NCDL

Business Context and Reporting Period

Nuveen Churchill Direct Lending Corp. (NCDL) is a closed-end, externally managed business development company (BDC) and regulated investment company (RIC). The company invests primarily in senior secured loans to private equity-owned U.S. middle market companies. This summary covers the quarterly period ended March 31, 2026.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Decline: Total investment income decreased to $46.3 million from $53.6 million year-over-year. This was driven by a decrease in the weighted average yield (9.31% vs. 10.10%) due to tighter spreads on new originations and lower base interest rates, as well as a slight reduction in portfolio size.
• Expense Reduction: Total expenses before waived fees decreased to $26.2 million from $28.4 million. Interest and debt financing expenses dropped significantly due to lower average daily borrowings ($1.13 billion vs. $1.16 billion) and a lower average interest rate (5.89% vs. 6.57%).
• Incentive Fees: Unlike the prior year where $2.3 million in incentive fees were waived, the company incurred $1.5 million in income-based incentive fees in Q1 2026 following the expiration of the waiver period.
• Realized Losses: The company recognized a net realized loss of $3.3 million, compared to a gain of $1.1 million in Q1 2025, primarily due to the restructuring of two underperforming debt positions.
• Unrealized Depreciation: Net change in unrealized appreciation/depreciation was a loss of $7.8 million, an improvement from the $13.6 million loss in the prior year, partially offset by the reversal of losses on restructured positions.

Guidance, Outlook, and Risks

Management Commentary: Management notes that private equity M&A activity started with momentum but slowed due to market volatility, trade policy uncertainty, and geopolitical tensions. Repayment activity decreased slightly. The company maintains a focus on defensive businesses with strong free cash flow.

Capital Resources: The company has $233.0 million available under its Revolving Credit Facility and $50.0 million authorized under a new share repurchase plan (Company 10b5-1 Plan) effective March 24, 2026. No shares were repurchased under this new plan as of March 31, 2026.

Risks and Contingencies:

• Asset Quality: Five portfolio companies were on non-accrual status as of March 31, 2026, representing 1.28% of total investments at cost. The weighted average internal risk rating of the portfolio was 4.3.
• Macro Risks: Risks include the impact of tariffs, geopolitical conflicts (Ukraine/Russia, Middle East), inflation, and the rapid evolution of AI on portfolio company operations.
• Interest Rate Risk: Approximately 94% of debt investments bear floating rates. While the company uses interest rate swaps to hedge fixed-rate liabilities, net investment income remains sensitive to base rate fluctuations.

Investor Verification Checklist

• Non-Accrual Status: Verify the specific portfolio companies on non-accrual and the progress of their restructuring efforts.
• Yield Compression: Assess the sustainability of the 9.31% weighted average yield given the competitive environment and potential for further spread tightening.
• Debt Refinancing: Review the terms and impact of the CLO-II refinancing completed in February 2026 and the associated one-time costs.
• Share Repurchase Activity: Monitor execution of the new $50 million share repurchase plan, particularly given the stock price trading below NAV ($12.72 market value vs. $17.50 NAV).
• Unfunded Commitments: Confirm the company's liquidity position relative to $154.9 million in unfunded investment commitments.