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Carlyle Secured Lending, Inc. (CGBD)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 modestly below Street: Net investment income (NII) per share of $0.37 vs S&P Global consensus $0.392; total investment income (TII) $66.5m vs consensus $69.6m; slight NAV drift to $16.36 (–0.4% q/q). Dividend held at $0.40, supported by $0.86/share spillover income . Consensus values marked with an asterisk are from S&P Global.*
  • Portfolio growth and credit improvement: Net investment activity +$117.1m; total investments rose to $2.42B; non‑accruals fell to 1.0% of FV (from 2.1% in Q2) following a successful restructuring of Maverick/Align Precision .
  • Capital structure optimized post‑quarter: Issued $300m 2031 notes (5.75% fixed, swapped to SOFR+2.31%), repaid CSL III SPV facility, and called $85m 8.20% 2028 baby bonds; lowers weighted average borrowing cost ~10 bps, extends maturities, and moves the debt stack to 100% floating to match assets .
  • Near‑term earnings headwind from lower base rates and tight spreads; management expects an “earnings trough” over the next couple quarters with improvement building in 2H26 as JVs scale and deployment remains healthy; board declared Q4 dividend of $0.40/share .

What Went Well and What Went Wrong

  • What Went Well

    • Credit improved: non‑accruals declined to 1.0% of FV/1.6% of cost vs 2.1%/3.0% prior quarter; Maverick restructuring completed and moved into performing categories .
    • Productive deployment with first‑lien focus: net investment activity +$117.1m on $260.4m fundings; 85.7% first‑lien exposure; median portfolio company EBITDA $98m .
    • Capital structure actions reduce cost and risk: 2031 notes issuance and redemption of 2028 notes/pro forma repayment of CSL III facility lower WAC ~10 bps, extend maturities, and cut mark-to‑market leverage exposure; 100% floating debt aligns with assets .
    • Management quote: “We experienced another quarter of net growth… maintain leverage at the mid‑point of our target range… optimize[d] capital structure… with consistent NII generation and significant spillover available to support our dividend” .

  • What Went Wrong

    • Small miss vs consensus on both NII/share ($0.37 vs $0.392*) and TII ($66.5m vs $69.6m*), primarily from lower OID accretion and historically tight spreads .*
    • Sequential NII/share eased to $0.37 from $0.39; aggregate realized/unrealized net loss of $2.9m ($0.04/share) on select underperformers .
    • Spread compression in new originations (~500 bps weighted average) and less non‑U.S. mix vs Q2 pressured portfolio yield; management sees limited near‑term catalysts for spread widening .

Financial Results

Income statement and NAV (USD, except per‑share data)

MetricQ3 2024Q2 2025Q3 2025
Total Investment Income ($mm)56.0 67.3 66.5
Net Investment Income per Share ($)0.47 0.39 0.37
Adjusted NII per Share ($)0.49 0.39 0.38
Net Income per Share ($)0.37 0.20 0.33
Net Income Margin % (Net income/TII)33.5% (calc. from )21.7% (calc. from )35.9% (calc. from )
NAV per Share ($)16.85 16.43 16.36

Consensus vs actuals and next quarter outlook (S&P Global consensus marked with *)

MetricQ3 2025 ActualQ3 2025 Consensus*SurpriseQ4 2025 Consensus*
EPS (NII/share) ($)0.37 0.392*-0.0220.375*
Revenue / TII ($mm)66.509 69.557*-3.04867.532*

Values marked with an asterisk are retrieved from S&P Global.

Key portfolio and balance sheet KPIs

KPIQ2 2025Q3 2025
Total Investments at Fair Value ($mm)2,335.0 2,422.6
Statutory Debt/Equity (x)1.10x 1.10x
First‑Lien % of Portfolio (FV)85.6% 85.7%
Weighted Avg Yield on Income‑Producing (amortized cost)10.9% 10.6%
Non‑Accruals (% of FV)2.1% 1.0%
Liquidity (cash + undrawn facilities) ($mm)—594.6

Segment breakdown: Not applicable (BDC lending book).

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ4 2025$0.40 (declared for Q3) $0.40 (declared for Q4; payable Jan 16, 2026) Maintained
Weighted Avg Cost of Borrowing (pro forma)Post‑Q3 actionsN/ALower by ~10 bps after issuing $300m 2031 notes and repaying CSL III SPV facility & 2028 notes Lowered
Leverage postureOngoingTarget mid‑range1.10x at quarter‑end; mid‑point of target range Maintained
JV contribution trajectory2025–2026N/AMMCF JV mid‑teens run‑rate; second JV in advanced talks; earnings uplift more 2026+ Long‑term driver

Earnings Call Themes & Trends

TopicQ1 2025 (Prior-2)Q2 2025 (Prior-1)Q3 2025 (Current)Trend
Spreads/tightnessEmphasized conservative underwriting amid tariff/trade uncertainty “Historically tight” spreads; record platform originations New origination spreads ~500 bps; less non‑U.S. mix; expect tight spreads near‑term Persistently tight
Rates/earnings sensitivity—Lower rates a headwind; liability actions contemplated Every 100 bps ≈ $0.03/share/quarter headwind; near‑term trough before 2H26 rebuild Near‑term headwind
Credit quality/non‑accrualsNon‑accruals 1.6% FV (3/31) 2.1% FV at 6/30; Maverick restructuring pro forma improvement 1.0% FV at 9/30; one credit migrated 4→5 during restructuring Improving
JV strategyConsolidated CF II; JV framework highlighted MMCF mid‑teens ROE; exploring second JV PNC facility upsized to $800m; MMCF mid‑teens to CGBD; second JV advanced Building
Capital structureCredit facility to $935m; maturity to 2030 Plan to issue index‑eligible debt; repay legacy facility $300m 2031 issued; repay CSL III SPV & call $85m 2028 notes; WAC –10 bps; 100% floating Positive
Macro/tariffs/regulatoryTariff/trade uncertainty noted <5% portfolio with material tariff risk Expect normalization in tariff/regulatory policy to support activity Moderately constructive
Origination pipeline—Expect slower Q3, stronger Q4 Top‑of‑funnel +~30% YoY last two months; active pipeline Strengthening

Management Commentary

  • CEO (press release): “We experienced another quarter of net growth in the portfolio… continued to optimize CGBD’s capital structure… With consistent NII generation and significant spillover… focused on delivering stable income and consistent credit performance” .
  • CFO: “NII was $0.37 per share… and $0.38 after adjusting… Board declared a $0.40 dividend… NAV $16.36” . “We estimate $0.86/share of spillover… aggregate realized and unrealized net loss $3m ($0.04/share)… non‑accruals 1.6% cost/1.0% FV” .
  • Capital structure: “Raised a new $300m institutional unsecured bond at… SOFR+231… repaid in full the higher‑priced legacy CSL3 facility… will redeem the $85m baby bond… lower WAC by 10 bps, extend maturities, and reduce mark‑to‑market leverage; debt stack now 100% floating” .
  • Origination/portfolio stance: “We are operating in a tight spread environment… portfolio continue[s] to trend first lien” .

Q&A Highlights

  • Revenue bridge: Top‑line flat q/q mainly due to lower OID accretion on repayments; average daily balances were flat; fee income up modestly .
  • Cost of funds: ~10 bps reduction reflects repaying CSL3 facility (SOFR+285) and calling the baby bond (swap‑adjusted ~SOFR+314), replaced with 2031 notes (swap‑adjusted ~SOFR+231) .
  • Dividend durability: Management “comfortable” at $0.40 near‑term, supported by $0.86/share spillover; notes rate‑cut sensitivity of ~$0.03/share per 100 bps per quarter and JVs as longer‑term offsets .
  • Credit watchlist: One credit migrated from risk 4→5 amid restructuring; contrast with Maverick (Align Precision) restructuring that moved to 2/3 with an eventual recovery path .
  • Spreads/pipeline: New deals around ~500 bps spreads; non‑U.S. premium absent this quarter; pipeline quality remains high with first‑lien focus and LTVs ~40% .

Estimates Context

  • Q3 2025 actuals missed S&P Global consensus on NII/share ($0.37 vs $0.392*) and TII ($66.5m vs $69.6m*), reflecting less OID accretion and tight spreads .*
  • Street expects Q4 2025 EPS (NII/share) of ~$0.375* and revenue of ~$67.5m*; with rate cuts as a headwind, we expect modest downward bias to near‑term EPS unless deployment acceleration and JV scaling offset sooner than planned .*

Values marked with an asterisk are retrieved from S&P Global.

Key Takeaways for Investors

  • Slight miss, better credit: While NII/TII were modestly below consensus, credit trends improved (non‑accruals down to 1.0% FV) and deployment remained healthy—supportive for NAV stability .
  • Dividend looks supported: $0.40 dividend maintained with ~$0.86/share spillover, providing a near‑term cushion against rate‑cut headwinds .
  • Funding tailwinds: Post‑quarter actions trimmed cost of funds (~10 bps), extended maturities, and aligned liabilities with assets (100% floating), reducing downside risk into a cutting cycle .
  • Spread risk persists: Originations at ~500 bps indicate ongoing spread compression; management does not assume near‑term widening—expect NII pressure if base rates decline faster than spreads adjust .
  • Offensive posture via JVs: MMCF JV (mid‑teens run‑rate) and a potential second JV are medium‑term earnings levers as they scale through 2026; watch for updates on partner, strategy, and capital deployment cadence .
  • Portfolio quality and mix: Defensive, diversified, first‑lien book (85.7% first lien; median EBITDA $98m) with limited single‑name concentration; continue to favor quality over yield .
  • Trading setup: Near‑term earnings trough rhetoric and a maintained dividend suggest income stability but constrained upside until spreads/base‑rate dynamics improve or JV scaling accelerates—stock likely sensitive to deployment updates and further capital structure savings .

Supporting Data and Detail

Additional portfolio and capital updates

  • Q3 new investment fundings $260.4m (WACY 9.5%); repayments/sales $143.4m (10.4%); net +$117.1m. Portfolio FV $2.423B across 158 companies; weighted avg yield on income‑producing investments 10.6% .
  • Liquidity $594.6m (cash + undrawn capacity). Credit Facility commitments upsized in July to $960m .
  • Credit Fund (MMCF JV): CGBD ownership 50%; investments FV $781m; effective cost SOFR+1.60%; annualized dividend yield to CGBD 15.3%; PNC facility commitments increased to $800m in October .

Disclosures and non‑GAAP

  • Adjusted NII per share excludes amortization/accretion from acquisition accounting (CSL III merger and CF II purchase); reported $0.38 in Q3 2025 .

Citations:

  • Press release/8‑K and presentation:
  • Q3 2025 call transcript:
  • Prior quarter materials:
  • Notes redemption 8‑K:

Values marked with an asterisk are retrieved from S&P Global.