Blue Owl Capital Corporation (OBDC) Earnings

Management highlights

### Financial Results - Adjusted net investment income (NII) per share was $0.34, up from $0.31 in Q1 2026, translating to a 9.6% annualized return on equity (up 100 basis points from Q1) that fully covered the base dividend. - A $0.02 per share supplemental dividend was declared per the firm's framework, and the Q3 2026 base dividend was maintained at $0.31 per share. - Net asset value (NAV) per share was $14.26, down modestly from $14.41 in Q1, driven by one isolated credit markdown, partially offset by over-earning the dividend and accretive share repurchases. - Ending net leverage was 1.11x, the lowest level in over two years, within the firm's 0.9x to 1.25x target range. ### Investment & Portfolio Activity - Total fundings were $429 million against $747 million in repayments, resulting in net negative deployment for the quarter. Repayments remained healthy, providing increased deployment flexibility. - The largest preferred income capital (PIC) realization in firm history: full repayment of the Mavis Tire preferred equity investment generated $274 million in total cash (including $66 million in accrued PIC interest) and a 1.5x multiple on invested capital (MOIC). - A strong realization in LSI, the firm's life sciences specialty finance joint venture, generated one-time incremental dividend income that boosted NII. LSI has delivered over 15% returns to OBDC since inception. - Portfolio credit quality remains strong: non-accruals were 0.8% at fair value (down slightly quarter-over-quarter, below industry averages), interest coverage held at ~2x, loan-to-value (LTV) was a stable 47%, and portfolio company net leverage declined modestly to 5.8x. - The portfolio is highly diversified across 30 industries, focused on large defensive businesses, with an average position size of ~40 basis points. No broad-based fundamental deterioration across borrowers. ### Balance Sheet & Capital Structure - The firm raised ~$800 million in new unsecured debt, addressed ~$1 billion in legacy maturities, extended the maturity of its $4 billion revolving credit facility with full participation from partner banks, and eliminated two higher-cost secured facilities to optimize its capital structure. - Total liquidity remains robust at ~$3.5 billion, with a diversified funding mix and staggered maturity schedule. - $35 million in OBDC shares were repurchased in Q2, accretive to NAV per share by $0.03. Total repurchases since Q4 2025 are ~$220 million.

Guidance

- No material changes to long-term strategic or financial guidance were announced. Management maintained the target net leverage range of 0.9x to 1.25x, and stated no expectation of dramatic leverage movements from the current 1.11x level. - Management confirmed the sustainability of the $0.31 per share base dividend, with supplemental dividends continuing to be declared when incremental earnings exceed the base dividend level. - Management is increasingly optimistic about the long-term investment opportunity set, noting the investment backdrop has improved meaningfully since the start of 2026, with stabilized credit spreads, higher forward rates, and more attractive financing terms for new originations. - The firm will continue to prioritize disciplined capital allocation, maintaining patience to deploy capital only into opportunities that meet its required risk-adjusted return thresholds.

Segment performance

This call does not break out separate financial performance for distinct product segments. Core business is upper middle market direct lending, with additional allocations to preferred income capital (PIC) and specialty finance joint ventures. As of Q2 2026: PIC represented 10.7% of total investment income, down from a peak of over 13% two years prior. Software investments make up approximately 18% of the total portfolio, which is the firm's best performing sector with the strongest revenue and EBITDA growth. Core portfolio borrower revenue and EBITDA grew mid-to-high single digits year-over-year.

Risks & headwinds

- Isolated credit risk was realized in the quarter: the Loperex credit was marked down after a planned transformative M&A recapitalization transaction fell through, leading to its addition to non-accruals. Management emphasized all other portfolio credit issues remain isolated with no broad-based deterioration. - Macro risks cited include ongoing macroeconomic uncertainty, earlier credit spread volatility, geopolitical uncertainty, commodity price volatility, and shifting consumer demand trends. As of Q2, these have had minimal impact on the overall portfolio. - Deal activity remains muted, driven by a pullback in M&A activity and sharply lower refinancing volume amid wider credit spreads, which limits near-term deployment opportunities. - The firm actively monitors risks in the software segment (which makes up 18% of the portfolio), though it remains the firm's best performing sector with strong fundamental growth.

Analyst Q&A

• Q: Elevated fee income this quarter came despite low origination activity. What drove the higher fee income, and is the elevated level sustainable? /

  A: The elevated fee income was driven entirely by the large one-time repayment of the Mavis Tire PIC investment, which generated $0.03 per share in fee income. Dividend increases across other specialty joint venture investments reflect the ongoing maturation of these portfolio assets, which represents a sustainable baseline run rate. The one-time boost from Mavis is not recurring, but smaller fee-generating repayments are a normal part of the firm's quarterly activity. The LSI one-time dividend boost came from a successful realization of the ITM Radio Pharma investment that generated a >20% IRR for the vehicle. /

• Q: The Mavis Tire outcome was a large successful PIC investment in a defensive non-software sector. Should investors expect more of these types of defensive assets going forward, and what is the firm's outlook on software exposure? /

  A: Mavis Tire is fully aligned with the firm's long-standing core investment strategy: large businesses with predictable recurring cash flow across economic cycles, which is the firm's bread and butter. The successful outcome validates the firm's intentional approach to PIC investing, which has faced increased market scrutiny recently. The firm will continue to be cautious about new software investment (software currently makes up 18% of the portfolio), and the remaining 82% of the portfolio is already weighted toward defensive non-tech assets like Mavis. Near-term deal flow remains modest, and management expects it will take broader market stabilization for activity to pick up meaningfully. /

• Q: How is the firm balancing capital allocation between share repurchases, maintaining balance sheet leverage, and new originations? Is there a discount to NAV threshold that would trigger more aggressive repurchases? /

  A: The firm evaluates all capital allocation choices to deploy incremental capital into the highest returning opportunity. Over recent quarters, this has meant opportunistic repurchases of OBDC shares trading below NAV, while maintaining leverage within the target range and preserving capacity for future new originations. This balanced, opportunistic approach will continue going forward. /

• Q: Why was Q2 2026 investment activity so low, and what is the outlook for Q3 activity? /

  A: Low activity stemmed from two core market factors: first, refinancing activity (which made up 50-75% of past deal flow) has ground to a halt because wider spreads make refinancing unattractive for most borrowers. Second, macro and geopolitical volatility has led to broad M&A pullback, cutting off new deal flow. As of the first month and a half of Q3, activity remains muted with no dramatic uptick, though management remains optimistic activity will pick up eventually.