Nuveen Churchill Direct Lending Corp.

Welcome to the Naveen Churchill Direct Lending Corp's first quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the management team's prepared remarks. As a reminder, this conference call is being recorded for replay purposes. I'd like to turn the call over to Robert Pond, Head of Investor Relations for MCDL. Robert, please go ahead.

Good morning and welcome to Naveen Churchill Direct Lending Corp's first quarter 2026 earnings call. Today I'm joined by NCDL's chairman, president, and CEO, Ken Kinsell, and chief financial officer and treasurer, Shai Vickness. Following our prepared remarks, we will be available to take your questions. Today's call may include forward-looking statements. Such statements involve known and unknown risks, uncertainties, and other factors, and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates, and projections about the company, our current and prospective portfolio investments, our industry, our beliefs and opinions, and our assumptions. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict. Actual results may differ materially from those expressed or forecasted in the forward-looking statements. We ask that you refer to the company's most recent filings with the SEC for important risk factors, Any forward-looking statements made today do not guarantee future performance and undue reliance should not be placed on them. The company assumes no obligation to update any forward-looking statements at any time. Our earnings release, 10Q, and supplemental earnings presentation are available on the news and investors sections of our website at ncdl.com. Now I would like to turn the call over to Ken.

Thank you, Robert. Good morning, everyone. And thank you all for joining us today. During my prepared remarks, I will start by discussing our first quarter results. And that will provide some thoughts on the current market conditions, our portfolio positioning, and our forward outlook. I'll then hand the call over to Shai for a more detailed discussion of our financial performance. Starting with our financial results for the quarter. Despite the headline noise and market volatility, we are pleased with the overall performance of our investment portfolio and our financial performance to start the year. This morning, we reported net investment income of 41 cents per share, which was impacted by one-time interest and debt financing expenses totaling approximately 2 cents per share. Excluding these non-recurring items, net investment income totaled 43 cents per share compared to 44 cents per share during the fourth quarter of 2025. These results reflect the continued strong performance of our investment portfolio, as well as the impact of lower base interest rates. Based on our earnings for the quarter, the Board has declared a total second quarter distribution of 38 cents per share, consisting of a regular quarter distribution of 36 cents per share and a supplemental distribution of 2 cents per share. In the first quarter, gross originations totaled approximately $83 million compared to $59 million in the fourth quarter of last year. Investment activity in the quarter was primarily focused on senior secured first lien loans, and we remain focused on investing into our core traditional middle market pipeline. Net asset value was $17.50 per share as of March 31st, compared to $17.72 per share as of December 31st, 2025. The decline quarter over quarter was primarily due to the impact of spread widening on valuations, as well as a slight decrease in the fair value of certain underperforming portfolio companies. In terms of the current market conditions and economic environment, 2026 began in a manner very similar to how 2025 ended, characterized by market volatility, negative private credit headlines, and geopolitical tensions. This was driven by market concerns of AI disruption and software exposure, increased redemption activity in non-traded BDCs, and the conflict in the Middle East. We believe there was a significant disconnect between the narrative and the media and the underlying fundamentals in private credit, particularly with our investment portfolio and the continued strength of our credit metrics. Against this backdrop, we have begun to see a widening of direct lending spreads, driven by the recent market concerns volatility and disruption. This shift in pricing and spreads is notable, following several quarters of stability in the 450 to 475 over range for traditional first lien loans. Additionally, interest rate forecasts have shifted away from aggressive cuts toward a more stable trajectory and indicate a prolonged higher for longer environment. The Federal Reserve is now expecting to keep rates steady throughout the remainder of the year, and some projections even show potential rate increases in 2027. from earlier in the year is largely driven by persistent inflation, a resilient labor market, as well as geopolitical tensions which have created economic uncertainty. Despite all of these factors, we continue to view private credit and direct lending as an attractive asset class with a compelling risk return profile. Following a slowdown in transaction activity earlier in the first quarter, we are now seeing momentum in new M&A activity. which is reflected in our pipeline for new deals, particularly over the last several weeks. We're encouraged by this steady growth in our pipeline and the quality of businesses seeking financing solutions. While there is some uncertainty in the economic environment and outlook, we continue to see signs of continued strength, including steady GDP growth, a low and stable unemployment rate, and solid corporate earnings. Based on our positioning and focus on the core middle market, we believe we are well positioned to take advantage of opportunities to deploy capital into higher quality companies. Now turning to our investment activity. At the Churchill platform level, we continued to see a healthy number of transactions, particularly new deals for high quality assets. As we expected due to the seasonality of the first quarter, the number of deals reviewed in the quarter was down sequentially relative to the strong fourth quarter of 2025. However, the number of deals reviewed in the first quarter increased 13% year over year compared to the first quarter of last year. This follows a record year in 2025 in which Churchill closed or committed to over $16 billion across 389 transactions for the full year. NCDL continues to benefit from attractive opportunities and activity at the Churchill platform level. particularly in senior lending, which represents approximately 90% of the fair value of the overall portfolio. We also continue to operate at the upper end of our target leverage range, and we remain focused on actively reinvesting cash received from repayments and sales into high-quality assets. During the first quarter, investment fundings totaled approximately $85 million, and repayments and sales total approximately $65 million. It's also important to remind everyone that at Churchill, we focus on the traditional core middle market, benefiting from our differentiated sourcing and long-term track record. We continue to target companies with $10 to $100 million of EBITDA, which we believe helps insulate us from the more aggressive structures and loosening terms prevalent in the upper middle market and broadly syndicated loan space. We believe that risk-adjusted returns in this segment of the market remain among the most compelling in private credit, particularly for scaled, highly selective managers with deep private equity relationships. We see the core middle market as a durable opportunity to generate long-term value and enhance portfolio diversification for our investors. Turning to our investment portfolio and credit quality, overall company performance across our portfolio remains resilient and healthy, which we believe reflects the quality of the deal flow we've experienced over the last several years. Additionally, our rigorous underwriting, high selectivity, and focus on diversification have been critical to minimizing losses and generating strong returns across multiple market cycles. That same discipline extends to today's shifting macroeconomic landscape. Our weighted average internal risk rating was 4.3 at the end of the first quarter, versus an original rating of 4.0 for all of our investments at the time of origination. Our internal watch list remains at a manageable level of approximately 8.4% of fair value. Credit metrics and fundamentals within the NCDL portfolio remain strong, with portfolio company total net leverage of 5.1 times, and interest coverage of 2.3 times on traditional middle market first lien loans. These metrics are a direct reflection of the conservative structuring and relatively low attachment points that we target when underwriting new transactions. NCDL added one new non-accrual during the first quarter with a total cost of $7.2 million and a fair value of $5 million. As of March 31st, non-accrual has represented 1.3% of our total investment portfolio on a cost basis and 0.6% on a fair value basis. Despite the slight increase compared to the prior quarter, we believe these percentages continue to compare favorably versus current BDC industry averages and the long-term historical BDC average. We continue to believe the strength of our platform, including our experience, workout, and portfolio management teams, will continue to drive favorable results. As of March 31st, we had 236 companies in our portfolio, and our top 10 portfolio companies represented approximately 13% of total fair value. This diversification remains a key focus of ours and is critical as we seek to maintain exceptional credit quality and originate additional attractive investment opportunities. We've achieved this diversification with a continued high level of selectivity facilitated by the significant proprietary deal flow our sourcing engine is able to generate from the breadth and depth of our PE relationships. Finally, recent market concerns regarding AI's potential disruption of software businesses have raised a lot of questions around private credit portfolio software exposure. We believe market volatility stemming from AI disruption underscores the importance of a diversified approach to portfolio construction. Looking at NCDL's portfolio, we have relatively low exposure to software as these are not the types of deals we tend to underwrite. The rapid pace of innovation in the software sector, often coupled with higher leverage attachment points, and less room for error were key reasons we passed on many of these software deals. In fact, as of March 31st, software businesses represented less than 3% of NCDL's total investment portfolio at fair value. Our definition of software exposure includes any borrower whose primary function is the design, development, and sale of software products and services. and whose business model reflects the operating or structural characteristics of a software company, regardless of industry classification. This excludes technology adjacent companies, such as managed service providers and systems integrators that may be assigned to the high technology industry category under Moody's industry classifications, but do not derive revenue from licensing or subscription sales or proprietary software. While AI will certainly contribute to disruption in the technology sector, the full impact remains difficult to assess at this time. It's also worth noting that AI could prove beneficial for certain business models, particularly for some business service firms and software companies with large proprietary data sets and deeply embedded workflows. We continue to monitor AI and its potential impact across the portfolio, as we have done long before these headlines emerged. We maintain an active dialogue with the senior management teams of all of our borrowers, as well as the private equity firms that own them, so that we have an informed and real-time view on this and any other risks our borrowers may face. Additionally, we have numerous firm-wide initiatives in place to keep informed of AI and we are looking far beyond just software companies. Overall, we feel positive as to how we are positioned relative to the risk that AI may pose to our portfolio companies. In summary, we are pleased with the continued strength of the NCDL's overall portfolio, despite the headline noise in the private credit market. Credit metrics remain strong and stable, and we believe systemic risk concerns are overstated and our focus on the core traditional middle market continues to offer structural advantages. We have been and continue to be a trusted and established investor in the core middle market with deep long-term relationships, which provides NCDL with a strong information and sourcing advantage. There are many reasons to be excited about the future of our business and the continued tailwinds of the private credit market. And we continue to see signs of increasing deal flow and attractive financing opportunities, which we are well-positioned to take advantage of. And now, I'll turn the call over to Shai to discuss our financial results in more detail.