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Crescent Capital BDC, Inc. (CCAP)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 results: net investment income (NII) per share $0.45, GAAP EPS $0.11, investment income $42.1m, NAV/share $19.62; NII decline vs Q4 reflected lower base rates, roll-off of one-time items, Logan JV dividend reduction, and higher nonaccruals .
  • Dividend framework intact: Board declared Q2 2025 regular dividend of $0.42 and the second $0.05 special; management emphasized continued dividend coverage and long-term NAV stability .
  • Balance sheet and capital updates: debt-to-equity rose to 1.25x (within 1.1–1.3x target); weighted average borrowing cost 6.36%, with SPV facility repriced (spread cut 50 bps, size rightsized) to lower funding costs .
  • Versus Street: CCAP missed consensus on EPS ($0.45 vs $0.525*) and revenue ($42.1m vs $45.1m*); drivers included base rate lag, Logan JV distribution timing/OC test effects, and higher nonaccruals . Values marked with * retrieved from S&P Global.
  • Near-term stock catalysts: elevated nonaccruals (3.5% cost/1.8% FV), Logan JV dividend lumpiness during wind-down, and deal flow tempered by tariff-related uncertainty despite selective spread-wider originations .

What Went Well and What Went Wrong

  • What Went Well
    • Portfolio growth and selectivity: net deployment ~$27m, 98% first lien, weighted average new-money spread ~565 bps (Q1 vs ~510 bps in Q4), with continued leadership and documentation strength in deals .
    • Dividend consistency: “This marks our 37th consecutive quarter of earning our regular dividend at CCAP” and NII continued to exceed the base dividend in Q1 .
    • Funding cost improvements: SPV asset facility reduced spread from 2.45% to 1.95% and resized to $400m, extending maturities such that 76% of committed debt now matures in 2028 or later; pro forma borrowing cost would be ~6.17% .
  • What Went Wrong
    • Earnings miss vs consensus: NII/share $0.45 vs $0.525*, and investment income $42.1m vs $45.1m*, driven mainly by lower base rates, one-time income roll-off, Logan JV equity tranche/lumpiness, and increased nonaccruals . Values marked with * retrieved from S&P Global.
    • Nonaccruals rose: loans on nonaccrual increased to 3.5% of cost and 1.8% of FV; four names added (mostly first lien positions) reflecting idiosyncratic events; management recognized not being “pleased” with the uptick .
    • Logan JV dividend step-down: equity tranche distributions retained due to OC tests and timing mismatch, driving a ~50% sequential drop; management expects lumpiness during deleveraging and a ~24-month wind-down base case .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Investment Income ($USD Millions)$50.361 $46.400 $42.129
Net Investment Income ($USD Millions)$23.317 $20.500 $16.621
NII per Share ($USD)$0.63 $0.55 $0.45
GAAP Net Income per Share ($USD)$0.76 $0.27 $0.11
NAV per Share ($USD)$20.28 $19.98 $19.62
NII Margin (%)46.3% 44.2% 39.5%
Estimates vs Actual (Q1 2025)ConsensusActual
Primary EPS ($USD)$0.525*$0.45
Revenue ($USD)$45.081m*$42.129m

Values marked with * retrieved from S&P Global.

Segment Portfolio Composition

Investment TypeDec 31, 2024 Fair Value ($mm)Dec 31, 2024 %Mar 31, 2025 Fair Value ($mm)Mar 31, 2025 %
Senior secured first lien$379.7 23.7% $400.3 24.8%
Unitranche first lien$1,044.1 65.3% $1,048.9 64.7%
Unitranche first lien – last out$14.8 0.9% $25.0 1.5%
Senior secured second lien$38.5 2.4% $22.5 1.4%
Unsecured debt$17.5 1.1% $18.2 1.1%
Equity & other$64.9 4.1% $66.8 4.1%
LLC/LP equity interests$39.4 2.5% $39.0 2.4%
Total investments$1,598.9 100.0% $1,620.7 100.0%

Key KPIs

KPIQ4 2024Q1 2025
Weighted avg yield on income-producing securities (at cost)10.9% 10.4%
% of debt investments at floating rates (FV)97.3% 97.2%
Portfolio companies (count)185 191
Investments at fair value ($mm)$1,598.9 $1,620.7
Debt-to-equity ratio1.19x 1.25x
Weighted average borrowing cost6.38% 6.36%
Cash + restricted cash ($mm)$39.4 $30.5
Undrawn capacity ($mm)$337.5 $310.0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Regular dividend per shareQ1 2025 → Q2 2025$0.42 (declared for Q1) $0.42 (declared for Q2) Maintained
Special dividend per share2025 (series)$0.15 total in 3 installments ($0.05 each) Second $0.05 to be paid June 13, 2025 Maintained/Confirmed schedule
Supplemental dividend (variable)Q4 2024 → Q2 2025Framework in place; not paid for Q4 Framework remains; not paid for Q2 (“measurement test cap exceeded 50%”) Maintained framework; not paid
SPV asset facility spreadApril 20252.45% 1.95% Lowered
SPV asset facility sizeApril 2025$500m $400m Rightsized lower
Weighted avg borrowing cost (pro forma)Post-amendment6.36% at 3/31 6.17% pro forma Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Base rates and NII sensitivityQ4: NII down as base rates fell; expected further decline in Q1 due to full-quarter lag Largest contributor to NII decline (~$0.04/share); coupon reset timing creates lag Continued headwind, now fully reflected
Logan JV (CLO equity/dividends)Q4: noted; largest investment is a middle market CLO Dividend ~50% lower; OC test retention and timing caused lumpiness; ~24-month wind-down base case Distribution volatility expected
Nonaccruals/Watch listQ4: nonaccruals 0.9% FV; proactive watch list adds Nonaccruals rose to 3.5% cost/1.8% FV; 4 names added (first lien; ~1.2% FV) Deterioration vs low base; still diversified
Spreads/OriginationQ4: weighted avg spread ~510 bps; lower leverage in smaller issuers New-money spread ~565 bps; continued selectivity, majority first lien Slightly wider spreads captured
Tariffs/MacroQ4: monitoring potential tariff exposure; minority of portfolio affected 90-day tariff pause tempered near-term M&A; sponsors “wait-and-see” Macro uncertainty weighing on activity
Leverage and maturity profileQ4: extended maturities, reduced % maturing in 2026 76% of debt matures 2028 or later post-amendments Improved term structure
Dividend policy/NAV stabilityQ4: consistent coverage; variable supplemental framework 37th consecutive quarter of earning regular dividend; base dividend maintained Consistency emphasized

Management Commentary

  • Earnings drivers and baseline: “We reported net investment income of $16.6 million or $0.45 per share… decline primarily driven by lower base rates, roll-off of nonrecurring items and a reduction in dividend income from the Logan JV… loans on nonaccrual increased to 3.5% cost/1.8% FV. We believe this quarter’s earnings are reflective of our earnings baseline in the near term.” — CEO Jason Breaux .
  • Portfolio construction and diversification: “We ended the quarter with just over $1.6 billion of investments at fair value across a highly diversified portfolio of 191 companies… our top 10 largest borrowers represented 18% of the portfolio… first lien loans collectively representing 91%” — CEO Jason Breaux .
  • Dividend philosophy: “This marks our 37th consecutive quarter of earning our regular dividend… we have prioritized consistency and NAV stability over the long term… guided us to not aggressively raise our base dividend when the rate hiking cycle began in 2022” — CEO Jason Breaux .
  • Funding costs and facility actions: “At the beginning of April, we rightsized our SPV asset facility from $500 million to $400 million and reduced the spread by 50 basis points from 2.45% to 1.95%… pro forma weighted average interest rate would be 6.17%” — CFO Gerhard Lombard .
  • Logan JV wind-down context: “Going forward, our expectation is that the dividend income attributed to the Logan JV will reduce over time as the CLO deleverages… base case ~24 months to unwind” — CFO Gerhard Lombard .

Q&A Highlights

  • Nonaccrual approach and specific exposures: Management emphasized preserving capital, working constructively with sponsors when appropriate, and willingness to reorganize or sell if value-maximizing; they avoid quick secondary exits and take a longer-term view in workouts .
  • Nuvera/sector mix: Two nonaccruals linked to software-related exposures, but issues were more end-market-specific; Nuvera characterized as MSP rather than pure-play SaaS .
  • Logan JV dividend volatility: Equity tranche distributions affected by timing and OC tests, driving a big sequential drop; near-term upside possible after reinvestment at attractive entry points post “Liberation Day” volatility; lumpiness to continue .
  • Spreads and portfolio repricing: Q1 new-money spreads mid-500s vs low-500s in Q4; repricing risk tied to LBO activity and fundraising dynamics, concentrated in upper middle market; CCAP maintains pricing discipline .
  • Buybacks: Board continues to evaluate buybacks given share price and leverage constraints; focus remains on long-term stability and quality asset base .

Estimates Context

  • Q1 2025 vs S&P Global consensus: EPS $0.45 vs $0.525* (miss); revenue $42.1m vs $45.1m* (miss). Drivers: base rate lag ($0.04/share headwind), runoff of one-time PIK ($0.03/share), Logan JV dividend decline ($0.03/share), and new nonaccruals ($0.02/share) . Values marked with * retrieved from S&P Global.
  • Implications: Street models likely to lower near-term NII, incorporate Logan JV wind-down distribution variability, and reflect elevated nonaccrual baseline; offset by lower funding costs from SPV repricing and portfolio at target leverage .

Key Takeaways for Investors

  • Near-term earnings baseline reset: Expect NII to reflect full-quarter lower base rates and Logan JV distribution variability; management does not assume further nonaccruals or base rate changes in baseline, but acknowledges risks .
  • Dividend durability: Base dividend $0.42 maintained; regular dividend earned despite NII decline, with special dividends proceeding per schedule; supplemental dividend not paid under framework constraints .
  • Credit risk watch: Nonaccruals rose to 3.5% cost/1.8% FV, but exposures remain diversified, largely first lien, with active workout posture; monitor watch list migration and any sector-specific headwinds (software/MSP, select end markets) .
  • Funding cost tailwind: SPV spread cut and rightsizing plus extended maturities reduce borrowing cost and strengthen liability profile; pro forma rate 6.17% .
  • Origination quality and spreads: Net deployment with mid-500s spreads and emphasis on lower/core middle market first-lien structures supports risk-adjusted returns amid macro/tariff uncertainty .
  • Macro/tariff lens: 90-day tariff pause slowed M&A; portfolio’s modest direct materials exposure and domestic focus mitigate broader impacts, but deal timing may remain choppy .
  • Trading setup: Results missed Street; watch for stabilization in nonaccruals, Logan JV distributions, and evidence of spread capture/funding cost benefits—potential catalysts for sentiment/NAV trajectory .

Values marked with * retrieved from S&P Global.