Crescent Capital BDC, Inc.

Please stand by, your program is about to begin. Good day everyone and welcome to the Q2 2024 Crescent Capital BDC Earnings Conference Call. At this time all participants are in a listen-only mode. Later you will have the opportunity to ask questions during the question and answer session. You may register to ask questions by pressing the star N1 on your telephone keypad. You may withdraw yourself from the queue by pressing star 2. Please note this call may be recorded and that will be sent in by should you need any assistance. It is now my pleasure to turn the conference over to Dan McMahon, Head of Investor Relations. Please go ahead.

Good morning and welcome to Crescent Capital BDC Inc's second quarter and to June 30th, 2024 earnings conference call. Please note that Crescent Capital BDC may be referred to as CCAP, Crescent BDC or the company throughout the call. Before we begin, I'll start with some important reminders. Comments made over the course of this call and webcast may contain forward-looking statements and are subject to risks and uncertainties. The company's actual results could differ materially from those expressed in such forward-looking statements for any reason, including those listed in its SEC filings. The company assumes no obligation to update any such forward-looking statements. Please also note that past performance or market information is not a guarantee of future results. Yesterday, after the market closed, the company issued its earnings press release for the second quarter ended June 30th, 2024, and posted a presentation to the investor relations section of its website at crescentbdc.com. The presentation should be reviewed in conjunction with the company's Form 10-Q filed yesterday with the SEC. As a reminder, this call is being recorded for replay purposes. Speaking on today's call will be CCAP's Chief Executive Officer, Jason Brough, President Henry Chung, and Chief Financial Officer Gerhard Lombard. With that, I'd now like to turn it over to Jason.

Thank you, Dan. Hello, everyone, and thank you all for joining us today. It was great to see some of you in person at our inaugural Analyst and Investor Day in early June. I'll start today's call by highlighting our second quarter results. Follow that with some thoughts on our investment approach and touch on our portfolio. Yesterday evening, we reported another quarter of solid earnings with continued strong credit performance across the portfolio. Net investment income, or NII, was $0.59 per share, which translates into an annualized NII return on equity of 11.7%. With our earnings, again, well in excess of the recently increased regular dividend, our Board has declared a supplemental dividend for the second quarter of $0.09 per share. When coupled with our previously declared regular dividend of 42 cents per share, this equates to a 10% annualized dividend yield on June 30, 2024, NAV. The strength of our earnings also led to growth in our net asset value, which increased to $20.30 per share, which is the highest it has been since June 2022. Let's shift gears and discuss the investment portfolio. Before I get into specific data points, I'd like to spend a minute on our investment approach and where we seek to originate new opportunities. It's no secret that in recent quarters, there has been a lot of competition in private credit, both with the syndicated markets and significant capital that we have seen raised in the sector. In recent quarters, the average tranche size of transactions that are being refinanced by the direct lending markets from the syndicated markets is well north of $1 billion. This segment of the market is not where we focus. Where we focus our efforts is in what we call the lower and core middle market. Segments of the market that are typically not able or less able to access the syndicated loan markets due to issuer size. So think issuers with EBITDA of 10 million on the low end up to roughly 150 to 200 million on the high end. In the lower and core middle market, we are able to directly negotiate terms with our sponsors that have structural features around collateral protection that we deem critical for investing in the space. This is in direct contrast with the looser documentation for some of the mega Unitronge deals completed over the past few quarters that resemble broadly syndicated loan documents, some of which have garnered significant public attention. Our segment focus provides us with an opportunity to truly lead our transactions and drive the documentation. We are focused on strong cash flow generation, tight EBITDA definitions, as well as enhanced monitoring rights, which allow us to be proactive versus reactive as we think about our approach to portfolio management. We are cash flow lenders, so we focus on underwriting businesses that have been operating for a long time that have a history of being able to generate cash flow consistently with low working capital requirements. It's for these reasons we do not invest in annual recurring revenue or ARR loans. Please turn to slides 13 and 14 of the presentation, which highlight certain characteristics of our portfolio. We ended the quarter with approximately $1.6 billion of investments at fair value. across a highly diversified portfolio of 183 companies, with an average investment size of approximately 0.5% of the total portfolio. We've deliberately maintained an investment portfolio that consists primarily of first lien loans, collectively representing 90% of the portfolio fair value at quarter end, unchanged from the prior quarter. We continue to focus our investing efforts on non-cyclical industries and remain well diversified across 20 broad industry categorizations. Our investments are almost entirely supported by well-capitalized private equity sponsors, with 98% of our debt portfolio in sponsor-backed companies as of quarter end. We have been pleased with the fundamental performance of our portfolio, as indicated by our performance ratings and non-accrual levels. Our weighted average portfolio grade of 2.1 remains stable quarter over quarter. And on slide 17, you will see the percentage of risk-rated one and two investments, the highest ratings our portfolio companies can receive, accounted for 89% of the portfolio at fair value, also stable quarter over quarter. As a quarter end, we had investments in eight portfolio companies on non-accrual status, representing 1.6% and 0.9%, of our total debt investments at cost and fair value, respectively, which was flat quarter over quarter. I'd now like to turn it over to Henry to discuss the market, our Q2 investment activity, and the portfolio. Henry.