Core Viewpoint - Carlyle Secured Lending, Inc. (CGBD) announced that shareholders voted overwhelmingly in favor of the merger with Carlyle Secured Lending III (CSL III), with 96% support from voting shareholders [1][2]. Company Overview - Carlyle Secured Lending, Inc. is a publicly traded business development company (BDC) that began investing in 2013, focusing on senior secured lending to middle-market companies primarily in the United States [3]. - CSL III is an externally-managed, non-diversified closed-end management investment company regulated as a BDC, aiming to generate current income and capital appreciation through secured debt investments [4]. - Carlyle Group, the parent company, manages $441 billion in assets as of December 31, 2024, and operates across three business segments: Global Private Equity, Global Credit, and Global Investment Solutions [5]. Merger Details - The merger transaction is expected to close on or about March 27, 2025, pending customary closing conditions [2]. - The CEO of CGBD and CSL III expressed confidence in the strategic benefits and long-term value creation from the merger, emphasizing increased portfolio scale and efficiency [3].

Financial Data and Key Metrics Changes - The company generated net investment income of $0.47 per share, representing an annualized yield of over 11% based on the December 31 NAV [11] - Total investment income for Q4 was $56 million, consistent with the prior quarter, primarily due to a higher average portfolio balance and increased dividends from joint ventures [18] - Total expenses were $31 million, flat compared to the prior quarter, as a higher average outstanding debt balance offset lower interest rates [18] - The net asset value as of December 31 was $16.80 per share, down from $16.85 per share as of September 30 [11] Business Line Data and Key Metrics Changes - The direct lending platform achieved record highs for deployment in both Q4 and the full year of 2024, growing the portfolio by about $100 million in the quarter [12] - 94% of 2024 originations were in first lien investments, with an average loan to value under 40% [12] - The median EBITDA across the portfolio was $88 million, indicating strong underlying performance [15] Market Data and Key Metrics Changes - The company maintained a highly diversified portfolio with 189 investments in 135 companies across more than 25 industries, with average exposure in any single portfolio company being less than 1% of total assets [15] - Non-accruals were largely flat at 0.6% of total investments at fair value, indicating stability in credit quality [22] Company Strategy and Development Direction - The company proposed a strategic affiliate merger with Carlyle Secured Lending 3, expected to deliver increased scale and liquidity, eliminate preferred stock dilution, and reduce aggregate costs [13][28] - The company aims to optimize long-term earnings power and capacity of joint ventures, enhancing the earnings profile of the broader portfolio [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to leverage the broader Carlyle network to achieve maximum recoveries for underperforming borrowers [22] - The company is focused on increasing origination activity while prioritizing overall credit performance and maintaining a diversified portfolio [15][29] - Market demand for private credit remains strong, with a growing pipeline of new originations [28][29] Other Important Information - The board declared a total dividend of $0.45 per share for Q4, consisting of a base dividend of $0.40 and a supplemental dividend of $0.05 [11][19] - The company received investment grade ratings from both Fitch and Moody's, allowing it to issue its first-ever institutional bond deal [14][25] Q&A Session Summary Question: Inquiry about the joint venture and future plans - Management indicated that the consolidation of MMCF 2 onto the balance sheet would free up non-qualifying asset capacity, and they anticipate ramping up the first joint venture with a new credit facility [34][35] Question: Clarification on tax line drop in Q4 - The tax line drop was attributed to a year-end true-up based on the year-end audit, with expectations for it to be in line with prior quarters [37][38] Question: Discussion on growth plans for the BDC - Management stated that the current focus is on capital deployment and completing the merger process, with future growth initiatives to be considered afterward [40] Question: Inquiry about fee income in Q4 - Fee income and OID acceleration were lower than historical averages, with an incremental dividend from the joint venture impacting the income line [44][45] Question: Dollar amount of incremental dividend related to the joint venture - The incremental dividend related to the joint venture was about $1.2 million, impacting net investment income by about two cents per share for the quarter [51]

Carlyle Secured Lending, Inc. Quarterly Earnings Presentation December 31, 2024 1 Disclaimer and Forward-Looking Statement This presentation (the "Presentation") has been prepared by Carlyle Secured Lending, Inc. (together with its consolidated subsidiaries, "we," "us," "our," "CGBD" or the "Company") (NASDAQ: CGBD) and may only be used for informational purposes only. This Presentation should be viewed in conjunction with the earnings conference call of the Company held on February 26, 2025 and the Company ...

Carlyle Secured Lending Inc. (NASDAQ:CGBD) Q4 2024 Earnings Conference Call February 26, 2025 11:00 AM ET Company Participants Nishil Mehta - Head of Shareholder Relations Justin Plouffe - Chief Executive Officer Thomas Hennigan - Chief Financial Officer Conference Call Participants Finian O'Shea - Wells Fargo Melissa Weddle - JPMorgan Derek Hewett - Bank of America Operator Good day, and thank you for standing by. Welcome to Carlyle Secured Lending, Inc. Fourth Quarter 2024 Earnings Call. At this time, all ...

Core Viewpoint - Carlyle Secured Lending, Inc. (CGBD) reported quarterly earnings of $0.47 per share, exceeding the Zacks Consensus Estimate of $0.44 per share, but down from $0.56 per share a year ago, indicating a mixed performance in earnings despite a positive surprise [1][2]. Financial Performance - The company achieved revenues of $39.23 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 8.04%, although this is a decline from $44.35 million in the same quarter last year [2]. - Over the last four quarters, Carlyle Secured Lending has exceeded consensus EPS estimates four times and topped revenue estimates twice [2]. Stock Performance and Outlook - Carlyle Secured Lending shares have decreased by approximately 0.9% since the beginning of the year, contrasting with the S&P 500's gain of 1.7% [3]. - The company's current consensus EPS estimate for the upcoming quarter is $0.44, with expected revenues of $36.77 million, and for the current fiscal year, the EPS estimate is $1.74 on revenues of $147.16 million [7]. Industry Context - The Financial - SBIC & Commercial Industry, to which Carlyle Secured Lending belongs, is currently ranked in the top 16% of over 250 Zacks industries, suggesting a favorable industry outlook [8]. - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Carlyle Secured Lending's stock performance [5].

Core Viewpoint - Carlyle Secured Lending, Inc. reported strong financial results for Q4 and the full year of 2024, highlighting portfolio growth and consistent net investment income despite market challenges [1]. Financial Performance - Net investment income for Q4 2024 was $0.47 per common share, maintaining consistency with the previous quarter [1]. - For the full year 2024, net investment income was $2.00 per common share, with an Adjusted Net Investment Income Per Common Share of $2.02 after accounting for one-time events [2]. - The net asset value per common share decreased by 0.3% in Q4 2024, from $16.85 to $16.80 [1]. - The total fair value of investments increased to $1.8 billion as of December 31, 2024 [1]. Dividends - The Board of Directors declared a base quarterly common dividend of $0.40 per share and a supplemental common dividend of $0.05 per share, payable on April 17, 2025 [3]. - A cash dividend of $0.438 per Preferred Share was declared for the period from October 1, 2024, to December 31, 2024 [3]. Company Overview - Carlyle Secured Lending, Inc. is a specialty finance company focused on lending to middle-market companies, managed by Carlyle Global Credit Investment Management L.L.C. [8]. - Since its inception in May 2013, the company has invested approximately $8.7 billion in debt and equity investments [8]. - The company aims to generate current income and capital appreciation primarily through debt investments in U.S. middle-market companies [8].

Debt and Interest Rates - The company's outstanding indebtedness as of December 31, 2024, is $978.4 million, with a weighted average effective annual interest rate of 6.65%[169] - To cover annual interest payments on the outstanding debt, the investment portfolio would need to produce an annual return of approximately 3.38%[169] - Rising interest rates have increased the cost of capital and may negatively impact the ability of portfolio companies to service their debt obligations[171] - The Federal Reserve has increased interest rates throughout 2023 and part of 2024, with potential for further increases in 2025 if inflation exceeds certain levels[171] - Approximately 99.6% of the company's debt investments bear interest at a floating rate, primarily subject to interest rate floors, as of December 31, 2024[476] - Interest rate sensitivity indicates that changes in market interest rates could materially affect the company's income in the future[477] - A 300 basis point increase in interest rates would result in a net investment income of $23.563 million for 2024, compared to $21.682 million in 2023[480] - A 200 basis point increase in interest rates would yield a net investment income of $15.708 million for 2024, compared to $14.455 million in 2023[480] - A 100 basis point increase in interest rates would generate a net investment income of $7.855 million for 2024, compared to $7.227 million in 2023[480] - A 100 basis point decrease in interest rates would lead to a net investment income loss of $7.855 million for 2024, compared to a loss of $7.227 million in 2023[480] Investment Risks and Portfolio Management - The incentive fee structure may encourage the Investment Adviser to pursue riskier investments, potentially increasing leverage and investment losses[178] - The company may incur incentive compensation for the Investment Adviser even if there is a net loss for the quarter, due to the calculation method based on pre-incentive fee net investment income[177] - The company is highly dependent on information systems, and failures could disrupt operations and negatively impact financial results and stock price[198] - Cybersecurity risks are increasing, and incidents could disrupt operations, compromise confidential information, and lead to significant financial losses[199] - The ability to operate depends on services from the Investment Adviser and other administrators, and their resignation could disrupt operations and financial condition[205] - The Investment Adviser's limited liability may lead to riskier behavior on behalf of the company, potentially impacting financial outcomes[207] - The company may face risks if it fails to make follow-on investments in portfolio companies, potentially impairing the value of its investments[249] - The company does not intend to hold controlling equity positions in portfolio companies, which may limit its ability to influence management decisions[253] - The company may rely on representations made by borrowers, which may not always be accurate or complete[243] - Due diligence conducted by the Investment Adviser may not reveal all relevant facts necessary for evaluating investment opportunities[244] - Prepayment of loans by portfolio companies may reduce investment income if returned capital cannot be reinvested at equal or greater yields[245] - The company may face increased regulatory scrutiny in the private equity industry, which could affect operational improvements and objectives[203] Financial Performance and Reporting - Total investment income for 2024 was $232.59 million, a decrease of 3.4% from $241.63 million in 2023[507] - Net investment income for 2024 was $105.25 million, compared to $109.97 million in 2023, reflecting a decline of 4.5%[507] - Total assets decreased to $1.93 billion in 2024 from $1.94 billion in 2023, a reduction of approximately 0.3%[505] - Total liabilities decreased to $1.02 billion in 2024 from $1.03 billion in 2023, a decline of about 0.1%[505] - Net assets at the end of 2024 were $905.20 million, down from $912.81 million in 2023, representing a decrease of 0.8%[510] - Basic earnings per common share for 2024 were $1.68, down from $1.75 in 2023, a decrease of 4.0%[508] - Diluted earnings per common share for 2024 were $1.58, compared to $1.64 in 2023, reflecting a decline of 3.7%[508] - The company declared dividends totaling $98.59 million in 2024, an increase from $92.90 million in 2023[510] - The company reported a net realized loss on investments of $39.75 million in 2024, compared to a loss of $20.85 million in 2023[510] - The net increase in net assets resulting from operations for 2024 was $88.98 million, down from $92.28 million in 2023, a decrease of 3.5%[510] - Net cash provided by operating activities for 2024 was $104,265,000, compared to $230,609,000 in 2023[512] - Total cash, cash equivalents, and restricted cash at the end of 2024 was $56,575,000, down from $60,447,000 in 2023[512] - Proceeds from the issuance of Senior Notes in 2024 were $300,000,000, compared to $85,000,000 in 2023[512] Regulatory and Compliance Issues - If the company fails to maintain its RIC status, it could be subject to corporate-level income tax, adversely affecting net assets and distributions to stockholders[185] - Certain investors are limited in their ability to make significant investments in the company due to restrictions under the Investment Company Act[191] - The Board of Directors is authorized to reclassify unissued shares of common stock into preferred stock, which could delay or prevent transactions that might benefit common stockholders[192] - The company issued Preferred Stock on May 5, 2020, which may adversely affect the market value of common stock and could lead to dilution upon conversion[193] - Provisions in the Maryland General Corporation Law (MGCL) and the company's Charter may deter takeover attempts, potentially impacting the price of common stock[194] - The Board of Directors can change investment objectives and strategies without prior notice or stockholder approval, which may adversely affect business and stock value[197] - Changes in laws and regulations could adversely affect the company and its portfolio companies, impacting business operations and financial condition[202] - The company may face challenges in making sufficient distributions to stockholders to meet the Annual Distribution Requirement necessary to maintain its status as a RIC, potentially requiring asset sales or additional capital raising[289] - Failure to meet the Annual Distribution Requirement could result in the company being subject to corporate-level U.S. federal income tax, impacting its financial performance[290] Mergers and Acquisitions - The company expects to achieve certain synergies and cost savings from the Mergers, but there is no assurance that these benefits will be realized or that the integration will be successful[315] - The completion of the Mergers is subject to various closing conditions, including stockholder approvals, which if not satisfied, could result in material adverse consequences[317] - The company may incur substantial expenses related to the Mergers, which will not yield benefits if the Mergers do not close[316] - The market price of the company's common stock post-Mergers may be influenced by factors different from those currently affecting its independent trading price[323] Investment Portfolio Composition - Investments primarily consist of loans to middle market companies, which are generally rated below investment grade and considered higher risk[222] - The company’s portfolio securities are generally illiquid, making it difficult to realize returns in a timely manner[225] - The actual liquidation value of assets may be materially less than the NAV due to volatile market conditions[228] - The portfolio may be concentrated in a limited number of companies and industries, increasing the risk of significant loss if any of these companies default[239] - Declines in corporate debt prices and illiquidity in the markets may adversely affect the fair value of portfolio investments, leading to reduced NAV[240] - The financial projections of portfolio companies could prove inaccurate, potentially leading to a substantial decrease in the value of investments[242] - The overall fair value of the investments reflects a strong interest rate spread, with several investments exceeding 10%[517] Shareholder and Stock Information - The company has authorized a $200 million stock repurchase program until November 5, 2025, to repurchase shares of common stock[279] - As of February 24, 2025, the company had 50,956,965 shares of common stock outstanding, with potential dilution risks from the conversion of Preferred Stock[282] - Distributions may exceed taxable income, resulting in a portion being treated as a return of capital for U.S. federal income tax purposes[285] - Non-U.S. stockholders may be subject to a 30% withholding tax on dividends that are not effectively connected with a U.S. trade or business[287] - The company can designate a consent dividend, allowing it to deduct the amount for tax purposes without actual cash distribution, which may affect stockholder income reporting[291] Valuation and Investment Performance - The company maintained effective internal control over financial reporting as of December 31, 2024, based on COSO criteria[497] - The audit opinion expressed on the consolidated financial statements was unqualified, indicating fair presentation in all material respects[486] - The audit included evaluating the design and operating effectiveness of controls over the Company's investment valuation process[493] - The Company’s management used significant unobservable inputs for the valuation of Level III investments, requiring significant judgment[493] - The fair value of the Company's Level III investments totaled $1.740 billion[493]

Financial Performance - Net investment income was $0.47 per common share, consistent with the previous quarter[13] - Total investment income for Q4 2024 was $62.685 million, compared to $62.007 million in Q3 2024[14] - Total investment income for Q4 2023 was $62.69 million, compared to $58.26 million in Q2 2024, reflecting a growth of 7.5%[45] - Net investment income for Q4 2023 was $28.24 million, with a net investment income per common share of $0.56[45] Asset Valuation - NAV per share was $16.80 as of December 31, 2024, compared to $16.75 as of September 30, 2024[13] - Net Asset Value available to Common shares was $16.99 in Q4 2023, slightly down from $17.07 in Q1 2024[16] - CGBD's Net Asset Value (NAV) per share has increased over the past 5 years, while BDC peers experienced a decline of 6.0%[33] Portfolio and Investments - Total fair value of the portfolio was $1.8 billion with a weighted average yield of 11.7%[13] - Total investments at fair value increased to $1,841,881,000 in Q4 2023 from $1,726,050,000 in Q2 2024, reflecting a growth of 6.7%[16] - Total investments at fair value reached $1.84 billion in Q4 2023, up from $1.73 billion in Q2 2024[44] - The company reported a total of 189 investments across 135 portfolio companies, with an average exposure of 0.7% per company[19] - New investment fundings totaled $76,931,000 in Q4 2023, with first lien debt accounting for $75,004,000, representing 97.5% of total fundings[17] Liquidity and Leverage - Total liquidity as of December 31, 2024, was $565.7 million, an increase from $354.8 million as of September 30, 2024[13] - Net financial leverage increased to 1.01x as of December 31, 2024, within the target range of 1.0x to 1.25x[13] - The company’s leverage ratio was reported at 1.03x in Q4 2023, up from 0.96x in Q1 2024[16] Dividends - The company declared a base dividend of $0.40 plus a $0.05 supplemental dividend, equating to an annualized yield of 10.7% on NAV[13] - The annualized base dividend is $0.18, with a dividend yield of 10.7% and a coverage ratio of 118%[31] - Annualized dividend yield to CGBD was reported at 11.4% for the Middle Market Credit Fund[20] Non-Accrual Investments - Non-accrual investments represented 1.0% based on amortized cost and 0.65% based on fair value as of December 31, 2024[13] - Non-accrual investments represented 0.6% of total fair value, consistent with the previous period[29] Corporate Actions - The company is progressing on the previously announced merger with CSL III, with a stockholder meeting scheduled for March 26, 2025[13] - The company has a stock repurchase program approved on November 5, 2018, which continues through November 2025[32] Investment Strategy - Carlyle Global Credit has $192 billion in assets under management (AUM), with various credit strategies including liquid credit and private credit[38] - The company has a rigorous investment process targeting non-cyclical companies with EBITDA of $25 million or more[40] - Carlyle Direct Lending focuses on delivering sustainable current cash income from predominantly floating rate instruments[40]

Core Viewpoint - Carlyle Secured Lending, Inc. (CGBD) is well-positioned to continue its earnings-beat streak in the upcoming report, supported by a strong earnings history and positive analyst sentiment [1][3]. Earnings Performance - For the last reported quarter, Carlyle Secured Lending achieved earnings of $0.49 per share, surpassing the Zacks Consensus Estimate of $0.48 per share, resulting in a surprise of 2.08% [2]. - In the previous quarter, the company reported earnings of $0.51 per share against an expectation of $0.50 per share, delivering a surprise of 2% [2]. Analyst Estimates - Recent estimates for Carlyle Secured Lending have been trending upward, with a positive Earnings ESP (Expected Surprise Prediction) indicating a strong likelihood of an earnings beat [3][6]. - The current Earnings ESP for the company stands at +0.57%, reflecting increased analyst optimism regarding its earnings prospects [6]. Predictive Metrics - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have historically produced a positive surprise nearly 70% of the time, suggesting a high probability of beating consensus estimates [4]. - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate being more reflective of recent analyst revisions [5].

Core Viewpoint - Carlyle Secured Lending, Inc. will announce its financial results for Q4 and the full year of 2024 on February 26, 2025, with a news release prior on February 25, 2025 [1]. Company Overview - Carlyle Secured Lending, Inc. is a publicly traded business development company (BDC) listed on NASDAQ under the ticker CGBD, which began its investment activities in 2013 [3]. - The company specializes in providing directly originated financing solutions, focusing on senior secured lending to middle-market companies primarily in the United States [3]. - Carlyle Secured Lending is externally managed by Carlyle Global Credit Investment Management L.L.C., a registered investment adviser and wholly owned subsidiary of Carlyle [3]. Carlyle Group Overview - Carlyle is a global investment firm with expertise across three business segments: Global Private Equity, Global Credit, and Global Investment Solutions [4]. - As of September 30, 2024, Carlyle has $447 billion in assets under management [4]. - The firm employs over 2,300 people across 29 offices on four continents [4].