Blue Owl Capital Inc.

Greetings and welcome to the Blue Owl Capital Corporation third quarter 2023 earnings call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the call, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. At this time, I'd like to turn the call over to Dana Scafani, head of investor relations. Thank you. You may begin.

Thank you, Operator. Good morning, everyone, and welcome to Blue Owl Capital Corporation's third quarter earnings call. Joining me this morning are our Chief Executive Officer, Craig Packer, and our Chief Financial Officer and Chief Operating Officer, Jonathan Lamb. We're also joined this quarter by senior members of our team, including Alexis Maggot, our Chief Creditor Officer, and Logan Nicholson, who joined the firm in September and served as the Portfolio Manager for several of our diversified direct lending funds, including OBDC. I'd like to remind our listeners that remarks made during today's call may contain forward-looking statements, which are not a guarantee of future performance or results and involve a number of risks and uncertainties that are outside 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 of the SEC. The company assumes no obligation to update any forward-looking statements. Certain information discussed on this call and in our 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. OBDC's earnings release 10Q and supplemental earnings presentation are available on the investor relations section of our website at blueowlcapitalcorporation.com. With that, I'll turn the call over to Craig.

Thanks, Dana. Good morning, everyone, and thank you all for joining us today. In the third quarter, we saw continued strong momentum, delivering excellent credit performance across the portfolio and another quarter of record earnings. Net investment income was $0.49 per share, reflecting our third consecutive quarter of record NII. This was driven by increased interest income due to higher rates, solid dividend income, and our resilient portfolio performance. These increased earnings translated into an attractive return on equity of 12.7% in addition to growing distribution for our shareholders. Based on our earnings well in excess of the regular dividend, our board has declared a supplemental dividend for the third quarter of $0.08 per share. Coupled with our previously declared regular dividend of $0.33, This equates to total dividends paid for the third quarter of 41 cents. Reflecting our confidence in both the sustainability of NII and the continued credit performance of our portfolio, our board has also approved a two cent increase to our regular dividend, increasing the fourth quarter regular dividend to 35 cents per share. The business is generating record earnings and we continue to share those earnings with our shareholders. This is the second increase in our base dividend since the second quarter of 2022, and our total dividend of 41 cents for the third quarter represents a more than 30% increase in our total quarterly dividend during this period. Net asset value per share increased to $15.40, up 14 cents from the second quarter. This marks the highest NAV per share since our inception. Our non-accrual rate remains low at 0.9% of the fair value of the debt portfolio, with just three names on non-accrual, unchanged from last quarter. We continue to demonstrate our ability to resolve non-accruals and protect our principal. Since inception, we have deployed over $25 billion of capital and experienced a net loss ratio of only 15 basis points. Our borrowers' operating performance remains solid. continuing to reflect the strength of the U.S. economy. Consistent with last quarter, our borrowers reported modest quarterly growth in revenues and EBITDA, with many borrowers delivering margin expansion as a result of price increases and moderating inflation levels. Borrowers' performance has grown steadily over the past year. On a year-over-year basis, our borrowers reported revenue and EBITDA growth of roughly 10 to 12% for each of the last two quarters. Our largest sectors, software, insurance, food, beverage, and healthcare continue to deliver strong results, reflecting the durable nature of these industries and the less discretionary services they provide. We believe the portfolio will continue to be resilient and to perform in line with our underwriting expectations. Even still, we are closely monitoring the impact of the higher weight environment on our portfolio. Over the course of this year, we have seen interest coverage levels come down as rates have increased, with coverage moving from 2.3 times to 1.8 times today. While the rate outlook today is higher than it was six months ago, the impact on coverage ratios has been meaningfully mitigated by better than expected operating performance. As a result, although rates are higher, we continue to believe interest coverage ratios will reach trough levels of mid-one times in the first half of 2024. We expect that the vast majority of our borrowers will maintain an adequate coverage cushion and strong operating performance through this period. The list of borrowers who we believe could see more challenged liquidity needs remains small. Our underwriting and portfolio management teams remain very focused and engaged with these borrowers, and we believe any challenges will be manageable across our portfolio as a whole. We continue to be very pleased with the performance of our companies despite the higher rates. With that, I'll turn it over to Jonathan to provide more detail on our financial results.