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Chicago Atlantic BDC, Inc. (LIEN)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was steady operationally: total investment income of $11.9M and NII of $7.6M ($0.34/share), with NAV per share essentially flat at $13.19 and no loans on non‑accruals .
  • Versus S&P Global consensus, LIEN slightly missed on “revenue” (total investment income) at $11.9M vs $12.46M* and on primary EPS at $0.33 vs $0.34*, with management citing back‑end weighted deployments that limited the quarter’s income contribution * .
  • Deployment runway strengthened by a new $100M senior secured revolver (SOFR+3%, 6% floor, Mar‑2028), which remained undrawn at 3/31; portfolio FV rose to $289.3M across 31 companies, 79% cannabis/21% non‑cannabis, and 76% floating‑rate exposure with 99% floors .
  • Dividend maintained at $0.34 for Q1 (paid Apr 11) and declared $0.34 for Q2 (payable Jul 11), consistent with the strategy to distribute substantially all income while scaling originations .
  • Near‑term catalysts: accelerating originations pipeline ($589.5M under evaluation), ample undrawn capacity on the revolver, and continued absence of non‑accruals; watch estimate revisions following modest Q1 underperformance and any deployment pacing updates .

What Went Well and What Went Wrong

What Went Well

  • Credit quality and structure: “None of our loans are on non‑accrual status,” with all debt investments senior secured and gross weighted‑average yield ~16.6% .
  • Balance sheet readiness: closed a new $100M revolver (SOFR+3%, 6% floor, matures Mar‑2028) to support growth; conservative leverage philosophy reiterated .
  • Strategic positioning and alpha: “We are uniquely positioned among BDCs as the only such vehicle focused on and able to lend to cannabis companies… Our weighted average yield… was 16.6%…,” highlighting above‑peer yield potential with disciplined underwriting .

What Went Wrong

  • Modest miss vs consensus: Q1 “revenue” (total investment income) $11.9M vs $12.46M* and Primary EPS $0.33 vs $0.34*; management pointed to back‑end timing of fundings that limited the quarter’s income contribution * .
  • Sequential dip in investment income: total investment income declined from Q4’s $12.7M to $11.9M, driven by timing of deployments and lower fee income ($0.64M vs $0.95M) .
  • Expense normalization: management fee and certain G&A items increased sequentially (e.g., management fee $1.26M vs $0.76M in Q4), partly offset by a G&A reimbursement waiver and expense limitation agreement in Q1 .

Financial Results

Income Statement Snapshot and Per-Share Metrics

MetricQ3 2024Q4 2024Q1 2025
Total Investment Income ($M)$3.18 $12.65 $11.92
Net Investment Income ($M)~$0.00 $7.99 $7.65
NII per Share ($)$0.00 $0.35 $0.34
Net Increase in Net Assets from Ops per Share ($)$(0.03) $0.35 $0.33
NII Margin % (calc)~0% (calc from )~63.2% (calc from )~64.1% (calc from )

Notes: NII margin is calculated as NII/Total Investment Income using cited figures.

Q1 2025 Actual vs S&P Global Consensus

MetricQ1 2025 ActualQ1 2025 ConsensusDelta
Total Investment Income (“Revenue”) ($M)$11.92 $12.46*Miss
Primary EPS ($)$0.33 $0.34*Miss

Values marked with * are retrieved from S&P Global.

Balance Sheet and Portfolio KPIs

KPIQ4 2024Q1 2025
Portfolio at Fair Value ($M)$275.2 $289.3
Portfolio Companies (#)28 31
NAV per Share ($)13.20 13.19
Gross Wtd-Avg Yield on Debt Investments (%)16.5% 16.6%
Floating-Rate Debt (% of FV)80% 76%
With Rate Floors (% of floating)99% 99%
Non‑accruals (% of cost)0% 0%

Mix/Segment Exposure (as of period end)

MixQ4 2024Q1 2025
Cannabis77% 79%
Non‑Cannabis23% 21%

Origination Activity and Pipeline

MetricQ4 2024Q1 2025
Gross Fundings ($M)$24.8 $20.8
Principal Repayments/Sales ($M)$17.1 ($13.0 repayments + $4.1 sales) $7.6 (of which $3.4 receivable)
Active Pipeline (platform)~$644M across 39 borrowers ~$589.5M across 35 borrowers

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cash Dividend per ShareQ1 2025$0.34 (Q4 2024 declared) $0.34 (paid Apr 11, 2025; record Mar 28, 2025) Maintained
Cash Dividend per ShareQ2 2025N/A$0.34 (record Jun 27, 2025; payable Jul 11, 2025) Announced
Quantitative Revenue/EPS/OpEx Guidance2025None disclosedNone disclosedN/A
Leverage/FacilityOngoingExploring financing options (Q3 2024) New $100M revolver (SOFR+3%, 6% floor; matures Mar‑2028) Introduced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Capital deployment & pipelineActive pipeline ~$559M (Q3), no leverage and exploring financing ; pipeline ~$644M by Q4 Commitments $32.3M; funded $20.8M; pipeline ~$589.5M; expect ramp as year progresses Stable to improving activity; slightly lower pipeline vs Q4
Leverage & liquidityPre‑revolver; financing options under evaluation ; revolver closed Feb 12, 2025 (post‑Q4) $100M revolver in place; conservative leverage strategy; undrawn at 3/31 Positive; capacity secured
Credit qualityNo non‑accruals No non‑accruals; portfolio senior secured Strong/unchanged
Macro (rates/tariffs)Limited commentaryTariffs caused March/early April volatility; limited direct impact expected; floors shield from falling rates Monitoring; manageable
Regulatory (cannabis)Favorable state/federal backdrop noted Rescheduling timing unpredictable; underwrite to status quo cash flow/collateral Cautious stance maintained
Dividend policyInitiated $0.34 in Q4 Maintained $0.34; intent to grow with scale (no explicit guidance) Stable; potential upside with scaling

Management Commentary

  • CEO positioning on alpha and structure: “We are uniquely positioned… able to lend to cannabis companies… Our weighted average yield… was 16.6%… All of our debt investments are senior secured… portfolio… entirely unlevered… We have no non‑accruals…” .
  • Deployment cadence explanation: “The total amount of originations was in line… but the back end timing limited the impact on our gross investment income. I expect that we will continue to ramp deployment…” .
  • Conservative approach to policy change: “While the outlook for… rescheduling is positive, the timing is unpredictable, and we continue to underwrite… based on… cash flow and collateral… in the current environment.” .
  • CFO on portfolio composition and rates: “76% of the portfolio is floating rate and 99%… have a rate floor… none of our loans are on non‑accrual… We are currently under levered…” .
  • President on macro/tariffs and originations: “Talk of tariffs… started to stabilize, and we have seen a recent pickup in potential opportunities… We believe there will be limited direct impact on the overall portfolio.” .

Q&A Highlights

  • Growth vs industry caution: Management emphasized a state‑by‑state focus and long‑term operator relationships to reconcile LIEN’s deployment appetite with broader sector caution .
  • Leverage philosophy and capacity: Room to grow the revolver and potentially add modest unsecured notes, but leverage likely to remain “well below industry averages” .
  • Dividend: No specific guidance; reiterated BDC requirement to distribute substantially all income by year‑end .

Estimates Context

  • Q1 2025 results modestly below S&P Global consensus: total investment income $11.92M vs $12.46M*; Primary EPS $0.33 vs $0.34*. Management cited back‑end timing of fundings as the key driver of the shortfall this quarter * .
  • Q2 2025 snapshot (for context): consensus Primary EPS $0.36* vs actual $0.34; consensus total investment income $13.10M* vs actual $13.08M (nearly in line)*.
  • Potential estimate revisions: With deployment capacity now in place (revolver) and pipeline healthy, estimate paths may hinge on pacing of draws and fee income variability; dividend trajectory remains tied to NII scaling .

Values marked with * are retrieved from S&P Global.

S&P Global Consensus Detail

MetricQ1 2025 Cons.*Q1 2025 ActualQ2 2025 Cons.*Q2 2025 Actual
Primary EPS ($)0.34*0.33 0.36*0.34
Total Investment Income ($M)12.46*11.92 13.10*13.08

Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

  • Credit quality remains pristine (0% non‑accruals) with fully senior‑secured exposure and high gross yields (~16.6%), supporting resilient NII generation .
  • Slight miss vs consensus stemmed from fundings landing late in the quarter; watch deployment cadence into Q2/Q3 given undrawn revolver and expanding pipeline .
  • Dividend held at $0.34 and management reiterates BDC distribution requirements; upward bias over time depends on sustained net portfolio growth and NII scale .
  • Rate floors (99% of floating loans) help protect yields if short rates decline; conservative leverage targets reduce downside risk relative to peers .
  • Cannabis/non‑cannabis mix (79%/21%) with strict underwriting and collateral focus positions LIEN to capitalize on niche, under‑served credit opportunities irrespective of federal policy timing .
  • Monitor: originations vs repayments, any draw on the revolver, fee income variability, and updates on tariff impacts (currently expected to be limited) .

Appendix: Additional Data Points

  • Q1 2025 results: Total investment income $11.9M; NII $7.6M ($0.34/share); net increase in net assets from operations $7.6M ($0.33/share) .
  • NAV: $13.19 vs $13.20 in Q4; total net assets ~$301.0M vs $301.2M at year‑end .
  • Activity: Q1 commitments $32.3M; funded $20.8M; repayments $7.6M (including $3.4M receivable); subsequent fundings $7.2M early Q2 .
  • Revolver terms: $100M, SOFR+3% (6% floor), 0.5% origination and unused fees, no prepayment penalty, maturity Mar 31, 2028 .