Blue Owl Capital Corporation

Good morning, everyone, and welcome to Blue Owl Capital Corporation's second quarter 2026 earnings call. As a reminder, this call is being recorded. At this time, I'd like to turn the call over to Mike Messicchio, head of BDC Investor Relations. Mike, please go ahead.

Thank you, Operator, and welcome to Blue Owl Capital Corporation's second quarter 2026 earnings conference call. Joining me today are Craig Packer, Chief Executive Officer, Logan Nicholson, President, and Jonathan Lam, Chief Financial Officer. I'd like to remind listeners that remarks made during today's call may contain forward-looking statements which are not guarantees of future performance or results and involve a number of risks and uncertainties that are outside of the company's control. Actual results may differ materially from those in forward-looking statements as a result of a number of factors. including those described in OBDC's filings with the SEC. The company assumes no obligation to update any forward-looking statements. We would also like to remind everyone that we'll refer to non-GAAP measures on the call which will reconcile the GAAP figures in our earnings presentation available on the events and presentation section of our website. Certain information discussed on this call and in the company's earnings materials including information related to portfolio companies was derived from third-party sources and has not been independently verified. The company makes no such representations or warranties with respect to this information. Yesterday, OBDC issued its financial results for the second quarter ended June 30, 2026, reporting adjusted net investment income per share of $0.34 and net asset value per share of $14.26. All materials referenced during today's call, including the earnings press release, earnings presentation, and 10-Q, are available on the news and events section of OBDC's website. With that, I'll turn the call over to Craig.

Craig Packer Thanks, Mike, and good morning, everyone. Thanks for joining us. We are very pleased with the quarter and feel good about where things stand for OBDC. We generated quarter-over-quarter NAI growth maintained strong overall credit quality and increased our financial flexibility during the quarter. In the second quarter, adjusted NII translated into a 9.6% annualized ROE up over 100 basis points from last quarter and comfortably covered the dividend. As you will recall, last quarter, we reset the base dividend to better align with the forward earnings power of the portfolio. following the impact of lower base rates and tighter spreads. This quarter's results provided a healthy cushion above that level. We also declared a two cent per share supplemental dividend in accordance with our framework, allowing shareholders to benefit from incremental earnings above the base dividend. We generated these results while also strengthening our balance sheet. We ended the quarter with net leverage at 1.11 times. Our lowest level in over two years, giving us substantial flexibility to deploy as attractive opportunities emerge. On the financing front, during the quarter, we issued two unsecured bonds and extended the maturity of our revolving credit facility. Together, those actions improved our funding profile and preserved liquidity, allowing us to remain patient as the investment opportunity set develops. Jonathan will cover this in more detail shortly. Turning to net asset value, our net asset value per share declined modestly quarter over quarter, and I want to provide some context on that. The decline was primarily driven by one credit-specific markdown that Logan will address in detail, while the marks across the rest of the portfolio were relatively consistent, as spreads were generally stable. That is an important distinction compared to Q1, when approximately three-quarters of the NAV decline was driven by broad spread widening across the debt portfolio. Modestly offsetting our NAV decline this quarter, we repurchased $35 million of shares, reflecting our continued focus on discipline, capital allocation, and conviction in the long-term value of OBDC while balancing the impact to leverage. Turning to the market environment, the second quarter was much more stable than the first. Earlier this year, credit spreads were volatile and sentiment was more cautious across the market. As the second quarter progressed, we began to see a more normalized backdrop with spread stabilizing, the rate outlook improving, and sentiment becoming more balanced. Against that backdrop, credit performance across our portfolio remained consistently strong. Borrower fundamentals held up well, and the key credit metrics we tracked continued to perform in line with our expectations. Transaction activity was modest as sponsors and borrowers continue to be cautious given the macro uncertainty we saw earlier this year. Refinancing activity has also been more limited as wider spreads have made refinancing less attractive for many borrowers. At the same time, we continue to have constructive dialogue on the transaction front and are seeing activity within our existing portfolio, including add-ons and other opportunities to support borrowers we know well. In this environment, our pipeline remains active Thanks, Craig.