Kayne Anderson BDC Reports Q4 2024 Results, Declares $0.40 Q1 2025 Dividend
Kayne Anderson BDC, Inc. (NYSE: KBDC) (“KBDC” or “the Company”), a business development company externally managed by its investment adviser, KA Credit Advisors, LLC, has announced its financial results for the fourth quarter ended December 31, 2024. The Company continues to pursue its investment strategy by lending to stable industries, focusing on producing attractive debt investment opportunities characterized by lower leverage and higher interest coverage.
Strategic Investments and Portfolio Performance
During the fourth quarter of 2024, KBDC added eight new investments to its platform, reinforcing its approach to targeting high-quality credit opportunities. Ken Leonard, Co-Chief Executive Officer of the Company, expressed confidence in the portfolio’s continued stability and performance. “Our portfolio continued to perform well during the fourth quarter, with only 1.3% of debt investments on non-accrual status and just 1.1% of interest income for the quarter represented by PIK income,” Leonard stated. This commitment to maintaining a strong portfolio has enabled KBDC to remain resilient despite fluctuations in market conditions.
Leverage and Market Positioning
KBDC has been actively working towards optimizing its leverage ratios, with a target debt-to-equity range of 1.0x to 1.25x. Co-Chief Executive Officer Doug Goodwillie highlighted the Company’s progress in this area, stating, “During the fourth quarter, we continued to make progress towards our leverage target and expect to achieve the low end of our debt-to-equity target range of 1.0x – 1.25x by the second or third quarter of 2025.” Additionally, KBDC has successfully identified and secured middle-market loans that provide compelling risk-adjusted returns. The first quarter of 2025 is projected to be one of the Company’s strongest quarters for origination since its inception.
Financial Highlights for the Quarter Ended December 31, 2024
- Net investment income: $34.0 million, or $0.48 per share ($0.49 excluding excise taxes).
- Net asset value (NAV): $16.70 per share, unchanged from $16.70 per share as of September 30, 2024.
- Amended Corporate Credit Facility: Extended maturity and reduced spread from SOFR plus 2.35% to SOFR plus 2.10%.
- New private credit and equity co-investment commitments: $230.6 million, with fundings of $208.5 million and sales and repayments totaling $139.1 million, resulting in a net funded private credit and equity investment increase of $69.4 million.
- Net repayments of broadly syndicated loans: $18.0 million.
- Regular dividend declared: $0.40 per share, payable on April 15, 2025, to stockholders of record as of March 31, 2025.
Selected Financial Highlights
| Financial Metric | December 31, 2024 | September 30, 2024 |
|---|---|---|
| Investment portfolio (fair value) | $1,995,143,000 | $1,943,439,000 |
| Total assets | $2,082,664,000 | $2,028,245,000 |
| Total debt outstanding (principal) | $858,000,000 | $788,000,000 |
| Net assets | $1,186,342,000 | $1,186,205,000 |
| Net asset value per share | $16.70 | $16.70 |
| Total debt-to-equity ratio | 0.72x | 0.66x |
Key Financial Results for Q4 2024 vs. Q3 2024
| Financial Metric | Q4 2024 | Q3 2024 |
|---|---|---|
| Net investment income per share | $0.48 | $0.52 |
| Net realized & unrealized gains (losses) per share | $0.02 | $0.01 |
| Earnings per share | $0.50 | $0.53 |
| Regular dividend per share | $0.40 | $0.40 |
| Special dividend per share | $0.10 | – |
Operational Performance and Investment Income
For the quarter ended December 31, 2024, KBDC reported total investment income of $56.3 million, compared to $57.8 million in the previous quarter. The slight decrease was primarily attributed to a decline in reference rates (SOFR) and a $0.7 million impact from placing Sundance on non-accrual status during the quarter. However, these reductions were partially offset by net additions to the investment portfolio, demonstrating the Company’s ability to identify new opportunities and maintain a robust portfolio.
Net investment income for Q4 2024 was reported at $34.0 million, or $0.48 per share, in comparison to $37.1 million, or $0.52 per share, in Q3 2024. The Company experienced a rise in net expenses, with costs increasing to $22.3 million from $20.8 million in the prior quarter. This rise was primarily driven by an additional $0.8 million in excise taxes related to undistributed income for the year, as well as higher interest expenses associated with increased borrowings.
Realized and Unrealized Gains/Losses
During the quarter, KBDC reported a realized gain of $0.7 million from the sale of an equity co-investment. Additionally, the Company recorded a net change in unrealized gains on investments totaling $1.4 million. The unrealized gains were largely driven by new upfront fees earned from originations, which were partially offset by changes in the fair value of certain investments and quarterly amortization of original issue discounts.
Furthermore, KBDC recognized $0.7 million in deferred income tax expenses related to unrealized gains within its wholly owned taxable subsidiary. These tax implications underscore the Company’s strategic approach to managing both realized and unrealized portfolio gains effectively.
KBDC remains committed to enhancing shareholder value by expanding its investment portfolio, maintaining strong credit quality, and optimizing its leverage structure. The Company anticipates achieving the lower end of its targeted debt-to-equity range by mid-2025, positioning itself for sustained growth and stability.
With expectations of a strong first quarter in 2025, KBDC continues to identify attractive middle-market lending opportunities that align with its risk-adjusted return strategy. The Company’s ability to execute disciplined underwriting practices while maintaining a focus on industries with stable cash flows provides confidence in its long-term outlook.
Kayne Anderson BDC, Inc. remains well-positioned for continued success, driven by its strategic investment approach, prudent leverage management, and disciplined financial execution. As the Company progresses into 2025, its emphasis on securing high-quality credit investments and delivering consistent returns to shareholders reinforces its standing as a reliable and resilient business development company in the financial sector.
