Executive Summary

Q2 total investment income rose 33% y/y to $36.5M and 5% q/q, but net investment income (NII) per share dipped to $0.48 (vs. $0.52 in Q1 and $0.56 y/y) as realized/unrealized losses of $10.4M related in part to a ConvergeOne restructuring pressured results and NAV fell to $16.85 (from $17.16) .
Credit quality remained solid with 0% non‑accruals at quarter‑end and minimal PIK ($182K; 0.5% of TII), while portfolio yield eased to 9.82% (‑29 bps q/q) amid rotation and market dynamics .
Balance sheet flexibility improved: liquidity rose to ~$192M (from ~$110M in Q1), though leverage increased to 1.49x (from 1.42x); PSBD closed a $400.5M CLO financing that augments long‑term funding .
Dividend policy intact: paid $0.47/share in Q2; declared Q3 base dividend of $0.42 with a supplemental dividend expected to be announced in September; separately, a Q2 supplemental dividend of $0.05 was declared on June 20 .
Near‑term stock catalysts: execution on CLO‑enabled deployment, stability of non‑accruals/NAV, and clarity on supplemental dividend cadence; consensus estimates from S&P Global were not retrievable during this pull, so beat/miss vs. Street cannot be assessed .

What Went Well and What Went Wrong

What Went Well
- Continued strong income generation: Total investment income rose to $36.5M (+33% y/y), supported by larger asset base and high floating‑rate exposure (98%) .
- Credit metrics solid: 0% non‑accruals at quarter‑end; minimal PIK ($182K; 0.5% of TII) underscores cash‑pay discipline .
- Strategic financing: Closed $400.5M PSBD CLO I (AAA at SOFR+1.60% on Class A), extending liabilities and enhancing flexibility; liquidity improved to ~$192M .
- CEO tone: “strong second quarter results… power of our differentiated liquid loan strategy… well‑positioned for upside… benefits of our liquid strategy to generate long‑term shareholder value” .
What Went Wrong
- Valuation pressure: Total net realized and unrealized losses of $10.4M drove NAV/share down to $16.85 from $17.16 q/q; portfolio yield also declined to 9.82% (‑29 bps q/q) .
- Specific credit event: ConvergeOne moved to non‑accrual in April and was restructured before quarter‑end, with the majority converted to equity; PSBD recorded a realized loss in June .
- NII per share compressed to $0.48 (from $0.52 in Q1; $0.56 y/y) as valuation marks and slightly lower portfolio yield offset income growth; leverage increased to 1.49x (from 1.42x) .

Financial Results

Metric	Q2 2023	Q1 2024	Q2 2024
Total Investment Income ($M)	$27.44	$34.78	$36.55
Net Investment Income ($M)	$14.20	$16.32	$15.76
NII Margin (%)	51.7% (calc. from TII/NII)	46.9% (calc. from TII/NII)	43.1% (calc. from TII/NII)
NII per Share ($)	$0.56	$0.52	$0.48
Net Increase (Decrease) in Net Assets from Ops per Share ($)	$0.94	$0.72	$0.16
Net Realized + Unrealized Gains (Losses) ($M)	$9.74	$6.56	$(10.45)
NAV per Share ($)	$16.55	$17.16	$16.85

KPIs and Portfolio Metrics

KPI	Q2 2023	Q1 2024	Q2 2024
Total Fair Value of Investments ($M)	$1,062.84	$1,393.19	$1,431.58
Portfolio Companies (count)	177	211	209
Portfolio Yield (WATY at FV, %)	11.40%	10.11%	9.82%
Non‑Accrual (% of investments)	0%	0%	0%
Debt‑to‑Equity (x)	1.47x	1.42x	1.49x
Available Liquidity ($M)	NA	~$110.0	~$192.0
Cash & Equivalents ($M)	NA	$8.26	$14.79
New Investments Funded (principal, $M)	$535.78	$346.48	$189.30
Sales/Repayments (principal, $M)	$209.58	$69.56	$140.03
PIK Income ($K; % of TII)	NA	NA	$182; 0.5%
Total Assets ($M)	NA	$1,412.54	$1,458.74
Total Net Assets ($M)	$426.53	$558.54	$548.79

Notes:

Revenue refers to Total Investment Income (TII) .
NII margin is calculated from reported TII/NII in each period .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Base Dividend per Share	Q3 2024	Q2 base dividend $0.42/share (paid Jul 16, 2024)	Q3 base dividend $0.42/share (payable Oct 14, 2024; record Sep 27, 2024)	Maintained
Supplemental Dividend per Share	Q2 2024	None	Declared $0.05/share supplemental (payable Jul 16, 2024; record Jun 28, 2024)	Introduced
Supplemental Dividend per Share	Q3 2024	None specified	Company expects to announce a supplemental dividend in September	Expected (unquantified)

No revenue, margin, OpEx, tax rate, or segment guidance was provided in company materials for Q2 2024 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2023 and Q1 2024)	Current Period (Q2 2024)	Trend
Liability management / CLO financing	Management flagged exploration of CLO and other financing; Board authorized buyback; active lender dialogues . In Q1, priced $400.5M CLO; close expected May 23 .	CLO closed May 23; AAA at SOFR+1.60%; long reinvestment; enhances flexibility .	Positive/Completed
Portfolio quality / Non‑accruals	0% non‑accruals; focus on large, senior, liquid credits .	0% non‑accruals at quarter‑end; ConvergeOne went non‑accrual in April and was restructured (realized loss) .	Mixed (event managed; end‑state clean)
Portfolio yield / pricing	Q1 yield 10.11%; discussed adding spread via primary; loans at discount supporting NAV potential .	Yield 9.82% (‑29 bps q/q), reflecting mix/market; still 98% floating at FV .	Slightly Negative
Leverage and liquidity	Target leverage flexible with environment; Q1 1.42x; liquidity ~$110M .	Leverage 1.49x; liquidity up to ~$192M; cash $14.8M .	Neutral/Improved Liquidity
Dividends	Q1 base $0.42 declared; supplemental policy in focus .	Paid $0.47 in Q2; Q3 base $0.42 declared; Q3 supplemental expected; Q2 supplemental $0.05 declared on June 20 .	Stable with supplements

Management Commentary

Strategy and positioning: “strong second quarter results… power of our differentiated liquid loan strategy… well‑positioned for upside… [team] excited to continue [to] demonstrate the benefits of our liquid strategy to generate long‑term shareholder value.” – Christopher D. Long, Chairman & CEO .
Portfolio construct: First‑lien senior secured 96%, 98% floating‑rate; diversified across 39 industries and 209 companies, aiming for stability and agility across syndicated and private credit markets .
Financing: Closed PSBD CLO I ($400.5M) with reinvestment period through 2029 and stated flexibility to refinance; supports long‑term balance sheet financing .
Credit update: ConvergeOne moved to non‑accrual in April, restructured before quarter end with majority of loan converted to equity; PSBD recorded a realized loss in June .

Select Quotes

“PSBD remains well‑positioned for upside in this dynamic operating environment… the potential for some near‑term volatility with macro and political uncertainty…” – CEO Christopher D. Long .

Q&A Highlights

A Q2 2024 earnings call was scheduled; however, a Q2 transcript was not available in our document set, so Q&A highlights cannot be summarized from primary sources .
For context, prior calls emphasized optionality across syndicated/private credit, flexible leverage targets (1.4x–1.5x in current environment), and opportunities from market reopening and refinancing cycles .

Estimates Context

S&P Global consensus estimates for Q2 2024 (EPS and revenue) were not retrievable during this data pull (API limit exceeded). As a result, we cannot quantify beat/miss vs. Street this quarter. Values would typically be sourced from S&P Global; comparisons to consensus are therefore unavailable in this recap [functions.GetEstimates error].

Key Takeaways for Investors

Income engine intact but valuation noise: TII grew to $36.5M (+33% y/y), while NII/share fell to $0.48 on net losses; margin compressed to ~43% (calc.)—watch for stabilization of marks as financing tailwinds and primary calendar support flows .
Credit event contained: ConvergeOne restructuring drove realized loss but non‑accruals remained 0% at quarter‑end; continued vigilant credit monitoring is key as markets normalize .
Funding optionality up: $400.5M CLO closed with long reinvestment window; available liquidity rose to ~$192M, positioning PSBD to rotate into relative value across liquid/large‑cap private credit .
Yield trade‑off: Portfolio yield at FV dipped to 9.82% from 10.11%—monitor for spread capture in primary and pricing tailwinds as loans refinance closer to par, aiding NAV trajectory .
Dividend visibility: Base dividend held at $0.42; supplemental cadence continues (Q2 supplemental $0.05; Q3 supplemental expected)—an important driver for total return .
Leverage and risk: Debt‑to‑equity at 1.49x (vs. 1.42x in Q1); management’s fee model (fees on net, not gross assets) and stated leverage flexibility mitigate incentives to lever into weaker risk/reward .
Near‑term setup: Watch pace of deployment post‑CLO, realization of spread opportunities, and NAV path as higher‑rate income persists against potential mark volatility; transcript details (when available) would further inform guidance tone .

Sources: Q2 2024 8‑K and press release including financial statements ; Q1 2024 8‑K and press release including financial statements ; Q2 supplemental dividend press release (8‑K) ; CLO closing 8‑K and details ; Prior call (Q4 2023) transcript for thematic context .

Palmer Square Capital BDC Inc. (PSBD)·Q2 2024 Earnings Summary