Good day, and thank you for standing by. Welcome to the Fourth Quarter and Full Year 2021 Crescent Capital BDC, Inc. Earnings Conference Call. [Operator Instructions] Please be advised today's conference may be recorded. [Operator Instructions] I'd now like to hand the conference over to your host today, Dan McMahon, Head of Investor Relations. Please go ahead.

Good morning, and welcome to Crescent Capital BDC Inc.'s fourth quarter and year ended December 31, 2021, earnings conference call. Please note that Crescent Capital BDC, Inc. may be referred to as CCAP, Crescent BDC or the company throughout today's call. Before we begin, I'll start with some important reminders. Comments made over the course of this conference call and webcast may contain forward-looking statements and are subject to risks and uncertainties. The company's actual results could differ materially from those expressed in such forward-looking statements for any reason, including those listed in its SEC filings. The company assumes no obligation to update any such forward-looking statements. Please also note that past performance or market information not a guarantee of future results. During this conference call, we may discuss certain non-GAAP measures as defined by SEC Regulation G, such as adjusted net investment income or NII per share. The company believes that adjusted NII per share provides useful information to investors regarding financial performance because it's one method the company uses to measure its financial condition and results of operations. A reconciliation of adjusted net investment income per share to net investment income per share, the most directly comparable GAAP financial measure can be found in the accompanying slide presentation for this call. In addition, a reconciliation of this measure may also be found in our earnings release. Yesterday, after the market closed, the company issued its earnings press release for the fourth quarter and year ended December 31, 2021, and posted a presentation to the Investor Relations section of its website at www.crescentbdc.com. The presentation should be reviewed in conjunction with the company's Form 10-K filed yesterday with the SEC. As a reminder, this call is being recorded for replay purposes. Speaking on today's call will be Jason Breaux, Chief Executive Officer of CCAP; and Gerhard Lombard, Chief Financial Officer of CCAP. With that, I'd now like to turn it over to Jason.

Thank you, Dan. Good morning, everyone, and thank you for joining our earnings call today. We appreciate your continued interest in CCAP. I'll provide some fourth quarter and full year highlights, review our investing activity, provide some color on our current portfolio and positioning and then turn it over to Gerhard to review our financial results in more detail. So let's begin. Please turn to Slide 6, where you'll see a summary of our results. We reported strong financial results for the fourth quarter and full year. We generated adjusted net investment income of $0.43 per share for the quarter and $1.89 per share for the full year. Our financial results reflect the strongest quarterly and annual origination activity since our inception with $280 million of new investments for the fourth quarter and $647 million for the year. Similar to the last three quarters, we accrued a capital gains-based incentive fee expense related to changes in net realized and unrealized gains and losses. This noncash expense was less than $0.01 per share for the quarter. On a GAAP basis, our fourth quarter net investment income per share, inclusive of the accrued capital gains-based incentive fee expense was $0.42 and $1.67 for the full year. As a reminder, the capital gains expense is only payable at the end of each fiscal year end based on our investment advisory agreement. And as of the fiscal year ended December 31, 2021, no capital gains, incentive fees were payable. Turning back to our results. Our net asset value per share increased 6.2% for the year. When you combine this NAV growth with our dividends paid during 2021, we generated a 14.7% total economic return for our stockholders for the year. Let's now shift gears and turn to Slides 13 and 14 of the presentation,…

Thanks, Jason, and good morning, everyone. Our adjusted net investment income per share of $0.43 for the fourth quarter of 2021 compares to $0.48 for the prior quarter and $0.47 for the fourth quarter of 2020. Our GAAP earnings per share or net increase in net assets resulting from operations for the fourth quarter of 2021 was $0.44, which compares to $0.59 per share for the third quarter of 2021 and $1.22 per share for the fourth quarter of 2020. . Total investment income of $24.1 million for the fourth quarter compares to $25.5 million for the prior quarter. The decrease primarily relates to lower levels of discount amortization in Q4 as a component of interest income when compared with the prior quarter. We recognized $3.9 million of accelerated OID last quarter versus $1.1 million this quarter in Q4. Dividend income was also down approximately $0.5 million quarter-over-quarter due to a tax distribution from a portfolio company in Q3. Importantly, interest income, excluding accelerated amortization, which represents recurring yield-related revenue, grew from $19 million in Q3 to $21 million for the fourth quarter. At December 31, our stockholders' equity was $652 million, resulting in a net asset value per share of $21.12 as compared to $596 million or $21.16 per share last quarter and $560 million or $19.88 per share at December 31, 2020. The increase in our total net asset value during the fourth quarter was primarily driven by the equity offering that Jason discussed. On a per share basis, the $0.05 special dividend paid in December was the primary driver of the 0.2% NAV decline in Q4. Net realized and unrealized gains on investments were relatively immaterial for Q4. 2021 was our most active year ever, which helped drive our total portfolio at fair value at the end…

Thanks, Gerhard. In closing, we believe 2021 was an excellent year for CCAP, capped off by record deployment in the fourth quarter. The strong position of the company is reflected in our adjusted net investment income per share, outpacing the dividend each quarter this year and our declaration of a series of special dividends resulting from our over earn. Our credit performance remains strong. We believe we have built a diverse and defensive portfolio of increasing scale, and we continue to focus on investing in high-quality sectors with a selective approach to financial sponsors and management teams. We're constructive on the opportunity set ahead of us, and are frankly excited at the prospect of return to a more normalized post-COVID environment and seeing many of you in person this year. We would like to thank all of you for your confidence and continued support. And with that, operator, please open the line for questions.

[Operator Instructions] Our first question comes from Robert Dodd with Raymond James.

So a few questions. First, on the SLF, the wind down plan. I mean looking at the return on invested capital on the SLF was under 8, right? So lower than just straight lending, right? So two components. Would you expect to wind down to be accretive to earnings? And then secondarily, sort of somewhat related, are there any plans - should we have expectations that there would be a new loan fund at some point, different part or maybe a slightly different strategy? Or is this just kind of the end of that approach within the BDC vehicle?

Robert, it's Jason. Thank you for the question on the joint venture. I think to your first question there, I would say that the answer is, yes, it ought to be accretive once redeployed into the private credit opportunities that we originate here at Crescent relative to the exposure that was in the joint venture, which was primarily broadly syndicated first lien loan. On your second point or your second question, I would say at the moment, I don't anticipate sort of a subsequent kind of unconsolidated joint venture at this point.

I appreciate that. Then another, not a new fund at the BDC, but obviously, the Crescent platform has recently raised a very large - well, a large private credit fund, I think, $6 billion targeted AUM, 4x the size of the previous when you've done that. Is that targeting the same kind of assets that go into the BDC? Or is it targeting a different segment of the market? And could you give us any color on if that's - if it is targeted in the same market, how - what potential impact that could, if any, there could be on the BDC potentially seeing more opportunities, increasing the number of names in the portfolio or anything like that?

Yes. Thanks, Robert. Thank you for calling that out. We did raise some meaningful institutional pools of capital and what we call our Crescent direct lending strategy, which is really a core strategy here at Crescent focused on what we call the lower middle market. Those are companies that we define as roughly $10 million to about $35 million or $40 million of EBITDA. It's a market that, as you might expect, is highly fragmented from a sponsor coverage standpoint, given that we're calling on lots and lots of mid-market sponsors for those opportunities. But it's a core Crescent strategy that's been in place really since about 2012. The BDC with exemptive relief to co-invest across the platform, participates in opportunities that are sourced by all of our strategies, but certainly, Crescent direct lending is a big feeder into the opportunity set that the BDC takes advantage of. From a sizing standpoint, I would say I view this as a big positive for the platform and for the prospects for the BDC as we've seen tremendous capital getting raised in the private markets, both on the private equity and the private credit side. It's important to continue to grow and have meaningful scale in the marketplace and be relevant in the marketplace, which we believe that we are. And while there has been certainly competition, I would say the competition is more muted in the lower end of the middle market than in the upper end, and there's certainly less competition from the syndicated markets as a result of that. But we've clearly seen with all the capital getting raised, share being taken away as well from the syndicated markets into the private market. So I think all in all, we're very pleased and constructive on the fundraise and the future prospects for the BDC going forward.

Got it. I appreciate that. A couple more if I can. On the - and then on the call, Integra and I know - I don't think you want to disclose much about private companies, but some of it is out in the press, right? I mean it was targeted to get acquired, that fell through. It sounds like it's back on. Is there anything post quarter that you can tell us about what's going on there with that business?

Yes. Thank you for asking, Robert. I can't really comment on that situation specifically. I will say that we did place that Integra second lien on nonaccrual in the fourth quarter. It is a small position for us. It represents less than half of 1% of fair value. But at this point, there's not much more that I can say specifically on that name.

Okay. Final one, I promise. I mean you obviously did execute a follow-on in November. I mean the stock - there is more liquidity now, but the valuation has been impact. I mean, there's a lot of other moving parts that go into valuations, obviously. And so it stops now trading at a relatively meaningful discount to book. I mean, has the Board discussed any plans to - anything that could be done to maybe add incremental value beyond just investing, which obviously is core competency. But it might seem kind of productive to ask given that you just raised equity, but has a buyback been considered, even a modest one, anything like that?

Thanks, Robert. We talk with the Board regularly about all kinds of topics, including this and certainly the value of our stock price. I think we certainly view our stock price as cheap relative to where we think it should be. I would - I can't comment on any plans for a buyback program. I will recall that Sun Life, our parent implemented a buyback plan, and there's some disclosure on that in the 10-K around shares owned as of year-end. But I would say that we are certainly in regular discussions with our Board about those types of topics.

[Operator Instructions] We have a question from the line of Derek Hewett with Bank of America.

Could you remind me what your target leverage range is? And then also, will that change now that you're kind of collapsing that joint venture?

Derek, this is Gerhard. I can take that question. Our target leverage, when we think about that more as a range than as a kind of a point estimate, but it's 1.1x to about 1.4x. We closed the year at 0.9x levered. So we're relatively still underlevered relative to that target range. But as to where we land in that range, I think a function of the kind of the macroeconomic backdrop, the portfolio composition. By that, I mean we lean senior secured with kind of a strong first lien focus. And so I think looking at the portfolio today, we probably would feel comfortable at kind of the higher end of the range versus the lower. The second part of your question, the additional liquidity that would be made available as that senior loan fund unwinds would be redeployed with leverage into other opportunities. And I don't think it changes the target leverage, but certainly, given that, that is currently an unlevered investment as we redeploy the capital, it would be - it will translate into - it's currently $40 million of committed capital on our balance sheet, and that would become 40 plus whatever times x depending on that - the target leverage on top of that.

I'm showing no further questions in queue at this time. I'd like to turn the call back to Jason Breaux for closing remarks.

Okay. Thank you, operator. Thank you all for joining the call. We appreciate your continued interest in CCAP and your support, and we look forward to speaking with you soon.

This concludes today's conference call. Thank you for participating. You may now disconnect.