Pearl Diver Credit Company Inc.

Greetings and welcome to the Pearl Diver Credit Company 2025 Q4 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Emma Little, Investor Relations. Thank you. You may begin.

Good day, ladies and gentlemen. Thank you for standing by. Pearl Diver Credit Company refers participants on this call to the investor webpage for the press release investor information and filings with the SEC for discussion of the risks that affect the business. Pearl Diver Credit Company specifically refers participants to the presentation furnished today with the SEC and to remind participants that some of the comments may contain forward-looking statements and as such, be subject to risks and uncertainties which, if they materialize, could materially affect results. Reference is made to the section titled Forward-Looking Statements in the company's press release for the quarter ended December 31, 2025, which is incorporated herein by reference. We note forward-looking statements, whether written or oral, include, but are not limited to, for all diver credit companies' expectations or predictions of financial or business performance and conditions. as well as its competitive and industry outlook. Forward-looking statements are subject to risks, uncertainties, and assumptions, which, if they materialize, could materially affect results, and such forward-looking statements do not guarantee performance, and as such, Pearl Driver Credit Company does not give such assurances. Pearl Driver Credit Company is under no obligation, especially disclaims any obligation to update, alter, or otherwise revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by law. In addition, historical data pertaining to the operating results and other performance indicators applicable to Pearl Driver Credit Company are not necessarily indicative of results to be achieved in succeeding periods. I will now turn the call over to Andrew Novasu, Chief Executive Officer of Pearl Driver Credit Company.

Thank you to everyone joining us today for your interest in Pearl Diver Crate Company, and welcome to our fourth quarter 2025 earnings call. I'd like to invite you to download our investor presentation from our website, which provides additional information about the company and our portfolio. With me today is our Chief Financial Officer, Chandrajit Chakraborty. And after our prepared remarks, we'll open it up to any questions. The broader CLO equity market continued to face challenges in the fourth quarter due to tight spreads, which impacted results industry-wide, and we were not immune. With that said, our results were mostly driven by unrealized losses, which are non-cash in nature and driven by market-based movements. Positively, our portfolio generated sequentially improving recurring cash flows once again, comfortably in excess of our distributions and expenses, and we also sequentially improved our net investment income. Looking into 2026, we remain optimistic about CLOs. CLOs remain a very attractive investment opportunity compared to other trade asset classes, and demand for CLOs remains high. Notably, despite a challenging 2025, CLO debt tranches delivered solid full-year returns, aided by pull-to-part dynamics across older vintage bonds and despite tighter spreads. With a resilient macro environment, inflation continuing to reduce to central bank targets, relatively healthy corporate earnings, and a low leverage loan default rate, We believe there continues to be many opportunities to utilize our differentiated data-driven approach to CLO equity investing and thoughtfully grow our portfolio. Our focus remains the same. Concentrate on disciplined portfolio management, invest opportunistically when we find attractive risk-adjusted positions, and drive long-term total returns. Nearly our entire portfolio is composed of CLOs with reinvestment period end dates of 2026 and later, allowing managers to manage exposure to individual credits or sectoral weaknesses. As CLO equity investors, we view dislocations like these as a chance to take advantage. As we discussed last quarter, the market had priced in two to three quarter point rate cuts as of September 30th, and we expressed optimism about the potential benefits for CLO equity in an orderly easing cycle. However, the fourth quarter presented a more complex reality that highlights the nuanced dynamics of our S-class. The Federal Reserve delivered on expectations with two additional 25 basis point cuts in October and December, bringing the total easing for the year in line with market projections. However, CLO equity faced significant headwinds in 2025 with industry returns at an estimated negative 10%. for the year, according to Citibank. Our own performance reflected some of these broader market challenges. The primary pressure came from substantial spread tightening in the underlying loans inside CLOs, approximately 34 basis points in the US loan market. While tightening credit spreads are typically constructive for corporate credit quality, The compression occurred unevenly across the market. CLO managers competed aggressively for higher quality credits, bidding up prices in the healthier segments of the loan universe, while stressed and distressed names experienced a difficult year. This bifurcation created a challenging environment where the anticipated benefits of rate cuts and increased LBO activity which did materialize with strong M&A volumes, were more than offset by the compressed arbitrage spreads at the CLO equity level. Additionally, while we saw continued CLO refinancing and reset activity, these technical benefits were insufficient to fully compensate CLO equity holders for the spread compression in the underlying loans. The net result was a downward pressure on NAS across the entire CLO closed-ended fund sector. Looking ahead to 2026, we're observing several developments that shape our outlook. The loan repricing momentum that characterized much of the last cycle appear to be petering out and we expect 2026 refinancings to deliver less spread compression than we experienced in 2025 and eventually stabilize. We are encouraged by improved activity in new loan issuance which we believe should provide better opportunities for CLO managers and potentially support wider CLO equity spreads going forward. Importantly, 2025 saw significant tightening in CLO debt tranches, which creates potential refinancing upside for CLO structures in the year ahead. Combined with a more stabilized loan market environment, we believe the worst of 2025 headwinds may be behind us. Our focus remains on prudent portfolio management and patient capital deployment as we navigate what we view as an improving backdrop for the asset class. Throughout the quarter, we remained active in managing the portfolio. We completed four resets and refinancings. Exited one position where the upside had been realized or risk-reward had diminished and added eight new positions that offered attractive relative value. This rotation contributed to a slight decrease in the portfolio's weighted average gap yield to 12.99% at quarter end compared to 13.07% as of September 30th. This quarter, we refinanced or reset 6% of the portfolio. Across these deals, we have reduced the weighted average cost of debt by 28 basis points and reduced triplet spreads by 12 basis points. This acts as a natural hedge to the spread compression seen in the load market, boosting the cash flows for the CLAO equity positions. Since quarter end, we have closed refinancings on an additional 6% of the portfolio. For those newer to Pearl Diver, a core part of our identity is the investment platform we have built over the past 17 years. From early on, we made a deliberate choice to combine machine learning and natural language processing technologies with traditional fundamental credit analysis, giving us a detailed real-time view of the entire CLO universe. Our systems independently value CLO tranches, monitor loan-level data across more than 2,000 leveraged loans, and integrate thousands of market data points every day. This allows us to rapidly assess relative value across structures, managers, and market conditions, and to identify mispricing when it appears. Importantly, our technology is not standalone. It is embedded into how we manage risk and allocate capital, enabling us to respond with speed, precision, and consistency, particularly during periods of volatility. We believe this infrastructure remains a meaningful competitive advantage in sourcing opportunities and managing the portfolio across cycles. As of December 31st, our portfolio consisted of 57 CLO equity positions managed by 33 distinct CLO managers. The underlying loan portfolios include approximately 1,300 obligors across more than 30 sectors, with no single CLO position representing more than 4.9% of the portfolio, and our largest corporate exposure remaining at just 0.7%. Nearly all our investments remain in their reinvestment periods, which gives managers the flexibility to adjust exposures reinvest prepayments at attractive levels, and manage sector-specific risks as the market evolves. We believe this diversification and reinvestment flexibility continue to position the portfolio well. With that, I'll now turn the call over to Chandrajit for a more detailed review of our financial highlights for the quarter.