Palmer Square Capital BDC Inc. Q1 FY2025 earnings call

• Chris Long started by noting the deployment of $104.3 million of capital, net investment income of $12.9 million, and a $0.39 per share dividend. Palmer Square is the only public BDC disclosing monthly NAV. - Angie Long discussed the resilient portfolio against macro backdrop, premium yield advantage, and ability to invest in private and public debt markets. - Matt Bloomfield talked about the portfolio and investment activity, including $104.3 million capital investment, $144.4 million realized through repayments/sales, and portfolio diversification with 10 largest investments accounting for 10.19% of the overall portfolio. - Jeff Fox reviewed financial results: total investment income $31.2 million (down 10.3% from prior year), net investment income $12.9 million ($0.40 per share), total net realized and unrealized losses $21.3 million, NAV per share $15.85, and details on balance sheet and stock repurchase plan.

During the first quarter, Palmer Square Capital BDC deployed $104.3 million of capital. Total investment income was $31.2 million, net investment income was $12.9 million. Net investment income per share was $0.40, and a $0.39 per share dividend was paid. The March NAV per share was $15.85. The total investment portfolio at fair value as of March 31, 2025, was approximately $1.33 billion, down 5.2% from the end of the fourth quarter of 2024. The portfolio is 96% senior secured with an average hold size of ~$5.2 million, and 3 loans were on nonaccrual status, representing 0.24% of fair value.

• The Board of Directors reinstated and extended the stock repurchase plan, which expired in January 2026. During the first quarter, 98,399 shares were purchased at an average price of $14.89. - A second quarter 2025 base dividend of $0.36 per share was declared, with the supplemental dividend to be announced in June based on undistributed net investment income above the base dividend.

• Uncertainties surrounding interest rates, changing economic conditions, and tariff volatility. - Credit spreads have widened due to market volatility, and there's uncertainty around trade policy development and tariff rate settlement. - M&A volumes are likely to remain muted due to heightened volatility and trade policy evolution.

Q: Just one on the macro backdrop. Any updated outlook or thoughts around where leverage could range? Is there still continued possibility of potential deleveraging over the near term there?

A: Matt Bloomfield said they feel good about where leverage is and trended, and feel comfortable with current leverage levels going forward.

Q: In terms of potential opportunities in liquid loan markets, are there early signs of pockets of opportunities? Any certain sectors or areas interesting?

A: Matt Bloomfield said it's a bit early to have strong conviction to deploy heavy capital into secondary market now, but there are some opportunities, especially in tariff impacted sectors, though policy and tariff moving pieces make it early to have much conviction yet.

Q: In terms of the earnings power of the portfolio going forward while taking a measured approach to deploying capital, how are you thinking about earnings power relative to 1Q levels?

A: Matt Bloomfield said first quarter is the lowest quarter from a day count standpoint, but with macro backdrop, refinancing activity low, and spread tightening in rearview, they feel good about go-forward earnings power and are open to deploy capital to right situations.

Q: As you are evaluating opportunities in fluid environment, should we be expecting repurchase activity to pick up with discount to NAV?

A: Matt Bloomfield said the buyback programs are formulaic and will continue to be deployed if discount persists, as the stock is at an attractive level with real NAV.

Q: Touch on the decline in NAV quarter-over-quarter. How was decision-making on asset rotation and should we think about that going forward?

A: Matt Bloomfield said January and February had little movement, but in March, especially back half, syndicated loan prices sold off due to ETF outflows. They don't aim to time markets perfectly and expect to recapture losses as loans normalize over time