Blue Owl Capital Corporation Reports Third Quarter Net Investment Income Per Share of $0.49 and NAV Per Share of $15.40; Increases Quarterly Dividend

Download as PDF

Related documents

NEW YORK, Nov. 8, 2023 /PRNewswire/ -- Blue Owl Capital Corporation (NYSE: OBDC, or the "Company") today announced financial results for its third quarter ended September 30, 2023.

THIRD QUARTER 2023 HIGHLIGHTS

  • Third quarter net investment income ("NII") of $0.49 per share, which represents the third consecutive quarter of record NII for the Company
  • As a result, Board declared a third quarter supplemental dividend of $0.08 per share
  • Total dividends for the third quarter were $0.41 per share, which represents a 21% increase from the same period a year ago
  • For the fourth quarter 2023, increased quarterly dividend by $0.02 to $0.35 per share
  • Delivered NII ROE1 of 12.7% in the third quarter, up from 10.2% the prior year
  • Net asset value per share increased to $15.40 compared to $15.26 as of June 30, 2023, which represents the Company's highest NAV since inception

Craig W. Packer, Chief Executive Officer of Blue Owl Capital Corporation commented, "We saw continued strong momentum in the third quarter, delivering excellent credit performance across the portfolio and our third consecutive quarter of record net investment income. These earnings continue to translate into an attractive return on equity of 12.7%, in addition to growing dividend distributions for our shareholders."

Dividend Declarations
The Company's Board of Directors has declared a fourth quarter 2023 dividend of $0.35 per share for stockholders of record as of December 29, 2023, payable on or before January 12, 2024 and a third quarter 2023 supplemental dividend of $0.08 per share for stockholders of record as of November 30, 2023, payable on or before December 15, 2023.

PORTFOLIO AND INVESTING ACTIVITY

For the three months ended September 30, 2023, new investment commitments totaled $500.2 million across seven new portfolio companies and six existing portfolio companies. This compares to $183.0 million for the three months ended June 30, 2023 across five new portfolio companies and six existing portfolio companies.

For the three months ended September 30, 2023, the principal amount of new investments funded was $386.6 million. For this period, the Company had $389.7 million aggregate principal amount in sales and repayments.

For the three months ended June 30, 2023, the principal amount of new investments funded was $169.6 million. For this period, the Company had $566.2 million aggregate principal amount in sales and repayments.

As of September 30, 2023 and June 30, 2023, the Company had investments in 187 portfolio companies with an aggregate fair value of $12.9 billion. As of September 30, 2023, the average investment size in each portfolio company was $69.0 million based on fair value.

As of September 30, 2023, based on fair value, our portfolio consisted of 68.9% first lien senior secured debt investments, 13.8% second lien senior secured debt investments, 2.1% unsecured debt investments, 3.1% preferred equity investments, 9.2% common equity investments, and 2.9% joint ventures.

As of June 30, 2023, based on fair value, our portfolio consisted of 69.1% first lien senior secured debt investments, 14.1% second lien senior secured debt investments, 2.1% unsecured debt investments, 3.1% preferred equity investments, 8.8% common equity investments, and 2.8% joint ventures.

As of September 30, 2023 and June 30, 2023, approximately 82.7% and 83.2% of the portfolio was invested in senior secured debt, respectively. As of September 30, 2023, 97.7% of our debt investments based on fair value in our portfolio were at floating rates.

As of September 30, 2023 and June 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 12.3% and 12.2%, respectively, and the weighted average total yield of accruing debt and income-producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 12.4% and 12.2%, respectively.

As of September 30, 2023, three portfolio companies with an aggregate fair value of $103.0 million were on non-accrual status, representing 0.9% of the total fair value of the debt portfolio.

RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 2023

Investment Income
Investment income increased to $399.0 million for the three months ended September 30, 2023 from $314.1 million for the three months ended September 30, 2022, primarily due to an increase in our portfolio's weighted average yield from 10.0% as of September 30, 2022 to 11.8% as of September 30, 2023, partially offset by a decrease in our debt investments portfolio from $11.7 billion as of September 30, 2022 to $11.2 billion as of September 30, 2023. Included in investment income is dividend income which includes income earned from our controlled, affiliated and non-controlled, affiliated equity investments. Included in interest income are other fees such as prepayment fees and accelerated amortization of upfront fees from unscheduled paydowns. Period over period, income generated from these fees was relatively consistent. Other income decreased period over period due to a decrease in incremental fee income, which are fees that are generally available as a result of closing investments and normally paid at the time of closing. We expect that investment income will vary based on a variety of factors including the pace of our originations and repayments.

Expenses
Total expenses, excluding taxes, increased to $206.2 million for the three months ended September 30, 2023 from $165.7 million for the three months ended September 30, 2022, primarily due to an increase in interest expense and incentive fees. The increase in interest expense was primarily driven by an increase in the average interest rate. As a percentage of total assets, professional fees, directors' fees and other general and administrative expenses remained relatively consistent period over period.

Liquidity and Capital Resources
As of September 30, 2023, we had $432.0 million in cash and restricted cash, $7.2 billion in total principal value of debt outstanding, and $1.4 billion of undrawn capacity on our credit facilities. The Company's weighted average interest rate on debt outstanding was 5.6% and 3.9% for the three months ended September 30, 2023 and September 30, 2022, respectively. Ending net debt to equity was 1.13x and 1.18x as of  September 30, 2023 and September 30, 2022, respectively.

CONFERENCE CALL AND WEBCAST INFORMATION

Conference Call Information:
The conference call will be broadcast live on November 9, 2023 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: 13741060





(1)

NII ROE is calculated as annualized Q3'23 net investment income divided by average Q3'23 and Q2'23 net asset value.

 

FINANCIAL HIGHLIGHTS

For the three months ended

($ in thousands, except per share amounts)

September 30,
2023

June 30, 2023

September 30,
2022

Investments at Fair Value

$           12,896,158

$           12,892,943

$           12,835,918

Total Assets

$           13,461,820

$           13,393,278

$           13,413,191

Net Asset Value Per Share

$                     15.40

$                     15.26

$                     14.85







Investment Income

$                399,022

$                394,223

$                314,053

Net Investment Income

$                190,053

$                186,676

$                146,774

Net Income

$                206,938

$                195,562

$                265,427







Net Investment Income Per Share

$                       0.49

$                       0.48

$                       0.37

Net Realized and Unrealized Gains (and
Losses) Per Share

$                       0.04

$                       0.02

$                       0.30

Net Income Per Share

$                       0.53

$                       0.50

$                       0.67

Distributions Declared from Net Investment
Income Per Share

$                       0.33

$                       0.33

$                       0.31

Supplemental Distributions Declared from
Net Investment Income Per Share

$                       0.08

$                       0.07

$                       0.03

Weighted Average Yield of Accruing Debt
and Income Producing Securities at Fair
Value

12.3 %

12.2 %

10.2 %

Weighted Average Yield of Accruing Debt
and Income Producing Securities at
Amortized Cost

12.4 %

12.2 %

10.2 %

Percentage of Debt Investment
Commitments at Floating Rates

97.7 %

98.1 %

98.3 %

 

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(Amounts in thousands, except share and per share amounts)

September 30, 2023

(Unaudited)

December 31, 2022

Assets



Investments at fair value



Non-controlled, non-affiliated investments (amortized cost of
$11,500,055 and $12,133,062, respectively)

$                11,471,820

$                12,010,369

Non-controlled, affiliated investments (amortized cost of $19,352
and $6,224, respectively)

19,805

6,175

Controlled, affiliated investments (amortized cost of
      $1,303,464, and $906,846, respectively)

1,404,533

993,801

Total investments at fair value (amortized cost of $12,822,871
and $13,046,132, respectively)

12,896,158

13,010,345

Cash (restricted cash of $89,264 and $96,420, respectively)

429,676

444,278

Foreign cash (cost of $2,357 and $809, respectively)

2,354

809

Interest receivable

107,112

108,085

Receivable from a controlled affiliate

22,532

17,709

Prepaid expenses and other assets

3,988

3,627

Total Assets

$                13,461,820

$                13,584,853

Liabilities



Debt (net of unamortized debt issuance costs of $80,535 and
$95,647, respectively)

$                  7,062,399

$                  7,281,744

Distribution payable

128,612

129,517

Management fee payable

47,796

47,583

Incentive fee payable

40,314

34,462

Payables to affiliates

6,292

6,351

Accrued expenses and other liabilities

176,398

202,793

Total Liabilities

7,461,811

7,702,450

Commitments and contingencies (Note 7)



Net Assets



Common shares $0.01 par value, 500,000,000 shares authorized;
389,732,868 and 392,476,687 shares issued and outstanding,
respectively

3,897

3,925

Additional paid-in-capital

5,936,644

5,970,674

Accumulated undistributed (overdistributed) earnings

59,468

(92,196)

Total Net Assets

6,000,009

5,882,403

Total Liabilities and Net Assets

$                13,461,820

$                13,584,853

Net Asset Value Per Share

15.40

14.99

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share and per share amounts)

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,


2023

2022

2023

2022

Investment Income







Investment income from non-controlled, non-affiliated investments:







Interest income

$      307,701

$      240,601

$      894,371

$      655,303

Payment-in-kind interest income

40,925

30,539

128,783

79,698

Dividend income

17,324

14,867

52,764

36,280

Other income

2,332

5,408

12,539

14,794

Total investment income from non-controlled, non-affiliated
investments

368,282

291,415

1,088,457

786,075

Investment income from non-controlled, affiliated investments:







Dividend income

36

—

213

—

Total investment income from non-controlled, affiliated investments

36

—

213

—

Investment income from controlled, affiliated investments:







Interest income

5,717

2,140

13,944

5,767

Payment-in-kind interest income

773

—

773

—

Dividend income

24,032

20,303

66,720

59,136

Other Income

182

195

760

520

Total investment income from controlled, affiliated investments

30,704

22,638

82,197

65,423

Total Investment Income

399,022

314,053

1,170,867

851,498

Expenses







Interest expense

110,445

81,210

324,416

209,935

Management fees

47,796

46,886

143,911

141,172

Performance based incentive fees

40,314

31,134

117,640

83,630

Professional fees

3,890

3,788

11,697

11,022

Directors' fees

445

276

960

832

Other general and administrative

3,349

2,381

9,158

6,656

Total Operating Expenses

206,239

165,675

607,782

453,247

Net Investment Income (Loss) Before Taxes

192,783

148,378

563,085

398,251

Income tax expense (benefit), including excise tax expense


2,730

1,604

8,495

3,998

Net Investment Income (Loss) After Taxes

$      190,053

$      146,774

$      554,590

$      394,253

Net Realized and Change in Unrealized Gain (Loss)







Net change in unrealized gain (loss):







Non-controlled, non-affiliated investments

$        22,371

$        75,368

$        91,855

$    (147,545)

Non-controlled, affiliated investments

507

—

502

—

Controlled, affiliated investments

(2,076)

47,026

14,113

31,632

Translation of assets and liabilities in foreign currencies

(2,292)

(3,807)

278

(7,510)

Income tax (provision) benefit

(1,521)

—

(4,217)

—

Total Net Change in Unrealized Gain (Loss)

16,989

118,587

102,531

(123,423)

Net realized gain (loss):







Non-controlled, non-affiliated investments

235

201

353

4,853

Non-controlled, affiliated investments

—

—

(52,482)

—

Foreign currency transactions

(339)

(135)

(647)

(1,218)

Total Net Realized Gain (Loss)

(104)

66

(52,776)

3,635

Total Net Realized and Change in Unrealized Gain (Loss)

16,885

118,653

49,755

(119,788)

Net Increase (Decrease) in Net Assets Resulting from Operations

$      206,938

$      265,427

$      604,345

$      274,465

Earnings Per Share - Basic and Diluted

$            0.53

$            0.67

$            1.55

$            0.70

Weighted Average Shares Outstanding - Basic and Diluted

389,703,612

393,823,013

390,223,606

394,103,935

 

PORTFOLIO AND INVESTMENT ACTIVITY

For the Three Months Ended 
September 30,

($ in thousands)

2023

2022

New investment commitments


Gross originations

$                   510,987

$                   427,436

Less: Sell downs

(10,803)

—

Total new investment commitments

$                   500,184

$                   427,436

Principal amount of investments funded:


First-lien senior secured debt investments

$                   363,504

$                   230,494

Second-lien senior secured debt investments

—

—

Unsecured debt investments

—

—

Preferred equity investments

—

24,716

Common equity investments

22,266

17,047

Joint ventures(3)

875

31,500

Total principal amount of investments funded

$                   386,645

$                   303,757

Principal amount of investments sold or repaid:


First-lien senior secured debt investments

$                 (342,060)

$                 (206,828)

Second-lien senior secured debt investments

(42,663)

—

Unsecured debt investments

—

(22,433)

Preferred equity investments

(4,963)

—

Common equity investments

—

—

Joint ventures(3)

—

—

Total principal amount of investments sold or repaid

$                 (389,686)

$                 (229,261)

Number of new investment commitments in new
portfolio companies(1)

7

13

Average new investment commitment amount

$                     61,240

$                     25,296

Weighted average term for new debt investment
commitments (in years)

4.3

6.0

Percentage of new debt investment commitments at

   floating rates

92.2 %

80.8 %

Percentage of new debt investment commitments at

   fixed rates

7.8 %

19.2 %

Weighted average interest rate of new debt investment

   commitments(2)

11.7 %

10.5 %

Weighted average spread over applicable base rate of
new floating rate debt investment commitments

6.3 %

6.3 %








(1)

Number of new investment commitments represents commitments to a particular portfolio company.

(2)

For the three months ended September 30, 2023, assumes each floating rate commitment is subject to the greater of the interest rate floor (if applicable) or 3-month SOFR, which was 5.40% as of September 30, 2023. For the three months ended September 30, 2022, assumes each floating rate commitment is subject to the greater of the interest rate floor (if applicable) or 3-month SOFR, which was 3.59% as of September 30, 2022.

(3)

This was disclosed as "Investment funds and vehicles" as of September 30, 2022.

ABOUT BLUE OWL CAPITAL CORPORATION

Blue Owl Capital Corporation (NYSE: OBDC) is a specialty finance company focused on lending to U.S. middle-market companies. As of September 30, 2023, OBDC had investments in 187 portfolio companies with an aggregate fair value of $12.9 billion. OBDC has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. OBDC is externally managed by Blue Owl Credit Advisors LLC, an SEC-registered investment adviser that is an indirect affiliate of Blue Owl Capital Inc. ("Blue Owl") (NYSE: OWL) and is a part of Blue Owl's Credit platform.

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 Clarkson
pro-blueowl@prosek.com 

Cision View original content:https://www.prnewswire.com/news-releases/blue-owl-capital-corporation-reports-third-quarter-net-investment-income-per-share-of-0-49-and-nav-per-share-of-15-40-increases-quarterly-dividend-301982373.html

SOURCE Blue Owl Capital Corporation

Released November 8, 2023