In This Article:
Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Nuveen Churchill Direct Lending Corp (NYSE:NCDL) has a highly diversified portfolio with over 200 companies, reducing risk exposure.
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The company's investment portfolio is largely concentrated in non-cyclical and service-oriented businesses, providing stability during economic uncertainty.
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NCDL's conservative approach to underwriting is supported by a weighted average portfolio company net leverage of under 5 times and an interest coverage ratio of 2.4 times.
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The company has a strong balance sheet with no near-term debt maturities, providing financial flexibility.
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NCDL's investment activity volume was up 60% year over year in the first quarter, indicating strong growth and market activity.
Negative Points
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Net investment income decreased to $0.53 per share in the first quarter, impacted by non-recurring interest and debt financing expenses.
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Total investment income decreased to $53.6 million in the first quarter, primarily driven by a decline in interest income due to the decline in base rates.
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The net asset value per share declined from $18.18 to $17.96, primarily due to modest valuation declines in some watch list names.
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The company's gross debt to equity ratio increased to 1.31 times, indicating higher leverage.
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Market volatility and uncertainty around tariffs pose ongoing risks to the company's portfolio and future performance.
Q & A Highlights
Q: With the $0.03 per share of non-recurring costs in the quarter, how does this affect the dividend coverage moving forward, and are there any levers to drive incremental net investment income (NII) throughout the year? A: Shai Vikness, CFO, explained that the dividend coverage is expected to remain strong despite the non-recurring costs. The company set the $0.45 regular dividend level with future earnings power in mind. They are optimistic about covering the dividend and see opportunities to drive incremental earnings through potential spread widening, portfolio rotation, and liability management exercises.
Q: With leverage at the upper end of the target, does it make sense to lean in more on share repurchases given the stock's current trading discount? A: Shai Vikness, CFO, noted that the share repurchase program is designed to be opportunistic, increasing activity as the discount to NAV widens. The program was extended for another 12 months, and while the authorization amount wasn't increased, they continue to evaluate the appropriateness of doing so.