Crescent Capital BDC, Inc. · NASDAQ:CCAP
Crescent Capital BDC — Investor Presentation (May 2024)
42 slides from Crescent Capital BDC's investor presentation, May 2024
Slide 1: Crescent Capital BDC, Inc. Investor Presentation
Crescent Capital BDC, Inc. Investor Presentation May 2024
Slide 2: Disclaimer and Forward-Looking Statement
Disclaimer and Forward-Looking Statement This presentation (the “Presentation”) has been prepared by Crescent Capital BDC, This Presentation may contain forward-looking statements that involve substantial Inc. (together with its consolidated subsidiaries, “CCAP,” “Crescent BDC” or the risks and unce
Slide 3: Table of Contents
Table of Contents CCAP Overview 4 Crescent Platform 7 Direct Lending Opportunity 13 Investment Philosophy & Process 20 CCAP Portfolio Highlights 28 Capital Structure 34 Appendix 36
Slide 4: CCAP Overview
Current or prospective client name CCAP Overview 4
Slide 5: Crescent Capital BDC, Inc. (CCAP)
Crescent Capital BDC, Inc. (CCAP) Specialty finance company focused on investing in the debt of private U.S. middle-market companies $1,563 Ticker CCAP Exchange NASDAQ Total Net Assets $752 million Net Asset Value per Share $20.28 Total Assets $1.6 billion Debt-to-Equity 1.11x Total Portfolio Invest
Slide 6: Track Record of NAV Stability and Resilience
Track Record of NAV Stability and Resilience Since its inception, CCAP has consistently delivered a stable NAV profile $33.38 $13.10 $19.90 $20.28 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'
Slide 7: Crescent Platform
Current or prospective client name Crescent Platform 7
Slide 8: Why Crescent? Singular Focus on Corporate Credit
Why Crescent? Singular Focus on Corporate Team Credit Continuity Cycle-Tested Fully Track Record Integrated Credit Platform 8
Slide 9: A Leading Specialist Focused Exclusively on Corporate Credit
A Leading Specialist Focused Exclusively on Corporate Credit Crescent seeks to deliver attractive returns with less volatility, lower default rates and higher recovery than the market average • Complementary strategies investing across the debt capital structure of companies of all sizes, in both pr
Slide 10: A Fully Integrated Platform of Complementary Credit Strategies
A Fully Integrated Platform of Complementary Credit Strategies Crescent's private markets sponsor relationships aid tradeable market allocations, and tradeable markets research analysts aid private markets credit underwriting Private Credit Tradeable Credit Direct Lending Strategies Multi-Asset Clas
Slide 11: Investing in Credit Across Market Cycles for More Than Three Decades
Investing in Credit Across Market Cycles for More Than Three Decades 1991 High Yield Strategy launches 1992 First Direct Lending Strategy with focus on junior credit launches 1993 Bank Loan Strategy launches and first CLO closes 2004 2013 European office opens European Senior Direct Lending Strategy
Slide 12: Access to Resources of SLC Management
Access to Resources of SLC Management Crescent focuses on its expertise within its corporate credit niche while benefiting from resources and financial support of a global investment platform 150+ years $277B 750+ 1,400+ Top 100 Of experience Assets Under Investment Clients Served Most sustainable m
Slide 13: The Direct Lending Opportunity
Current or prospective client name The Direct Lending Opportunity 13
Slide 14: Direct Lending Defined
Direct Lending Defined Middle Market Direct Lending is large and growing, with advantages to lenders and borrowers Private Loan Ongoing Relationship Ownership Direct Lender Private Equity Company Sponsor Floating Interest Payments Definition Opportunity Key Characteristics Borrower Benefits A strate
Slide 15: Direct Lending – Why Now?
Direct Lending – Why Now? Private Credit is benefiting from a combination of economic and secular trends Private Equity Demand Shift From Traditional Current Environment for Debt Continues to Bank Lending to Private Presents a Highly Grow Credit Is Accelerating Attractive Entry Point 15
Slide 16: Robust Demand for Middle Market Capital
Robust Demand for Middle Market Capital We believe private equity-backed middle market companies represent a large, attractive lending opportunity Record levels of private equity dry powder is expected to drive robust deal activity(1) Private Equity & Private Credit Dry Powder ($ in billions) Privat
Slide 17: Private Credit Extends Beyond LBOs
Private Credit Extends Beyond LBOs Non-LBO transactions supplement traditional deal flow and expand Private Credit’s opportunity set Refinancings, growth capital, and recaps account for over half of Private Credit volume annually(1) % of Private Credit Deals where Use of Proceeds is Non-LBO 70% 66%
Slide 18: The Industry Is Shifting to Private Credit
The Industry Is Shifting to Private Credit We believe the expanding addressable lending market will provide ample opportunity for Crescent’s Private Credit strategies, inclusive of CCAP, to deploy capital Banks continue to retrench from middle market lending…(1) …with private capital filling the voi
Slide 19: Highly Attractive Entry Point
Highly Attractive Entry Point We believe the current market presents an opportunity for compelling returns Private Credit has historically compared favorably to other credit asset classes…(1) Risk-Return (2004 – Dec. 2023) 12% Public Equities 10% Private Credit (CDLI) Total Return 8% High Yield 6% L
Slide 20: Investment Philosophy & Process
Current or prospective client name Investment Philosophy & Process 20
Slide 21: Underwriting in Today’s Environment
Underwriting in Today’s Environment Historically Recession Resilient Potentially Highly Cash Generative Industries with Prior Investment Business Models Experience Consistent Focus on Preservation of Capital Conservative Structures Stringent Documentation with Attractive Loan-to-Values 21
Slide 22: Mature, Resilient Businesses
Mature, Resilient Businesses We focus on mature companies with annuity-like revenue characteristics and strong cash flows Examples of What We Like Recurring Cash Flows Mission Critical Product or Service Long, Stable Operating History Strong Cash Flow Conversion Examples of Why We Pass Capital Inten
Slide 23: Credit Is in Our DNA…Details Matter
Credit Is in Our DNA…Details Matter Leverage and Covenants don’t always tell the whole story Metric Expectation Reality Crescent Approach Tighter EBITDA Add-backs / Non-Recurring Charges definition can be Pro Forma Adjustments more important than Leverage Can be Low leverage absolute leverage level
Slide 24: Crescent’s Investment Philosophy
Crescent’s Investment Philosophy Utilize a fundamental investment approach to seek out high quality businesses with defensive market positions, sustainable competitive advantages and strong management teams Sourcing & Due Diligence & Structuring & Monitoring & Origination Underwriting Execution Repo
Slide 25: Robust, Proprietary Sourcing
Robust, Proprietary Sourcing Select Sponsor Relationships Private Credit Deal Flow by Year 2,000 1,920 1,830 1,800 1,738 1,532 1,565 1,545 1,600 1,524 1,399 1,400 1,299 1,288 Number of Deals Reviewed 1,165 1,200 1,000 800 735 600 400 200 67 16 37 34 37 30 36 54 38 41 28 38 (4%) (2%) (3%) (3%) (2%) (
Slide 26: Investment Process
Investment Process Crescent employs an established sourcing and investment process Transaction Sourcing Investment & Review hundreds of transactions Crescent/ Sponsors Commercial annually sourced from private equity Other Banks sponsors and financial intermediaries Initial Review by Transaction Team
Slide 27: Active Portfolio Management
Active Portfolio Management Portfolio management begins with loan documentation. Deals typically structured with monthly financials, quarterly maintenance covenants, incurrence tests, and capped baskets for add-backs Daily / Weekly Monthly Quarterly Annual / Ongoing • Real time updates as new • Deta
Slide 28: CCAP Portfolio Highlights
Current or prospective client name CCAP Portfolio Highlights 28
Slide 29: Disciplined Portfolio Construction
Disciplined Portfolio Construction Designed to minimize losses via strong credit and non-credit risk mitigation $1,563mm First Lien (1) Investments at fair value(1) 98% 90% Floating Rate (1),(3) Wtd. Avg. Portfolio Company 183 Attachment Point & Leverage (2),(3),(4),(5) Portfolio 72% 98% companies N
Slide 30: Portfolio Diversity
Portfolio Diversity Diversification by Obligor Diversification by Industry(2) Health Care Equipment & Services Top 10 15% 19% Software & Services 17% Next 11-25 27% Commercial & Professional Services ~$9mm 2% / 0.5% 2% 3% Consumer Services Logan JV 5% Average 1% Insurance Position LLC / LP Investmen
Slide 31: Investment Activity
Investment Activity Conservative investment strategy with 90% of portfolio in first lien loans New Investment Fundings End of Period Investments At Cost. $ in millions At Fair Value. $ in millions $1,566.0 $1,581.0 $1,564.5 $1,582.1 $1,563.3 3% 3% 3% 3% 3% 4% 3% <1% 4% <1% 4% <1% 4% <1% 4% <1% 3% 4%
Slide 32: Portfolio Net Interest Margin
Portfolio Net Interest Margin(1) (2) Weighted Average Yield of Income Producing Securities (at Cost) Weighted Average Spread Over SOFR of Floating Rate Debt Investments Weighted Average Stated Interest Rate on Debt Outstanding 3 Month Term Secured Overnight Financing Rate ("SOFR") 14.0% 12.1% 12.3%
Slide 33: Investment Portfolio Performance Ratings
Investment Portfolio Performance Ratings Internal Performance Rating Migration % of Portfolio at Fair Value 85% 87% 89% 87% 89% 12% 11% 9% 11% 10% 3% 2% 2% 2% 1% Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Internal Performance Ratings 4 & 5 Internal Performance Rating 3 Internal Performance Ratings 1 &
Slide 34: Capital Structure
Current or prospective client name Capital Structure 34
Slide 35: Liquidity Management
Liquidity Management Short term flexibility of $343.6 million of undrawn debt capacity Debt Summary Debt Maturities ($ in millions) ($ in millions) Total Principal Maturity Committed Amount Interest Rate Date Amount Outstanding SPV Asset Facility $500 $308 S+275 3/7/28 $152 SMBC Corporate 385 233 S+
Slide 36: Appendix
Current or prospective client name Appendix 36
Slide 37: Financial Highlights
Financial Highlights $ in millions, except per share data Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Net investment income per share $0.54 $0.56 $0.59 $0.61 $0.63 Net realized gains (losses) per share(1) $0.01 ($0.18) ($0.00) ($0.18) ($0.00) Net unrealized gains (losses) per share(1) ($0.31) $0.23 $0.0
Slide 38: Portfolio Highlights – Selected Metrics
Portfolio Highlights – Selected Metrics $ in millions, except per share data Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Investments at Fair Value $1,566 $1,581 $1,565 $1,582 $1,563 Number of Portfolio Companies 187 187 185 186 183 Median Portfolio Company EBITDA $26 $26 $26 $28 $27 Asset Mix of Investm
Slide 39: Net Asset Value per Share Bridge – Q1 2024
Net Asset Value per Share Bridge – Q1 2024 ($0.41) $0.13 $0.63 ($0.10) $20.28 ($0.00) $20.04 December 31, 2023 Net Regular Supplemental Net Realized Net Change in March 31, 2024 NAV/Share Investment Dividend Dividend Losses on Exits Unrealized NAV/Share Income Distribution Distribution and Sales App
Slide 40: Quarterly Statements of Assets and Liabilities
Quarterly Statements of Assets and Liabilities As of ($ in thousands, except per share data) 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 Assets Investments, at fair value $1,566,045 $1,581,130 $1,564,828 $1,582,075 $1,563,343 Cash, cash equivalents and restricted cash 34,473 21,462 22,755 24,
Slide 41: Operating Results Detail
Operating Results Detail For the Three Months Ended ($ in thousands, except per share data) 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 Investment income Interest & dividend income $39,235 $46,411 $47,754 $49,767 $49,472 Other income 46 330 398 192 889 Total investment income $39,281 $46,741
Slide 42: Additional Footnotes
Additional Footnotes “Robust Demand for Middle Market Capital” Morningstar LSTA U.S. Leveraged Loan Index. “High Yield” is represented by the Bloomberg U.S. Corporate High Yield Index. “Investment Grade Bonds” is 1) Dry powder is defined as the sum of uncalled capital commitments which GPs will repr
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