Company Overview

Crescent Capital BDC is a specialty finance company that lends money to middle-market companies in the United States. The company operates as a business development company (BDC) under the Investment Company Act of 1940. As a BDC, Crescent is required to invest at least 70% of its assets in qualifying private companies and publicly trade below a certain market capitalization threshold.

Crescent aims to maximize returns for its shareholders through current income earned on its debt investments and capital appreciation from equity investments. The company invests primarily in secured and unsecured debt as well as related equity securities of U.S. middle-market companies.

Financial Highlights

• Total investment income increased by 28% year-over-year, driven by higher interest income from rising benchmark rates
• Net investment income rose 34% due to higher revenues, partially offset by increased interest and operating expenses
• Net increase in net assets from operations totaled $28.0 million compared to $7.8 million in Q1 2023
• Net asset value per share grew 6% from Q1 2023

Investment Portfolio

As of March 31, 2024, Crescent had $1.56 billion of total investments at fair value across 183 portfolio companies. The portfolio was invested 62.7% in first lien unitranche loans, 26.1% in first lien loans, 3.4% in second lien loans, and 7.8% across other debt and equity investments.

Over 97% of the debt portfolio bore a floating rate, providing protection against rising interest rates. The weighted average yield on income producing investments was 12.3% as of quarter-end.

During the first quarter, Crescent invested $73.9 million in 17 new portfolio companies and had $98.4 million in repayments across 29 exits. This led to a net portfolio decrease of $24.5 million for the quarter.

Operating Results

Crescent’s total investment income rose 28% year-over-year to $50.4 million, driven by a $10.3 million increase in interest income related to portfolio growth and higher benchmark rates. This helped drive net investment income up 34% to $23.4 million, or $0.63 per share.

Operating expenses totaled $27.0 million, up 24% versus the prior year due to higher management fees and interest expense on borrowings. The increase was partially offset by lower general and administrative expenses.

Crescent realized $4.3 million of net gains on investments during the first quarter, compared to net losses of $9.9 million in Q1 2023. The company also had $4.5 million of net unrealized gains, reversing the $10.2 million of unrealized losses last year.

Liquidity and Capital Resources

As of March 31, 2024, Crescent had $31.9 million of cash on hand and $343.6 million of undrawn capacity on its credit facilities. This liquidity position exceeds the company’s $171.0 million of unfunded debt commitments to portfolio companies.

Crescent has total debt outstanding of $838.0 million under its credit facilities and unsecured bonds. The company’s debt-to-equity ratio was 0.9x, with asset coverage of 189%. Both metrics are well above the required 150% threshold for a BDC.

In summary, Crescent Capital BDC delivered strong first quarter results driven by rising portfolio yields and higher investment balances. The company maintains a solid liquidity position and balance sheet to support further growth.