Palmer Square Capital BDC Inc. (PSBD)·Q1 2024 Earnings Summary

Executive Summary

• Total investment income rose to $34.8M, Net investment income was $16.3M ($0.52 per share), and NAV/share increased to $17.16; sequentially, NII/share declined from $0.58 in Q4 2023 while revenue stepped up meaningfully .
• Portfolio quality and liquidity remained strong: 98% floating-rate exposure, 0% non‑accruals, $110.0M available liquidity, and debt-to-equity at 1.42x .
• The company priced PSBD CLO I at $400.5M in April, providing long-term financing flexibility; the Board declared a Q2 2024 base dividend of $0.42/share and expects to announce a supplemental distribution in June .
• Consensus estimates from S&P Global were unavailable at time of access; based on internal metrics, drivers included increased interest income (+$7.8M YoY) and active deployment ($346M funded in Q1) .

What Went Well and What Went Wrong

What Went Well

• Strong top-line and NII: Total investment income of $34.8M (+$8.6M YoY), NII of $16.3M ($0.52/share), with NAV/share up to $17.16 .
• Credit quality and structure: 98% floating-rate, 0% non‑accruals, and first‑lien senior secured debt predominates (87.0%), reflecting a defensive posture .
• Strategic financing and positioning: Priced $400.5M PSBD CLO I, and management emphasized agility across syndicated and private credit; “we are strategically positioned to deliver industry‑leading credit performance with compelling risk‑adjusted returns” — Christopher D. Long, CEO .

What Went Wrong

• Sequential earnings per share softness: NII/share declined to $0.52 from $0.58 in Q4 2023 (reflecting higher expenses including incentive fees and interest expense in the quarter) .
• Realized losses: Q1 included $(1.74)M in net realized losses, partially offset by $8.30M in unrealized gains (net $6.56M) .
• Leverage modestly higher: Debt-to-equity increased to 1.42x vs. 1.39x in Q4, while absolute cash remained low at $8.3M (mitigated by $110.0M available liquidity) .

Financial Results

Segment/Portfolio Mix (as of March 31, 2024):

KPIs and Balance Sheet:

Notes:

• “Total Debt Outstanding” is disclosed as aggregate principal amount of debt; liquidity/commitments subject to borrowing base restrictions .
• “Available Liquidity” includes cash and undrawn capacity on credit facilities .

Guidance Changes

No revenue, margin, OpEx, OI&E, or tax rate guidance was provided in Q1 materials .

Earnings Call Themes & Trends

Management Commentary

• “Palmer Square Capital BDC generated strong first quarter results… due to our high-quality portfolio of shorter duration and liquid credits… we are strategically positioned to deliver industry‑leading credit performance with compelling risk‑adjusted returns for our shareholders.” — Christopher D. Long, CEO .
• Recent developments highlighted strategic financing: PSBD CLO I priced at $400.5M to provide long‑term balance sheet financing, with reinvestment period through 2029 and maturity in 2037 .
• Liquidity/resource positioning: $110.0M available liquidity versus $30.8M of undrawn investment commitments; both support ongoing deployment flexibility .

Q&A Highlights

• Distribution policy clarity: Following Q4 indications that the Board was evaluating dividend policy, Q1 actions delivered a base dividend and signaled a supplemental dividend in June .
• Leverage approach: Management continues to frame leverage as opportunity‑dependent, targeting roughly 1.4x–1.5x in the current environment, aligned via fees on net assets (prior-quarter commentary continued to be reflected in Q1 leverage metrics) .
• Market opportunity set: Ongoing focus on primary BSL calendar and refinancing tailwinds, with deployment flexibility between syndicated and large‑cap private credit; Q1 funding activity ($346M) underscores the theme .

Note: The full Q1 2024 earnings call transcript is hosted externally; public sources report the call and headline beats but detailed Q&A content was not available within our internal document set .

Estimates Context

• S&P Global Wall Street consensus for Q1 2024 was unavailable due to access limitations at time of retrieval. Where estimate comparisons are required, please note that values could not be fetched from SPGI; no SPGI-derived consensus metrics are presented here.
• Third‑party reporting indicates Q1 2024 EPS of $0.52 beat by $0.03 and revenue of $34.78M beat by $6.16M; however, we have not anchored these comparisons on S&P Global and therefore do not incorporate them into our formal estimate comparison .

Key Takeaways for Investors

• Revenue momentum with disciplined credit: Strong YoY growth in total investment income and stable NII supports the income profile; defensive mix (predominantly first lien, 98% floating) and 0% non‑accruals reduce downside risk .
• Financing tailwind: The $400.5M PSBD CLO I should lower funding costs and extend liability duration, supporting NAV and income stability through cycles .
• Dividend path clearing: Base dividend declared and supplemental expected; distribution visibility improves, a near‑term trading catalyst for income‑focused investors .
• Deployment agility: $346M funded in Q1 with increased primary BSL activity; platform benefits from spread/pricing movements and refinancing trends to add spread and capture price appreciation .
• Leverage prudence: Operating at 1.42x within the stated comfort range, with liquidity of $110.0M; watch for balance between growth and risk management as CLO proceeds are utilized .
• Expense/earnings cadence: Sequential NII/share declined vs. Q4; monitor incentive fees and interest expense trends relative to asset growth to gauge EPS trajectory .
• Medium-term thesis: High-quality, liquid credit strategy plus liability optimization (CLO) positions PSBD to compound NAV and deliver attractive risk‑adjusted returns through varying rate environments .