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Blue Owl Capital Corp, Blue Owl Capital Corporation III, Blue Owl Capital Inc

Blue Owl Capital Corporation Reports Third Quarter Net Investment Income Per Share of $0.47 and Net Asset Value Per Share of $15.28

NEW YORK , Nov. 6, 2024 /PRNewswire/ -- Blue Owl Capital Corporation (NYSE: OBDC, or the "Company") today announced financial results for its third quarter ended September 30, 2024.

THIRD QUARTER 2024 HIGHLIGHTS

  • Third quarter net investment income ("NII") per share of $0.47, exceeding the regular dividend of $0.37 per share by 27% and generating an ROE of 12.4%
  • Based on OBDC's supplemental dividend framework, the Board of Directors (the "Board") declared a third quarter supplemental dividend of $0.05 per share
  • Total dividends for the third quarter were $0.42 per share, representing an 11.0% annualized dividend yield based on third quarter net asset value ("NAV") per share
  • NAV per share of $15.28, as compared with $15.36 as of June 30, 2024
  • Originations for the third quarter were $1.2 billion, offset by $1.1 billion of sales and repayments, as compared with $3.3 billion of originations and $1.1 billion of sales and repayments for the three months ended June 30, 2024
  • Investments on non-accrual decreased to 0.7% of the total fair value of the debt portfolio, as compared with 1.4% as of June 30, 2024

"OBDC produced another quarter of strong earnings and generated a 12.4% return on equity, supported by the quality of our portfolio and robust origination activity," commented Craig W. Packer, Chief Executive Officer. "We are pleased with how OBDC is positioned for the evolving economic environment and remain confident that our scale will continue to serve as a competitive advantage moving forward."

Merger Update
 On August 7, 2024, OBDC entered into an agreement to merge with Blue Owl Capital Corporation III (NYSE: OBDE), an affiliated business development company managed by Blue Owl Diversified Credit Advisors, LLC, with the Company as the surviving entity.

On August 16, 2024, the Company filed a preliminary registration statement on Form N-14, which included a joint proxy statement of the Company and OBDE and the Company's prospectus. On October 11, 2024, the Company filed an amended registration statement on Form N-14. The registration statement was declared effective by the SEC on October 21, 2024, and the special meetings for each of the Company's and OBDE's shareholders are scheduled for January 8, 2025. The merger is expected to close shortly after the special meetings, subject to shareholder approvals and other customary closing conditions.

Dividend Declarations
 The Company's Board declared a fourth quarter 2024 regular dividend of $0.37 per share for stockholders of record as of December 31, 2024, payable on or before January 15, 2025.

The Board also declared a third quarter 2024 supplemental dividend of $0.05 per share for stockholders of record as of November 29, 2024, payable on or before December 13, 2024.

PORTFOLIO AND INVESTING ACTIVITY

For the three months ended September 30, 2024, new investment commitments totaled $1.2 billion across 23 new portfolio companies and 14 existing portfolio companies. This compares to $3.3 billion for the three months ended June 30, 2024 across 25 new portfolio companies and 24 existing portfolio companies.

For the three months ended September 30, 2024, the principal amount of new investments funded was $1.1 billion. For this period, the Company had $1.1 billion aggregate principal amount in sales and repayments.

For the three months ended June 30, 2024, the principal amount of new investments funded was $2.3 billion. For this period, the Company had $1.1 billion aggregate principal amount in sales and repayments.

As of September 30, 2024 and June 30, 2024, the Company had investments in 219 and 212 portfolio companies with an aggregate fair value of $13.4 billion and $13.3 billion, respectively. As of September 30, 2024, the average investment size in each portfolio company was $61.4 million based on fair value.

As of September 30, 2024, based on fair value, the portfolio consisted of 75.9% first lien senior secured debt investments, 5.4% second lien senior secured debt investments, 2.3% unsecured debt investments, 2.9% joint ventures, 2.9% preferred equity investments, and 10.6% common equity investments.

As of June 30, 2024, based on fair value, the portfolio consisted of 75.4% first lien senior secured debt investments, 6.3% second lien senior secured debt investments, 2.2% unsecured debt investments, 2.9% joint ventures, 2.9% preferred equity investments, and 10.3% common equity investments.

As of September 30, 2024 and June 30, 2024, approximately 81.3% and 81.7% of the portfolio was invested in secured debt, respectively. As of September 30, 2024, 96.3% of the debt investments based on fair value in the portfolio were at floating rates.

As of September 30, 2024 and June 30, 2024, 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 11.5% and 11.9%, 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 11.6% and 12.0%, respectively.

As of September 30, 2024, loans on non-accrual represented 0.7% of the total fair value of the debt portfolio.

RESULTS OF OPERATIONS FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2024

Investment Income
 Investment income increased to $406.0 million for the three months ended September 30, 2024 from $399.0 million for the same period in the prior year primarily due to higher dividend income and was partially offset by a decrease in the yield of our debt investment portfolio. Dividend income increased period-over-period primarily due to an increase in dividends earned from the Company's controlled, affiliated and non-controlled, affiliated equity investments. Other income increased period-over-period primarily due to higher incremental fee income, which are fees received and recognized to OBDC upon closing investments and normally paid at the time of closing. The Company expects that investment income will vary based on a variety of factors including the pace of our originations and repayments.

Expenses
 Total expenses increased to $217.6 million for the period ended September 30, 2024 compared to $206.2 million in the same period in the prior year primarily due to an increase in interest expense and average daily borrowings. As a percentage of total assets, management fees, professional fees, directors' fees and other general and administrative expenses remained relatively consistent period-over-period.

Liquidity and Capital Resources
 As of September 30, 2024, the Company had $481.3 million in cash and restricted cash, $7.8 billion in total principal value of debt outstanding, and $1.6 billion of undrawn capacity on the Company's credit facilities. The Company's weighted average interest rate on debt outstanding was 5.8% and 5.6% for the three months ended September 30, 2024 and June 30, 2024, respectively. Ending net debt-to-equity was 1.23x and 1.20x as of September 30, 2024 and June 30, 2024, respectively.

CONFERENCE CALL AND WEBCAST INFORMATION

Conference Call Information:
 The conference call will be broadcast live on November 7, 2024 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: 13748669

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, 2024, OBDC had investments in 219 portfolio companies with an aggregate fair value of $13.4 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:
 BDC Investor Relations
Michael Mosticchio
credit-ir@blueowl.com

Media Contact:
 Prosek Partners
Josh Clarkson
pro-blueowl@prosek.com

FINANCIAL HIGHLIGHTS



For the Three Months Ended

($ in thousands, except per share amounts)

September 30,
2024

June 30,
2024


September 30,
2023

Investments at Fair Value

$           13,447,536

$         13,341,982


$      12,896,158

Total Assets

$           14,090,780

$         13,866,620


$      13,461,820

Net Asset Value Per Share

$                    15.28

$                  15.36


$               15.40






Investment Income

$                406,029

$              396,760


$           399,022

Net Investment Income

$                184,912

$              189,134


$           190,053

Net Income

$                135,358

$              122,220


$           206,938






Net Investment Income Per Share

$                      0.47

$                    0.48


$                 0.49

Net Realized and Unrealized Gains (and Losses)
Per Share

$                     (0.13)

$                   (0.17)


$                 0.04

Net Income Per Share

$                      0.35

$                    0.31


$                 0.53

Distributions Declared from Net Investment
Income Per Share

$                      0.37

$                    0.37


$                 0.33

Supplemental Distributions Declared from Net
Investment Income Per Share

$                      0.05

$                    0.06


$                 0.08

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

11.5 %

11.9 %


12.3 %

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

11.6 %

12.0 %


12.4 %

Percentage of Debt Investment Commitments at
Floating Rates

96.3 %

96.5 %


97.7 %

 

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

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




September 30, 2024
(Unaudited)


December 31, 2023

Assets





Investments at fair value





Non-controlled, non-affiliated investments (amortized cost of
     $11,729,785 and $11,271,962, respectively)


$                11,710,694


$              11,264,956

Non-controlled, affiliated investments (amortized cost of
     $97,711 and $19,004, respectively)


98,967


19,988

Controlled, affiliated investments (amortized cost of
     $1,572,894 and $1,341,236, respectively)


1,637,875


1,428,404

Total investments at fair value (amortized cost of $13,400,390
     and $12,632,202, respectively)


13,447,536


12,713,348

Cash (restricted cash of $54,553 and $87,067, respectively)


479,477


658,702

Foreign cash (cost of $1,826 and $946, respectively)


1,838


956

Interest receivable


121,082


112,260

Receivable from a controlled affiliate


24,244


22,978

Prepaid expenses and other assets


16,603


3,152

Total Assets


$                14,090,780


$               13,511,396

Liabilities





Debt (net of unamortized debt issuance costs of $80,810 and
     $81,492, respectively)


$                  7,741,075


$                 7,077,088

Distribution payable


144,380


136,407

Management fee payable


49,264


47,711

Incentive fee payable


39,224


42,217

Payables to affiliates


10,719


3,835

Accrued expenses and other liabilities


144,269


182,745

Total Liabilities


8,128,931


7,490,003

Commitments and contingencies (Note 7)





Net Assets





Common shares $0.01 par value, 500,000,000 shares
authorized; 390,217,304 and 389,732,868 shares issued and
outstanding, respectively


3,902


3,897

Additional paid-in-capital


5,931,419


5,924,002

Accumulated undistributed (overdistributed) earnings


26,528


93,494

Total Net Assets


5,961,849


6,021,393

Total Liabilities and Net Assets


$                 14,090,780


$               13,511,396

Net Asset Value Per Share


$                          15.28


$                        15.45

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share amounts)

(Unaudited)



For the Three Months Ended September 30,


For the Nine Months Ended September 30,


2024


2023


2024


2023

Investment Income








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








Interest income

$    299,598


$    307,701


$    881,408


$    894,371

Payment-in-kind ("PIK") interest income

45,561


40,925


131,068


128,783

Dividend income

17,115


17,324


54,764


52,764

Other income

5,326


2,332


16,627


12,539

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

367,600


368,282


1,083,867


1,088,457

Investment income from non-controlled, affiliated investments:








Interest income

471


—


579


—

Payment-in-kind ("PIK") interest income

180


—


312


—

Dividend income

12


36


74


213

Other income

11


—


11


—

Total investment income from non-controlled, affiliated investments:

674


36


976


213

Investment income from controlled, affiliated investments:








Interest income

7,589


5,717


22,760


13,944

Payment-in-kind ("PIK") interest income

359


773


1,062


773

Dividend income

29,627


24,032


93,151


66,720

Other Income

180


182


550


760

Total investment income from controlled, affiliated investments

37,755


30,704


117,523


82,197

Total Investment Income

406,029


399,022


1,202,366


1,170,867

Expenses








Interest expense

121,273


110,445


349,527


324,416

Management fees

49,264


47,796


144,512


143,911

Performance based incentive fees

39,224


40,314


118,111


117,640

Professional fees

3,476


3,890


11,185


11,697

Directors' fees

320


445


960


960

Other general and administrative

4,001


3,349


10,051


9,158

Total Operating Expenses

217,558


206,239


634,346


607,782

Net Investment Income (Loss) Before Taxes

188,471


192,783


568,020


563,085

Income tax expense (benefit)

3,559


2,730


11,209


8,495

Net Investment Income (Loss) After Taxes

$    184,912


$     190,053


$    556,811


$    554,590

Net Realized and Change in Unrealized Gain (Loss)








Net change in unrealized gain (loss):








Non-controlled, non-affiliated investments

$      33,552


$       22,371


$     (32,267)


$      91,855

Non-controlled, affiliated investments

(143)


507


251


502

Controlled, affiliated investments

(24,132)


(2,076)


(22,187)


14,113

Translation of assets and liabilities in foreign currencies

(2,321)


(2,292)


7,917


278

Income tax (provision) benefit

(1,178)


(1,521)


(1,188)


(4,217)

Total Net Change in Unrealized Gain (Loss)

5,778


16,989


(47,474)


102,531

Net realized gain (loss):








Non-controlled, non-affiliated investments

$     (55,368)


$            235


$     (60,408)


$            353

Non-controlled, affiliated investments

—


—


—


(52,482)

Foreign currency transactions

36


(339)


(8,834)


(647)

Total Net Realized Gain (Loss)

(55,332)


(104)


(69,242)


(52,776)

Total Net Realized and Change in Unrealized Gain (Loss)

(49,554)


16,885


(116,716)


49,755

Net Increase (Decrease) in Net Assets Resulting from Operations

$     135,358


$     206,938


$     440,095


$    604,345

Earnings Per Share - Basic and Diluted

$           0.35


$           0.53


$           1.13


$          1.55

Weighted Average Shares Outstanding - Basic and Diluted

390,217,304


389,703,612


390,018,665


390,223,606

 

PORTFOLIO AND INVESTMENT ACTIVITY




For the Three Months Ended
September 30,

($ in thousands)


2024


2023

New investment commitments





Gross originations


$       1,151,667


$          510,987

Less: Sell downs


—


(10,803)

Total new investment commitments


$       1,151,667


$          500,184

Principal amount of investments funded:





First-lien senior secured debt investments


$       1,044,951


$          363,504

Second-lien senior secured debt investments


—


—

Unsecured debt investments


—


—

Preferred equity investments


1,097


—

Common equity investments


13,318


22,266

Joint ventures


21,437


875

Total principal amount of investments funded


$       1,080,803


$          386,645

Principal amount of investments sold or repaid:





First-lien senior secured debt investments


$      (1,027,432)


$         (342,060)

Second-lien senior secured debt investments


(65,812)


(42,663)

Unsecured debt investments


—


—

Preferred equity investments


(21,360)


(4,963)

Common equity investments


(15)


—

Joint ventures


—


—

Total principal amount of investments sold or repaid


$      (1,114,619)


$        (389,686)

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


23


7

Average new investment commitment amount


$            42,251


$           61,240

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


4.4


4.3

Percentage of new debt investment commitments at floating rates


98.8 %


92.2 %

Percentage of new debt investment commitments at fixed rates


1.2 %


7.8 %

Weighted average interest rate of new debt investment commitments(2)


9.7 %


11.7 %

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


5.1 %


6.3 %

____________________

(1)

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

(2)

For the three months ended September 30, 2024, assumes each floating rate commitment is subject to the greater of the interest rate floor (if applicable) or 3-month SOFR, which was 4.59% as of September 30, 2024. 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.

Forward-Looking Statements

Some of the statements in this press release constitute forward-looking statements because they relate to future events, future performance or financial condition of OBDC or OBDE or the two-step merger (collectively, the "Mergers") of OBDE with and into OBDC. The forward-looking statements may include statements as to: future operating results of OBDC and OBDE and distribution projections; business prospects of OBDC and OBDE and the prospects of their portfolio companies; and the impact of the investments that OBDC and OBDE expect to make. In addition, words such as "anticipate," "believe," "expect," "seek," "plan," "should," "estimate," "project" and "intend" indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this press release involve risks and uncertainties. Certain factors could cause actual results and conditions to differ materially from those projected, including the uncertainties associated with (i) the timing or likelihood of the Mergers closing; (ii) the expected synergies and savings associated with the Mergers; (iii) the ability to realize the anticipated benefits of the Mergers, including the expected accretion to net investment income and the elimination or reduction of certain expenses and costs due to the Mergers; (iv) the percentage of OBDC and OBDE shareholders voting in favor of the proposals submitted for their approval; (v) the possibility that competing offers or acquisition proposals will be made; (vi) the possibility that any or all of the various conditions to the consummation of the Mergers may not be satisfied or waived; (vii) risks related to diverting management's attention from ongoing business operations; (viii) the risk that shareholder litigation in connection with the Mergers may result in significant costs of defense and liability; (ix) changes in the economy, financial markets and political environment; (x) the impact of geo-political conditions, including revolution, insurgency, terrorism or war, including those arising out of the ongoing war between Russia and Ukraine and the escalated conflict in the Middle-East, including the Israel-Hamas conflict, and general uncertainty surrounding the financial and political stability of the United States (including uncertainties related to the 2024 U.S. presidential election), the United Kingdom, the European Union and China, on financial market volatility, global economic markets, and various markets for commodities globally such as oil and natural gas; (xi) future changes in law or regulations; (xii) conditions to OBDC's and OBDE's operating areas, particularly with respect to business development companies or regulated investment companies; (xiii) an economic downturn, elevated interest and inflation rates, ongoing supply chain and labor market disruptions, including those as a result of strikes, work stoppages or accidents, instability in the U.S. and international banking systems, and the risk of recession or a shutdown of government services could impact business prospects of OBDC and OBDE and their portfolio companies or following the closing of the Mergers, the combined company; (xiv) the ability of Blue Owl Credit Advisors LLC (the "Adviser") to locate suitable investments for the combined company and to monitor and administer its investments; (xv) the ability of the Adviser to attract and retain highly talented professionals; and (xvi) other considerations that may be disclosed from time to time in OBDC's and OBDE's publicly disseminated documents and filings with the Securities and Exchange Commission ("SEC"). OBDC and OBDE have based the forward-looking statements included in this press release on information available to them on the date hereof, and they assume no obligation to update any such forward-looking statements. Although OBDC and OBDE undertake 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 they may make directly to you or through reports that OBDC and OBDE in the future may file with the SEC, including the Joint Proxy Statement and the Registration Statement (each as defined below), annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

Additional Information and Where to Find It

In connection with the Merger, OBDC and OBDE have filed with the SEC and intend to mail to their respective shareholders a joint proxy statement/prospectus (the "Joint Proxy Statement") and OBDC has filed with the SEC a registration statement on Form N-14 (the "Registration Statement") that includes the Joint Proxy Statement and a prospectus of OBDC. The Joint Proxy Statement and the Registration Statement contains important information about OBDC, OBDE, the Merger and related matters. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. SHAREHOLDERS OF OBDC AND OBDE ARE URGED TO READ THE JOINT PROXY STATEMENT AND THE REGISTRATION STATEMENT AND OTHER DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT OBDC, OBDE, THE MERGER AND RELATED MATTERS. Investors and security holders will be able to obtain the documentation filed with the SEC free of charge at the SEC's website, http://www.sec.gov and for documents filed by OBDC, from OBDC's website at https://www.blueowlcapitalcorporation.com and for documents filed by OBDE, from OBDE's website at https://www.blueowlcapitalcorporationiii.com. 

Participation in the Solicitation

OBDC, its directors, certain of its executive officers and certain employees and officers of the Adviser and its affiliates may be deemed to be participants in the solicitation of proxies in connection with the Merger. Information about directors and executive officers of OBDC is set forth in the Joint Proxy Statement. OBDE, its directors, certain of its executive officers and certain employees and officers of Blue Owl Diversified Credit Advisors LLC and its affiliates may be deemed to be participants in the solicitation of proxies in connection with the Merger. Information about directors and executive officers of OBDE is set forth in the Joint Proxy Statement. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the OBDC and OBDE shareholders in connection with the Merger is contained in the Joint Proxy Statement. These documents may be obtained free of charge from the sources indicated above.

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SOURCE Blue Owl Capital Corporation