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Blue Owl Capital Corp (OBDC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 came in soft versus expectations: GAAP NII/share was $0.37 and adjusted NII/share $0.36 (down from $0.40 in Q2), with total investment income of $453.1M; NAV/share declined $0.14 to $14.89 on unrealized depreciation concentrated in a few names . Against S&P Global consensus, EPS/NII missed (~$0.372 actual vs $0.394 est.) and revenue missed ($453.1M actual vs $466.6M est.) as non-recurring income fell from Q2 levels (see Estimates Context) .
  • Credit remained resilient but non-accruals increased to 1.3% of fair value from 0.7% in Q2; management flagged two tariff-impacted positions (Conair second lien, Beauty Industry Group) as primary drivers of markdowns .
  • The Board maintained the base dividend at $0.37 for Q4 (no supplemental); a new $200M, 18-month buyback was authorized to replace the expiring $150M plan .
  • Post-quarter, OBDC terminated the proposed merger with OBDC II citing market conditions; the previously announced $200M buyback remains in place .

What Went Well and What Went Wrong

  • What Went Well

    • Portfolio fundamentals: management emphasized continued resilience, with borrowers’ revenue/EBITDA growth in mid-to-high single digits, interest coverage ~2.0x (up from 1.7x YoY) and senior-secured focus near record levels .
    • Origination activity and scale: Q3 new commitments were $1.3B with $963M funded, as Blue Owl’s platform accessed larger, high-quality direct lending opportunities; weighted average spreads on new deployments remained ~500 bps over base .
    • Shareholder return tools: base dividend held at $0.37 for Q4 and a fresh $200M repurchase program was launched to support value in dislocations .

  • What Went Wrong

    • Earnings softness vs Q2/consensus: adjusted NII/share fell to $0.36 from $0.40 as non-recurring prepayment and fee income dropped to ~$0.02/share from ~$0.05 in Q2; total investment income also declined sequentially .
    • Credit headlines and marks: NAV/share declined to $14.89, with unrealized depreciation tied to a small number of watchlist names (including tariff-impacted Conair and Beauty Industry Group) and a modest uptick in non-accruals to 1.3% .
    • Merger uncertainty: while initially announced with expected synergies, the OBDC–OBDC II merger was later terminated post-quarter due to market conditions, removing a potential NII accretion lever near-term .

Management quotes:

  • “OBDC delivered another quarter of strong performance…Our portfolio continues to demonstrate solid credit quality and underlying fundamentals” – Craig W. Packer, CEO .
  • “We generated adjusted NII per share of $0.36…Our results…reflected a lower level of non-recurring income” – Craig W. Packer .
  • “Our non-accrual rate…1.3% at fair value this quarter…primarily due to the addition of Beauty Industry Group” – Logan Nicholson, President .

Financial Results

Core P&L and balance metrics (oldest → newest):

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Total Investment Income ($M)$406.0 $464.6 $485.8 $453.1
GAAP NII/Share ($)$0.47 $0.41 $0.42 $0.37
Adjusted NII/Share ($)$0.47 $0.39 $0.40 $0.36
Net Realized & Unrealized Gains (Losses)/Share ($)$(0.13) $0.08 $(0.15) $(0.12)
Net Increase in Net Assets/Share ($)$0.35 $0.49 $0.27 $0.25
NAV/Share ($)$15.28 $15.14 $15.03 $14.89
Net Debt-to-Equity (x)1.23x 1.26x 1.17x 1.22x
Weighted Avg Yield at FV (%)11.5% 10.7% 10.6% 10.3%
Non-accruals (% of FV)—0.8% 0.7% 1.3%

Q3 vs S&P Global consensus:

MetricEstimateActualSurprise
EPS/NII per share ($)0.39417*0.3719 Miss ~($0.02)
Total Investment Income ($M)466.56*453.07 Miss ~($13.5M)

Values with asterisks retrieved from S&P Global.

Portfolio composition (mix by fair value):

CategoryQ2 2025Q3 2025
First-lien Sr. Secured75.0% 74.4%
Second-lien Sr. Secured5.4% 5.1%
Unsecured Debt2.2% 2.3%
Preferred Equity3.3% 3.3%
Common Equity3.9% 4.1%
Specialty Finance Equity7.1% 7.6%
Joint Ventures2.3% 2.3%
% Debt Floating97.6% 97.4%
% Senior Secured (Debt)81.2% 80.4%

Additional Q3 KPIs:

  • New commitments: $1.338B; Fundings: $963M; Repayments: $797M .
  • Non-recurring “unscheduled paydowns” income: $11.1M vs $32.1M in Q2 .
  • Liquidity: $321.3M cash/restricted; $2.9B undrawn; total debt principal $9.6B .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Base Dividend/ShareQ4 2025$0.37 (Q3 dividend run-rate) $0.37 declared Maintained
Supplemental Dividend/ShareQ3 2025$0.02 (Q2 2025) None declared Lowered
Share Repurchase18 months$150M program to 11/7/25 New $200M program authorized 11/4/25 Raised
Strategic Action2026 (initially)Announced OBDC–OBDC II merger (expected 1Q26 close) Merger terminated 11/19/25 Withdrawn

Management dividend color: if SOFR trends toward ~3% in 2026, the base dividend may be evaluated lower (historical base $0.33 in a 3% base-rate environment), but no change for Q4 2025; spillover ($0.31/share) offers limited cushion .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q1)Current Period (Q3)Trend
Rates/dividendsSupplemental dividends paid ($0.01 in Q1, $0.02 in Q2) amid higher base rates Non-recurring income normalized; base dividend maintained; potential 2026 reset if rates fall Downshift vs early-2025 as base rates decline
Credit qualityNon-accrual 0.8% (Q1) to 0.7% (Q2) Non-accrual up to 1.3%; issues concentrated (Conair, BIG) Slight deterioration, still sector-low per mgmt
Originations/deal flowQ1–Q2 commitments ~$1.1–$1.2B; repayments elevated in Q2 Q3 commitments $1.3B; pipeline pickup; mix tilting to sell-side M&A with better fees Improving volume/mix into fall
Spreads/marketYields easing from 11–12% to ~10.6–10.7% in H1 2025 New deployment spreads ~500 bps; public markets at tight levels; scope for eventual widening Spreads tight; potential widening upside
Strategic actionsOBDE merger closed Jan 2025, scaling platform OBDC–OBDC II merger announced for accretion/synergies; later terminated post-quarter Unwound near-term accretion lever
Capital returnRegular dividends maintained ($0.37); supplemental in Q1–Q2 New $200M buyback authorized; no 2024 repurchases were executed Increased flexibility for buybacks

Management Commentary

  • Prepared remarks: “Adjusted NII per share of $0.36…roughly in line with our long-term average, though…down from peak levels due to the declining base rate and spread environment” – CEO .
  • Credit stance: “Non-accrual rate…1.3%…do not reflect new credit issues…watchlist for several quarters” – CEO .
  • Portfolio fundamentals: “Borrowers…year-over-year revenue and EBITDA growth…mid to high single digits; interest coverage ~2x…PIK income 9.5% of TII, down from 13.5% a year ago” – President .
  • Dividend outlook: “Logical…to evaluate reducing the dividend appropriate with…lower rate environment…when rates were ~3%, our dividend was about $0.33” – CEO .
  • Buybacks: $200M program authorized; use balanced with leverage/opportunity set; no repurchases under 2024 plan .

Q&A Highlights

  • Merger accretion: ROE accretion estimated at ~15–20 bps from OpEx synergies and financing optimization; expected in 2026 before termination (post-quarter event) .
  • Dividend sensitivity: management reiterated base dividend sustainability framework and willingness to adjust for lower base rates; spillover ~ $0.31/share .
  • Deal pipeline/leverage: pro forma leverage would have ticked down with OBDC II; robust pipeline with more sell-side M&A and fee income tailwinds .
  • Credit specifics: Conair (tariffs, CCC-rated first lien creating technical mark pressure) and Beauty Industry Group (tariffs/operational; tighter liquidity) were main drivers of marks .
  • Repurchases: management did not repurchase stock under the 2024 program; timing windows and opportunity/leverage balance will dictate pace under the new $200M plan .

Estimates Context

  • EPS (Primary EPS, proxy for NII/share) and revenue both missed S&P Global consensus: EPS/NII $0.3719 vs $0.3942 est.; revenue $453.1M vs $466.6M est.; EBITDA not available. Misses were driven by a sharp drop in non-recurring income (unscheduled prepayment/fee), which fell to ~$0.02/share vs ~$0.05 in Q2, and lower interest income from debt investments * .
  • Target price consensus mean stood at ~$14.88 during the period; no consensus recommendation text returned in tool result*.

Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term print was light vs estimates on lower non-recurring income and a modest uptick in non-accruals; focus on sustainability of $0.37 base dividend into 2026 as base rates decline .
  • Credit quality remains comparatively strong and diversified; watch the small cohort of tariff-impacted names and any further migration into non-accruals from current 1.3% .
  • Pipeline improving with a shift toward sell-side M&A, potentially lifting fee income even if base rates drift lower; Blue Owl’s scale is a competitive advantage .
  • Repurchase authorization ($200M) provides valuation support; management intends to balance buybacks with leverage and deployment opportunities .
  • Post-quarter merger termination removes a potential NII accretion lever; re-focus on organic origination, spread normalization optionality, and cost of capital management .
  • Spreads are tight; any normalization in syndicated markets and continued M&A pickup could widen direct-lending spreads and partially offset lower base rates over 12–18 months .

Citations

  • Q3 2025 8-K and Exhibit 99.1 press release: .
  • Q3 2025 standalone press release: .
  • Q3 2025 Earnings call transcript: .
  • Merger announcement press release (Nov 5, 2025): .
  • Merger termination press release (Nov 19, 2025): .
  • Q2 2025 8-K/press release: .
  • Q1 2025 8-K/press release: .

S&P Global estimates used in “Estimates Context” and “Q3 vs S&P Global consensus” tables (no document citations for estimates per tool design). Values retrieved from S&P Global.