Crescent Capital BDC, Inc. Q4 FY2024 earnings call

• Fourth quarter NII was $0.55 per share, with NII coverage of the base dividend at 131%. Net asset value decreased to $19.98 per share.
• Investment portfolio: ~$1.6B in fair value, 185 companies, 90% first lien loans, diversified across 20 industries, 99% sponsor-backed. Weighted average portfolio grade 2.1, 87% in 1-2 rated, 1% in 4-5 rated, 3% in 3 rated. Added 7 names to watch list.
• Dividend: Declared $0.42 per share regular dividend for Q1 2025, payable April 15, 2025, with special dividends related to undistributed taxable income.
• Q4 investment activity: Gross deployment $127M, 98% first lien, 14 new platform investments $64M, incremental investments $63M, net deployment $21M. Weighted average yield of income-producing securities at cost 10.9%, 97% floating rate debt, interest coverage improved to 1.9 times.

In the fourth quarter, Crescent Capital BDC, Inc. (CCAP) reported NII of $0.55 per share, translating to an annualized NII return on equity of 11%. This is down from $0.64 in the prior quarter and $0.61 in Q4 2023. The decline was due to a lower investment portfolio yield (base rates 100 basis points lower than Q4 2023) and less non-recurring income. Net asset value decreased $0.22 to $19.98 per share. The investment portfolio had approximately $1.6 billion in fair value across 185 companies, with top ten borrowers representing 15% of the portfolio. 90% of the portfolio was first lien loans, diversified across 20 industries, and 99% in sponsor-backed companies. Non-accruals were 0.9% of fair value and 2.2% of cost.

• NII expected to decline further in Q1 2025 due to full quarter impact of rate cuts in Q4 2024.
• Declared $0.42 per share regular dividend for Q1 2025, with special dividends related to undistributed taxable income.
• Amended debt terms: SMBC revolver size reduced, new senior unsecured notes issued, extending maturity and adjusting size.

• Potential impact of tariffs on US companies, with ~12% of portfolio fair value exposed to foreign suppliers and <5% from government contracts.
• Repricing risk in the market, especially if LBO volumes don't pick up.
• Migration of some assets to watch list leading to unrealized losses.

Q: About the increase in watch list names, what are the common themes and exposure?

A: Themes include third-party logistics (freight rate compression), packaging (destocking trends), and early-stage med tech biotech (impacted by higher rates). Exposure to consumer-indexed businesses in watch list names is exhibiting longer recovery than broader portfolio.

Q: What drove realized and unrealized gains/losses for the quarter?

A: Unrealized losses attributable to increase in three-rated assets and migration of watch list names, with about $40M increase quarter over quarter in watch list related movements.

Q: On non-accruals, origin and exposure to tariffs, CapEx?

A: Some non-accruals were Crescent originated. Exposure to tariffs is a minority of portfolio (~12% fair value from foreign suppliers), and focus remains on cash flow and operating models, not leaning into CapEx-heavy manufacturing businesses.