Nuveen Churchill Direct Lending Corp. Q1 FY2025 earnings call

• Market Conditions: Experienced significant market volatility due to tariffs, but positioned with deep expertise, diversified portfolio, conservative underwriting, and strong balance sheet. Historically, market volatility in private credit has led to attractive opportunities.
• Financial Results: Net investment income $0.53 per share, impacted by non-recurring items; new originations $166 million; net investment value declined due to watch list name valuations.
• Investment Activity: Focus on senior secured first lien loans, 60% year-over-year increase in investment activity volume, 44% of new commitments to existing borrowers.
• Credit Quality: Portfolio company performance healthy, weighted average internal risk rating 4.1, watch list below 7%, non-accrual percentage low at 0.4% of fair value.

Net investment income for the first quarter was $0.53 per share, impacted by $0.03 per share in one-time interest and debt financing expenses; excluding these, net investment income was $0.56 per share, in line with fourth quarter 2024 results. New originations totaled $166 million for the first quarter. Net investment value was $17.96 per share at 03/31/2025, down from $18.18 per share at 12/31/2024 due to modest valuation declines in some watch list names. The portfolio is highly diversified with over 200 companies, top 10 portfolio companies represent 13% of fair value, and total non-accrual percentage is extremely low at 0.4% of portfolio fair value at quarter-end.

• Expect near-term market volatility to continue but well-positioned to deliver strong returns. Anticipate modestly wider spreads and more favorable lending terms if market volatility persists. Continue to focus on underwriting discipline, selective investing, and managing the current investment portfolio.

• Market volatility driven by tariffs and economic uncertainty. Potential impact on portfolio from tariffs, including direct revenue, cost, and supply chain impacts; elevated macroeconomic risk and uncertainty.

Q: Appreciate the detail on $0.03 per share of non-recurring costs, thoughts on quarterly dividend moving forward and levers to drive incremental NII?

A: Shai Vichness noted dividend coverage looks good with forward view, and potential levers include watching spreads, portfolio rotation, and liability management to drive incremental NII.

Q: Thoughts on leverage, willingness to let it move higher, and buyback?

A: Shai Vichness said committed to target leverage range, buyback program is opportunistic, extended the authorization but not increased the amount yet, and program is designed to take advantage of discounts to NAV.

Q: Impact of direct lending taking share from BSL market on competition and pipeline?

A: Ken Kencel said size and scale in core middle market is an advantage, pipeline is good with focus on non-tariff impacted, high-quality deals, and some larger deals skew from BSL market.

Q: Full impact of base rate changes on portfolio?

A: Ken Kencel said there is a roughly one-quarter lag in how base rate changes impact the portfolio, with weighted average SOFR during the quarter down about 15 basis points from prior quarter