Hello, and welcome to Carlyle Secured Lending Third Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I will now like to turn the conference over to Nishil Mehta. You may begin.

Good morning and welcome to CARLA Secured Lending's third quarter 2026 earnings call. I'm joined by Alex Chi, CGVD's chief executive officer, and Tom Hennigan, our president and chief financial officer. Last night, we filed our form 10-Q and issued a press release with a presentation of our results, which are available on the investor relations section of our website. Following our remarks today, we will hold a question and answer session for analysts and institutional investors. This call is being webcast, and a replay will be available on our website. Today's earnings call may include forward-looking statements reflecting our views with respect to, among other things, our future operating results and financial performance. Any forward-looking statements made today do not guarantee future performance, and undue reliance should not be placed on them. These statements are based on current management expectations Estimates and projections involve inherent risk and uncertainties, including those identified in the risk factors and cautionary statement regarding forward-looking statements, sections of our 10-K and 10-Qs. These risks and uncertainties could cause actual results to differ materially from those indicated in our forward-looking statements. CGPD assumes no obligation to update any forward-looking statements at any time. During this call, the company may discuss certain non-GAAP financial measures as defined by SEC Regulation G, such as adjusted net investment income or adjusted NAI. The company's management believes adjusted net investment income, adjusted net investment income per common share, adjusted net income, and adjusted net income per common share are useful to investors as additional tools to evaluate ongoing results and trends and to review our performance without giving effect to the amortization or accretion resulting from the new cost basis of the investments acquired and accounted for under the acquisition method of accounting in accordance with ASC 805 and the one-time purchase or non-recurring investment income and expense events, including the effects on incentives and are used by management to evaluate the economic earnings of the company. A reconciliation of GAAP net investment income per share The most directly comparable GAAP financial measure to adjusted NII per common share can be found in the accompanying slide presentation for this call that is available on our website. In addition, a reconciliation of these measures may also be found in our earnings press release filed last night with the SEC on Form 8K. With that, I'll turn the call over to Alex.

Thanks, Nishil, and good morning. On today's call, I'll give an overview of our third quarter results including the quarter's investment activity and portfolio positioning. I provide an update on our investment outlook. I'll then hand the call over to our president and CFO, Tom Hennigan. During the third quarter, macroeconomic and geopolitical uncertainty weighed on direct lending volume, which declined year over year as private equity activity remained slower than anticipated. However, we continue to be very pleased with the strength of Carlisle Direct Lending's origination platform and a consistent credit performance of CGVD. In total, excluding joint venture activity, we funded $81 million of investments at CGVD as our origination engine remained active during the quarter despite lower market-wide volume. On our new originations, weighted average spreads on those deals were approximately 505 basis points, approximately 35 basis points wider than the fourth quarter of 2025. while weighted average leverage on entry continued to decrease by over two-thirds of return quarter-over-quarter to 4.9 times, with a substantial majority of the deals in the quarter having financial maintenance covenants. A rejuvenated origination team leveraged the One Carlyle platform to drive differentiated deal flow, increase selectivity, and credit discipline. Proprietary One Carlyle deal flow, sourced from outside of direct lending, generated half of new platform originations with spreads that averaged approximately 35 basis points wider compared to core U.S. originations. Over 80% of this quarter's originations were to new borrowers, and Carlyle played a lead role in all of those investments. As an example, Carlyle Direct Lending leveraged Carlyle's private equity business lines, deep expertise, and aerospace and defense to secure a lead role and a solution for Avantis, a leading manufacturer of mission-critical aerospace materials and components. The payments increased in the quarter with $129 million of activity, and combined with investment activity related to our joint ventures, net investment activity resulted in total investments at CGVD remaining relatively flat, ending the quarter at $2.3 billion. Moving to our investment funds, both of our JVs MMCF, and SEP continue to scale and generate attractive returns to CGPD. The annualized dividend yield at MMCF increased by 80 basis points to 18.4% in the quarter and over 300 basis points since the first quarter of 2026. At SEP, the portfolio grew to $2.1 billion and produced an annualized dividend yield of 20.3% to CGPD. During the quarter, we generated $0.36 per share of net investment income on both a GAAP and an adjusted basis. In line with the revised dividend policy, our board of directors declared a fourth quarter 2026 dividend of $0.35 per share, which is fully covered by net investment income. Our net asset value as of September 30th increased to $15.65 per share, up from $15.61 per share as of June 30th. With a quarter point Federal Reserve hike in September, consensus estimates suggesting an additional two to three hikes through 2027, we expect rising rates to be an earnings tailwind as nearly 100% of our portfolio is floating rate. Our portfolio companies continue to perform well. Based on the latest forward curve, we do not expect an increase in rates that have a material impact on a borrower's ability to service debt. The markets continue to experience volatility related to the anticipated quantum of future debt issuance needed to finance the AI compute build-out. From an underwriting perspective, Carlyle continues to take a measured approach to data center and GPU financing transactions, despite their prominence in the credit market. While we continue to review potential opportunities, we have minimal exposure to compute infrastructure and remain selective in our approach to investments in this sector. as structures and documentation continue to loosen and market pricing continues to tighten. Turning to portfolio construction, we remain focused on portfolio diversification while managing to target leverage. As of September 30th, our portfolio grew to 180 companies across more than 25 industries. The average exposure to any single portfolio company was less than 60 basis points of total investments and 96% of our investments are in senior secured loans. The median EBITDA across our portfolio was $97 million. As always, discipline and consistency drove performance in the third quarter, and we expect these tenants to drive performance in future quarters. Looking ahead, despite the complicated market backdrop, we continue to expect strong activity in our market over the medium and long term once there is greater macroeconomic and geopolitical certainty, and we are well positioned with our revitalized origination platform to take advantage of increasing market activity and to continue taking share. Looking at our pipeline, a significant majority of deals continue to be in old economy sectors, including industrials, aerospace and defense, healthcare, and consumer products. As managers of environments dispersion increases, we expect the breadth of the Carlyle platform and the consistency of our performance to differentiate us through our ability to leverage Carlisle's scale, scope of investment capabilities, and dedicated in-house investing, portfolio management, and restructuring resources. With that, I'll now hand the call over to our president and CFO, Tom Hennigan.

Thank you, Alex. Today, I'll begin with an overview of our third quarter financial results. Then I'll discuss portfolio performance before concluding with detail on our balance sheet positioning. Total investment income for the third quarter was $63 million. up from $62 million last quarter, primarily driven by an increase in dividend income from both the MMCF and SCPJVs. This was partially offset by a lower average investment balance for the loan book. Total expenses of $38 million were in line with prior quarter. The result was net investment income for the third quarter of $25 million, or $0.36 per share, on both a gap basis and after adjusting for the impact of asset acquisition accounting, which means we again fully earned our new base dividend. Our board of directors declared the dividend for the fourth quarter of 2026 at that $0.35 per share base dividend level, which is payable to stockholders of record as of the close of business on December 31st. As a reminder, we maintain our existing supplemental dividend policy, which targets paying out 50% of excess earnings above the base dividend. allowing us to deliver additional value to shareholders as earnings grow. We still anticipate achieving full dividend coverage in future quarters, along with an increase in earnings and supplemental dividends as we continue to ramp the JVs and benefit from increasing rates based on the latest forward curve. During the quarter, we repurchased $6.1 million of shares at an average discount 32%, resulting in $0.04 of accretion to NAV per share. Total repurchases since inception of the program exceed $200 million, and the Board approved the reauthorization of the existing $300 million plan through November of 2027. On valuations, our total realized and unrealized net loss for the quarter was about $1 million, or two cents per share, as valuations remain relatively flat in the aggregate. Turning to credit performance, We continue to see overall stability in credit quality across the portfolio. Key credit stats continue to be stable, including portfolio company leverage levels, interest coverage, and LTVs. Both PIC income and the fair value of loans utilizing PIC provisions decreased during the third quarter. And the majority of our PIC was underwritten at origination or for performing borrowers, and is what we would consider to be good PIC. We did add two positions to non-accrual in the quarter, resulting in non-accruals totaling 1.1% of investments at fair value and 2.2% at amortized costs. We continue to work closely with these sponsors and borrowers to position the portfolio companies for improved financial performance. And while our non-accrual rates may fluctuate from period to period, we're confident in our ability to leverage the broader Carlon network, including our dedicated workout team, to achieve maximum recoveries for underperforming borrowers. Moving to the Minimum Market Credit Fund, our longstanding JV, we continue to focus on maximizing both asset growth and returns. During the third quarter, MMCF achieved an 18.4% dividend yield, an increase of 80 basis points quarter over quarter, and over 300 basis points since the first quarter of this year. MMCF currently holds $1.2 billion in direct lending assets with no fees at the joint venture, resulting in an effective net base management fee of less than 1% for CGVD on all direct lending assets. The increases in both debt and equity commitments to MMCF that closed earlier this year position us to continue asset growth and income generation at the JV. In addition, our newer JV, Structured Credit Partners, or SCP, ramped to $2.1 billion of investments and produced a dividend yield of 20.3%, which was again elevated this quarter as a result of delayed settlements on loan purchases, as is common for broadly syndicated loans. We expect the more normalized yield to be mid-teens longer term. During the quarter, SCP priced another CLO with long-term, non-mark-to-market, and predominantly investment grade rated CLO debt. SEP priced an additional CLO in the fourth quarter of 26 and that's in line with our plan to ramp at a cadence of four CLO issuances per year to ensure vintage diversification. Both recently issued CLOs benefited from market volatility as we locked in tight liability pricing while purchasing broadly syndicated loans at discounted prices. Over time, the JV is expected to manage approximately six to seven billion of assets fee-free at the JV. I'll finish by touching on our financing facilities and leverage. Our debt stack is 100% floating rate, matching our primarily floating rate assets, meaning CGVD is well positioned in advance of any additional interest rate movements. At quarter end, statutory leverage was 1.26 times and net financial leverage was 1.2 times after adjusting for working capital. Given our current strong liquidity profile, we believe we're well positioned to benefit from both more attractive terms for new investments and the expected pickup in deal volume in future quarters. With that, I'll turn the call back over to Alex.

Thanks, Tom. As we approach the middle of the fourth quarter, our portfolio remains resilient and our strategy remains unchanged. We continue to focus on sourcing transactions with significant equity cushions, conservative leverage profiles, and attractive spreads relative to market levels, and expect to take advantage of improved conditions in the market with a revitalized origination platform. Our pipeline of new originations is steady, and with a stable, high-quality portfolio, CGVD stockholders are benefiting from the continued execution of our strategy. As always, We remain committed to delivering a resilient, stable cash flow stream to our investors through consistent income and solid credit performance. I'd like to now hand the call over to the operator to take your questions. Thank you.

Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star 11 on your telephone, then wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Eric Zwick with Lucid Capital Markets. Your line is open.

Good morning. First question, more of a kind of just a housekeeping question maybe for Tom. Just looking at the balance sheet and the recent growth in derivatives liabilities, just curious what's kind of driven that increase. Hey, Eric. Good morning. That is our interest rate swaps for our bonds. So you'll see it's really an offset. We hedged the two bonds. You see that liability goes up, but actually on the balance sheet, the face of the debt is lower. So it's just an offset based on interest rates going up. Got it. That makes a lot of sense. Thank you. And then just thinking about your commentary on the strong pipeline, cash position is certainly higher than it's been in a number of quarters, but also the stock is You know, attractive from a valuation standpoint for continued use of the buybacks. Just curious if you could, you know, expand a little bit on your thoughts or how you continue to execute on those two, you know, strategy priorities.

Yeah, look, we'll continue to. Hey, Eric, it's Alex. Thanks for the question. We're going to continue to focus on new investments. The pipeline is starting to build. I think that in the third quarter, as you can see from our originations as well as for the whole market, it was a bit muted just heading into the midterms as well as the volatility in the macro as well as the geopolitical environment. But now that we have the midterms behind us, it looks like we're going to be in an environment where, at least for the next couple of years, there probably won't be a whole lot of movement, which actually ironically creates some stability. Therefore, we're pretty optimistic, actually, that it sets us up well next year for a more active deal environment. So we want to make sure that we have enough capacity to take advantage of that. At the same time, we can't ignore where the stock's trading, and we do have some additional capacity for buyback. So we're going to continue to look at both. As you can see, in the third quarter, we did buy back some stock, but more of a modest amount as we just balance the origination activity.

Thanks, Alex. I appreciate the answers. Thank you.

Please stand by for our next question. Our next question comes from the line of Chris Murillo with Citizens. Your line is open.

Yes, this is Nate on for Chris. Thanks for taking my question this morning. Just maybe one on structured credit partners. I know you guys talked about it a little bit, but the vehicle continued to scale in the quarter with, you know, about about 30 million of activity on your side. Can you guys just talk a little bit about how that partnership's progressing relative to what you expected originally and how we should think about the pace of deployment and maybe earnings contribution going forward?

Hey, Nate. Good morning. Tom. I'd say that the partnership's going great, and I'd say it's really right on track in terms of our initial forecast with the original commitment from CGPD of $150 million. We've been targeting four CLOs per year, really focused on vintage diversification. That's exactly what we've done. So it's very much on plan. But one thing I think the good news is it's short term and it'll be short lived is, you know, our dividend rate is higher than expected. It's nuanced. We said it last quarter was one time. Well, maybe it's one time again, but it is or two time. It's just the nuances of settling the loans in the broader syndicated market. So we had a pop in earnings, but we anticipate that Longer Intermediate Term. We're looking at mid-teens return. But the ramp is right on pace. We anticipate deploying the rest of our original commitment over the course of the next few quarters.

Okay, great. That's it for me. I appreciate the call today.

Thank you. As a reminder, ladies and gentlemen, let's start 1-1 to ask the question. Our next question comes from the line of Robert Dodd with Raymond James. Your line is open.

Morning, everybody, and congrats on an excellent quarter. A couple of questions. One, getting nitpicky on wording in your remarks, Alex. When you talked about expect strong performance in originations, I noticed a couple of caveats. One, you said medium-long term, so I presume not short term. You don't expect strength in the fourth quarter or maybe even Q1. and then two, even that medium-long term was caveated with a once geopolitical uncertainty stabilizer. So, I mean, is that the deal? Like, you know, you're optimistic about the platform capabilities, but you are not optimistic about the market and activity levels.

Hey, Robert, thanks for the question. I think you characterized it pretty well. We're obviously sitting midway through the fourth quarter, and funding and deployment in the fourth quarter is really driven by activity that was in the market in the prior quarter. And given, again, the environment, I think that at least for the fourth quarter, I wouldn't be surprised if the amount of origination activity for ourselves as well as the broader market continued to be muted. Having said that, Looking at the pipeline of new investments that are activity and opportunities that are coming in the door right now, that gives us a bit more optimism with respect to what could happen in the first and second quarter of next year. And as you know, January tends to be more of a seasonal quarter with respect to just new deal activity as everyone comes back to holidays. And so, look, if we all come back and There is more certainty with respect to some resolution on a geopolitical theater. I don't think anyone's changing their outlook with respect to the macroeconomic picture. I think that it could actually set us up pretty well for some additional deal activity for 2027, which leads more to my medium-term outlook comment.

Got it. Fair enough. Thank you. And next one, again, going back to the SEP and, Tom, your comment about long-term mid-teens, I mean, can you reconcile for us, I mean, the dividend this quarter was large, and to be clear, it seems it was larger than the earnings in terms of NII within the vehicle. So can you reconcile that? I mean, if it's sensitive to when loans get closed, etc., etc., That, I would assume, meant sensitivity to when you get loan fee income. But if it generates income, it would also generate NII, and the dividend this quarter was higher than the NII generation within the vehicle. I mean, obviously, yeah, it's first year, it's ramp up, everything's new, but can you reconcile kind of like Exactly how that worked, and I take as read, like, you know, mid-teams long-term, not this year, but I'm just trying to understand how the dividend occurred when the earnings didn't. Is that an OID amortization versus a cash receipt kind of question? Okay, fair enough.

Understood. And you know what? We actually predicted you might ask that question. so the it absolutely is earned so when we talk about the delayed comp that is absolutely earned and that's and we're paying that out the delta you're seeing is really gap versus tax and it's organizational expenses that we amortize over a longer period of time based on it's a newer vehicle so that's really the difference in what you're seeing as earned and what we paid out so when you look at about the longer term amortization of those expenses then we paid out what we've earned we did not earn what we paid

Yeah, yeah, yeah, got it, got it. And then one more, if I can. On the example you gave with aerospace, Carlisle leading the deal, obviously CGPD benefiting from that. I mean, that's obviously a core platform level of expertise. I mean, and that's precision manufacturing, et cetera, et cetera. I mean, they're not likely particularly AI vulnerable. What would be... and your target or maybe your cap. I mean, how much would you be willing to add into the portfolio in that kind of, I don't want to call it a niche, it's a very big market segment. But I mean, obviously, we want at the same time diversification in the portfolio, et cetera. But I mean, it is a core platform expertise. I'm just trying to get a handle on how big would you be willing to take aerospace and those kind of, and maybe manufacturing drones for Skynet and things like that.

Aerospace and Defense is obviously one of the power alleys of Carlyle. And to your point, we certainly benefited in the example of Avantis where if there is an opportunity in the market within that sector, I think many of the borrowers out there will think about coming to us at Carlyle and partnering with us. But to your point, we are absolutely focused on diversification by industry sector. I think the market obviously woke up to the importance of diversification earlier this year as it relates to software. So despite the fact that I think there will be a plethora of very attractive opportunities for aerospace and defense, given the tailwinds that are out there, we are going to just make sure that we maintain diversification Not going to go out with a specific hard cap on the sector, but I think if you just look at our portfolio in general, I think you'll see that we're very well diversified across all industry sectors, and we're going to maintain that.

Got it. Thank you.

Thank you. Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Alex for closing remarks.

Great. Well, thank you everybody for joining our call. Appreciate your time and we look forward to speaking again when we report our fourth quarter. Have a great weekend.

That concludes today's conference. Thank you for your participation. You may now disconnect.