Blue Owl Capital Corp false 0001655888 0001655888 2024-05-08 2024-05-08

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 8, 2024

 

 

BLUE OWL CAPITAL CORPORATION

(Exact name of Registrant as Specified in Its Charter)

 

 

 

Maryland   814-01190   47-5402460

(State or Other Jurisdiction

of Incorporation)

  

(Commission

File Number)

   (IRS Employer
Identification No.)

 

399 Park Avenue,

37th Floor

New York, NY

   10022
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s Telephone Number, Including Area Code: (212) 419-3000

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading

Symbol(s)

  

Name of each exchange

on which registered

Common Stock, par value $0.01 per share   OBDC   The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934. Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 2.02. Results of Operations and Financial Condition

On May 8, 2024, Blue Owl Capital Corporation (the “Company”) issued a press release announcing its financial results for the first quarter ended March 31, 2024. The press release is attached as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.

The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 furnished herewith, is being furnished and shall not be deemed “filed” for any purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such Section. The information in this Current Report on Form 8-K shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

 

Exhibit Number    Description
99.1    Press Release, dated May 8, 2024.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  Blue Owl Capital Corporation
May 8, 2024   By:  

/s/ Jonathan Lamm

    Name:   Jonathan Lamm
    Title:   Chief Operating Officer and Chief Financial Officer

Exhibit 99.1

Blue Owl Capital Corporation Reports First Quarter Net Investment Income Per Share of $0.47

and NAV Per Share of $15.47

NEW YORK — May 8, 2024 — Blue Owl Capital Corporation (NYSE: OBDC, or the “Company”) today announced financial results for its first quarter ended March 31, 2024.

FIRST QUARTER 2024 HIGHLIGHTS

 

  •  

First quarter net investment income (“NII”) per share of $0.47, exceeding the regular dividend by over 25%

 

  •  

As a result, the Board of Directors (the “Board”) declared a first quarter supplemental dividend of $0.05 per share

 

  •  

Total dividends for the first quarter were $0.42 per share, representing a 10.9% annualized dividend yield based on first quarter net asset value (“NAV”) per share

 

  •  

NAV per share increased to $15.47 compared to $15.45 as of December 31, 2023, which represents the Company’s highest NAV per share since inception

“OBDC’s first quarter results reflect a strong start to the year, achieving record net asset value per share for the third consecutive quarter while maintaining solid credit performance,” commented Craig W. Packer, Chief Executive Officer. “We generated a 12.1% return on equity this quarter, which we view as a very compelling rate of return for a portfolio comprised of predominantly first lien loans in high-quality, upper-middle market companies.”

Dividend Declarations

The Company’s Board declared a second quarter 2024 regular dividend of $0.37 per share for stockholders of record as of June 28, 2024, payable on or before July 15, 2024.

The Board also declared a first quarter 2024 supplemental dividend of $0.05 per share for stockholders of record as of May 31, 2024, payable on or before June 14, 2024.

2024 Stock Repurchase Program

On May 6, 2024, the Board approved the 2024 Repurchase Program (the “repurchase program”) under which the Company may repurchase up to $150 million of the Company’s common stock. Under the repurchase program, purchases may be made at management’s discretion from time to time in open-market transactions, including via trading plans with investment banks pursuant to Rule 10b5-1 of the Exchange Act, in accordance with all applicable rules and regulations. Unless extended by the Board, the repurchase program will terminate 18 months from the date it was approved.

PORTFOLIO AND INVESTING ACTIVITY

For the three months ended March 31, 2024, new investment commitments totaled $1,202.7 million across 18 new portfolio companies and 13 existing portfolio companies. This compares to $1,296.9 million for the three months ended December 31, 2023 across 17 new portfolio companies and 14 existing portfolio companies.

For the three months ended March 31, 2024, the principal amount of new investments funded was $920.4 million. For this period, the Company had $1,241.4 million aggregate principal amount in sales and repayments.

For the three months ended December 31, 2023, the principal amount of new investments funded was $1,029.9 million. For this period, the Company had $1,142.6 million aggregate principal amount in sales and repayments.

As of March 31, 2024 and December 31, 2023, the Company had investments in 198 and 193 portfolio companies with an aggregate fair value of $12.4 billion and $12.7 billion, respectively. As of March 31, 2024, the average investment size in each portfolio company was $62.7 million based on fair value.

As of March 31, 2024, based on fair value, our portfolio consisted of 73.0% first lien senior secured debt investments, 7.7% second lien senior secured debt investments, 2.2% unsecured debt investments, 2.8% joint ventures, 3.6% preferred equity investments, and 10.7% common equity investments.

As of December 31, 2023, based on fair value, our portfolio consisted of 68.1% first lien senior secured debt investments, 14.0% second lien senior secured debt investments, 2.3% unsecured debt investments, 2.7% joint ventures, 3.4% preferred equity investments, and 9.5% common equity investments.

As of March 31, 2024 and December 31, 2023, approximately 80.7% and 82.1% of the portfolio was invested in secured debt, respectively. As of March 31, 2024, 97.3% of our debt investments based on fair value in our portfolio were at floating rates.

As of March 31, 2024 and December 31, 2023, 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 12.1% and 12.4%, 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 12.3% and 12.5%, respectively.

As of March 31, 2024, loans on non-accrual represented 1.8% of the total fair value of the debt portfolio.

RESULTS OF OPERATIONS FOR THE FIRST QUARTER ENDED MARCH 31, 2024

Investment Income

Investment income increased to $399.6 million for the three months ended March 31, 2024 from $377.6 million for the same period in the prior year due to an increase in interest income earned from prepayment fees and accelerated amortization of upfront fees from unscheduled paydowns, partially offset by a decrease in our debt investments portfolio at par. Included in investment income is dividend income which includes income earned from our controlled, affiliated and non-controlled, affiliated equity investments. Dividend income increased primarily due to an increase in dividends earned from our controlled, affiliated and non-controlled, affiliated equity investments. Other income increased period-over-period due to an increase in incremental fee income, which are fees that are generally available to us as a result of closing investments and normally paid at the time of closing. We expect that investment income will vary based on a variety of factors including the pace of our originations and repayments.

Expenses

Total expenses increased to $211.6 million for the three months ended March 31, 2024 from $196.4 million for the same period in the prior year primarily due to an increase in interest expense. The increase in interest expense was driven by an increase in the average interest rate period over period while our average borrowings outstanding stayed consistent during both periods. As a percentage of total assets, management fees, incentive fees, professional fees, directors’ fees and other general and administrative expenses remained relatively consistent period over period.

Liquidity and Capital Resources

As of March 31, 2024, we had $742.8 million in cash and restricted cash, $7.0 billion in total principal value of debt outstanding, and $1.7 billion of undrawn capacity on our credit facilities. The Company’s weighted average interest rate on debt outstanding was 5.8% and 5.6% for the three months ended March 31, 2024 and December 31, 2023, respectively. Ending net debt to equity was 1.04x and 1.09x as of March 31, 2024 and December 31, 2023, respectively.

CONFERENCE CALL AND WEBCAST INFORMATION

Conference Call Information:

The conference call will be broadcast live on May 9, 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: 13745168

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 March 31, 2024, OBDC had investments in 198 portfolio companies with an aggregate fair value of $12.4 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

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)    March 31,
2024		     December 31,
2023		     March 31,
2023		  

Investments at Fair Value

    $ 12,414,384     $ 12,713,348     $ 13,157,251  

Total Assets

    $ 13,329,632     $ 13,511,396     $ 13,679,100  

Net Asset Value Per Share

    $ 15.47     $ 15.45     $ 15.15  

Investment Income

    $ 399,577     $ 411,227     $ 377,622  

Net Investment Income

    $ 182,765     $ 199,021     $ 177,859  

Net Income

    $ 182,517     $ 188,969     $ 201,842  

Net Investment Income Per Share

    $ 0.47     $ 0.51     $ 0.45  

Net Realized and Unrealized Gains (and Losses) Per Share

    $ —      $ (0.03 )    $ 0.07  

Net Income Per Share

    $ 0.47     $ 0.48     $ 0.52  

Distributions Declared from Net Investment Income Per Share

    $ 0.37     $ 0.35     $ 0.33  

Supplemental Distributions Declared from Net Investment Income Per Share

    $ 0.05     $ 0.08     $ 0.06  

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

      12.1 %      12.4 %      12.0 % 

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

      12.3 %      12.5 %      12.0 % 

Percentage of Debt Investment Commitments at Floating Rates

      97.3 %      97.4 %      98.2 % 

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

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

 

     March 31, 2024
(Unaudited)		      December 31, 2023  

Assets

      

Investments at fair value

      

Non-controlled, non-affiliated investments (amortized cost of $10,843,376 and $11,271,962, respectively)

    $ 10,831,170      $ 11,264,956  

Non-controlled, affiliated investments (amortized cost of $31,026 and $19,004, respectively)

      32,223        19,988  

Controlled, affiliated investments (amortized cost of $1,454,485, and $1,341,236, respectively)

      1,550,991        1,428,404  
  

 

 

     

 

 

  

Total investments at fair value (amortized cost of $12,328,887 and $12,632,202, respectively)

      12,414,384        12,713,348  

Cash (restricted cash of $89,838 and $87,067, respectively)

      666,716        658,702  

Foreign cash (cost of $76,145 and $946, respectively)

      76,095        956  

Interest receivable

      119,050        112,260  

Receivable from a controlled affiliate

      25,985        22,978  

Prepaid expenses and other assets

      27,402        3,152  
  

 

 

     

 

 

  

Total Assets

    $ 13,329,632      $ 13,511,396  
  

 

 

     

 

 

  

Liabilities

      

Debt (net of unamortized debt issuance costs of $90,019 and $81,492, respectively)

    $ 6,885,675      $ 7,077,088  

Distribution payable

      144,201        136,407  

Management fee payable

      47,243        47,711  

Incentive fee payable

      38,768        42,217  

Payables to affiliates

      6,252        3,835  

Accrued expenses and other liabilities

      178,963        182,745  
  

 

 

     

 

 

  

Total Liabilities

      7,301,102        7,490,003  
  

 

 

     

 

 

  

Commitments and contingencies (Note 7)

      

Net Assets

      

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

      3,897        3,897  

Additional paid-in-capital

      5,924,002        5,924,002  

Accumulated undistributed (overdistributed) earnings

      100,631        93,494  
  

 

 

     

 

 

  

Total Net Assets

      6,028,530        6,021,393  
  

 

 

     

 

 

  

Total Liabilities and Net Assets

    $ 13,329,632      $ 13,511,396  
  

 

 

     

 

 

  

Net Asset Value Per Share

    $ 15.47      $ 15.45  

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share amounts)

(Unaudited)

 

     For the Three Months Ended
March 31,		  
     2024     2023  

Investment Income

     

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

     

Interest income

    $ 294,450     $ 288,678  

Payment-in-kind (“PIK”) interest income

      41,235       43,055  

Dividend income

      21,336       17,833  

Other income

      5,313       2,964  
  

 

 

    

 

 

  

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

      362,334       352,530  
  

 

 

    

 

 

  

Investment income from non-controlled, affiliated investments:

     

Interest income

    $ 68       —   

Dividend income

      16       —   
  

 

 

    

 

 

  

Total investment income from non-controlled, affiliated investments:

      84       —   
  

 

 

    

 

 

  

Investment income from controlled, affiliated investments:

     

Interest income

      8,002       2,674  

Payment-in-kind (“PIK”) interest income

      176       —   

Dividend income

      28,789       22,026  

Other Income

      192       392  
  

 

 

    

 

 

  

Total investment income from controlled, affiliated investments

      37,159       25,092  
  

 

 

    

 

 

  

Total Investment Income

      399,577       377,622  
  

 

 

    

 

 

  

Expenses

     

Interest expense

      119,129       103,955  

Management fees

      47,243       48,093  

Performance based incentive fees

      38,768       37,728  

Professional fees

      3,596       3,673  

Directors’ fees

      320       258  

Other general and administrative

      2,516       2,671  
  

 

 

    

 

 

  

Total Operating Expenses

      211,572       196,378  
  

 

 

    

 

 

  

Net Investment Income (Loss) Before Taxes

      188,005       181,244  
  

 

 

    

 

 

  

Income tax expense (benefit)

      5,240       3,385  
  

 

 

    

 

 

  

Net Investment Income (Loss) After Taxes

    $ 182,765     $ 177,859  
  

 

 

    

 

 

  

Net Realized and Change in Unrealized Gain (Loss)

     

Net change in unrealized gain (loss):

     

Non-controlled, non-affiliated investments

    $ (951 )    $ 65,423  

Non-controlled, affiliated investments

      214       (1 ) 

Controlled, affiliated investments

      9,338       10,254  

Translation of assets and liabilities in foreign currencies

      (1,946 )      1,210  

Income tax (provision) benefit

      (10 )      (281 ) 
  

 

 

    

 

 

  

Total Net Change in Unrealized Gain (Loss)

      6,645       76,605  
  

 

 

    

 

 

  

Net realized gain (loss):

     

Non-controlled, non-affiliated investments

      (5,193 )      (52,483 ) 

Foreign currency transactions

      (1,700 )      (139 ) 
  

 

 

    

 

 

  

Total Net Realized Gain (Loss)

      (6,893 )      (52,622 ) 
  

 

 

    

 

 

  

Total Net Realized and Change in Unrealized Gain (Loss)

      (248 )      23,983  
  

 

 

    

 

 

  

Net Increase (Decrease) in Net Assets Resulting from Operations

    $ 182,517     $ 201,842  
  

 

 

    

 

 

  

Earnings Per Share - Basic and Diluted

    $ 0.47     $ 0.52  

Weighted Average Shares Outstanding - Basic and Diluted

      389,732,868       391,049,102  

PORTFOLIO AND INVESTMENT ACTIVITY

 

     For the Three Months Ended
March 31,		  
($ in thousands)    2024     2023  

New investment commitments

     

Gross originations

    $ 1,240,198     $ 175,114  

Less: Sell downs

      (37,500 )      —   
  

 

 

    

 

 

  

Total new investment commitments

    $ 1,202,698     $ 175,114  
  

 

 

    

 

 

  

Principal amount of investments funded:

     

First-lien senior secured debt investments

    $ 844,033     $ 36,809  

Second-lien senior secured debt investments

      —        —   

Unsecured debt investments

      —        —   

Preferred equity investments

      732       24,194  

Common equity investments

      69,042       9,653  

Joint Ventures(1)

      6,563       23,625  
  

 

 

    

 

 

  

Total principal amount of investments funded

    $ 920,370     $ 94,281  
  

 

 

    

 

 

  

Principal amount of investments sold or repaid:

     

First-lien senior secured debt investments

    $ (412,299 )    $ (56,696 ) 

Second-lien senior secured debt investments

      (800,422 )      (19,200 ) 

Unsecured debt investments

      (28,278 )      (193 ) 

Preferred equity investments

      (373 )      —   

Common equity investments

      —        —   

Joint Ventures(1)

      —        —   
  

 

 

    

 

 

  

Total principal amount of investments sold or repaid

    $ (1,241,372 )    $ (76,089 ) 
  

 

 

    

 

 

  

Number of new investment commitments in new portfolio companies(2)

      18       3  

Average new investment commitment amount

    $ 51,899     $ 941  

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

      5.8       3.0  

Percentage of new debt investment commitments at floating rates

      99.9 %      100.0 % 

Percentage of new debt investment commitments at fixed rates

      0.1 %      —  % 

Weighted average interest rate of new debt investment commitments(3)

      11.1 %      12.4 % 

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

      5.7 %      7.2 % 

 

(1)

This was disclosed as “Investment funds and vehicles” as of March 31, 2023.

(2)

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

(3)

For the three months ended March 31, 2024, assumes each floating rate commitment is subject to the greater of the interest rate floor (if applicable) or 3-month SOFR, which was 5.30% as of March 31, 2024. For the three months ended March 31, 2023, assumes each floating rate commitment is subject to the greater of the interest rate floor (if applicable) or 3-month SOFR, which was 4.91% as of March 31, 2023.

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Document and Entity Information
May 08, 2024
Cover [Abstract]  
Entity Registrant Name Blue Owl Capital Corp
Amendment Flag false
Entity Central Index Key 0001655888
Document Type 8-K
Document Period End Date May 08, 2024
Entity Incorporation State Country Code MD
Entity File Number 814-01190
Entity Tax Identification Number 47-5402460
Entity Address, Address Line One 399 Park Avenue
Entity Address, Address Line Two 37th Floor
Entity Address, City or Town New York
Entity Address, State or Province NY
Entity Address, Postal Zip Code 10022
City Area Code (212)
Local Phone Number 419-3000
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Security 12b Title Common Stock, par value $0.01 per share
Trading Symbol OBDC
Security Exchange Name NYSE
Entity Emerging Growth Company false
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