Nuveen Churchill Direct Lending Corp. Announces Third Quarter 2024 Results

Rhea-AI Summary

Nuveen Churchill Direct Lending Corp. (NYSE: NCDL) reported strong Q3 2024 results with net investment income of $0.58 per share and a net asset value of $18.15 per share. The company's portfolio fair value reached $2.05 billion across 202 portfolio companies, consisting of 90.1% first-lien loans. NCDL declared a Q4 regular distribution of $0.45 per share and maintained its special distribution of $0.10 per share, representing a 12.1% total annualized yield. The weighted average yield of debt investments decreased to 10.9%, and the company maintained a strong balance sheet with $69.4 million in cash and $1.1 billion in debt, with a debt-to-equity ratio of 1.11x.

Positive

• Net investment income of $0.58 per share fully covered regular and special distributions
• Portfolio fair value increased to $2.05 billion from $1.99 billion quarter-over-quarter
• NAV per share increased to $18.15 from $18.03 in previous quarter
• Strong 12.1% total annualized yield based on NAV
• Low non-accrual rate of 0.5% at fair value

Negative

• Weighted average yield decreased to 10.9% from 11.9% year-over-year
• Net expenses increased to $28.8M from $20.1M year-over-year
• Debt-to-equity ratio increased to 1.11x from 1.04x quarter-over-quarter

Insights

Financial Analyst

NCDL delivered strong Q3 2024 results with $0.58 net investment income per share, fully covering its regular $0.45 and special $0.10 distributions. The portfolio's fair value increased to $2.05 billion across 202 companies, with 90.1% in first-lien loans. The 12.1% total annualized yield and NAV growth to $18.15 demonstrate solid performance.

Key strengths include conservative portfolio composition, low non-accrual rate of 0.5% by fair value and robust liquidity with $291.5 million available for borrowing. The debt-to-equity ratio of 1.11x remains within target range. While weighted average yield decreased to 10.9% due to spread tightening, strong originations and potential M&A activity in 2025 suggest continued growth opportunities.

Reports Net Investment Income of $0.58 per Share

Declares Fourth 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 September 30, 2024.

Financial Highlights for the Quarter Ended September 30, 2024

• Net investment income of $0.58 per share
• Net realized and unrealized gain on investments of $0.09 per share
• Net increase in net assets resulting from operations of $0.67 per share
• Net asset value ("NAV") per share of $18.15, compared to $18.03 per share as of June 30, 2024
• Paid third quarter regular distribution of $0.45 per share and the second of four special distributions of $0.10 per share on October 28, 2024, which represents a 12.1% total annualized yield based on the third quarter NAV per share
• Declared fourth quarter regular distribution of $0.45 per share

“We are pleased to report strong third quarter results, including $0.58 per share of net investment income, which fully covered our regular quarterly and special distributions, and an increase in our net asset value per share quarter-over-quarter,” said Ken Kencel, President and Chief Executive Officer of NCDL and Churchill. “Deal activity and originations across the Churchill platform continued at a strong pace this quarter, which benefited NCDL, and we believe the beginning of a rate reduction cycle will spur increased M&A activity in 2025. Looking ahead, we are excited about NCDL’s future prospects, as we believe we are well-positioned to take advantage of the significant opportunity we see in the private credit market and continue to deliver an attractive yield to our shareholders.”

“Our investment portfolio remains strong and healthy, reflecting the quality of the deal flow we have seen over the last several years, as well as our focus on diversification, a continued high-level of selectivity and a differentiated sourcing model,” said Shai Vichness, Chief Financial Officer of NCDL and Churchill. “With the strong originations we experienced during the quarter, we were able to increase our leverage ratio to the mid-point of our target range. Additionally, NCDL continues to have a strong balance sheet and liquidity position, as we have constructed a diversified capital structure that is match-funded to our floating rate assets with no near-term debt maturities.”

Distribution Declaration

The Company’s Board of Directors (the "Board") has declared a fourth quarter 2024 regular distribution of $0.45 per share payable on January 28, 2025 to shareholders of record as of December 31, 2024. On January 10, 2024, the Board declared four special distributions of $0.10 per share, to be paid over a one-year period, with the next distribution payable on January 28, 2025 to shareholders of record as of November 11, 2024.

PORTFOLIO AND INVESTMENT ACTIVITY

As of September 30, 2024, the fair value of the Company's portfolio investments was $2.05 billion across 202 portfolio companies and 26 industries. This compares to $1.99 billion as of June 30, 2024 across 198 portfolio companies and 26 industries.

As of September 30, 2024, the Company’s portfolio based on fair value consisted of approximately 90.1% first-lien loans, 8.3% subordinated debt investments, and 1.7% equity investments. As of June 30, 2024, the Company’s portfolio based on fair value consisted of 90.6% first-lien loans, 7.8% subordinated debt investments, and 1.6% equity investments.

For the three months ended September 30, 2024, the Company funded $203.2 million of portfolio investments and received $155.6 million of proceeds from principal repayments and sales, compared to $305.0 million and $100.0 million for the three months ended June 30, 2024, respectively.

As of September 30, 2024 and June 30, 2024, the weighted average Internal Risk Rating of the portfolio at fair value was 4.2 and 4.1 (4.0 being the initial rating assigned at origination), respectively, and loans on non-accrual status represented 1.4% of total investments at amortized cost (or 0.5% of total investments at fair value) and 1.4% at amortized cost (or 0.5% at fair value), respectively. No new portfolio companies were put on non-accrual status during the quarter.

RESULTS OF OPERATIONS

Investment Income

Investment income, primarily attributable to interest and fees on our debt investments, increased to $60.3 million for the three months ended September 30, 2024, from $41.7 million for the three months ended September 30, 2023, primarily due to increased investment activity driven by an increase in deployed capital, slightly offset by a decrease in the weighted average yield of debt and income producing investments. As of September 30, 2024, the weighted average yield of debt and income producing investments at fair value decreased to 10.9%, compared to 11.9% as of September 30, 2023, as a result of market spread tightening and a decline in base rates.

Net Expenses

Net expenses increased to $28.8 million for the three months ended September 30, 2024, compared to $20.1 million for the three months ended September 30, 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, and the completion of two debt securitizations on December 7, 2023 and March 14, 2024, respectively. The increase in management fees was driven by the Company's increase in total assets. 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).

Net Realized Gain (Loss) and Net Change in Unrealized Gain (Loss) on Investments

For the three months ended September 30, 2024, the Company recorded a net realized gain of $1.1 million compared to a realized loss of $(13.1) million for the three months ended September 30, 2023. The increase in the net realized gain was primarily driven by full or partial repayments and sales of certain of our investments. For the three months ended September 30, 2024, the Company recorded a net change in unrealized gain of $4.1 million, which resulted from an increase in fair value primarily attributable to market spread tightening and net positive credit performance of our portfolio companies in the third quarter of 2024. This compares to a net unrealized gain of $11.6 million for the three months ended September 30, 2023.

Financial Condition, Liquidity and Capital Resources

As of September 30, 2024, the Company had $69.4 million in cash and cash equivalents and $1.1 billion in total aggregate principal amount of debt outstanding. Subject to borrowing base and other conditions, the Company had approximately $291.5 million available for additional borrowings under its existing credit facilities, as of September 30, 2024. At September 30, 2024, the Company's debt to equity ratio was 1.11x compared to 1.04x at June 30, 2024. On November 5, 2024, the SMBC Financing Facility was paid down using proceeds from a drawdown under the Company's Corporate Revolving Credit Facility and subsequently terminated.

CONFERENCE CALL AND WEBCAST INFORMATION

Nuveen Churchill Direct Lending Corp. will hold a conference call to discuss its third 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)
	September 30, 2024				December 31, 2023
Assets	(Unaudited)
Investments
Non-controlled/non-affiliated company investments, at fair value (amortized cost of $2,075,365 and $1,666,169, respectively)	$	2,046,887			$	1,641,686
Cash and cash equivalents		69,304				67,395
Restricted cash		50				50
Interest receivable		18,127				17,674
Receivable for investments sold		5,657				3,919
Prepaid expenses		85				13
Other assets		—				127
Total assets	$	2,140,110			$	1,730,864
Liabilities
Secured borrowings (net of $7,503 and $7,941 deferred financing costs, respectively) (See Note 6)	$	1,094,461			$	943,936
Payable for investments purchased		2,545				—
Interest payable		15,462				9,837
Due to adviser for expense support (See Note 5)		—				632
Management fees payable		3,873				3,006
Distributions payable		30,037				22,683
Directors’ fees payable		128				96
Accounts payable and accrued expenses		2,995				2,789
Total liabilities	$	1,149,501			$	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, 54,571,650 and 41,242,105 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	$	546			$	412
Paid-in-capital in excess of par value		1,017,248				776,719
Total distributable earnings (loss)		(27,185	)			(29,246	)
Total net assets	$	990,609			$	747,885
Total liabilities and net assets	$	2,140,110			$	1,730,864
Net asset value per share (See Note 10)	$	18.15			$	18.13

CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except share and per share data)
	Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Investment income:
Non-controlled/non-affiliated company investments:
Interest income	$	57,317			$	40,370			$	159,413			$	110,049
Payment-in-kind interest income		2,503				951				6,024				1,823
Dividend income		16				16				357				56
Other income		444				409				1,170				879
Total investment income		60,280				41,746				166,964				112,807
Expenses:
Interest and debt financing expenses		23,198				16,048				58,860				43,089
Management fees (See Note 5)		3,873				2,722				10,727				7,503
Incentive fees on net investment income		5,496				—				13,030				—
Professional fees		912				730				2,315				2,284
Directors' fees		128				96				383				287
Administration fees (See Note 5)		535				370				1,561				1,029
Other general and administrative expenses		145				125				888				653
Total expenses before expense support and incentive fees waived		34,287				20,091				87,764				54,845
Expense support (See Note 5)		—				—				—				(158	)
Incentive fees waived (See Note 5)		(5,496	)			—				(13,030	)			—
Net Expenses after expense support		28,791				20,091				74,734				54,687
Net investment income		31,489				21,655				92,230				58,120
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) on non-controlled/non-affiliated company investments		1,086				(13,107	)			(1,522	)			(6,408	)
Net change in unrealized appreciation (depreciation):
Non-controlled/non-affiliated company investments		4,050				11,574				(3,995	)			(3,805	)
Income tax (provision) benefit		18				27				159				(735	)
Total net change in unrealized gain (loss)		4,068				11,601				(3,836	)			(4,540	)
Total net realized and unrealized gain (loss) on investments		5,154				(1,506	)			(5,358	)			(10,948	)
Net increase (decrease) in net assets resulting from operations	$	36,643			$	20,149			$	86,872			$	47,172
Per share data:
Net investment income per share - basic and diluted	$	0.58			$	0.62			$	1.71			$	1.85
Net increase (decrease) in net assets resulting from operations per share - basic and diluted	$	0.67			$	0.58			$	1.61			$	1.50
Weighted average common shares outstanding - basic and diluted		54,688.86				34,812.72				54,080.979				31,409.296

PORTFOLIO AND INVESTMENT ACTIVITY
(dollars in thousands)
	Three Months Ended September 30,
		2024				2023
Net funded investment activity
New gross commitments at par 1	$	225,612			$	216,710
Net investments funded		203,159				150,866
Investments sold or repaid		(155,616	)			(20,490	)
Net funded investment activity	$	47,543			$	130,376
Gross commitments at par 1
First-Lien Debt	$	221,097			$	193,794
Subordinated Debt		3,145				17,852
Equity Investments		1,370				5,064
Total gross commitments	$	225,612			$	216,710
Portfolio company activity
Portfolio companies, beginning of period		198				161
Number of new portfolio companies		18				14
Number of exited portfolio companies		(14	)			(1	)
Portfolio companies, end of period		202				174
Count of investments		457				363
Count of industries		26				24
New Investment Activity
Weighted average annual interest rate on new debt investments at par		9.63	%			12.07	%
Weighted average annual interest rate on new floating rate debt investments at par		9.59	%			11.50	%
Weighted average spread on new debt investments at par		5.00	%			6.10	%
Weighted average annual coupon on new debt investments at par		13.67	%			13.80	%

__________________________

1 Gross commitments at par includes unfunded investment commitments.

See Notes to Consolidated Financial Statements

View source version on businesswire.com: https://www.businesswire.com/news/home/20241107315310/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 NCDL's net investment income per share in Q3 2024?

NCDL reported net investment income of $0.58 per share for Q3 2024.

What is NCDL's Q4 2024 distribution amount?

NCDL declared a regular distribution of $0.45 per share for Q4 2024, plus a special distribution of $0.10 per share.

What was NCDL's portfolio composition as of September 30, 2024?

NCDL's portfolio consisted of 90.1% first-lien loans, 8.3% subordinated debt investments, and 1.7% equity investments.

What is NCDL's current debt-to-equity ratio?

As of September 30, 2024, NCDL's debt-to-equity ratio was 1.11x.