Blue Owl Capital Corp Q1 FY2025 earnings call

• Completed merger between OBDC and OBDE on January 13, with first quarter results representing the combined company.
• Portfolio is weighted towards defensive sectors like healthcare, business services, etc., with ~94% of portfolio based in the US, limiting international exposure.
• First quarter had $1.2 billion of new investment commitments and $800 million of fundings. Portfolio borrowers' median EBITDA was $120 million and weighted average EBITDA was $215 million.
• Nonaccrual rate at fair value was 0.8%, at cost was 1.4%. Internal rating system was steady, interest coverage was 1.8x, and PIK income declined.

In the first quarter, Blue Owl Capital Corporation generated an ROE of 10.2% based on $0.39 per share of adjusted NII. Total portfolio investments were nearly $18 billion, total net assets nearly $8 billion, and total outstanding debt approximately $10 billion. The nonaccrual rate as of quarter end was 0.8% at fair value and 1.4% at cost. PIK income declined to 10.7% of total investment income. The portfolio borrowers' median EBITDA grew slightly to $120 million and weighted average EBITDA increased to $215 million. Revenue and EBITDA of portfolio companies increased in the mid- to high single digits year-over-year.

• Board declared a $0.01 supplemental dividend, to be paid on June 13, and a second quarter base dividend of $0.37, to be paid on July 15.
• Expected net leverage in Q2 to be within target range of 0.9x to 1.25%.
• Confident in navigating uncertain environment, with stable earnings profile and attractive risk-adjusted returns even in lower rate environment.

• Uncertain economic outlook including tariff policy, equity sell-off, and potential economic slowdown.
• Impact of potential negative economic developments on portfolio companies, including broader recessionary pressures.

Q: Brian McKenna asks about macro trends, spread movement, and public listing of OTF.

A: Craig Packer responds that macro trends are impacted by tariff uncertainty, spread stability with private credit spreads stable, and public listing of OTF is explored strategically.

Q: Mickey Schleien asks about share repurchases.

A: Craig Packer says share repurchase program is considered, but windows need to align.

Q: Casey Alexander asks about liabilities inherited from Blue Owl III.

A: Jonathan Lamm says they've started repricing secured facilities and taking out high coupon notes.

Q: Robert Dodd asks about underwriting and near-term recession probability.

A: Craig Packer says they factor in recession cases, focus on stable sectors, and are cautious about potential recessions.

Q: Finian O'Shea asks about spread trends and secular shifts.

A: Craig Packer says spread is cyclical, strategy remains focused on credit quality, and spillover income supports dividends.

Q: Maxwell Fritscher asks about pipeline and PIK transition.

A: Logan Nicholson says pipeline is consistent with prior quarters, and there is visibility on borrowers transitioning to cash pay.