Blue Owl Capital Corporation Reports Full Year Results and Fourth Quarter Net Investment Income Per Share of $0.51 and NAV Per Share of $15.45; Increases Quarterly Dividend
- Record net investment income and dividends for the full year and fourth quarter of 2023.
- Total return of over 40% in 2023, with increased NAV per share.
- Increased quarterly dividend for the first quarter of 2024.
- Significant growth in new investment commitments and funded investments.
- Positive trends in investment income and expenses.
- Strong liquidity and capital resources with ample cash and undrawn capacity on credit facilities.
- None.
Insights
The reported increase in net investment income (NII) and net asset value (NAV) per share for Blue Owl Capital Corporation indicates a strong financial performance, which is typically a positive signal for investors. The company's ability to sustain a record NII for four consecutive quarters and declare a supplemental dividend reflects a robust income-generating capability. The increased dividend payout for 2023, along with the announcement of an additional dividend increase for the first quarter of 2024, suggests confidence in the company's future cash flows and may attract income-focused investors.
However, the increase in total expenses, driven by higher interest and incentive fees, could signal rising costs that may impact future margins if not managed effectively. The reported weighted average interest rate on debt remaining stable at 5.6% for consecutive quarters, despite the increased debt level, demonstrates the company's ability to maintain its borrowing costs. Still, the ending net debt to equity ratio of 1.09x, slightly reduced from 1.13x, will require monitoring as it impacts financial leverage and risk profile.
The strategic growth in investment commitments and the shift in portfolio composition towards more first lien senior secured debt investments underscore a conservative approach to risk management. The emphasis on secured debt, comprising 82.1% of the portfolio, alongside a high percentage of floating rate debt investments at 97.4%, positions Blue Owl Capital Corporation to potentially benefit from rising interest rates, as these loans' yields would increase accordingly.
The year-over-year increase in investment income can be attributed to the portfolio's higher weighted average yield and increased dividend income. This performance metric is essential as it reflects the company's operational efficiency in generating earnings from its investments. The uptick in repayment activity contributing to income also suggests a healthy turnover within the portfolio, which can enhance liquidity and provide opportunities for reinvestment.
The legal perspective is particularly relevant when evaluating the company's portfolio composition and the nature of its investments. The predominance of secured debt in the portfolio provides a measure of protection to the company, as these investments are backed by collateral that can be seized in the event of borrower default. The presence of a small percentage of the portfolio on non-accrual status (1.1%) indicates that the company is not facing significant issues with loan defaults, which is reassuring for stakeholders concerned about credit risk.
It is also important to consider the regulatory environment, especially in the context of a financial entity like Blue Owl Capital Corporation. The company's adherence to disclosure norms and regulatory requirements, as evidenced by the detailed financial reporting, supports investor confidence and compliance with financial regulations.
HIGHLIGHTS FOR FULL YEAR AND QUARTER ENDED DECEMBER 31, 2023
- Fourth quarter net investment income ("NII") per share of
$0.51 - As a result, Board declared a fourth quarter supplemental dividend of
$0.08 - Total dividends for the fourth quarter were
$0.43 11% annualized yield based on fourth quarter net asset value ("NAV") per share - Total dividends of
$1.59 25% from the prior year - Delivered a total return of greater than
40% 1 for 2023 - For the first quarter 2024, increased quarterly dividend by
$0.02 $0.37 - NAV per share increased to
$15.45 $15.40
"OBDC achieved record NII for the fourth consecutive quarter and its highest NAV per share since inception in the fourth quarter," commented Craig W. Packer, Chief Executive Officer. "As a result of our strong earnings, OBDC earned a record
Dividend Declarations
The Company's Board of Directors has declared a first quarter 2024 dividend of
PORTFOLIO AND INVESTING ACTIVITY
Full Year
For the full year ended December 31, 2023, new investment commitments totaled
This compares to
For the full year ended December 31, 2023, the principal amount of new investments funded was
For the full year ended December 31, 2022, the principal amount of new investments funded was
Fourth Quarter
For the three months ended December 31, 2023, new investment commitments totaled
This compares to
For the three months ended December 31, 2023, the principal amount of new investments funded was
For the three months ended September 30, 2023, the principal amount of new investments funded was
For the three months ended December 31, 2022, the principal amount of new investments funded was
As of December 31, 2023 and September 30, 2023, the Company had investments in 193 and 187 portfolio companies with an aggregate fair value of
As of December 31, 2023, based on fair value, our portfolio consisted of
As of September 30, 2023, based on fair value, our portfolio consisted of
As of December 31, 2023 and September 30, 2023, approximately
As of December 31, 2023 and September 30, 2023, the weighted average total yield of accruing debt and income-producing securities at fair value (which includes interest income and amortization of fees and discounts) was
As of December 31, 2023, 4 portfolio companies with an aggregate fair value of
RESULTS OF OPERATIONS FOR THE FULL YEAR AND QUARTER ENDED DECEMBER 31, 2023
Investment Income
Investment income increased to
Investment income increased to
Expenses
Total expenses increased to
Total expenses increased to
Liquidity and Capital Resources
As of December 31, 2023, we had
CONFERENCE CALL AND WEBCAST INFORMATION
Conference Call Information:
The conference call will be broadcast live on February 22, 2024 at 10:00 a.m. Eastern Time on the Events section of OBDC's website at www.BlueOwlCapitalCorporation.com. Please visit the website to test your connection before the webcast.
Participants are also invited to access the conference call by dialing one of the following numbers:
- Domestic: (877) 737-7048
- International: +1 (201) 689-8523
All callers will need to reference "Blue Owl Capital Corporation" once connected with the operator. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected.
Replay Information:
An archived replay will be available for 14 days via a webcast link located on the Events section of OBDC's website, and via the dial-in numbers listed below:
- Domestic: (877) 660-6853
- International: +1 (201) 612-7415
- Conference ID: 13743048
(1) | Total return calculated using LTM dividends paid and stock appreciation divided by net asset value. | ||||||
(2) | NII ROE is calculated as annualized Q4'23 net investment income divided by average Q4'23 and Q3'23 net asset value. | ||||||
(3) | This was disclosed as "Investment funds and vehicles" prior to Q2 2023. | ||||||
ABOUT BLUE OWL CAPITAL CORPORATION
Blue Owl Capital Corporation (NYSE: OBDC) is a specialty finance company focused on lending to
Certain information contained herein may constitute "forward-looking statements" that 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 OBDC, its current and prospective portfolio investments, its industry, its beliefs and opinions, and its 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 OBDC'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 OBDC's filings with the SEC. Investors should not place undue reliance on these forward-looking statements, which apply only as of the date on which OBDC makes them. OBDC 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.
INVESTOR CONTACTS
Investor Contact:
Dana Sclafani
212-419-3000
credit-ir@blueowl.com
Media Contact:
Prosek Partners
Josh
pro-blueowl@prosek.com
FINANCIAL HIGHLIGHTS | ||||
For the three months ended | ||||
($ in thousands, except per share amounts) | December 31, | September 30, | December 31, | |
Investments at Fair Value | $ 12,713,348 | $ 12,896,158 | $ 13,010,345 | |
Total Assets | $ 13,511,396 | $ 13,461,820 | $ 13,584,853 | |
Net Asset Value Per Share | $ 15.45 | $ 15.40 | $ 14.99 | |
Investment Income | $ 411,227 | $ 399,022 | $ 350,506 | |
Net Investment Income | $ 199,021 | $ 190,053 | $ 162,464 | |
Net Income | $ 188,969 | $ 206,938 | $ 191,888 | |
Net Investment Income Per Share | $ 0.51 | $ 0.49 | $ 0.41 | |
Net Realized and Unrealized Gains (and Losses) Per Share | $ (0.03) | $ 0.04 | $ 0.07 | |
Net Income Per Share | $ 0.48 | $ 0.53 | $ 0.49 | |
Distributions Declared from Net Investment Income Per Share | $ 0.35 | $ 0.33 | $ 0.33 | |
Supplemental Distributions Declared from Net Investment Income Per Share | $ 0.08 | $ 0.08 | $ 0.04 | |
Weighted Average Yield of Accruing Debt and Income Producing Securities at Fair Value | 12.4 % | 12.3 % | 11.5 % | |
Weighted Average Yield of Accruing Debt and Income Producing Securities at Amortized Cost | 12.5 % | 12.4 % | 11.5 % | |
Percentage of Debt Investment Commitments at Floating Rates | 97.4 % | 97.7 % | 98.3 % | |
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (Amounts in thousands, except share and per share amounts) | ||||
December 31, 2023 | December 31, 2022 | |||
Assets | ||||
Investments at fair value | ||||
Non-controlled, non-affiliated investments (amortized cost of | $ 11,264,956 | $ 12,010,369 | ||
Non-controlled, affiliated investments (amortized cost of | 19,988 | 6,175 | ||
Controlled, affiliated investments (amortized cost of | 1,428,404 | 993,801 | ||
Total investments at fair value (amortized cost of | 12,713,348 | 13,010,345 | ||
Cash (restricted cash of | 658,702 | 444,278 | ||
Foreign cash (cost of | 956 | 809 | ||
Interest receivable | 112,260 | 108,085 | ||
Receivable from a controlled affiliate | 22,978 | 17,709 | ||
Prepaid expenses and other assets | 3,152 | 3,627 | ||
Total Assets | $ 13,511,396 | $ 13,584,853 | ||
Liabilities | ||||
Debt (net of unamortized debt issuance costs of | $ 7,077,088 | $ 7,281,744 | ||
Distribution payable | 136,407 | 129,517 | ||
Management fee payable | 47,711 | 47,583 | ||
Incentive fee payable | 42,217 | 34,462 | ||
Payables to affiliates | 3,835 | 6,351 | ||
Accrued expenses and other liabilities | 182,745 | 202,793 | ||
Total Liabilities | 7,490,003 | 7,702,450 | ||
Commitments and contingencies (Note 7) | ||||
Net Assets | ||||
Common shares shares issued and outstanding, respectively | 3,897 | 3,925 | ||
Additional paid-in-capital | 5,924,002 | 5,970,674 | ||
Accumulated undistributed (overdistributed) earnings | 93,494 | (92,196) | ||
Total Net Assets | 6,021,393 | 5,882,403 | ||
Total Liabilities and Net Assets | $ 13,511,396 | $ 13,584,853 | ||
Net Asset Value Per Share | $ 15.45 | $ 14.99 | ||
CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except share amounts) | |||||
For the Year Ended December 31, | |||||
2023 | 2022 | 2021 | |||
Investment Income | |||||
Investment income from non-controlled, non-affiliated investments: | |||||
Interest income | $ 931,870 | $ 887,753 | |||
Payment-in-kind ("PIK") interest income | 169,763 | 113,256 | 53,185 | ||
Dividend income | 72,936 | 52,422 | 28,052 | ||
Other income | 14,755 | 18,514 | 25,845 | ||
Total investment income from non-controlled, non-affiliated investments | 1,466,990 | 1,116,062 | 994,835 | ||
Investment income from non-controlled, affiliated investments: | |||||
Dividend income | 252 | — | — | ||
Total investment income from non-controlled, affiliated investments: | 252 | — | — | ||
Investment income from controlled, affiliated investments: | |||||
Interest income | 20,174 | 8,206 | 5,531 | ||
Payment-in-kind ("PIK") interest income | 1,934 | — | — | ||
Dividend income | 91,802 | 77,047 | 20,394 | ||
Other Income | 942 | 689 | 643 | ||
Total investment income from controlled, affiliated investments | 114,852 | 85,942 | 26,568 | ||
Total Investment Income | 1,582,094 | 1,202,004 | 1,021,403 | ||
Expenses | |||||
Interest expense | 436,306 | 307,539 | 219,132 | ||
Management fees | 191,622 | 188,755 | 178,472 | ||
Performance based incentive fees | 159,857 | 118,091 | 103,968 | ||
Professional fees | 15,532 | 14,709 | 15,071 | ||
Directors' fees | 1,280 | 1,092 | 1,021 | ||
Other general and administrative | 11,127 | 9,290 | 9,593 | ||
Total Operating Expenses | 815,724 | 639,476 | 527,257 | ||
Net Investment Income (Loss) Before Taxes | 766,370 | 562,528 | 494,146 | ||
Income tax expense (benefit) | 12,759 | 5,810 | 4,009 | ||
Net Investment Income (Loss) After Taxes | $ 753,611 | $ 556,718 | $ 490,137 | ||
Net Realized and Change in Unrealized Gain (Loss) | |||||
Net change in unrealized gain (loss): | |||||
Non-controlled, non-affiliated investments | $ 90,497 | $ (133,980) | $ 148,300 | ||
Non-controlled, affiliated investments | 1,033 | (49) | — | ||
Controlled, affiliated investments | 213 | 45,602 | 44,081 | ||
Translation of assets and liabilities in foreign currencies | 5,808 | (2,118) | (3,953) | ||
Income tax (provision) benefit | (4,605) | (3,964) | (8,604) | ||
Total Net Change in Unrealized Gain (Loss) | 92,946 | (94,509) | 179,824 | ||
Net realized gain (loss): | |||||
Non-controlled, non-affiliated investments | (52,003) | 5,171 | (46,332) | ||
Foreign currency transactions | (1,242) | (1,025) | 1,253 | ||
Total Net Realized Gain (Loss) | (53,245) | 4,146 | (45,079) | ||
Total Net Realized and Change in Unrealized Gain (Loss) | 39,701 | (90,363) | 134,745 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ 793,312 | $ 466,355 | $ 624,882 | ||
Earnings Per Share - Basic and Diluted | $ 2.03 | $ 1.18 | $ 1.59 | ||
Weighted Average Shares Outstanding - Basic and Diluted | 390,104,585 | 394,006,852 | 392,297,907 | ||
PORTFOLIO AND INVESTMENT ACTIVITY | ||||||
For the Year Ended December 31, | ||||||
($ in thousands) | 2023 | 2022 | 2021 | |||
New investment commitments | ||||||
Gross originations | $ 2,165,911 | $ 1,997,087 | $ 7,456,901 | |||
Less: Sell downs | (10,803) | (224,665) | (632,072) | |||
Total new investment commitments | $ 2,155,108 | $ 1,772,422 | $ 6,824,829 | |||
Principal amount of investments funded: | ||||||
First-lien senior secured debt investments | $ 1,523,503 | $ 788,717 | $ 4,369,794 | |||
Second-lien senior secured debt investments | — | 6,883 | 846,299 | |||
Unsecured debt investments | — | 90,451 | 132,288 | |||
Preferred equity investments | 36,377 | 90,110 | 238,367 | |||
Common equity investments | 86,457 | 131,777 | 113,780 | |||
Joint Ventures(4) | 34,125 | 69,125 | 141,876 | |||
Total principal amount of investments funded | $ 1,680,462 | $ 1,177,064 | $ 5,842,404 | |||
Principal amount of investments sold or repaid: | ||||||
First-lien senior secured debt investments | $ (2,069,540) | $ (1,116,583) | $ (3,343,381) | |||
Second-lien senior secured debt investments | (97,713) | (29,800) | (910,582) | |||
Unsecured debt investments | (193) | (31,427) | — | |||
Preferred equity investments | (6,952) | (22,843) | — | |||
Common equity investments | (195) | (7,350) | (4,827) | |||
Joint Ventures(4) | — | — | — | |||
Total principal amount of investments sold or repaid | $ (2,174,593) | $ (1,208,003) | $ (4,258,790) | |||
Number of new investment commitments in new portfolio companies(1) | 32 | 52 | 67 | |||
Average new investment commitment amount | $ 53,397 | $ 22,757 | $ 82,831 | |||
Weighted average term for new debt investment commitments (in years) | 5.6 | 5.6 | 6.3 | |||
Percentage of new debt investment commitments at floating rates | 96.2 % | 95.1 % | 98.1 % | |||
Percentage of new debt investment commitments at fixed rates | 3.8 % | 4.9 % | 1.9 % | |||
Weighted average interest rate of new debt investment commitments(2)(3) | 11.7 % | 10.4 % | 7.3 % | |||
Weighted average spread over applicable base rate of new floating rate debt investment commitments | 6.3 % | 6.9 % | 6.4 % | |||
(1) | Number of new investment commitments represents commitments to a particular portfolio company. | ||||||
(2) | For the year ended December 31, 2023 and December 31, 2022, assumes each floating rate commitment is subject to the greater of the interest rate floor (if applicable) or 3-month SOFR, which was | ||||||
(3) | For the year ended December 31, 2021, assumes each floating rate commitment is subject to the greater of the interest rate floor (if applicable) or 3-month LIBOR, which was | ||||||
(4) | This was disclosed as "Investment funds and vehicles" as of December 31, 2022 and 2021. | ||||||
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FAQ
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