Nuveen Churchill Direct Lending Corp. Announces First Quarter 2024 Results

Rhea-AI Summary

Nuveen Churchill Direct Lending Corp. reported first quarter 2024 financial results, highlighting net investment income of $0.56 per share and a declared second quarter regular distribution of $0.45 per share. The Company closed on a new CLO and diversified its liability structure. As of March 31, 2024, the fair value of the Company's portfolio investments was $1.8 billion across 195 portfolio companies and 26 industries. Investment income increased to $51.6 million due to higher interest rates, while net expenses rose to $21.9 million primarily due to increased interest and debt financing expenses. The Company had $64.2 million in cash and cash equivalents and $825.5 million in total debt outstanding as of March 31, 2024.

Positive

• Increased net investment income per share of $0.56 for the quarter.

• Closed on Churchill NCDLC CLO-III.

• Declared a second quarter regular distribution of $0.45 per share.

• Reported a fair value of $1.8 billion across 195 portfolio companies as of March 31, 2024.

• Increased investment income to $51.6 million due to higher interest rates.

Negative

• Net expenses increased to $21.9 million for the three months ended March 31, 2024.

• There was one portfolio company on non-accrual as of March 31, 2024.

• Net debt to equity ratio was 0.82x as of March 31, 2024.

Insights

Financial Analyst

The first quarter results from Nuveen Churchill Direct Lending Corp. (NCDL) indicate a steady performance, with a net investment income per share increase to $0.56 and a net income per share of $0.57. The consistency of NCDL's earnings is underscored by the NAV per share, which saw a marginal increase from the previous quarter. The declaration of a $0.45 per share distribution implies a confidence in the company's earnings stability and the special distributions potentially suggest a strategic approach to capital management. From a financial structure perspective, the significant liquidity and the controlled net debt to equity ratio provide NCDL with a solid balance sheet, which could imply a resilient position amidst market fluctuations. For an investor, the increased investment income highlights a successful capital deployment and an effective interest rate strategy, as evidenced by the weighted average yield increase on debt investments. However, the uptick in net expenses, particularly due to higher interest rates and debt financing, is a factor worth monitoring, as it could impact future net income.

Debt Market Analyst

NCDL's activities in the debt market merit attention, notably the closing of Churchill NCDLC CLO-III with competitive pricing in the current rate environment and the increased investment income sourced from a growing portfolio and rising interest rates. The CLO's pricing of SOFR + 2.11% resonates well within the context of current market conditions, which may signal a prudent and strategic capital management approach by NCDL. The makeup of the portfolio, predominantly first-lien term loans, aligns with conservative credit positions that tend to offer security, particularly in times of economic uncertainty. The report of one non-accrual portfolio company is not overly concerning given the small proportion of total investments it represents, but it is an important indicator of the quality and performance of the portfolio that investors should observe.

Risk Analyst

The Internal Risk Rating of the portfolio remaining unchanged at 4.1 suggests NCDL's investment strategy maintains its risk profile, which is pivotal for investors assessing the company's risk management capabilities. This stability, in conjunction with an increasing NAV, can be interpreted as a positive indication of NCDL's capability to sustain asset quality even while expanding their portfolio. Nevertheless, an investor must consider the potential risks that come with a scaling portfolio, such as the increased exposure to market volatility and the management's ability to maintain quality under expansion. The mention of liquidity nearing $500 million, coupled with the expansion of the portfolio, indicates a robust financial position but also alludes to the need for a rigorous selection process to ensure continued investment quality.

Reports Net Investment Income of $0.56 per Share

Declares Second Quarter Regular Distribution of $0.45 per Share

NEW YORK--(BUSINESS WIRE)-- Nuveen Churchill Direct Lending Corp. (NYSE: NCDL) (“NCDL” or the “Company”), a business development company externally managed by its investment adviser, Churchill DLC Advisor LLC (the “Adviser”), and by its sub-adviser, Churchill Asset Management LLC (“Churchill”), today reported financial results for the quarter ended March 31, 2024.

Financial Highlights for the Quarter Ended March 31, 2024

• Net investment income per share of $0.56
• Total net realized and unrealized gain per share of $0.01
• Net income per share of $0.57
• Net asset value ("NAV") per share of $18.21, compared to $18.13 per share as of December 31, 2023
• Closed on Churchill NCDLC CLO-III, with weighted average pricing of SOFR + 2.11%
• Paid first quarter regular distribution of $0.45 per share on April 29, 2024, which represents a 9.9% total annualized yield based on the first quarter NAV per share
• Declared second quarter regular distribution of $0.45 per share

“As we navigate the evolving credit landscape, we believe that NCDL is well-positioned to benefit from the increase in deal flow owing to Churchill’s position as a leading private credit provider with scale and long-standing private equity limited partner relationships,” said Ken Kencel, President and Chief Executive Officer of NCDL and Churchill. “In the current investment environment, we have a high degree of conviction in our differentiated platform’s ability to deliver strong risk-adjusted returns for our investors.”

“We further diversified and optimized our liability structure by pricing and closing on our third CLO out of NCDL,” said Shai Vichness, Chief Financial Officer of NCDL and Churchill. “With nearly $500 million of liquidity, we are encouraged by the current investment environment and our ability to take advantage of these opportunities. We continue to benefit from the incumbency in our diversified and mature portfolio, which is allowing us to deliver consistent earnings and support our dividend yield.”

Distribution Declaration

The Company’s Board of Directors (the "Board") has declared a second quarter 2024 regular distribution of $0.45 per share payable on July 29, 2024 to shareholders of record as of June 28, 2024. On January 10, 2024, the Board declared four special distributions of $0.10 per share, payable over the next year, the first of which is payable on July 29, 2024, to shareholders of record as of May 13, 2024.

PORTFOLIO AND INVESTMENT ACTIVITY

As of March 31, 2024, the fair value of the Company's portfolio investments was $1.8 billion across 195 portfolio companies and 26 industries. This compares to $1.6 billion as of December 31, 2023 across 179 portfolio companies and 25 industries.

As of March 31, 2024, the Company’s portfolio based on fair value consisted of approximately 89.0% first-lien term loans, 9.3% subordinated debt investments, and 1.8% equity investments. As of December 31, 2023, the Company’s portfolio based on fair value consisted of 87.0% first-lien term loans, 11.2% subordinated debt investments, and 1.9% equity investments.

For the three months ended March 31, 2024, the Company funded $204.3 million of portfolio investments and received $54.9 million of proceeds from principal repayments and sales, compared to $236.1 million and $80.6 million for the three months ended December 31, 2023, respectively.

As of March 31, 2024, the weighted average Internal Risk Rating of the portfolio at fair value remained unchanged at 4.1 (4.0 being the initial rating assigned to investments at origination), as compared to the period ended December 31, 2023. As of March 31, 2024, there was one portfolio company on non-accrual, which represented approximately 0.4% of total investments at amortized cost (or 0.1% of total investments at fair value). As of December 31, 2023, there were no loans on non-accrual.

RESULTS OF OPERATIONS

Investment Income

Investment income, primarily attributable to interest and fees on our debt investments, increased to $51.6 million for the three months ended March 31, 2024, from $34.0 million for the three months ended March 31, 2023, primarily due to an increase in interest income from higher weighted average interest rates and an increase in the Company's deployed capital. As of March 31, 2024, the weighted average yield (based upon fair value) of our debt and income producing investments increased to 11.7%, compared to 11.4% as of March 31, 2023, primarily due to increases in base interest rates.

Net Expenses

Net expenses increased to $21.9 million for the three months ended March 31, 2024, compared to $16.2 million for the three months ended March 31, 2023, primarily due to an increase in interest and debt financing expenses and management fees. Interest and debt financing expenses increased due to higher average daily borrowings, higher average interest rates, the addition of a senior secured revolving credit facility in the second quarter of 2023 and the completion of two debt securitizations on December 7, 2023 and March 14, 2024. The increase in management fees was driven by the Company's deployment of capital and its increased invested balance. Under the terms of the advisory agreement, the Adviser is waiving the incentive fee on income and the incentive fee on capital gains for the first five quarters beginning with the calendar quarter in which the IPO was consummated (i.e., beginning with the calendar quarter ended March 31, 2024 through the calendar quarter ending March 31, 2025).

Liquidity and Capital Resources

As of March 31, 2024, the Company had $64.2 million in cash and cash equivalents and $825.5 million in total aggregate principal amount of debt outstanding. Subject to borrowing base and other conditions, the Company had approximately $431.5 million available for additional borrowings under its existing credit facilities, as of March 31, 2024. Net debt to equity was 0.82x and 1.48x as of March 31, 2024 and March 31, 2023, respectively.

CONFERENCE CALL AND WEBCAST INFORMATION

Nuveen Churchill Direct Lending Corp. will hold a conference call to discuss its first quarter 2024 financial results today at 11:00 AM Eastern Time. All interested parties may participate in the conference call by dialing (866) 605-1826 approximately 10-15 minutes prior to the call; international callers should dial +1 (215) 268-9877. Participants should reference Nuveen Churchill Direct Lending Corp. when prompted.

A live webcast of the conference call will also be available on the Events section of the Company's website at https://www.ncdl.com/news/events. A replay will be available under the same link following the conclusion of the conference call.

About Nuveen Churchill Direct Lending Corp.

Nuveen Churchill Direct Lending Corp. (“NCDL”) is a specialty finance company focused primarily on investing in senior secured loans to private equity-owned U.S. middle market companies. NCDL has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. NCDL is externally managed by its investment adviser, Churchill DLC Advisor LLC, and by its sub-adviser, Churchill Asset Management LLC ("Churchill"). Both the investment adviser and sub-adviser are affiliates and subsidiaries of Nuveen, LLC (“Nuveen”) the investment management division of Teachers Insurance and Annuity Association of America (“TIAA”) and one of the largest asset managers globally. Churchill is a leading capital provider for private equity-backed middle market companies and operates as the exclusive U.S. middle market direct lending and private capital business of Nuveen and TIAA. Churchill is a registered investment advisor and majority-owned, indirect subsidiary of TIAA.

Forward-Looking Statements

This press release contains historical information and “forward-looking statements” with respect to the business and investments of NCDL, including, but not limited to, statements about NCDL’s future performance and financial performance and financial condition, which involve substantial risks and uncertainties. Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond NCDL’s control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation, the risks, uncertainties and other factors identified in NCDL’s filings with the Securities and Exchange Commission, including changes in the financial, capital, and lending markets; general economic, political and industry trends and other external factors, and the dependence of NCDL’s future success on the general economy and its impact on the industries in which it invests. Investors should not place undue reliance on these forward-looking statements, which apply only as of the date on which NCDL makes them. NCDL does not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law.

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(dollars in thousands, except share and per share data)
		March 31, 2024				December 31, 2023
Assets		(Unaudited)
Investments
Non-controlled/non-affiliated company investments, at fair value (amortized cost of $1,814,985 and $1,666,169, respectively)		$	1,794,559			$	1,641,686
Cash and cash equivalents			64,146				67,395
Restricted cash			50				50
Interest receivable			16,067				17,674
Receivable for investments sold			422				3,919
Prepaid expenses			118				13
Other assets		$	125			$	127
Total assets		$	1,875,487			$	1,730,864
Liabilities
Secured borrowings (net of $8,286 and $7,941 deferred financing costs, respectively) (See Note 6)		$	817,214			$	943,936
Payable for investments purchased			16,877				—
Interest payable			11,022				9,837
Due to adviser expense support (See Note 5)			—				632
Management fees payable			3,264				3,006
Distributions payable			24,684				22,683
Directors’ fees payable			128				96
Accounts payable and accrued expenses			4,065				2,789
Total liabilities		$	877,254			$	982,979
Commitments and contingencies (See Note 7)
Net Assets: (See Note 8)
Common shares, $0.01 par value, 500,000,000 and 500,000,000 shares authorized, 54,815,740 and 41,242,105 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		$	548			$	412
Paid-in-capital in excess of par value			1,021,573				776,719
Total distributable earnings (loss)			(23,888	)			(29,246	)
Total net assets		$	998,233			$	747,885
Total liabilities and net assets		$	1,875,487			$	1,730,864
Net asset value per share (See Note 9)		$	18.21			$	18.13

CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except share and per share data)
		Three Months Ended March 31,
		2024				2023
Investment income:
Non-controlled/non-affiliated company investments:
Interest income		$	49,078			$	33,387
Payment-in-kind interest income			1,992				321
Dividend income			308				16
Other income			217				236
Total investment income			51,595				33,960
Expenses:
Interest and debt financing expenses			16,941				12,743
Management fees (See Note 5)			3,264				2,306
Incentive fees on net investment income			4,459				—
Professional fees			710				590
Directors' fees			128				96
Administration fees (See Note 5)			542				309
Other general and administrative expenses			277				171
Total expenses before expense support and Incentive fees waived			26,321				16,215
Expense support (See Note 5)			—				(14	)
Incentive fees waived (See Note 5)			(4,459	)			—
Net Expenses			21,862				16,201
Net investment income			29,733				17,759
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) on non-controlled/non-affiliated company investments			(3,625	)			6,481
Net change in unrealized appreciation (depreciation):
Non-controlled/non-affiliated company investments			4,057				(11,137	)
Income tax (provision) benefit			(141	)			(386	)
Total net change in unrealized gain (loss)			3,916				(11,523	)
Total net realized and unrealized gain (loss) on investments			291				(5,042	)
Net increase (decrease) in net assets resulting from operations		$	30,024			$	12,717
Per share data:
Net investment income per share - basic and diluted		$	0.56			$	0.62
Net increase (decrease) in net assets resulting from operations per share - basic and diluted		$	0.57			$	0.44
Weighted average common shares outstanding - basic and diluted			52,758,353				28,727,285

PORTFOLIO AND INVESTMENT ACTIVITY
(information presented herein is at amortized cost; dollar amounts in thousands)
		Three Months Ended March 31,
		2024				2023
Investments:
Total investments, beginning of period		$	1,666,169			$	1,225,573
Purchase of investments			204,329				99,914
Proceeds from principal repayments and sales of investments			(54,896	)			(39,602	)
Payment-in-kind interest			1,992				321
Amortization of premium/accretion of discount, net			1,016				905
Net realized gain (loss) on investments			(3,625	)			6,481
Total investments, end of period		$	1,814,985			$	1,293,592
Portfolio companies at beginning of period			179				145
Number of new portfolio companies funded			23				11
Number of portfolio companies sold or repaid			(7	)			(3	)
Portfolio companies at end of period			195				153
Count of investments			414				304
Count of industries			26				23

BPS-3564396CR-Q0524W

View source version on businesswire.com: https://www.businesswire.com/news/home/20240508935066/en/

Investors:

Investor Relations

NCDL-IR@churchillam.com

Media:

Prosek Partners

Madison Hanlon

Pro-churchill@prosek.com

Source: Nuveen Churchill Direct Lending Corp.

FAQ

What was Nuveen Churchill Direct Lending Corp.'s net investment income per share for the first quarter of 2024?

Nuveen Churchill Direct Lending Corp.'s net investment income per share for the first quarter of 2024 was $0.56.

When is the second quarter regular distribution payable to shareholders?

The second quarter regular distribution of $0.45 per share is payable on July 29, 2024.

How many portfolio companies did Nuveen Churchill Direct Lending Corp. have investments in as of March 31, 2024?

Nuveen Churchill Direct Lending Corp. had investments in 195 portfolio companies as of March 31, 2024.

What was the Company's total debt outstanding as of March 31, 2024?

The Company had $825.5 million in total debt outstanding as of March 31, 2024.