Carlyle Credit Income Fund

Good day and thank you for standing by. Welcome to the Carlisle Credit Income Fund Second Quarter 2026 Financial Results and Investor Conference 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. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Joseph Castillo. Please go ahead.

Good morning and welcome to Carlyle Credit Income Fund's second quarter 2026 earnings call. With me on the call today is Nishal Mehta, CCIF's principal executive officer and president, Lauren Bazmajan, CCIF's chair and Carlyle's global head of liquid credit, and Nelson Joseph, CCIF's principal financial officer. Last night, we issued our Q2 financial statements and a corresponding press release and earnings presentation discussing 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. These statements are based on current management expectations and involve inherent risks and uncertainties, including those identified in the risk factors section of our annual report on the Form NCSR. These risks and uncertainties could cause actual results to differ materially from those indicated. Carlisle Credit Income Fund assumes no obligation to update any forward-looking statements at any time. During the conference call, we may discuss adjusted net investment income per common share and core net investment income per common share, which are calculated and presented on a basis other than in accordance with GAAP. We use these non-GAAP financial measures internally to analyze and evaluate financial results and performance, and we believe these non-GAAP financial measures are useful to investors gauging the quality of the fund's financial performance, identifying trends in its results, and providing meaningful period-to-period comparisons. The presentation of this non-GAAP measure is not intended to be a substitute for financial results prepared in accordance with GAAP and should not be considered in isolation. With that, I'll turn the call over to Nishal.

Thanks, Joe. Good morning, everyone, and thank you all for joining CCIS Quarterly Earnings Club. The steel equity market continued to face pressure during the quarter due to a combination of a repricing wave in January, which led to further declines in rate average spreads, weakness in certain software-related loans due to concerns regarding AI disintermediation, and volatility from the conflict in the Middle East. These factors weighed on loan prices, CELO equity valuations and CELO equity cash flows across the market and within CSF's portfolio. However, underlying credit fundamentals remain broadly stable during the quarter and the volatility created better balance in the market with very limited repricings in February and March. To navigate this market environment, we continue to focus on optimizing the portfolio, including selectively completing refinancings and resets, and defensively position CSF with experienced CELO managers and transactions with longer reinvestment periods. I'd like to highlight the fund activities over the last quarter and key stats on the portfolio as of March 31st. We maintain our monthly dividend of $0.06 per share for 21.5% annualized based on the share price as of May 12th, which is now declared through August 2026. CCIS underlying COO investments generate an annualized cash and cash yield of 20.11% for the quarter. which resulted in $0.44 of recurring cash flows and $0.29 of core net investment income for the quarter at the fund level. Core net investment income provided dividend coverage of 161%, a revised monthly dividend of $0.06 per share. New CEO investments during the quarter totaled $1.5 million, with a weighted average gap yield of 11.5%. Total sales proceeds during the quarter totaled $21.7 million, as we used the proceeds to redeem $20 million of the 7.5% Series C convertible preferred shares in cash to reduce leverage. Within CCI's portfolio, we completed four resets in Q2 2026, in addition to the 26 refinancings and resets completed in calendar year 2025. Refinancings and resets reduce the cost liabilities and extend the investment periods across CLOs and both share equity cash flows. We expect to continue to refinance and reset the portfolio to enhance returns. The weight average years left during this period decreased slightly from approximately 3.4 years to 3.3 years. This provides CLO managers the opportunity to capitalize on periods of volatility through active management. There were also zero CLOs in the portfolio that were proposed for the investment period as of March 31st. We believe the portfolio weight average junior over-collarization cushion of 4.18% is healthy and offsets potential defaults and losses in the ongoing loan portfolios. And the average percentage of loans rated CCC by S&P was 4.1%, below the 7.5% CCC limit in sales. The weight average spread of the ongoing loan portfolio was 2.96%, a 10 basis point decline from the prior quarter. The continued decline in wood average spread reflects the cumulative impact of the elevated repricing activity over the last several quarters, particularly the very high level of repricing activity experienced in January. Lower loan spreads continue to pressure the earnings for our CELA equity as resets and refinancings have not fully offset the spread compression. Importantly, our knowing credit fundamentals across CCI's portfolio remain broadly stable. We believe recent CELA equity performance has been driven more by valuation and technical factors than broad-based credit deterioration. We remain confident in the resilience of our portfolio, which is diversified across high-quality managers and structured to navigate evolving market conditions. While liability costs have increased and equity distributions have moderated, we believe resilient credit fundamentals and continued demand for floating-rate assets will support COO performance over time. We saw a stabilization of NAVs in April as loan prices partly retraced the declines from earlier this year, and we saw very limited loan reprices. Now I will switch gears to discuss our outlook. CELA equity continues to benefit from historically attractive liability costs. Any normalization in loan spreads or increase in loan spike can improve excess spread generation over time, particularly for deals with longer reinvestment periods. With approximately 17% of the loan market maturing by the end of 2028, we expect heightened refinancing activity, which could also lead to spread widening, benefiting steel equity. Looking ahead, we believe steel equity performance will continue to depend on manager selection, reinvestment discipline, and active credit management. We continue to position CSAP conservatively while selectively deploying capital into opportunities where we believe valuations appropriately compensate investors for underlying risks. We also continue to leverage Carlyle's in-house credit research platform to conduct a detailed bottom-up analysis across underlying loan portfolios, including software-related exposures and evolving AI-related ones. CCI's portfolio remains highly diversified across approximately 1,850 underlying loans, with exposure to any single issuer representing less than 1% of the portfolio. In addition, the portfolio is predominantly compromised of first-line senior-secret loans representing over 97% exposure, which we believe provides meaningful downside protection and structural resilience. With that, I will now hand the call over to Lauren to discuss the current market environment.