Declares Fourth Quarter 2024 Base Dividend of $0.42 Per Share with Supplemental Dividend Expected to be Announced in December
MISSION WOODS, Kan., November 05, 2024--(BUSINESS WIRE)--Palmer Square Capital BDC Inc. (NYSE: PSBD) ("PSBD" or the "Company"), an externally managed business development company, today announced its financial results for the third quarter ended September 30, 2024.
Financial and Operating Highlights
Total investment income of $37.3 million for the third quarter of 2024, compared to $28.8 million for the prior year period
Net investment income of $15.7 million or $0.48 per share for the third quarter of 2024, as compared to $14.8 million or $0.57 per share for the comparable period last year
Net asset value of $16.61 per share as of September 30, 2024, compared to $16.85 per share as of June 30, 2024
Total net realized and unrealized losses of $8.2 million for the third quarter of 2024, compared to gains of $19.0 million in the third quarter of 2023
As of September 30, 2024, total assets were $1.4 billion and total net assets were $541.9 million
Debt-to-equity as of September 30, 2024 was 1.52x, compared to 1.49x as of June 30, 2024
Paid cash distributions to stockholders totaling $0.47 per share for the third quarter of 2024
Declared a fourth quarter regular base dividend distribution of $0.42 per share payable on January 13, 2025 to shareholders of record as of December 27, 2024. In accordance with our dividend policy, we expect to announce a supplemental dividend in December
In the third quarter, we had only $205 thousand of PIK income, or 0.5% of total investment income
"Palmer Square Capital BDC delivered strong third quarter earnings results as we continue to execute our differentiated, opportunistic strategy that allows us to invest across the syndicated, structured and direct lending credit markets to seek out the best relative returns on behalf of our investors," said Christopher D. Long, Chairman and Chief Executive Officer of PSBD. "During the quarter, we invested in a wide range of high quality borrowers across the primary and secondary markets. As we look ahead, we believe our more liquid investment approach relative to other BDC peers puts us in a position of strength as we can not only capitalize on new deal activity, but also trade the portfolio to take advantage of spread movements. We believe PSBD’s ability to act quickly across liquid and private markets will continue to drive shareholder value."
$ in thousands, except per share data
For the Quarter Ended
Financial Highlights
9/30/2024
6/30/2024
9/30/2023
Net Investment Income Per Share1
$0.48
$0.48
$0.57
Net Investment Income
$15,729
$15,758
$14,804
NAV Per Share
$16.61
$16.85
$16.76
Dividends Earned Per Share2
$0.47
$0.47
$0.56
Portfolio Highlights
9/30/2024
6/30/2024
9/30/2023
Total Fair Value of Investments
$1,389,801
$1,431,577
$1,104,713
Number of Industries
39
39
40
Number of Portfolio Companies
212
209
184
Portfolio Yield3
10.48%
9.82%
11.47%
Senior Secured Loan4
96%
96%
97%
Investments on Non-Accrual
0.26%
0%
0%
Total Return5
1.43%
1.00%
7.97%
Debt-to-Equity
1.52x
1.49x
1.42x
1.
Net investment income for the period divided by the weighted average share count for the period.
2.
Dividend amount reflects dividend earned in period.
3.
Weighted average total yield of debt and income producing securities at fair value.
4.
As a percentage of long-term investments, at fair value.
5.
As a percentage of total investments, at fair value.
6.
Total return is calculated as the change in net asset value ("NAV") per share during the period, plus distributions per share (if any), divided by the beginning NAV per share. Total return is not annualized. Assumes reinvestment of distributions.
Portfolio and Investment Activity
As of September 30, 2024, we had 258 investments in 212 portfolio companies with an aggregate fair value of approximately $1.3 billion. Based on a total fair value of $1.4 billion, including short term investments, the portfolio consisted of 87.1% first lien senior secured debt investments, 6.2% second lien senior secured debt investments, 3.2% short-term investments, 3.1% collateralized loan obligation structured credit funds ("CLOs") mezzanine and equity investments, 0.3% corporate bond investments, and 0.1% equity investments.
As of September 30, 2024, 99% of the long-term investments based on fair value in our portfolio were at floating rates. At the end of the third quarter, 99.74% of the portfolio at fair value was income producing. There were two loans on non-accrual status. As of September 30, 2024, the weighted average total yield to maturity of debt and income producing securities at fair value was 10.48%, and weighted average total yield to maturity of debt and income producing securities at amortized cost was 9.41%. For the third quarter of 2024, the principal amount of new investments funded was $66.2 million which included 21 investments at an average value of approximately 2.7 million. For this period, the Company had $82.8 million aggregate principal amount in sales and repayments.
Liquidity and Capital Resources
As of September 30, 2024, the Company had $1.8 million in cash and cash equivalents and approximately $824.4 million in total aggregate principal amount of debt outstanding. Subject to borrowing base and other restrictions, the Company had available liquidity, consisting of cash and undrawn capacity on credit facilities of approximately $181.1 million compared to $19.6 million of undrawn investment commitments as of September 30, 2024.
Recent Developments
On November 5, 2024, PSBD’s Board of Directors announced that it had declared a fourth quarter regular base dividend distribution of $0.42 per share payable on January 13, 2025, to shareholders of record as of December 27, 2024. We expect to announce an additional quarterly supplemental dividend distribution for the fourth quarter of 2024 in December.
Earnings Conference Call
The Company will host a conference call on Tuesday, November 5, 2024 at 1:00 pm ET to review its financial performance and conduct a question-and-answer session. To participate in the earnings call, participants should register online at the Palmer Square Investor Relations website. To avoid potential delays, please join at least 10 minutes prior to the start of the call. The conference call can be accessed through the following links:
A replay of the live conference call will be available shortly after the conclusion of the event and accessible on the events and presentations section of the Palmer Square Investor Relations website.
About Palmer Square Capital BDC Inc.
Palmer Square Capital BDC Inc. (NYSE: PSBD) is an externally managed, non-diversified closed-end management investment company that primarily lends to and invests in corporate debt loans, including but not limited to large private U.S. companies in the broadly syndicated loan market, as well as the direct large cap private credit market. PSBD has elected to be regulated as a business development company under the Investment Company Act of 1940. PSBD’s investment objective is to maximize total return, comprised of current income and capital appreciation. PSBD’s current investment focus is guided by two strategies that facilitate its investment opportunities and core competencies: (1) investing in corporate debt loans and, to a lesser extent, (2) investing in other debt securities which may include collateralized loan obligation debt and equity. PSBD’s investment activities are managed by its investment adviser, Palmer Square BDC Advisor LLC, an affiliate of Palmer Square Capital Management LLC.
Forward-Looking Statements
Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. The forward-looking statements may include statements as to our future base and supplemental dividend distributions and the prospects of our portfolio companies. These and other forward-looking statements can be identified by the use of forward-looking terminology such as "may," "will," "should," "seek," "expect," "anticipate," "project," "estimate," "intend," "continue," "target," or "believe" or the negatives thereof or other variations thereon or comparable terminology. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in PSBD’s filings with the SEC. PSBD undertakes no duty to update any forward-looking statement made herein unless required by law. All forward-looking statements speak only as of the date of this press release. Although PSBD undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that PSBD may make directly to you or through reports that in the future may be filed with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
Financial Highlights
For the Nine Months Ended
September 30,
2024
2023
Per Common Share Operating Performance
Net Asset Value, Beginning of Period
$
17.04
$
14.96
Results of Operations:
Net Investment Income(1)
1.48
1.68
Net Realized and Unrealized Gain (Loss) on Investments(4)
(0.48
)
1.74
Net Increase (Decrease) in Net Assets Resulting from Operations
1.00
3.42
Distributions to Common Stockholders
Distributions from Net Investment Income
(1.43
)
(1.62
)
Net Decrease in Net Assets Resulting from Distributions
(1.43
)
(1.62
)
Net Asset Value, End of Period
$
16.61
$
16.76
Shares Outstanding, End of Period
32,623,502
26,665,813
Ratio/Supplemental Data
Net assets, end of period
$
541,937,155
$
446,859,594
Weighted-average shares outstanding
32,260,537
25,359,324
Total Return(3)
6.23
%
23.20
%
Portfolio turnover
23
%
19
%
Ratio of operating expenses to average net assets without waiver(2)
14.72
%
13.18
%
Ratio of operating expenses to average net assets with waiver(2)
14.70
%
12.93
%
Ratio of net investment income (loss) to average net assets without waiver(2)
11.54
%
13.59
%
Ratio of net investment income (loss) to average net assets with waiver(2)
11.55
%
13.84
%
(1)
The per common share data was derived by using weighted average shares outstanding.
(2)
The ratios reflect an annualized amount.
(3)
Total return is calculated as the change in net asset value ("NAV") per share during the period, plus distributions per share (if any), divided by the beginning NAV per share. Total return is not annualized. Assumes reinvestment of distributions.
(4)
Realized and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the Consolidated Statements of Operations due to share transactions during the period.
Palmer Square Capital BDC Inc.
Consolidated Statement of Assets and Liabilities
September 30,
2024
(Unaudited)
December 31,
2023
Assets:
Non-controlled, non-affiliated investments, at fair value (amortized cost of $1,433,876,560 and $1,159,135,422, respectively)
$
1,389,801,144
$
1,108,810,753
Cash and cash equivalents
1,785,799
2,117,109
Receivables:
Receivable for sales of investments
8,647,655
97,141
Receivable for paydowns of investments
840,486
344,509
Due from investment adviser
108,225
1,718,960
Dividend receivable
158,001
301,637
Interest receivable
12,071,303
8,394,509
Prepaid expenses and other assets
139,514
30,100
Total Assets
$
1,413,552,127
$
1,121,814,718
Liabilities:
Credit facilities (net of deferred financing costs of $5,775,000 and $3,211,510, respectively) (Note 6)
$
518,483,459
$
641,828,805
Notes (net of deferred financing costs of $1,783,958) (Note 6)
305,928,313
—
Payables:
Payable for investments purchased
26,123,384
14,710,524
Distributions payable
15,333,270
—
Management fee payable
2,424,412
2,252,075
Incentive fee payable
2,229,576
—
Accrued other general and administrative expenses
1,092,558
1,067,921
Total Liabilities
$
871,614,972
$
659,859,325
Commitments and contingencies (Note 9)
Net Assets:
Common Shares, $0.001 par value; 450,000,000 shares authorized; 32,623,502 and 27,102,794 as of September 30, 2024 and December 31, 2023, respectively issued and outstanding
$
32,624
$
27,103
Additional paid-in capital
611,482,028
520,663,106
Total distributable earnings (accumulated deficit)
(69,577,497
)
(58,734,816
)
Total Net Assets
$
541,937,155
$
461,955,393
Total Liabilities and Net Assets
$
1,413,552,127
$
1,121,814,718
Net Asset Value Per Common Share
$
16.61
$
17.04
The accompanying notes are an integral part of these consolidated financial statements.
(Note 6)
Security or portion thereof held within Palmer Square BDC Funding I, LLC ("PS BDC Funding") and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Bank of America, N.A. ("BofA N.A.") (see Note 6 to the consolidated financial statements).
(Note 9)
As of September 30, 2024 and December 31, 2023, the Company had an aggregate of $19.6 million and $20.1 million, respectively, of unfunded commitments to provide debt financing to its portfolio companies. As of each of September 30, 2024 and December 31, 2023, there were no capital calls or draw requests made by the portfolio companies to fund these commitments. Such commitments are generally up to the Company’s discretion to approve or are subject to the satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Company’s consolidated statements of assets and liabilities and are not reflected in the Company’s consolidated statements of assets and liabilities.
Palmer Square Capital BDC Inc.
Consolidated Statement of Operations
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2024
2023
2024
2023
Income:
Investment income from non-controlled, non-affiliated investments:
Interest income
$
35,775,337
$
27,323,754
$
104,261,540
$
78,943,113
Dividend income
599,667
1,297,090
2,659,394
3,115,974
Payment-in-kind interest income
204,826
—
439,129
—
Other income
726,171
152,846
1,280,377
341,968
Total investment income from non-controlled, non-affiliated investments
37,306,001
28,773,690
108,640,440
82,401,055
Total Investment Income
37,306,001
28,773,690
108,640,440
82,401,055
Expenses:
Incentive fees
2,229,576
—
6,404,282
—
Interest expense
15,670,636
11,500,504
43,846,496
32,697,517
Management fees
2,424,412
2,197,758
7,290,730
6,155,999
Professional fees
318,504
143,560
954,527
562,835
Directors fees
37,705
18,904
112,295
56,096
Other general and administrative expenses
896,437
383,771
2,277,810
1,101,395
Total Expenses
21,577,270
14,244,497
60,886,140
40,573,842
Less: Management fee waiver (Note 3)
—
(274,720
)
(50,511
)
(769,500
)
Net expenses
21,577,270
13,969,777
60,835,629
39,804,342
Net Investment Income (Loss)
15,728,731
14,803,913
47,804,811
42,596,713
Realized and unrealized gains (losses) on investments and foreign currency transactions
Net realized gains (losses):
Non-controlled, non-affiliated investments
(7,119,299
)
(2,103,618
)
(18,267,554
)
(2,423,632
)
Total net realized gains (losses)
(7,119,299
)
(2,103,618
)
(18,267,554
)
(2,423,632
)
Net change in unrealized gains (losses):
Non-controlled, non-affiliated investments
(1,054,247
)
21,152,793
6,210,881
45,708,992
Total net change in unrealized gains (losses)
(1,054,247
)
21,152,793
6,210,881
45,708,992
Total realized and unrealized gains (losses)
(8,173,546
)
19,049,175
(12,056,673
)
43,285,360
Net Increase (Decrease) in Net Assets Resulting from Operations
$
7,555,185
$
33,853,088
$
35,748,138
$
85,882,073
Per Common Share Data:
Basic and diluted net investment income per common share
$
0.48
$
0.57
$
1.48
$
1.68
Basic and diluted net increase (decrease) in net assets resulting from operations
$
0.23
$
1.30
$
1.11
$
3.39
Weighted Average Common Shares Outstanding - Basic and Diluted
32,613,897
26,016,761
32,260,537
25,359,324
The accompanying notes are an integral part of these consolidated financial statements.
(Note 3)
Prior to the IPO, the base management fee was 2.00% of the average value of the weighted average (based on the number of shares outstanding each day in the quarter) of the Company’s total net assets at the end of the two most recently completed calendar quarters. The Investment Advisor, however, during any period prior to the IPO, agreed to waive its right to receive management fees in excess of an annual rate of 1.75% of the average value of the weighted average total net assets at the end of each of our two most recently completed calendar quarters. The Investment Advisor will not be permitted to recoup any base management fees waived for any period of time prior to the IPO.
Palmer Square Capital BDC Inc.
Portfolio and Investment Activity
For the Three Months Ended
September 30,
For the Nine Months Ended September 30,
2024
2023
2024
2023
New investments:
Gross investments
$
66,239,961
$
78,271,670
$
602,024,188
$
188,402,217
Less: sold investments
(82,822,220
)
(58,480,713
)
(292,405,569
)
(194,434,792
)
Total new investments
(16,582,259
)
19,790,957
309,618,619
(6,032,575
)
Principal amount of investments funded:
First-lien senior secured debt investments
$
62,171,592
$
74,412,920
$
526,804,513
$
184,543,467
Second-lien senior secured debt investments
4,068,369
3,858,750
46,292,869
3,858,750
Convertible bonds
—
—
4,095,000
—
Collateralized securities and structured products - debt
—
—
23,573,612
—
Common stock
—
—
1,258,194
Total principal amount of investments funded
66,239,961
78,271,670
602,024,188
188,402,217
Principal amount of investments sold or repaid:
First-lien senior secured debt investments
$
75,231,088
$
57,657,965
$
253,203,637
$
184,842,717
Second-lien senior secured debt investments
1,200,000
13,549
19,654,359
5,013,549
Corporate Bonds
4,020,000
—
4,020,000
—
CLO Equity
1,121,132
809,199
9,027,573
1,699,051
Collateralized securities and structured products - debt
1,250,000
—
6,500,000
2,879,475
Total principal amount of investments sold or repaid
82,822,220
58,480,713
292,405,569
194,434,792
For the Three Months Ended
September 30,
For the Nine Months Ended September 30,
2024
2023
2024
2023
Number of new investment commitments
21
20
78
45
Average new investment commitment amount
$
2,717,288
$
2,889,085
$
4,157,481
$
3,517,770
Weighted average maturity for new investment commitments
5.29 years
5.61 years
5.6 years
4.91 years
Percentage of new debt investment commitments at floating rates
100.00
%
100.00
%
100.00
%
100.00
%
Percentage of new debt investment commitments at fixed rates
0.00
%
0.00
%
0.00
%
0.00
%
Weighted average interest rate of new investment commitments(1)
9.07
%
10.00
%
9.58
%
10.24
%
Weighted average spread over reference rate of new floating rate investment commitments(2)
4.17
%
4.57
%
4.63
%
4.82
%
Weighted average interest rate on long-term investments sold or paid down
9.50
%
10.15
%
10.22
%
9.49
%
(1)
New CLO equity investments do not have an ascribed interest rate and are therefore excluded from the calculation.
(2)
Variable rate loans bear interest at a rate that may be determined by reference to either a) LIBOR (which can include one-, two-, three- or six-month LIBOR) or b) the CME Term Secured Overnight Financing Rate ("SOFR" or "S") (which can include one-, three-, or six-month SOFR), which resets periodically based on the terms of the loan agreement. At the borrower’s option, loans may instead reference an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate), which also resets periodically based on the terms of the loan agreements. Loans that reference SOFR may include a Credit Spread Adjustment ("CSA"), where the CSA is a defined additional spread amount based on the tenor of SOFR the borrower selects (making the reference rate S+CSA).
