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Chicago Atlantic BDC, Inc. (LIEN)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered record originations and a clean credit book: gross investment income $15.1M, NII $9.5M ($0.42/share), NAV/share rose to $13.27; no loans on non‑accrual .
  • Results beat S&P Global consensus: revenue $15.07M vs $13.46M estimate, EPS $0.42 vs $0.35; next quarter (Q4 2025) Street expects ~$13.41M revenue and $0.36 EPS; limited coverage (1 estimate)* .
  • Dividend maintained at $0.34/share for the December quarter, with strong coverage from NII ($0.42/share) .
  • Liquidity and leverage remain conservative ($99.5M liquidity at quarter‑end; $11M drawn on $100M facility), supporting further measured deployment; management emphasized rate‑floor protection and differentiation in cannabis/lower‑middle market niches .

Values with asterisks retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Record deployment: funded 11 portfolio companies with $66.3M par (seven new borrowers) and another $5.0M post quarter‑end; CEO highlighted differentiated platform and no non‑accruals .
  • Strong earnings quality and coverage: NII $9.5M ($0.42/share) vs dividend $0.34/share; CEO noted “12.5% yield to book value” potential and reiterated focus on diversification and rate sensitivity management .
  • Portfolio resilience to falling rates: 71% of debt is fixed or at contractual floors; Oppenheimer scenarios rank LIEN #2 in NII resilience under 100–200 bps declines .

What Went Wrong

  • One‑time fee contribution: interest income included $1.9M of prepayment/make‑whole fees, boosting revenue but non‑recurring in nature .
  • Elevated repayments: Q3 principal amortization/repayments totaled ~$62.7M (including early payoffs ~$59.6M); management acknowledged larger‑than‑expected repayments though pipeline pace is not reactive to liquidity .
  • Slightly lower portfolio yield vs prior quarter: gross weighted average yield moved to 15.8% from 16.1% in Q2, reflecting mix and rate dynamics .

Financial Results

Income Statement and Per‑Share Metrics (quarterly)

MetricQ1 2025Q2 2025Q3 2025
Total Gross Investment Income ($USD Millions)$11.9 $13.1 $15.1
Net Investment Income ($USD Millions)$7.6 $7.7 $9.5
Net Investment Income per Share ($)$0.34 $0.34 $0.42
Net Inc. in Net Assets from Ops per Share ($)$0.33 $0.38 $0.39
NAV per Share ($)$13.19 $13.23 $13.27
Weighted Avg Shares (Basic/Diluted)22,820,386 22,820,405 22,820,568

Note: NII margin (%) is calculated as NII / Total Gross Investment Income from cited figures: Q1 ~63.8% , Q2 ~58.9% , Q3 ~62.9% .

Actuals vs S&P Global Consensus and Next Quarter Outlook

MetricQ3 2025 Estimate*Q3 2025 ActualSurprise*Q4 2025 Estimate*
Revenue ($USD Millions)$13.46*$15.07 +$1.61*$13.41*
EPS ($)$0.35*$0.42 +$0.07*$0.36*
# of Estimates1*——1*

Values with asterisks retrieved from S&P Global. Surprise calculated from S&P Global estimates and company‑reported actuals.

Portfolio KPIs and Credit Metrics

KPIQ1 2025Q2 2025Q3 2025
Gross Weighted Avg Yield on Debt Investments (%)16.6% 16.1% 15.8%
Loans on Non‑Accrual (% of cost)0.0% 0.0% 0.0%
Floating‑Rate Debt (% of FV)76% 76.3% 69%
Floating Loans at Floor (% of floating)99% 46% 58%
Debt Outstanding ($MM)$0 $5.0 $11.0
Liquidity at Quarter‑End ($MM)—$108.8 $99.5

Segment/Composition

Mix (% of total FV)Q1 2025Q2 2025Q3 2025
Cannabis79% 78% 76%
Non‑Cannabis21% 22% 24%
Non‑Cannabis Industries (% of total FV)Q1 2025Q2 2025Q3 2025
Finance & Insurance49% 43% 37%
Information24% 18% 26%
Public Administration17% 18% 15%
Retail Trade6% 17% 15%
Real Estate & Rental/Leasing4% 4% 3%
Manufacturing——4%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per ShareQ4 2025 (quarter ending Dec 31, 2025)$0.34 (Q3 declared for Sep 30, 2025) $0.34 Maintained
Revenue/EPS/OpEx/TaxFY/Q4 2025Not providedNot provided—

Management reiterated expectation of additional deployment activity through year‑end at a measured pace; no formal quantitative guidance provided .

Earnings Call Themes & Trends

TopicQ1 2025 (Prior‑2)Q2 2025 (Prior‑1)Q3 2025 (Current)Trend
Originations/DeploymentCommitted $32.3M; funded $20.8M; pipeline ~$590M Funded $39.1M; post‑quarter funded $24.7M; pipeline ~$780M Record $66.3M funded; $5M post quarter; pipeline ~$610M Accelerated, then sustained deployment
Rate Sensitivity/Floors99% of floaters have floors; no debt outstanding 76% floating; 46% at floor 69% floating; 58% of floaters at floor; 71% fixed or floored Improved downside protection
Credit QualityNo non‑accruals No non‑accruals No non‑accruals; under‑levered Stable/strong
Liquidity/LeverageNew $100M facility; under‑levered $5M drawn; $125.4M liquidity post quarter $11M drawn; $97.8–99.5M liquidity Conservative leverage maintained
Regulatory/MacroTariffs monitored; limited direct impact expected Rescheduling seen as “Goldilocks” for demand and cash flow Hemp‑derived THC crackdown seen as net positive; 280E liabilities viewed as debt‑like Constructive, nuanced positioning

Management Commentary

  • “We remain the only BDC focused on and able to lend to cannabis companies… Net investment income per share was $0.42… we executed on our pipeline and funded $66.7 million… a new originations record” — Peter Sack, CEO .
  • “Gross investment income totaled $15.1 million… included $1.9 million of one‑time prepayment/make‑whole fees… NII was $9.5 million, or $0.42 per share… NAV/share was $13.27” — Tom Geoffroy, Interim CFO .
  • “84% of our portfolio company investments are agented internally… highly selective and not dependent on syndicated deals” — Dino Colonna, President .

Q&A Highlights

  • Repayments were larger than expected, but deployment pace is driven by long‑developed relationships and pipeline, not reactive to liquidity .
  • Hemp‑derived THC closing of loopholes likely supports licensed markets; beverages expanded the user base, but overall impact is positive for borrowers .
  • 280E/uncertain tax liabilities: LIEN views unpaid tax liabilities as debt‑like obligations; seeks to limit incurrence via loan covenants .
  • Smaller borrower focus yields stronger structuring: lower leverage, tighter covenants, enhanced monitoring; balances size‑related risks .

Estimates Context

  • Q3 2025 results exceeded S&P Global consensus: revenue $15.07M vs $13.46M*, EPS $0.42 vs $0.35*; only one covering estimate underscores under‑followed status* .
  • Q4 2025 Street outlook implies continued earnings power: ~$13.41M revenue* and $0.36 EPS*, with originations and floors expected to sustain NII; management gave no formal guidance .

Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat: Both revenue and EPS exceeded consensus; note one‑time prepayment fees ($1.9M) boosted revenue, but underlying NII coverage remains robust .
  • Credit cleanliness and protection: No non‑accruals; significant rate‑floor/fixed‑rate protection (71% shielded); under‑levered balance sheet supports downside resilience .
  • Deployment momentum: Record originations with broadened diversification (seven new borrowers), while liquidity remains ample for measured growth into year‑end .
  • Differentiated niche and sourcing: 84% internally agented, minimal overlap with public BDCs; structural protections and pricing power sustain above‑market yields .
  • Regulatory backdrop is a net positive: rescheduling/hardening of hemp rules likely to improve borrowers’ after‑tax cash flows and demand; LIEN underwrites status quo and embeds covenants around tax liabilities .
  • Near‑term trading lens: Dividend stability ($0.34) with NII coverage ($0.42) and strong credit quality are potential catalysts; watch originations cadence and fee/repayment mix for sustainability of the beat .
  • Medium‑term thesis: Conservative leverage plus differentiated origination/platform should compound NAV and support distributions; continued diversification into non‑cannabis lowers correlation risk .