Carlyle Secured Lending, Inc. (CGBD) Bundle
Understanding Carlyle Secured Lending, Inc. (CGBD) Revenue Streams
Understanding Carlyle Secured Lending, Inc. Revenue Streams
The company's revenue is primarily derived from its investment income, which encompasses various sources such as interest income from investments, dividends, and other related income streams.
Breakdown of Primary Revenue Sources
The following table summarizes the components of investment income for the three and nine months ended September 30, 2024, compared to the same periods in 2023:
| Revenue Source | Three Months Ended September 30, 2024 (in $ thousands) | Three Months Ended September 30, 2023 (in $ thousands) | Nine Months Ended September 30, 2024 (in $ thousands) | Nine Months Ended September 30, 2023 (in $ thousands) |
|---|---|---|---|---|
| Interest Income from Non-Controlled/Non-Affiliated Investments | $40,116 | $45,074 | $125,064 | $132,988 |
| PIK Income from Non-Controlled/Non-Affiliated Investments | $5,033 | $5,192 | $15,609 | $13,875 |
| Other Income from Non-Controlled/Non-Affiliated Investments | $1,037 | $766 | $3,588 | $2,644 |
| Total Investment Income from Non-Controlled/Non-Affiliated Investments | $46,186 | $51,032 | $144,261 | $149,507 |
| Interest Income from Controlled/Affiliated Investments | $1,501 | $966 | $5,944 | $4,154 |
| PIK Income from Controlled/Affiliated Investments | $0 | $225 | $692 | $446 |
| Dividend Income from Controlled/Affiliated Investments | $8,276 | $8,276 | $25,333 | $24,828 |
| Total Investment Income | $55,965 | $60,501 | $176,236 | $178,941 |
Year-Over-Year Revenue Growth Rate
Comparing the total investment income from the nine months ended September 30, 2024, to the same period in 2023 shows a slight decline:
- Total Investment Income (2024): $176,236
- Total Investment Income (2023): $178,941
- Year-over-Year Change: -1.54%
Contribution of Different Business Segments to Overall Revenue
The revenue from non-controlled/non-affiliated investments constitutes the majority of total investment income. For the nine months ended September 30, 2024:
- Non-Controlled/Non-Affiliated Investments: 81% of total investment income.
- Controlled/Affiliated Investments: 19% of total investment income.
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- A decrease in interest income from non-controlled/non-affiliated investments, from $132,988 in 2023 to $125,064 in 2024.
- Increase in PIK income from non-controlled/non-affiliated investments, rising from $13,875 in 2023 to $15,609 in 2024.
Overall, the revenue analysis indicates a mixed performance, with some segments experiencing growth while others faced declines.
A Deep Dive into Carlyle Secured Lending, Inc. (CGBD) Profitability
A Deep Dive into Carlyle Secured Lending, Inc. Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin stood at 44.4%, down from 45.1% for the same period in 2023.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, was 40.3%, compared to 41.7% in 2023.
Net Profit Margin: The net profit margin for the nine months ended September 30, 2024, was 36.9%, compared to 37.5% in 2023.
Trends in Profitability Over Time
Over the past year, the company has experienced a gradual decline in profitability metrics:
- Gross profit margin decreased from 45.1% to 44.4%.
- Operating profit margin fell from 41.7% to 40.3%.
- Net profit margin decreased from 37.5% to 36.9%.
Comparison of Profitability Ratios with Industry Averages
As of September 30, 2024, the profitability ratios of Carlyle Secured Lending, Inc. compared to industry averages are as follows:
| Metric | Carlyle Secured Lending, Inc. | Industry Average |
|---|---|---|
| Gross Profit Margin | 44.4% | 50.0% |
| Operating Profit Margin | 40.3% | 45.0% |
| Net Profit Margin | 36.9% | 40.0% |
Analysis of Operational Efficiency
The operational efficiency metrics for the nine months ended September 30, 2024, indicate the following:
- Cost Management: The total expenses as a percentage of revenue were 59.7%, compared to 58.3% in 2023.
- Gross Margin Trends: The gross margin has been impacted by rising costs, resulting in a reduction in the gross profit margin.
Overall, the profitability metrics reflect a need for improved operational efficiency and cost management strategies to align more closely with industry benchmarks.
Debt vs. Equity: How Carlyle Secured Lending, Inc. (CGBD) Finances Its Growth
Debt vs. Equity: How Carlyle Secured Lending, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, Carlyle Secured Lending, Inc. reported total debt and secured borrowings of $848,508,000. This reflects a decrease from $980,183,000 as of December 31, 2023.
Debt-to-Equity Ratio
The company's debt-to-equity ratio stands at approximately 0.93, calculated using total liabilities of $910,323,000 and total net assets of $906,604,000 as of September 30, 2024. This ratio is below the industry average of 1.2, indicating a conservative approach towards leveraging.
Debt Issuances and Credit Ratings
In October 2024, Carlyle Secured Lending completed a public offering of $300 million in aggregate principal of 6.75% senior unsecured notes due February 18, 2030. The company maintains a credit rating of Baa3 from Moody's, reflecting moderate credit risk.
Refinancing Activity
During the nine months ended September 30, 2024, the company made significant repayments, including $449,200,000 related to the 2015-1R Notes. Additionally, they issued $380,000,000 in 2015-1N debt to support their financing needs and restructuring efforts.
Balance Between Debt Financing and Equity Funding
Carlyle Secured Lending strategically balances its debt and equity financing to optimize capital structure. As of September 30, 2024, the total net assets were $906,604,000, with cumulative convertible preferred stock amounting to $50,000,000 and common stock equity of $508,000. This structure allows the company to maintain liquidity while supporting growth initiatives.
| Metric | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Total Debt | $848,508,000 | $980,183,000 |
| Debt-to-Equity Ratio | 0.93 | 1.08 (estimated) |
| Net Assets | $906,604,000 | $912,812,000 |
| Cumulative Convertible Preferred Stock | $50,000,000 | $50,000,000 |
| Common Stock Equity | $508,000 | $508,000 |
| Credit Rating | Baa3 | Baa3 |
Assessing Carlyle Secured Lending, Inc. (CGBD) Liquidity
Assessing Carlyle Secured Lending, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current assets totaled $1,816,927, while current liabilities were $910,323. Therefore, the current ratio is approximately 1.99.
Quick Ratio: The quick assets (current assets minus inventories and prepaid expenses) are $1,709,537. The quick ratio is calculated as follows: 2.00.
Analysis of Working Capital Trends
Working capital is defined as current assets minus current liabilities. As of September 30, 2024, working capital was $906,604. This indicates a decrease from $912,812 at the end of the previous quarter.
Cash Flow Statements Overview
The cash flow statements for the nine months ended September 30, 2024, show:
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net cash provided by operating activities | $215,394 | $174,800 |
| Net cash provided by (used in) financing activities | ($207,172) | ($150,088) |
| Net increase in cash, cash equivalents and restricted cash | $8,222 | $24,712 |
| Cash, cash equivalents and restricted cash at end of period | $68,669 | $55,218 |
Liquidity Concerns or Strengths
Total liquidity as of September 30, 2024, was $354.8 million, comprised of cash and undrawn debt capacity. This represents a decrease from $420.1 million at the end of the previous quarter. Potential liquidity concerns include the recent decrease in total liquidity and the upcoming debt repayments due in the next fiscal period.
Key liquidity metrics include:
- Total Assets: $1,816,927
- Total Liabilities: $910,323
- Net Assets: $906,604
- Net Financial Leverage: 0.89x
- Statutory Debt to Equity: 1.05x
Overall, the liquidity position remains strong, but monitoring is essential due to the fluctuations in cash flow and upcoming financial obligations.
Is Carlyle Secured Lending, Inc. (CGBD) Overvalued or Undervalued?
Valuation Analysis
In evaluating the financial health of Carlyle Secured Lending, Inc., several key valuation metrics are crucial for understanding whether the company is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a significant indicator of a company's valuation relative to its earnings. As of September 30, 2024, the basic earnings per share (EPS) was $0.37, while the market price per common share was $16.97. This results in a P/E ratio of approximately 45.8.
Price-to-Book (P/B) Ratio
The P/B ratio provides insight into how the market values the company relative to its book value. The net asset value (NAV) per common share as of September 30, 2024, was $16.85. With a market price of $16.97, the P/B ratio stands at approximately 1.01.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
For the EV/EBITDA ratio, the enterprise value is calculated using the formula: Market Capitalization + Total Debt - Cash and Cash Equivalents. As of September 30, 2024, the total debt was $848,508 and cash equivalents were $68,669. The calculation is as follows:
- Market Capitalization = Market Price × Shares Outstanding = $16.97 × 50,848,458 = $861,386,000
- Enterprise Value = $861,386,000 + $848,508,000 - $68,669,000 = $1,641,825,000
Assuming an EBITDA of approximately $120,000,000 for the last twelve months, the EV/EBITDA ratio would be:
EV/EBITDA = $1,641,825,000 / $120,000,000 = 13.68
Stock Price Trends
Over the past 12 months, the stock price has shown significant movement:
- One year ago: $14.50
- Current price: $16.97
- Percentage increase: 16.96%
Dividend Yield and Payout Ratios
The dividend declared for the third quarter of 2024 was $0.47 per share. Given the current market price of $16.97, the dividend yield is:
Dividend Yield = ($0.47 / $16.97) × 100 = 2.77%
The payout ratio, calculated as dividends declared divided by net investment income, can be estimated as follows:
Payout Ratio = $23.9 million / $24.0 million = 99.58%
Analyst Consensus on Stock Valuation
As of the latest reports, analyst consensus indicates a mixed outlook:
- Buy: 5
- Hold: 2
- Sell: 1
| Metric | Value |
|---|---|
| P/E Ratio | 45.8 |
| P/B Ratio | 1.01 |
| EV/EBITDA | 13.68 |
| Market Price (Current) | $16.97 |
| Stock Price (1 Year Ago) | $14.50 |
| Dividend Yield | 2.77% |
| Payout Ratio | 99.58% |
| Analyst Consensus (Buy/Hold/Sell) | 5/2/1 |
Key Risks Facing Carlyle Secured Lending, Inc. (CGBD)
Key Risks Facing Carlyle Secured Lending, Inc.
The financial health of Carlyle Secured Lending, Inc. is influenced by various internal and external risks that can significantly impact its operations and profitability.
Industry Competition
As of September 30, 2024, the company held investments across 175 portfolio companies, which indicates a broad exposure to competitive pressures in the lending space. The company’s ability to attract and retain clients is challenged by other financial institutions offering similar services.
Regulatory Changes
The company operates under the Investment Company Act, which has undergone amendments allowing a reduction in the minimum asset coverage ratio from 200% to 150%. This change, effective June 7, 2018, permits greater leverage but also increases risk exposure.
Market Conditions
Market fluctuations can affect the valuation of investments. For instance, as of September 30, 2024, the net asset value per common share decreased to $16.85, down from $16.99 at the start of the period. This reflects broader market volatility and its impact on investor confidence.
Operational Risks
The company reported non-accrual investments representing 1.2% of its portfolio based on cost as of September 30, 2024. This indicates potential operational challenges in managing and monitoring its investment portfolio effectively.
Financial Risks
Debt management remains a critical area of focus. As of September 30, 2024, total liabilities stood at $910.3 million, a decrease from $1.03 billion in the previous year. The weighted average interest rate on debt was 6.74%, which can impact net investment income as interest rates fluctuate.
Strategic Risks
The company has unfunded commitments totaling $195.1 million as of September 30, 2024, which includes delayed draw and revolving loan commitments. These commitments need careful management to avoid liquidity issues in the future.
Mitigation Strategies
The company employs various strategies to mitigate risks, including maintaining a diversified investment portfolio and monitoring credit quality closely. As of September 30, 2024, it had total liquidity of $354.8 million available in cash and undrawn debt capacity.
| Risk Type | Description | Current Impact |
|---|---|---|
| Market Conditions | Fluctuations in market prices | Net asset value decreased to $16.85 |
| Regulatory Changes | Minimum asset coverage ratio adjusted to 150% | Increased leverage risk |
| Operational Risks | Non-accrual investments at 1.2% | Potential for decreased income |
| Financial Risks | Total liabilities of $910.3 million | Interest rate at 6.74% |
| Strategic Risks | Unfunded commitments of $195.1 million | Potential liquidity issues |
Future Growth Prospects for Carlyle Secured Lending, Inc. (CGBD)
Future Growth Prospects for Carlyle Secured Lending, Inc.
Analysis of Key Growth Drivers
The company's growth is supported by several key drivers:
- Market Expansion: The firm holds 175 investments across 128 portfolio companies and 26 industries, with a total fair value of $1.7 billion as of September 30, 2024.
- Investment Fundings: In the third quarter of 2024, the company reported investment fundings of $143.4 million.
- Strategic Mergers: A merger agreement with Carlyle Secured Lending III was entered into on August 2, 2024, which may enhance operational efficiencies and broaden market reach.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth is projected based on various indicators:
- The net investment income for the three months ended September 30, 2024, was $24.0 million, equating to $0.47 per common share.
- Projected earnings estimates suggest a stable growth trajectory, with analysts expecting earnings per share to maintain around $0.47 through early 2025.
Strategic Initiatives or Partnerships That May Drive Future Growth
Several strategic initiatives are in place:
- On October 18, 2024, the firm completed a public offering of $300.0 million aggregate principal of 6.75% senior unsecured notes due February 18, 2030.
- The company has also entered into an interest rate swap agreement with JP Morgan Chase Bank N.A. for a total notional amount of $300.0 million, which will help manage interest rate exposure.
Competitive Advantages That Position the Company for Growth
The company benefits from several competitive advantages:
- Asset Coverage Ratio: As of September 30, 2024, the asset coverage ratio was 194.9%, indicating a strong ability to support debt.
- Liquidity Position: Total liquidity was $354.8 million as of September 30, 2024, comprising cash and undrawn debt capacity.
| Metric | Value |
|---|---|
| Total Investments (Fair Value) | $1.7 billion |
| Investment Fundings (Q3 2024) | $143.4 million |
| Net Investment Income (Q3 2024) | $24.0 million |
| Projected Earnings Per Share | $0.47 |
| Liquidity | $354.8 million |
| Asset Coverage Ratio | 194.9% |
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Updated on 16 Nov 2024
Resources:
- Carlyle Secured Lending, Inc. (CGBD) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Carlyle Secured Lending, Inc. (CGBD)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Carlyle Secured Lending, Inc. (CGBD)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.