Executive Summary

Q4 2024 delivered net investment income of $0.56 per share (down vs $0.58 in Q3), NAV per share rose to $18.18 (+$0.03 QoQ); total investment income was $57.1M (+17% YoY), with NII fully covering the $0.55 combined regular and special dividend .
Credit quality improved: non‑accruals fell to one company representing 0.1% of fair value (0.4% of cost), vs three companies and 0.5% of fair value in Q3; watch list remained manageable at ~5.9% of fair value according to management commentary .
Capital structure optimization is a 2025 catalyst: January unsecured notes issuance ($300M, 6.65%; swapped to SOFR+230), termination of Wells Fargo facility, and a CLO-I reset expected to lower weighted average cost of debt from SOFR+214 bps to SOFR+202 bps; liquidity stood at ~$250M at year‑end .
Origination activity remained healthy but moderated QoQ: $163M gross new commitments (vs $226M in Q3), with 98% senior loans; portfolio fair value increased to $2.08B across 210 companies; weighted average portfolio yield at cost declined to 10.3% (from 10.9% in Q3) on spread compression and lower SOFR .
Wall Street consensus from S&P Global was unavailable for Q4 2024, so beats/misses cannot be assessed; management reiterated regular dividend of $0.45 for Q1’25 and described a supplemental dividend policy targeting ~50% of excess earnings beyond the base dividend .

What Went Well and What Went Wrong

What Went Well

Portfolio resilience and reduced non‑accruals: two restructurings led to removals from non‑accrual; at year‑end only one name remained on non‑accrual (0.1% FV, 0.4% cost), which management views favorably vs BDC averages .
NAV accretion and dividend coverage: NAV rose to $18.18 (+$0.03 QoQ); NII of $0.56 covered the $0.55 combined payout, supporting an attractive ~12.0% total annualized dividend yield .
Cost of capital actions: $300M unsecured notes at 6.65% (swapped to SOFR+230), CLO‑I reset expected to reduce WACD to SOFR+202 bps; management emphasizes diversified funding and no near‑term maturities .

Quote: “We remain confident in the Company’s positioning as a leader in the core middle market direct lending space and remain focused on continuing to deliver an attractive yield to our shareholders.” — Ken Kencel, CEO .

What Went Wrong

Yield and spread pressure: weighted average yield at cost fell to 10.3% from 10.9% QoQ, driven by base rate declines and spread tightening; CFO noted repricing largely complete (≈2/3–75%) but still pressured portfolio yields .
NII modestly down QoQ: $0.56 vs $0.58 in Q3, impacted by ~$0.01 per share excise taxes and ~$0.01 per share non‑recurring interest/debt financing expense from accelerated deferred financing costs tied to the SMBC facility termination .
Origination volume moderated: Q4 gross new commitments of $162.7M vs $225.6M in Q3; net funded activity was $31.6M vs $47.5M prior quarter, reflecting timing shifts into early 2025 .

Financial Results

Metric	Q2 2024	Q3 2024	Q4 2024
Total Investment Income ($USD Millions)	$55.1	$60.3	$57.1
Net Investment Income per Share ($)	$0.57	$0.58	$0.56
Net Increase in Net Assets from Operations per Share ($)	$0.37	$0.67	$0.54
NAV per Share ($)	$18.03	$18.15	$18.18
Total Distributions per Share ($)	$0.55	$0.55	$0.55
Net Interest Margin (bps)	368	320	323

Segment/Composition (at fair value):

Composition	Q2 2024	Q3 2024	Q4 2024
First‑Lien Debt (%)	90.6%	90.1%	90.6%
Subordinated Debt (%)	7.8%	8.3%	7.7%
Equity Investments (%)	1.6%	1.7%	1.8%
Floating Rate Debt (%)	94.8%	94.3%	94.7%
Fixed Rate Debt (%)	5.2%	5.8%	5.3%

Key KPIs:

KPI	Q2 2024	Q3 2024	Q4 2024
Weighted Avg Yield (Cost)	11.3%	10.9%	10.3%
Weighted Avg Yield (Fair Value)	11.4%	10.9%	10.4%
Debt-to-Equity (Quarter End)	1.04x	1.11x	1.15x
Portfolio Companies (count)	198	202	210
Non‑Accruals (% FV / % cost)	0.49% / 1.44%	0.55% / 1.40%	0.10% / 0.35%
Interest Coverage (1st lien)	2.2x	2.1x	2.2x
Portfolio Net Leverage	4.8x	4.9x	4.9x

Notes: Investment income used as “Revenue” proxy consistent with BDC reporting .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Regular Dividend per Share	Q1 2025	$0.45 (Q3/Q4 declarations)	$0.45 declared for April 28, 2025 payment	Maintained
Special Dividend per Share	Q1 2025	Four $0.10 specials over one year (announced Jan 2024)	Final $0.10 payable April 28, 2025 (record Feb 12, 2025)	Maintained/completion
Supplemental Dividend Policy	Ongoing post‑specials	Indicated at IPO; evolving	~50% of excess earnings over base dividend to be paid as supplemental	Clarified
Target Leverage (Debt/Equity)	Ongoing	1.0–1.25x; mid‑point targeted in Q3	Operating toward upper end of 1.0–1.25x; 1.15x at Q4 end	Maintained; trajectory higher
Weighted Avg Cost of Debt	Near‑term	~SOFR+214 bps	Expected ~SOFR+202 bps post CLO-I reset	Lowered
Asset Mix Allocation	Ongoing	85–90% senior loans; balance junior/equity low single‑digit	Reiterated; 90.6% senior loans at Q4	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q3 2024)	Current Period (Q4 2024)	Trend
Rates/Base SOFR	SOFR ~5.32%; yields declining; NIM 368 bps	SOFR ~4.59%; NIM 320 bps	SOFR ~4.31%; NIM 323 bps; base rate decline pressured income	Stabilizing NIM; lower base rates
Spread Compression	Tightening noted; yields down	Continued compression	Stabilization in TMM spreads (~475–500 bps new deals)	Stabilizing
Non‑Accruals/Credit	Three non‑accruals; WA risk 4.1	Three non‑accruals; WA risk 4.2	One non‑accrual; WA risk 4.1; watch list ~5.9% FV	Improving credit quality
Origination Mix	95%+ first lien; $360M commitments	98% first lien; $226M commitments	98% first lien; $163M commitments	Healthy, moderated QoQ
Capital Structure Actions	Funding diversified; facilities in place	SMBC facility terminated; revolver priced at SOFR+200	$300M unsecured notes; CLO reset lowers WACD; terminate Wells Fargo facility	Lower cost, diversified
Share Repurchase	Program initiated; ~$6.5M by Jul 31	~$13.8M by Oct 31	~$57.6M through Feb 25, 2025; ~$42M remaining	Increased activity
Market Structure (Direct Lending vs BSL)	—	—	Direct lenders ~90% of middle market new LBOs; core middle market insulated from BSL pressure (CEO)	Supportive for NCDL focus

Management Commentary

Strategic positioning: “We remain confident in the company’s positioning as a leader in the core middle market direct lending space…deliver an attractive yield to our shareholders.” — Ken Kencel, CEO .
Dividend policy: “Roughly 50% of the excess earnings…would be funding the supplemental [dividend]” — Shai Vichness, CFO .
Repricing largely complete: “Anywhere in that 2/3, 70% range is probably a reasonable estimate [repriced]…not much left to go.” — CFO .
Cost of capital optimization: CLO‑I reset reduces AA tranche spread from SOFR+166 to +143; expected WACD to drop to SOFR+202 bps; $300M unsecured notes due 2030 at 6.65% (swapped to SOFR+230) — CFO .
Portfolio health and diversification: Top‑10 represent 13.2% of FV; average position 0.5%; one non‑accrual — CEO/CFO .

Q&A Highlights

Supplemental dividend framework: Target ~50% of excess earnings; potential year‑end special/top‑ups if equity realizations occur .
Portfolio repricing: CFO estimates ~2/3–75% repricing completed; limited residual impact expected; yields reflect base rate declines and past repricing .
PIK income outlook: Low single‑digit (~4%) expected, primarily from junior capital; minimal from senior lending .
Direct lending dominance: CEO expects core middle market to remain dominated by direct lenders due to speed/certainty of execution; BSL more relevant in refinancings and larger issuers .

Estimates Context

Wall Street consensus estimates via S&P Global were unavailable at the time of this analysis (tool request limit exceeded), so we cannot benchmark NCDL’s Q4 EPS/NII or investment income against consensus. Given base rate declines and stabilization of spreads, forward sell‑side models may need to reflect lower asset yields and the expected reduction in cost of debt from capital structure actions .

Key Takeaways for Investors

Dividend coverage and NAV stability: NII covered $0.55 total dividends; NAV rose modestly—supports the income thesis with ~12% annualized yield in Q4 .
Improving credit metrics: Non‑accruals dropped materially; watch list manageable; portfolio diversified across 210 companies—reduces downside risk .
Cost of capital tailwind: Unsecured notes + CLO reset expected to lower WACD; enhances NIM resilience as spreads stabilize and SOFR drifts lower .
Portfolio discipline: 90.6% first‑lien, ~95% floating—positioned to benefit from rate dynamics over time; origination focused on traditional middle market with tighter terms .
Near‑term trading catalysts: Final $0.10 special dividend (Apr 28) and clarity on supplemental dividend policy could attract yield‑focused flows; increased buyback activity provides technical support .
Medium‑term considerations: Lower asset yields from repricing and base rate declines may pressure NII, partially offset by leverage moving toward upper end and reduced funding costs .
Monitor credit hotspots: Healthcare and transportation/cargo were noted areas of prior weakness, though valuations improved this quarter—continue tracking watch list migration and restructurings .

Nuveen Churchill Direct Lending Corp. (NCDL)·Q4 2024 Earnings Summary