Overview of Carlyle Secured Lending, Inc.

Carlyle Secured Lending, Inc. is an investment company that provides financing to middle-market companies. The company invests primarily in first and second lien senior secured loans, as well as equity investments. As of December 31, 2024, Carlyle Secured Lending had a $1.8 billion investment portfolio across 189 companies.

Financial Performance

For the year ended December 31, 2024, Carlyle Secured Lending reported $232.6 million in total investment income, down from $241.6 million in 2023. This decrease was driven by a lower average investment balance and lower yields across the portfolio. Net investment income was $105.3 million in 2024, down from $110.0 million in 2023.

The company had a net realized loss on investments of $38.3 million in 2024, compared to a $21.2 million loss in 2023. This was primarily due to losses on the write-off of an investment in American Physician Partners and the sale of an investment in Emergency Communications Network, LLC. However, the company also had $18.3 million in net unrealized appreciation on its investments in 2024, up from $7.1 million in 2023.

Overall, Carlyle Secured Lending’s net increase in net assets resulting from operations was $89.0 million in 2024, down from $92.3 million in 2023.

The following table summarizes the company’s key financial metrics:

Portfolio and Investment Activity

As of December 31, 2024, Carlyle Secured Lending’s investment portfolio consisted of 189 investments across first lien debt, second lien debt, and equity investments. The portfolio had a total fair value of $1.8 billion.

The company’s investment activity for the year ended December 31, 2024 included:

• $500.9 million in new investments purchased
• $530.4 million in investments sold or repaid
• 72 new investment commitments with an average size of $7.1 million

The weighted average yield on the company’s debt investments was 11.7% based on amortized cost and 12.0% based on fair value as of December 31, 2024. The portfolio was diversified across various industries, with the largest exposures in healthcare & pharmaceuticals (12.9%), software (10.5%), and high tech industries (8.0%).

Portfolio Credit Quality

Carlyle Secured Lending monitors the credit quality of its debt investments using an internal risk rating system. As of December 31, 2024, 87.4% of the portfolio was rated “2”, indicating the borrower was operating as expected. 12.0% was rated “3”, meaning the borrower was operating below expectations. Only 0.6% was rated “4” or “5”, indicating higher risk investments.

The company had 4 investments on non-accrual status as of December 31, 2024, representing 0.6% of the total investment portfolio at fair value. This was an improvement from 4 non-accrual investments representing 2.1% of the portfolio at the end of 2023.

Financing and Liquidity

Carlyle Secured Lending’s primary sources of financing are a secured revolving credit facility, unsecured notes, and securitizations. As of December 31, 2024, the company had $978.4 million in total outstanding debt, with a weighted average interest rate of 6.65%.

The company’s credit facility had $213.4 million in borrowings outstanding as of the end of 2024, with $509.1 million of available borrowing capacity. Carlyle Secured Lending also had $385.0 million in unsecured notes outstanding, including $300.0 million of 6.75% senior notes due 2030 issued in 2024.

In addition, the company completed a $380.0 million securitization refinancing in 2024, replacing the previous $449.2 million 2015-1R Notes.

As of December 31, 2024, Carlyle Secured Lending had $565.7 million in total liquidity, including $56.6 million in cash and cash equivalents and $509.1 million in available credit facility capacity.

The company’s net financial leverage ratio was 1.01x as of the end of 2024, down slightly from 1.03x at the end of 2023. Its statutory debt to equity ratio was 1.20x, in compliance with regulatory requirements.

Outlook and Conclusion

Carlyle Secured Lending had a mixed year in 2024, with lower investment income and net investment income compared to 2023, but improved credit quality and unrealized appreciation in the portfolio. The company continues to maintain a diversified investment portfolio focused on senior secured loans to middle-market companies.

Looking ahead, the company’s ability to generate consistent investment income will depend on its ability to deploy capital into new investments, manage credit risk, and control costs. Carlyle Secured Lending’s access to diversified financing sources and ample liquidity position it well to continue supporting its investment objectives. However, the company remains exposed to risks such as interest rate fluctuations, valuation challenges for illiquid investments, and potential credit deterioration in its portfolio.

Overall, Carlyle Secured Lending appears to be navigating the current market environment effectively, but will need to closely monitor economic conditions and manage its portfolio risks to deliver stable returns to shareholders going forward.