Carlyle Secured Lending, Inc.

Hello, good day, and thank you for standing by. Welcome to the Carlisle Secured Lending, Inc. first quarter 2025 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. If you'd like to ask a question, please press star and the number one on your telephone keypad. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today. Michel Mehta, Head of Shareholder Relations. Please go ahead.

Good morning and welcome to Carlyle Secured Lending's conference call to discuss their earnings results for the first quarter of 2025. I'm joined by Justin Plouffe, our Chief Executive Officer, and Tom Hennigan, our Chief Financial Officer. Last night, we filed our Form 10-Q and issued a press release with a presentation of our results, which are available on the Investor Relations section of our website. Following our remarks today, we will hold a question and answer session for analysts and institutional investors. This call is being webcast, and a replay will be available on our website. Any forward-looking statements made today do not guarantee future performance, and any undue reliance should not be placed on them. Today's conference call may include forward-looking statements reflecting our views with respect to, among other things, the expected synergies associated with the merger, the ability to realize the anticipated benefits of the merger, and our future operating results and financial performance. These statements are based on current management expectations and involve inherent risk and uncertainties, including those identified in the risk factor sections of our 10-K and 10-Qs. These risks and uncertainties could cause actual results to differ materially from those indicated. CGVD assumes no obligation to update any forward-looking statements at any time. During the conference call, the company may discuss certain non-GAAP measures as defined by SEC Regulation G, such as adjusted net investment income or adjusted NII. The company's management believes adjusted net investment income, adjusted net investment income per share, adjusted net income, and adjusted net income per share are useful to investors as an additional tool to evaluate ongoing results and trends and to review our performance without giving effect to the amortization or accretion resulting from the new cost basis of the investments acquired and accounted for under the acquisition method of accounting in accordance with ASC 805 and the purchase one-time or non-recurring investment income and expense events, including the effects on incentive fees, and are used by management to evaluate the economic earnings of the company. A reconciliation of GAAP net investment income, the most directly comparable GAAP financial measure to adjusted NRI per share, can be found in the accompanying slide presentation for this call. In addition, a reconciliation of these measures may also be found in our earnings release file last night with the SEC on Form 8K. With that, I'll turn the call over to Justin, CGVD's Chief Executive Officer.

Thanks, Nishal. Good morning, everyone, and thank you all for joining. I'm Justin Plouffe, the CEO of the Carlyle BDCs and Deputy CIO for Carlyle Global Credit. On today's call, I'll give an overview of our first quarter 2025 results including the quarter's investment activity, strategic transactions, and portfolio positioning. I'll then hand the call over to our CFO, Tom Hennigan. In the first quarter, CGPD benefited from growth in the overall portfolio, but was also impacted by headwinds from declining base rates and historically tight market spreads. During the quarter, we generated gap net investment income of $0.40 per share and adjusted net investment income of $0.41 per share after adjusting for asset acquisition accounting. This represents an annualized yield of approximately 10% on our 331 NAV. Our board of directors declared a second quarter dividend of 40 cents per share, and our net asset value as of March 31st was $16.63 per share compared to $16.80 per share as of December 31st. While sponsor M&A activity was muted during the first quarter, CGPD was still able to add approximately $180 million in organic originations to its portfolio. In addition, the total size of our portfolio was bolstered by our strategic activity, including the merger with CSL3 and the consolidation of Credit Fund 2's assets onto the balance sheet. Upon the close of the CSL3 merger on March 27th, DGBD received approximately $490 million in new investments, and the consolidation of Credit Fund 2 in February increased the portfolio size by a net $127 million. Cumulatively, total assets increased from $1.9 billion to $2.5 billion this quarter based on net investment and strategic activity. From a market perspective, broadly syndicated and private credit markets remained in competition. While our pipeline continues to be active, recent volatility around tariffs is likely to remain a near-term headwind to overall capital markets and M&A activity. We have examined our entire portfolios. At this time, we see minimal potential direct risk from tariffs. We estimate that less than 5% of the portfolio has any material direct exposure. As trade policy evolves, we'll continue to assess and monitor our portfolio companies for other direct and indirect impacts. So far, broader market volatility has had a limited impact on spreads in the private credit space, which remain near historically tight levels, presenting a potential headwind to near-term earnings for the sector. Overall, we remain selective in our underwriting approach, taking quality credits at the top of the capital structure. As previously mentioned, we closed the strategic affiliate merger with CSL3 at the end of the first quarter. The merger increased our scale and eliminated the CGVD preferred stock dilution overhang, with Carlisle exchanging its investment at NAV. We expect the combination to improve the liquidity of our stock and reduce aggregate costs. all while maintaining our existing investment strategy, given the near 100% overlap between CSL3's portfolio and CGVD's portfolio. To support the transaction, and in addition to exchanging his preferred stock, Carlisle provided $5 million of merger-related expense coverage, mitigating the cost impact to CGVD. With increased uncertainty and volatility in the markets driven by tariff and trade policy, we are focused on overall credit performance and diversification, while continuing to deploy and increase the size of our portfolio. As of March 31st, our portfolio is comprised of 195 investments in 138 companies across more than 25 industries. The average exposure in any single portfolio company was less than 1% of total investments, and 94% of our investments were in senior secured loans. The median EBITDA across our portfolio was $87 million. As always, discipline and consistency drove performance in the first quarter. We expect these tenants to drive performance in future quarters. With that, I'll now hand the call over to our CFO and our newest member of the Board of Directors, Tom Hennigan.