Carlyle Secured Lending, Inc. (CGBD) Earnings

Management highlights

- **Investment Origination & Pipeline Activity** * Closed $1.5 billion of new and incremental commitments at the platform level in Q2 2026, with CGPD funding $248 million of investments excluding joint venture activity; platform originations increased over 20% quarter-over-quarter * Maintained high deal selectivity, with a pipeline commitment rate of less than 5%; weighted average spreads held steady from Q1, while weighted average leverage on entry continued to decrease * Carlisle served as lead on nearly 90% of platform originations; repayments totaled $68 million, down from prior quarters * Current pipeline is majority focused on non-cyclical old economy sectors, including industrials, aerospace and defense, healthcare, and consumer products; avoids deep cyclical industrial subsectors and favors aftermarket repair, maintenance, and replacement business models - **Portfolio & Credit Performance** * Overall portfolio credit quality remains stable; non-accrual levels are very low; DCA was returned to accrual status after restructuring, while U.S. Infra and Project Castle were added to non-accrual status * Zero defaults on $7 billion in software sector commitments over the last six years; fundamental performance from software borrowers in the portfolio remains strong despite market focus on the sector * Average single-company exposure is less than 60 basis points of total investments, supporting strong portfolio diversification; all CGPD debt is floating rate, matching the portfolio's primarily floating rate assets to mitigate interest rate risk * Leverage stood at 1.2x for both statutory and net financial leverage at quarter end, with a strong liquidity position - **Joint Venture Development** * Both JVs continue to scale and generate high, growing returns for CGPD; SCP accelerated pricing and closing of its first two CLOs in Q2 2026, capitalizing on market volatility for favorable pricing * Share repurchase activity: repurchased $12.5 million of CGPD shares in Q2 at an average 29% discount to NAV, generating 7 cents of accretion to NAV per share; total repurchases since program inception exceed $200 million * The board declared a Q3 2026 dividend of $0.35 per share, fully covered by Q2 net investment income; the supplemental dividend policy remains in place, targeting payout of at least 50% of excess earnings above the base dividend

Guidance

- Management reaffirms that Q2 2026 will be the near-term earnings trough; earnings are expected to increase over the next four to six quarters as both joint ventures continue to ramp their portfolios and income - As earnings grow, management anticipates supplemental dividends will increase, supported by 73 cents per share of existing spillover income for dividend coverage - SCP (SEP) is on track to price and close two additional CLOs in 2026, subject to market conditions, maintaining a planned cadence of four CLO issuances per year to support vintage diversification; over time, the JV is expected to manage $6 to $7 billion in fee-free assets - Management expects medium- and long-term market activity will remain strong, and CGPD is well positioned to gain market share with its revitalized origination platform; M&A activity is expected to pick up once macroeconomic and geopolitical clarity improves, likely later in 2026 or early 2027 - Management maintains its commitment to a disciplined underwriting approach focused on deals with significant equity cushions, conservative leverage profiles, and attractive spreads

Segment performance

Core CGBD Portfolio: Total investments increased from $2.3 billion to $2.4 billion quarter-over-quarter, with 95% of investments in senior secured loans across 177 companies in over 25 industries. Non-accruals represented only 0.6% of investments at fair value and 1.2% at amortized cost as of Q2 end. Net investment income for Q2 2026 was $24 million, or $0.35 per share on both GAAP and adjusted bases. Total investment income was $62 million, down from the prior quarter due to lower OID accretion from reduced repayment activity and lower fee income. Total expenses were $38 million, driven by lower interest expense from reduced outstanding debt balances. Net asset value per share was $15.61 as of June 30, 2026, down from $15.89 per share at Q1 end. MMCF Joint Venture: Total investments grew to $1.2 billion, with an annualized dividend yield of 17.6%, an increase of over 200 basis points quarter-over-quarter. The JV closed a $400 million upsize to its credit facility in Q2, increasing total credit commitments to $1.2 billion at an attractive spread of SOFR plus 170 basis points. This segment contributes ~33% of total CGBD platform investments. SCP (Structured Credit Partners / SEP) Joint Venture: Total portfolio investments reached $1.7 billion, producing an annualized dividend yield of 18.7% to CGBD. This segment contributes ~41% of total CGBD platform investments.

Risks & headwinds

- Ongoing macroeconomic and geopolitical uncertainty is suppressing M&A activity, limiting near-term deal flow growth; uncertainty around inflation, interest rates, and oil price volatility from global conflicts makes business forecasting difficult, delaying M&A transactions - Valuation markdowns on a limited number of investments led to an aggregate realized and unrealized net loss of $24 million (35 cents per share) in Q2; specific markdowns were taken on residual equity in the SPF investment and the U.S. Infra investment due to lower than expected earnings and recovery expectations - Even generally recession-resistant sectors such as residential home services are seeing top-line deceleration and margin compression, requiring increased selectivity to avoid underperforming credits - Market pricing competition can lead to tighter spreads on attractive, high-quality deals, limiting potential yield generation - Forward-looking statements around future performance, deal activity, and CLO issuance are subject to inherent uncertainties that could cause actual results to differ materially from current expectations

Analyst Q&A

• Q: Rick Shane (JP Morgan) asked about current deal pricing, the split between new and refinance transactions, and portfolio rotation opportunities amid improving equity values and muted M&A activity. /

  A: Alex Chi confirmed that Q2 originations were strong and the Q3 pipeline remains robust, though overall M&A activity is still muted due to ongoing macro and geopolitical uncertainty. Weighted average spreads on new deals held steady from Q1, with no material further widening, though pricing varies by sector: attractive high-quality industrial deals see more competition and slightly tighter pricing, but leverage documentation standards have continued to improve. Most pipeline deals are in non-cyclical sectors that are less exposed to broad economic volatility.\n\nQ: Justin (Lucid Capital Markets) asked about second half spread outlook and how management balances capital deployment for new loans versus share repurchases, given CGPD's discount to NAV. / A: Tom Hennigan explained that management is focused on balancing the two activities, with a priority on continued deployment to the joint ventures, given their high, accretive yields and ongoing ramp. Deployment at both JVs, which have delivered strong yield increases, is a core focus, alongside continued active share repurchases. He also noted the QoQ decline in other income stemmed from an atypically large one-time repayment fee in Q1, making Q2 other income lower than the steady baseline.\n\nQ: Robert Dodd (Raymond James) asked if full macro stability is required before M&A picks up, and how CGPD's outlook compares to peers' more optimistic back-half expectations. / A: Alex Chi stated that clearer visibility on inflation and interest rates (tied to global geopolitical and oil price uncertainty) is needed for M&A to fully recover, as uncertainty suppresses seller willingness to launch auctions at current valuations. While the top of the deal funnel has expanded across the industry, it will take another one to two quarters for deals to close, so M&A growth will likely come later in 2026 or early 2027. Healthy deal flow remains for non-cyclical businesses that can insulate themselves from current risks, and management remains selective amid this environment.\n\nQ: Robert Dodd (Raymond James) asked if the planned SCP CLO ramp cadence of four per year would change if market conditions heat up, given the focus on vintage diversification. / A: Tom Hennigan responded that vintage diversification is a core, non-negotiable priority for the SCP program, so management plans to stick to the even deployment cadence of roughly four CLOs per year. While minor timing adjustments could lead to 3 one year and 5 another, the overall plan is to spread issuance evenly across time to avoid overexposure to any single vintage.\n\nQ: Robert Dodd (Raymond James) asked for detail on attractive niches within the broad industrial, aerospace and defense sectors. / A: Alex Chi explained that CGPD avoids deep cyclical industrial subsectors such as new OEM manufacturing, and instead favors businesses with aftermarket repair, replacement, and maintenance models that are more resilient through economic cycles. The team is more cautious on popular recession-resistant sectors like residential home services, where deal aggregation has led to slowing top-line growth and margin compression, requiring extra selectivity.