Good morning and welcome to Crescent Capital BDC Inc.'s first quarter ended March 31, 2025 earnings conference call. Please note that Crescent Capital BDC Inc. may be referred to as CCAP, Crescent BDC, or the company throughout the call. I'll start with some important reminders. Comments made over the course of this conference and webcast may contain forward-looking statements and are subject to risks and uncertainties. The company's actual results could differ materially from those expressed in such forward-looking statements for any reason, including those listed in its SEC filings. The company assumes no obligation to update any such forward-looking statements. Please also note that the past performance or market information is not a guarantee of future results. I'll now turn the call over to Dan McMahon.

Thank you. Yesterday, after the market closed, the company issued its earnings press release for the first quarter ended March 31, 2025, and posted a presentation to the IR section of its website at crescentbdc.com. The presentation should be reviewed in conjunction with the company's Form 10-Q filed yesterday with the SEC. As a reminder, this call is being recorded for replay purposes. Speaking on today's call will be CCAP's Chief Executive Officer, Jason Brough, President Henry Trump, and Chief Financial Officer, Gerhard Lombard. With that, I'd now like to turn it over to Jason.

Thank you, Dan. Hello, everyone, and thank you all for joining us. I'll start today's call by summarizing our first quarter results. Follow that with some thoughts on the market. In terms of first quarter earnings, we reported net investment income of $16.6 million, or $0.45 per share, or $0.55 per share. The impact of lower base rates resulting from the roll-off of certain dividend income from the Logan JV, the last driver of the quarterly, which increased to 3.5% and 1.8% of our debt investments at cost and fair value. While we are not pleased with the increase in non-accrual, clean positions and represent less than one portfolio at fair value, and resulted from one-off credit that we have consistently taken a preemptive and rigorous approach to both our watch list and reevaluating the accrual status, recognizing that there are a wide variety of approaches. Looking ahead, we believe that this quarter's earnings are reflective of our earnings baseline. We have potential near-term tailwinds from our SPV asset-based facility repricing and right-sizing that we completed at the beginning of the quarter, which Gerard will discuss in more detail, as well as the full quarter impact of our portfolio at target leverage. Baseline view, this near-term outlook does not reflect the impact of any further loans we may place on non-accurl. Financial results and outlook in more detail, so let me provide an update on what we're seeing in the market and an active deployment quarter. Stained pickup in M&A has been tempered by tariffs to take a wait-and-see approach with regards to new platform acting to the backlog of deal activity that has existed for many PE-owned assets. We've still seen attractive investment opportunities, even following the Liberation Day announcements, that fit our core investment mandate of bursting investments in portfolio companies backed by sponsors. The recent volatility requires us to maintain our selectivity and underscores the importance of consistently applying our sponsors. For our sponsors, we believe that our tenure in the direct lending space and depth of our relationships, which have been cultivated over decades, underscore our value proposition and the ability to serve as a true partner in developing bespoke capital structure. We continue to lead the majority of our transactions and drive stringent documentation, attributes that are much more difficult to accomplish in the upper middle market BSL replacement segment, the investment portfolio. Please turn to slides 13 and 14 of the presentation. With just over $1.6 billion of investments at fair value, a portfolio of 191 companies with an average investment size, the origination platform activity has provided us the opportunity to nearly double the number of portfolio companies in our portfolio since listing, even after taking into account prior acquisitions. We believe that diversification is an important component of providing stability to our shareholders in order to help mitigate the impact of one-off credit events on both our investment income. Our top 10 largest borrowers represented 18% of the portfolio as we are believers in modulating credit risk through position size, which we believe has served crescent well in previous credit cycles. We have consistently maintained an investment portfolio via first lien loans since inception, collectively representing 91% of the portfolio at fair value at quarter end. We continue to focus our investing efforts on non-cyclical industries and remain well-diversified across 20 broad industry categorizations. We will provide some additional detail on this, and his current framework has positioned our portfolio in a way that naturally limits our exposure to the most severe and direct impact. Really supported by well-capitalized with 99% of our debt portfolio and sponsor-backed company. We have partnered with our sponsors to invest in well-capitalized borrowers with significant equity capital beneath us, resulting in a 39% weighted average loan-to-value across our investment. Let's flip to slide 17, which shows the trend Overall, we have seen stability in the fundamental performance of our portfolio, resulting in consistency in our risk ratings and a weighted average portfolio risk rating. You'll see that one in two rated investments representing names that are performing at or above our underwriting expectations continue to represent the lion's share or 87% of our portfolio at their back. Moving on to our dividend, we declared a second quarter 2025 regular dividend of $0.42. The dividend is payable on July 15, 2025 to stockholders of record as of June 30. Additionally, a second in a series of three previously announced $0.05 per share special dividends related to undistributed taxable income will be paid on June 13 to stockholders of record. We have earned our dividends since CCAP's inception, and we note that our NII continues to be in excess of our base dividends. The consistency and NAV stability goes to simply delivering a high dividend yield. This principle guided us to not aggressively raise our base dividend when the rate-hiking cycle began in 2020. This marks our 37th consecutive quarter of earning our regular dividend at CCAP, which we have accomplished while maintaining NAV per share within a tight end. We are focused on earning our dividend for the portion. Our view is that dividend yields in the BDC space remain elevated given the current base rate outlook and lack of meaningful fundamental headwinds that have been demonstrated in corporate credit. Our positioning has and always will be for the long term. With that, I will now turn the call over to Henry. Henry.

Thanks, Jason. Please turn to slide 15, where we highlight our recent out-of-5 million, which 98% was in the first quarter. We closed to selling $78 million. These new investments were loans to private equity-backed companies. With attractive opportunities, we are still in selectivity inherent in our own. $27 million came from incremental investments. $105 million in gross deployment compares to approximately $78 million in aggregate exits, sales and repayments, resulting in net deployment of approximately $27 million for the first. A form-wide bottoms-up review of the potential tariff, given our focus on service businesses with low materials components and high free cash flow conversion, the overall direct material exposure, investing in the core and lower middle market, both for our U.S. and European portfolio companies, naturally points us to businesses that primarily serve their respective domestic market. Review of the potential exposure through multiple lenses. Manufacturing businesses that source raw materials from abroad force intermediate or finished goods from abroad. And third, business models closely tied to the transportation of goods. For the vast majority of these businesses, we did identify mitigating factors with the ability to pass-through price increases and limited supply. The ability to increase prices was demonstrable for most of our portfolio during the recent inflationary. It represents a much larger component of direct costs, although the full extent of tariffs, including knock-on effects, remain to be fully seen, we believe CCAP's portfolio... Turning back to the broader portfolio, please flip to slide 16. You can see that the weighted average yield of our income-producing securities at cost came down 50 basis points, 4%, reflecting the impact of changes in base rates. As of March 31st, 97% of our debt investments at fair value were floating rate, with a weighted average floor of 79 basis, compared to our 55% floating rate liabilities. Our investment portfolio continues to perform well, with year-over-year weighted average revenue and EBITDA growth. The weighted average interest coverage of the companies in our investment portfolio at quarter end improved to two times. As a reminder, this calculation is based on the latest annual-wide terms of managing fixed operating costs. Approximately 73% of aggregate revolved with our portfolio companies in the aggregate remain well-positioned to address fixed charges with operating cash flows.

With that, I'll now turn it over to Gerard. Henry, and hello, everyone. As Jason previously noted, $0.55 per share. The four key drivers that drove the change in this quarter typically have their coupons reset at the beginning of each quarter. There is a lag effect on this. This is best highlighted on slide 16. This was the largest contributor to this. The second driver was the runoff of one-time non-recurring income. Specifically, we had runoff of one-time PIC income. The third driver was the Logan JV, where dividend income declined by $0.03 per share. As a reminder, we acquired the Logan JV in connection with our acquisition. Its largest investment is a middle market CLO. We preemptively ended the reinvestment period for the CLO at the beginning of the quarter, almost five months before the official excavated broadly syndicated loan prices. Following the volatility in the broadly syndicated loan market after the Liberation Day announcements, we opportunistically reinvested a portion of quality BSL borrowers before the contractual end of the reinvestment period. Going forward, our expectation is that the dividend income attributed to the Logan JV will reduce over time with potential lumpiness in quarter-to-quarter distributed. Once the CLO is fully wound down, we find the joint venture and redeploy the proceeds of the originated investment. The fourth driver was loans we pledged on non-accrual during the quarter, which drove a $0.02 per share decrease in NII on a quarter. As Jason noted in his comments, a diverse portfolio with minimal single obligor consequences. Our gap earnings per share for the first quarter of 2025 was $0.11, but net investment income of shareholders' equity was $727 million, resulting in net asset value per share of $19.60. Now let's shift to our capitalization and liquidity. I'm on slide 19. In December 2024, we priced $115 million of new seniors. $35 million of senior unsecured loan during the first quarter. At the beginning of April, we right-sized our SPB asset facility from $500 million to $400 million and reduced the spread by 50 basis points to $195 million. This facility resizing provides us with, while minimizing interest expense, equity structure reflects our target size and leverage with our current equity base today, and we have ensured that our borrowing capacity is 76% replaced with the weighted average stated interest rate on our total borrowings, former for the SPB facility amendment, the weighted average interest rate. This quarter's net deployment brought our debt-to-equity ratio up from 1.19 times. Additionally, second of three previously announced, CCAP will not pay to turn it back to Jason.

Thank you, Gerhard. Historically, in periods of market volatility, Crescent's focus on disciplined credit underwriting, capital preservation, strong free cash flow generation, and robust. We believe Crescent and CCAP will continue to be on the right side of this performance, and we look forward to delivering on that in the quarter. As always, we thank you for joining our call today and look forward to connecting with many of you soon. And with that, Operator, we can open the line.

We are now opening the floor for question and answer session. If you'd like to ask a question, please press star followed by one on your telephone keypad. That's star followed by one on your telephone keypad. Your first question comes from the line of Paul Johnson of KBW. Your line is now open.

Good afternoon. Thank you for picking my questions. The first one is just on one of the new, it was marked around 71, I believe. Does that reflect the restructuring that was recently announced for that company? And I guess second question, it looks like it might be more of a non-traditional deal for you. It looks like it might be a potentially larger company than what's normal. I guess your idea on that as well.

So we could be in line. Could you, for your second part of the question, could you repeat which company?

The same company, yeah, it's just, you know, correct me if I'm wrong, but it looks like the company might be a little bit larger than what you've traditionally targeted.

I'm just trying to clarify here. New Era on our books has not yet reached. It sounded like you were citing a company that had restructured recently.

There was something going on with that company.

We can certainly reconcile and take it offline with you.

You know, and then I guess just kind of going along with just the non-crules, so I was wondering if you could just kind of tell us maybe about the Creston's just kind of overall approach to working toward the tries fast, the solution to protect value or kind of take the longer game approach here and sort of willing to fight it out to salvage value here. But wondering kind of what's the company in the form of, if we feel like they're equipped to do that and the right group to do that, we will try to be constructive.

And that said, if that is not an available option or it's not, in our view, a value-maximized, a few different alternatives. It could be to organize the company through a balance sheet restructuring and take ownership. We've done all of those things in the past, and I would expect to use all of those options really with the foremost interest.

Yeah, I think just to add to that, you know, one thing that we don't do when it comes to, you know, generally value at one time and factors that we're willing to contribute, as well as capital to the extent that there's some short-term capital needs of the business that we can help solve. So I think to answer the first part of your question,

for all that, for me,

here today, about 8% of the total fair value is acquired. There's really only one, the vast majority.

Your next question comes from the line of Robert Todd of Raymond James. Your line is now open.

Hi, guys. One on Logan first. I mean, can you explain, I mean, And I get you pre-entered the end of the re-investment period, but, I mean, effectively the dividend dropped almost 50% sequentially. I get, you know, it's going to wind down and go ahead, you know, over the next 24 months, right? I mean, I would have expected the dividend to decline over that kind of time period rather than suddenly as soon as the – and then decline further from that lower level. So can you explain, what was the driver of the big sequential decline given, I mean, the fair value of the portfolio was written or the position, the equity position was written up in the quarter versus where it was last quarter. So what was behind that big sequential decline just because the reinvestment period ended?

Yeah, so there's two components. This is Henry. Thanks for the question. There's two components to the Logan dividend. And the tranches of the underlying middle market CLO there provides kind of a stated consistent coupon. And then there's an equity tranche, which pays out based on residual cash flows. The determination date of what the residual cash flows are, there's actually about a month and a half. So as a result, what you'll see is the most kind of lumpy part. We've seen that continue to be the case as the structure delevers. So it's not as if the equity tranche has, I guess, one.

Understood. I mean, and, you know, the equity just distributes your own, roughly speaking, your ownership share of the residual cash flows. But, I mean, did the cash flows within Lugano, Lugano, sorry, got something else on my mind. Did the cash flows within Logan drop materially, right, or was it a timing mismatch? I mean, basically, is the dividend, is this 1.2, kind of for now, like the low, and you could see the equity, is it the low end of the equity volatility range, or it just seems like a pretty big drop, given it doesn't sound like, I mean, we don't see the details of the portfolio of Logan anymore, but it doesn't sound like the portfolio itself. You just sell some assets, but then you reinvest it. I mean, was the income within that vehicle down materially in Q1?

Yes, your observation is correct. The overall holdings of the portfolio and the credit profile did not. You may already be aware that's really the difference. I do think that there is some, we did mention this near-term outlook for Logan, but I think about from now we do expect.

Got it, got it. thank you i appreciate that now on on the non-accruals um uh you know so so you know obviously went up to to three and a half percent on cost basis um and you know two on the same when i look at your internal ratings four and five were under one percent right which was basically what one of non-accruals were at that time so i mean on these new non-accruals was there just zero visibility heading into Q2, that there were no warning signs at all on these new poll matters? I mean, can you give us, you know, any color on that? Because, I mean, obviously, if new non-ocalls aren't visible in the internal risk ratings the quarter before, it does raise the question of are there more to come that we just don't know about and you don't know about yet?

Yeah, that's a fair question. And I think how I'd characterize that is the non-accrual that we designate as non-accrual this quarter, they were all prior watchlist names. So in terms of the concern around did these just come completely out of left field, I would say that's not the case. These are companies that we've kind of noted as watchlist companies. I would say that, you know, when you think about how we determine a company going on non-accrual, do we think that there's sufficient near-term headwinds that sitting here today, we think that there is, I would say that developments.

Got it. Got it. I mean, I think that's being, I mean, flipping it the other way. Were any of those assets that were placed on non-accrual still paying cash interest?

Your next question comes from the line of Finian O'Shea of Wells Fargo. Your line is now open.

Hey, everyone. Good afternoon. And if you could let me know what the take is on the cash interest as well, I'd appreciate it. But sticking with the non-accruals, potentially challenged sectors last quarter, Software wasn't one of them, but three of these were. Now, I know you just sort of outlined to Robert that it was a sort of ongoing determination on their performance, but seeing if anything is going on there, more broadly, if there's a reckoning on these being too far behind, sponsors not supporting, and so forth, just given the concentration in sector and the sort of surprise here. Thanks.

Yeah, and maybe you could clarify the comment on the three being in the names here, and these were all, they're not. Are we seeing something more broadly?

Yeah, I mean, sounds like I have one wrong. But, yeah, I guess sort of still question applies. It's a recent trend we're seeing that a lot of the, let's say, smaller software companies at least are seeing headwinds.

Within the software space, I'd say that to the end kind of demand drivers within specific end market that's serving. The other, which I think Paul referenced as well, when you think of it, there were kind of the MSP spaces.

That's helpful. And then just a small one on the top line, I know you mentioned the one-time items were light. Was there any additional headwind with timing of fundings or spread compression as the portfolio moved? Just seeing if there's any other headwinds on the top. Yeah, well, it just felt like a bit more of a drop than many. I know there's the non-accruals, there's the one-time, but seeing if there's any just, you know, thinking about the sort of exit rate into second quarter, if there were any irregularities in, yeah, deployment, so average portfolio or spread.

Yeah, so Q2, just assuming all else being equal, There should be a spread piece to attract a spread.

Yeah, that was a little bit – spreads were actually a bit wider in terms of deployment platform.

Okay, very good. All for me, thank you so much.

Next question comes from the line of Mickey Schlenk of Landenburg-Fallman. Your line is now open.

Yes, good afternoon. Jason, I wanted to ask you about your sentiment toward the overall market. We've seen, you know, large growth in private PDCs and all that capital that's been introduced into the market. But at the same time, risks have increased. Obviously, volatility has increased. We saw some spread stability. So do you think the market's more imbalanced? And what is your outlook for spreads?

Yeah, thanks a lot, Mickey. market a bit into different sizes of the middle market. Your first comment on the non-traded BDC inflows, that's no doubt significant. I looked at that immediately. What I would say, though, however, is if you think about where the three into managers that are deploying into the upper mid-market, typically companies with EBITDAs north of $200 million. And not necessarily surprising when you're taking in significant inflows, you've got to deploy and scale. But our estimation is 90% of the inflows are focused on the upper mid-market. So that's one piece that I would relay. In terms of outlook and part of the year, and I think there was a fair amount of activity for the balance of the year, That was certainly impacted. I do think that that has translated into a fairly meaningful slowdown in deal activity. What did happen was good companies that still came to market were getting deals done in the private market because the public market was shut for a number of weeks. That has seemed to thaw somewhat at this market is that the focus petition from certainly the non-traded BDCs with the significant inflows. So activity, because CCAP on its own is a $35 billion private credit platform, for CCAP's purposes, we will be very selective.

Jason, if I could follow up, given all the uncertainty that's out there, a lot of folks are focused on follow on investments, you know, basically investing in their existing portfolio, particularly since everyone's chasing anything that doesn't have any tariff risk. So those spreads are probably not as interesting. But another way to invest in your portfolio is to buy back your stock. Is the board, you know, thinking about that? You know, is the discount meaningful enough for that to start to occur? You know, any guidance you could give us on that would be helpful.

Yeah, thanks. Thanks, Mickey. This is something that we continue to evaluate, especially now where our shares are trading at the beginning of the year. The buybacks certainly provide short-term benefit, and I would note that we've always taken a long-term view with CCAP and position, which includes having a stable equity, keep our portfolio invested, earn our dividend, and also mindful of the amount of buybacks we could do given where...

I understand. Those are all my questions. Thank you for your time this afternoon.

Thank you so much. I'd now like to hand back the call over to Jason for final remarks.

Well, thank you, everyone, for the questions. We certainly appreciate your interest in CCAP, and we look forward to speaking.

Thank you for attending today's conference call. You may now disconnect. Goodbye.