externally managed specialty finance company focused on lending to middle-market companies. CSL is managed by Carlyle Global Credit Investment Management L.L.C., an SEC-registered investment adviser and a wholly owned subsidiary of The Carlyle Group Inc. Since it commenced investment operations in May 2013 through June 30, 2023, CSL has invested approximately $7.9 billion in aggregate principal amount of debt and equity investments prior to any subsequent exits or repayments. CSL’s investment objective is to generate current income and capital appreciation primarily through debt investments in U.S. middle market companies. CSL has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended.
Web: carlylesecuredlending.com
About Carlyle
Carlyle (“Carlyle,” or the “Adviser”) (NASDAQ: CG) is a global investment firm with deep industry expertise that deploys private capital across three business segments: Global Private Equity, Global Credit and Global Investment Solutions. With
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$385 billion of assets under management as of June 30, 2023, Carlyle’s purpose is to invest wisely and create value on behalf of its investors, portfolio companies and the communities in which we live and invest. Carlyle employs more than 2,200 people in 29 offices across five continents. Further information is available at www.carlyle.com. Follow Carlyle on Twitter @OneCarlyle.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by the use of forward-looking terminology such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may,” “plans,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words. You should read statements that contain these words carefully because they discuss our plans, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. There may be events in the future, however, that we are not able to predict accurately or control. You should not place undue reliance on these forward-looking statements, which speak only as of the date on which we make it. Factors or events that could cause our actual results to differ, possibly materially from our expectations, include, but are not limited to, the risks, uncertainties and other factors we identify in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in filings we make with the Securities and Exchange Commission, and it is not possible for us to predict or identify all of them. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Contacts:
| Investors: | Media: | ||||
| Daniel Hahn | Kristen Greco | ||||
| +1-212-813-4900 publicinvestor@carlylesecuredlending.com | +1-212-813-4763 kristen.greco@carlyle.com | ||||
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1 Carlyle Secured Lending, Inc. Quarterly Earnings Presentation June 30, 2023
Disclaimer and Forward-Looking Statement This presentation (the “Presentation”) has been prepared by Carlyle Secured Lending, Inc. (together with its consolidated subsidiaries, “we,” “us,” “our,” “CSL” or the “Company”) (NASDAQ: CGBD) and may only be used for informational purposes only. This Presentation should be viewed in conjunction with the earnings conference call of the Company held on August 9, 2023 and the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The information contained herein may not be used, reproduced, referenced, quoted, linked by website, or distributed to others, in whole or in part, except as agreed in writing by the Company. This Presentation does not constitute a prospectus and should under no circumstances be understood as an offer to sell or the solicitation of an offer to buy our common stock or any other securities nor will there be any sale of the common stock or any other securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such state or jurisdiction. This Presentation provides limited information regarding the Company and is not intended to be taken by, and should not be taken by, any individual recipient as investment advice, a recommendation to buy, hold or sell, or an offer to sell or a solicitation of offers to purchase, our common stock or any other securities that may be issued by the Company, or as legal, accounting or tax advice. An investment in securities of the type described herein presents certain risks. This Presentation may contain forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by the use of forward- looking terminology such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may,” “plans,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words. You should read statements that contain these words carefully because they discuss our plans, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. There may be events in the future, however, that we are not able to predict accurately or control. You should not place undue reliance on these forward-looking statements, which speak only as of the date on which we make them. Factors or events that could cause our actual results to differ, possibly materially from our expectations, include, but are not limited to, the risks, uncertainties and other factors we identify in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in filings we make with the Securities and Exchange Commission (the “SEC”), and it is not possible for us to predict or identify all of them. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Information throughout the Presentation provided by sources other than the Company (including information relating to portfolio companies) has not been independently verified and, accordingly, the Company makes no representation or warranty in respect of this information. The following slides contain summaries of certain financial and statistical information about the Company. The information contained in this Presentation is summary information that is intended to be considered in the context of our SEC filings and other public announcements that we may make, by press release or otherwise, from time to time. We undertake no duty or obligation to publicly update or revise the information contained in this Presentation. CSL is managed by Carlyle Global Credit Investment Management L.L.C. (the “Investment Adviser”), an SEC-registered investment adviser and a wholly owned subsidiary of The Carlyle Group Inc. (together with its affiliates, “Carlyle”). This Presentation contains information about the Company and certain of its affiliates and includes the Company’s historical performance. You should not view information related to the past performance of the Company as indicative of the Company’s future results, the achievement of which is dependent on many factors, many of which are beyond the control of the Company and the Investment Adviser and cannot be assured. There can be no assurances that future dividends will match or exceed historical rates or will be paid at all. Further, an investment in the Company is discrete from, and does not represent an interest in, any other Carlyle entity. Nothing contained herein shall be relied upon as a promise or representation whether as to the past or future performance of the Company or any other Carlyle entity. 2
• Paid the 2Q23 base dividend of $0.37 plus a supplemental dividend of $0.07 per share • Completed a $57 million upsize on our credit facility bringing total commitments to $745 million • Net financial leverage decreased to 1.11x, comfortably within our target range • Total liquidity at 2Q23 was $396.9 million in cash and undrawn debt capacity • Net investment income per share was $0.52 per common share, up $0.02 compared to our 1Q23 core earnings due primarily to the continued rise in benchmark interest rates • NAV per share was $16.73, down 2.1% compared to our 1Q23 NAV of $17.09 per share • The change in NAV in 2Q23 was primarily driven by net unrealized losses from our watchlist names offset by NII generated in excess of our 2Q23 dividend • Declared a $0.37 base dividend plus a $0.07 supplemental for 3Q23, equating to an annualized dividend yield of 10.5% on our 2Q23 NAV • 2Q23 portfolio included total commitments of $2.2 billion across 130 portfolio companies • New investment fundings during the quarter were $51.0 million with a weighted average yield of 12.4% • Total repayments and sales during the quarter were $107.5 million with a weighted average yield of 11.5% • Non-accrual investments in 2Q23 decreased to 3.2% and 1.8% of the total portfolio based on amortized cost and fair value, respectively, aided by closing the restructuring of Bayside OPCP (f.k.a. PPT Management Holdings) • The annualized dividend yield on our Investment Funds was 12.2% in 2Q23 Portfolio & Investment Activity Second Quarter Results Q2 2023 Quarterly Highlights Liquidity & Capital Activity 3 Note: Per share amounts within this presentation apply to common shares of the Company unless otherwise noted.
Quarterly Operating Results Detail Please refer to the Company’s Form 10-Q for more information. (1) Includes the preferred stock dividend. (2) Presented net of the preferred stock dividend for the period. (3) Includes deferred financing costs. (4) Reflects cumulative convertible preferred securities as equity, net of excess cash held at period end, which was $34.5 million on June 30, 2023. (5) Reflects cumulative convertible preferred securities as debt. These securities are considered "senior securities" for the purposes of calculating asset coverage pursuant to the Investment Company Act. (Dollar amounts in thousands, except per share data) Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 SUMMARY INCOME STATEMENT Total investment income $ 44,568 $ 59,143 $ 56,036 $ 58,375 $ 60,065 Total expenses(1) (23,573) (28,865) (31,411) (32,680) (33,765) Net Investment Income(2) $ 20,995 $ 30,278 $ 24,625 $ 25,695 $ 26,300 Net realized and change in unrealized gains (losses) (17,205) 6,677 (13,041) 1,417 (22,462) Net Income (Loss)(2) $ 3,790 $ 36,955 $ 11,584 $ 27,112 $ 3,838 Weighted average shares of common stock outstanding 52,421 51,863 51,310 50,887 50,795 Net Investment Income per Share(2) $ 0.40 $ 0.58 $ 0.48 $ 0.50 $ 0.52 Net Income (Loss) per Share(2) $ 0.07 $ 0.71 $ 0.23 $ 0.53 $ 0.08 SUMMARY BALANCE SHEET Total investments, at fair value $ 1,889,276 $ 1,948,957 $ 1,979,877 $ 1,973,565 $ 1,896,420 Cash, cash equivalents and restricted cash 39,291 68,644 30,506 42,873 54,150 Other assets 117,386 36,431 31,314 38,969 32,027 Total Assets $ 2,045,953 $ 2,054,032 $ 2,041,697 $ 2,055,407 $ 1,982,597 Debt and secured borrowings(3) 1,079,954 1,060,615 1,077,192 1,092,707 1,037,185 Accrued expenses and liabilities 39,506 57,766 47,082 44,507 45,731 Preferred stock 50,000 50,000 50,000 50,000 50,000 Total Liabilities and Preferred Stock $ 1,169,460 $ 1,168,381 $ 1,174,274 $ 1,187,214 $ 1,132,916 Net Assets $ 926,493 $ 935,651 $ 917,423 $ 918,193 $ 899,681 Preferred stock (50,000) (50,000) (50,000) (50,000) (50,000) Net Assets $ 876,493 $ 885,651 $ 867,423 $ 868,193 $ 849,681 Common shares outstanding at end of period 52,148 51,617 51,060 50,795 50,795 Net Asset Value per Common Share $ 16.81 $ 17.16 $ 16.99 $ 17.09 $ 16.73 LEVERAGE Net Financial Leverage (4) 1.05x 1.09x 1.16x 1.16x 1.11x Statutory Debt to Equity (5) 1.29x 1.26x 1.30x 1.32x 1.28x 4
Please refer to the Company’s Form 10-Q for more information. No assurance is given that the Company will continue to achieve comparable results. (1) Excludes activity related to the Investment Funds. (2) Based on cost/proceeds of equity activity. (3) At quarter end. (4) As a percentage of fair value. (5) Weighted average yields exclude investments placed on non-accrual status. Weighted average yields of income producing investments include Credit Fund and Credit Fund II, as well as income producing equity investments. Origination Activity Detail (Dollar amounts in thousands and based on par) Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 NEW INVESTMENT FUNDINGS BY ASSET TYPE (1) First lien debt $ 198,625 $ 267,262 $ 126,400 $ 53,164 $ 44,511 Second lien debt 430 285 318 325 4,825 Equity(2) 1,287 14,623 1,868 2,361 1,630 Total $ 200,342 $ 282,170 $ 128,586 $ 55,850 $ 50,966 Weighted Average Yield at Amortized Cost 8.3 % 10.0 % 11.8 % 12.7 % 12.4 % SALES & REPAYMENTS BY ASSET TYPE (1) First lien debt $ (156,301) $ (180,937) $ (87,352) $ (68,505) $ (106,038) Second lien debt (5,000) (31,500) — (6,954) — Equity(2) (1,031) — (60) (829) (1,495) Total $ (162,332) $ (212,437) $ (87,412) $ (76,288) $ (107,533) Weighted Average Yield at Amortized Cost 7.9 % 8.8 % 10.1 % 10.1 % 11.5 % Net Investment Activity $ 38,010 $ 69,733 $ 41,174 $ (20,438) $ (56,567) TOTAL INVESTMENT PORTFOLIO BY ASSET TYPE (3)(4) First lien debt 66.5 % 68.2 % 68.6 % 68.5 % 67.1 % Second lien debt 15.4 % 13.5 % 13.3 % 13.1 % 14.0 % Equity 4.2 % 4.7 % 4.8 % 5.2 % 5.4 % Investment funds 13.9 % 13.6 % 13.3 % 13.2 % 13.5 % Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Weighted Average Yield on Debt Investments at Amortized Cost(5) 8.8 % 10.4 % 11.7 % 12.0 % 12.6 % Weighted Average Yield on Debt and Income Producing Investments at Amortized Cost(5) 9.3 % 10.6 % 11.8 % 12.1 % 12.6 % 5
67% 14% 5% 14% First Lien Debt Second Lien Debt Equity Investments Investment Funds 11% 10% 8% 8% 7% 7%7% 5% 37% Healthcare & Pharmaceuticals Software Business Services Aerospace & Defense High Tech Industries Leisure Products & Services Diversified Financial Services Consumer Services All Others Portfolio Highlights (1) Includes investments in Credit Fund and Credit Fund II. (2) Weighted average yields of income producing investments include Credit Fund and Credit Fund II, as well as income producing equity investments. Weighted average yields exclude investments placed on non-accrual status. (3) Represents CSL's exposure to the respective underlying portfolio companies, including CSL's proportionate share of the portfolio companies held in the Investment Funds. (4) Excludes equity positions, loans on non-accrual, unfunded commitments, and certain asset-backed, asset-based, and recurring revenue loans. (5) As a percentage of fair value. Total invested commitments on debt ($mm)(1) $1,908 Total unfunded commitments on debt ($mm) $150 Total investments at fair value ($mm) $1,896 Weighted Average Yield on Debt and Income Producing Investments at Amortized Cost(2) 12.6% Number of investments 174 Number of portfolio companies 130 Average exposure by portfolio company 0.8% 6 Key Statistics Asset Mix(5) Portfolio Industry Exposure(3)(5) Floating Rate 99% Sponsored 94% Company EBITDA(4) (Median) $72mm Floating Rate Covenanted Median EBITDA Origination LTV % $ Senior Secured Exposure(3) 94% %
34% 36% 30% Top 10 Investments Next 11-25 Remaining Investments 13% 9% 7% 7% 6% 6%5%5% 42% Business Services Diversified Financial Services Healthcare & Pharmaceuticals Utilities: Electric Aerospace & Defense Telecommunications Leisure Products & Services Capital Equipment All Others Combined Investment Funds Portfolio Overview of Investment Funds (1) Weighted average yields at cost of the debt investments include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of period end. Weighted average yields exclude investments placed on non-accrual status. Actual yields earned over the life of each investment could differ materially from the yields presented above. 7 Key Statistics - Credit Fund II Diversification by Borrower Diversification by Industry CSL Investment at cost ($mm) $78 CSL ownership 84.1 % Yield of debt investments at cost (1) 11.8 % Leverage 2.0x Effective cost of debt SOFR + 2.88% Annualized dividend yield to CSL 14.2 % Key Statistics - Credit Fund CSL Investment at cost ($mm) $193 CSL ownership 50.0 % Yield of debt investments at cost (1) 10.9 % Leverage 1.6x Effective cost of debt SOFR +2.70% Annualized dividend yield to CSL 11.4 % Portfolio Fair Value Asset Yield Floating Rate First Lien % of CSL Portfolio $1,026 11.1% 99.5% 97.6% 13.5% • Weighted average annualized dividend yield from Investment Funds was 12.2% for the quarter
Funding and Capital Management Overview Commitment Outstanding Maturity Date Pricing(1) Credit facility $745 $400 05/25/2027 SOFR + 1.88% 2015-1R notes $449 $449 10/15/2031 SOFR + 2.00%(2)(3) 2019 senior notes $115 $115 12/31/2024 4.75% 2020 senior notes $75 $75 12/31/2024 4.50% Total / Weighted Average(3) $1,384 $1,039 5.4 years 6.60% Overview of Balance Sheet Financing Facilities 8 75% % of Committed Balance Sheet Leverage Utilized % of Utilized Balance Sheet Leverage Mark-To-Market % of Utilized Balance Sheet Leverage Fixed 21% (1) SOFR borrowings are subject to an additional spread adjustment (2) Represents the weighted average interest rate for the 2015-1R Notes over the various tranches of issued notes, excluding a $25 million note that has a fixed interest rate of 4.56%. (3) On June 30, 2023, the 2015-1R Notes were amended and transitioned from LIBOR to SOFR, effective for the subsequent interest accrual period. (3) Weighted average maturity and pricing amounts are calculated based on amount outstanding. 38%
Note: The net asset value per share and dividends declared per share are based on the shares outstanding at each respective quarter-end. Net investment income per share and net realized and unrealized gain (loss) per share are based on the weighted average number of shares outstanding for the period. Net investment income is also net of the preferred dividend. Totals may not sum due to rounding. Net Asset Value Per Share Bridge YTD Q2 2023Q2 2023 9 $17.09 $0.52 $(0.44) $(0.44) $16.73 March 31, 2023 NAV Net Investment Income Dividend Declared Net Realized and Unrealized Gain (Loss) & Other June 30, 2023 NAV $16.99 $1.02 $(0.88) $(0.40) $16.73 December 31, 2022 NAV Net Investment Income Dividend Declared Net Realized and Unrealized Gain (Loss) & Other June 30, 2023 NAV
• As of June 30, 2023, three borrowers were on non-accrual status, representing 1.8% of total investments at fair value and 3.2% at amortized cost. Risk Rating Distribution RATING DEFINITION 1 Borrower is operating above expectations, and the trends and risk factors are generally favorable. 2 Borrower is operating generally as expected or at an acceptable level of performance. The level of risk to our initial cost basis is similar to the risk to our initial cost basis at the time of origination. This is the initial risk rating assigned to all new borrowers. 3 Borrower is operating below expectations and level of risk to our cost basis has increased since the time of origination. The borrower may be out of compliance with debt covenants. Payments are generally current although there may be higher risk of payment default. 4 Borrower is operating materially below expectations and the loan’s risk has increased materially since origination. In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due, but generally not by more than 120 days. It is anticipated that we may not recoup our initial cost basis and may realize a loss of our initial cost basis upon exit. 5 Borrower is operating substantially below expectations and the loan’s risk has increased substantially since origination. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. It is anticipated that we will not recoup our initial cost basis and may realize a substantial loss of our initial cost basis upon exit. (Dollar amounts in millions) March 31, 2023 June 30, 2023 Internal Risk Rating Fair Value % of Fair Value Fair Value % of Fair Value 1 $ 28.7 1.8 % $ 28.6 1.9 % 2 1,305.2 81.0 % 1,248.0 81.1 % 3 207.4 12.9 % 226.9 14.7 % 4 68.9 4.3 % 34.7 2.3 % 5 — — % — — % Total $ 1,610.2 100.0 % $ 1,538.2 100.0 % 10
11 Appendix
Quarterly Balance Sheet Detail Please refer to the Company’s Form 10-Q for more information. (Dollar amounts in thousands, except per share data) Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 ASSETS Investments—non-controlled/non-affiliated, at fair value $ 1,593,901 $ 1,642,494 $ 1,671,488 $ 1,661,414 $ 1,588,732 Investments—non-controlled/affiliated, at fair value 32,697 41,863 45,367 50,996 51,668 Investments—controlled/affiliated, at fair value 262,678 264,600 263,022 261,155 256,020 Total Investments, at Fair Value 1,889,276 1,948,957 1,979,877 1,973,565 1,896,420 Cash, cash equivalents and restricted cash 39,291 68,644 30,506 42,873 54,150 Receivable for investments sold 89,445 4,884 1,528 6,908 1,396 Interest and dividend receivable 22,055 24,328 24,023 26,174 24,703 Prepaid expenses and other assets 5,886 7,219 5,763 5,887 5,928 Total Assets $2,045,953 $2,054,032 $2,041,697 $2,055,407 $1,982,597 LIABILITIES & NET ASSETS Debt and secured borrowings, net of unamortized debt issuance costs $ 1,079,954 $ 1,060,615 $ 1,077,192 $ 1,092,707 $ 1,037,185 Payable for investments purchased 322 13,872 287 — — Interest and credit facility fees payable 3,198 5,240 6,749 6,782 7,097 Dividend payable 20,840 20,625 22,446 22,321 22,320 Base management and incentive fees payable 11,581 13,748 12,681 12,729 12,804 Administrative service fees payable 938 1,409 1,711 1,221 1,439 Other accrued expenses and liabilities 2,627 2,872 3,208 1,454 2,071 Total Liabilities $1,119,460 $1,118,381 $1,124,274 $1,137,214 $1,082,916 Preferred Stock 50,000 50,000 50,000 50,000 50,000 Total Liabilities and Preferred Stock $1,169,460 $1,168,381 $1,174,274 $1,187,214 $1,132,916 Net Assets $876,493 $885,651 $867,423 $868,193 $849,681 Net Asset Value Per Common Share $ 16.81 $ 17.16 $ 16.99 $ 17.09 $ 16.73 12
Quarterly Income Statement Detail Note: There can be no assurance that we will continue to earn income at this rate and our income may decline. If our income declines, we may reduce the dividend we pay and the yield you earn may decline. Refer to the consolidated financial statements of the Company’s Form 10-Q for additional details. (1) Inclusive of payment-in-kind interest income. (Dollar amounts in thousands, except per share data) Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 INVESTMENT INCOME Interest income(1) 35,410 48,645 47,021 49,136 50,870 Income from credit funds 7,524 7,524 8,276 8,276 8,276 Other income 1,634 2,974 739 963 919 Total Investment Income $ 44,568 $ 59,143 $ 56,036 $ 58,375 $ 60,065 EXPENSES Management fees $ 7,113 $ 7,262 $ 7,378 $ 7,236 $ 7,185 Incentive fees 4,458 6,451 5,277 5,472 5,593 Interest expense and credit facility fees 9,170 11,937 15,238 17,281 17,873 Other expenses 1,781 1,891 1,792 1,293 1,589 Excise tax expense 176 449 851 523 650 Net Expenses $ 22,698 $ 27,990 $ 30,536 $ 31,805 $ 32,890 Preferred stock dividend 875 875 875 875 875 Net Investment Income $ 20,995 $ 30,278 $ 24,625 $ 25,695 $ 26,300 Net realized and change in unrealized gains (losses) (17,205) 6,677 (13,041) 1,417 (22,462) Net Income (Loss) $ 3,790 $ 36,955 $ 11,584 $ 27,112 $ 3,838 Net Investment Income per Common Share $ 0.40 $ 0.58 $ 0.48 $ 0.50 $ 0.52 Net Income (Loss) per Common Share $ 0.07 $ 0.71 $ 0.23 $ 0.53 $ 0.08 13