Blue Owl Capital (OBDC) Beats on Q2 Earnings, Plans OBDE Merger
Blue Owl Capital Corporation OBDC reported second-quarter 2024 earnings per share (EPS) of 48 cents, which beat the Zacks Consensus Estimate by a penny. The bottom line remained flat year over year.
The total investment income of Blue Owl Capital amounted to $396.8 million, which increased 0.6% year over year. Also, the top line beat the Zacks Consensus Estimate by 2%.
Blue Owl Capital’s better-than-expected second-quarter results were supported by growing investment income, strong portfolio performance, new investment commitmentsand flat expenses.
Blue Owl Capital Corporation Price, Consensus and EPS Surprise
Blue Owl Capital Corporation price-consensus-eps-surprise-chart | Blue Owl Capital Corporation Quote
Q2 Update
Net investment income increased 1.3% year over year to $189.1 million. Also, the metric beat our estimate by 3.3%. Total new investment commitments (net of sell downs) were $3.3 billion across 25 new portfolio companies and 24 existing ones.
Blue Owl Capital ended the second quarter with investments in 212 portfolio companies, backed with an aggregate fair value of $13.3 billion. Based on the fair value, the average investment size in each portfolio company was $62.9 million as of Jun 30, 2024.
Total expenses remained flat from the year-ago period at $205.2 million in the second quarter. The metric was higher than our estimate of $200.8 million, primarily due to higher interest expenses, management fees and performance-based incentive fees.
The company recorded a net income of $122.2 million in the second quarter compared with $195.6 million in the year-ago period.
Financial Update (as of Jun 30, 2024)
Blue Owl Capital exited the second quarter with cash and restricted cash of $380 million, which declined from $658.7 million as of Dec 31, 2023. Total assets of $13.9 billion rose from $13.5 billion at 2023-end.
Debt was $7.4 billion, up from $7.1 billion at 2023-end. Blue Owl Capital had $1.3 billion of undrawn capacity under its credit facilities. At the second-quarter end, net debt to equity was 1.20X.
Net cash used in operating activities in the first half of 2024 was $282.2 million against the prior-year operating cash flow figure of $542.8 million.
Dividend & Repurchase Update
The board of directors at Blue Owl Capital declared a third-quarter 2024 dividend of 37 cents per share, to be paid on or before Oct 15, 2024, to shareholders of record as of Sep 30. It also provided a second-quarter 2024 supplemental dividend of 6 cents per share.
Blue Owl Capital’s board earlier approved a new share repurchase plan for 2024, under which the company may purchase shares up to $150 million. The company did not make share repurchases under this program in the second quarter, leaving it with a remaining fund of $150 million.
Merger Agreement
OBDC has agreed to merge with Blue Owl Capital Corporation III OBDE and OBDC will come out as the surviving entity. The tax-efficient reorganization effort will involve an exchange ratio for shareholders of OBDE to receive OBDC stock. The agreement has already received board approvals and is expected to be completed in the first quarter of 2025. The move is expected to bring significant operational savings over time while enhancing scale and preserving credit quality.
Zacks Rank & Key Picks
OBDC currently has a Zacks Rank #3 (Hold).
Investors interested in the broader Finance space may look at some better-ranked players like Jackson Financial Inc. JXN and HIVE Digital Technologies Ltd. HIVE, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Jackson Financial’s current-year earnings is pegged at $17.33 per share, which indicates 35% year-over-year growth. It witnessed two upward estimate revisions in the past 30 days against no downward movement. The consensus mark for JXN’s current year revenues suggests a 116.7% surge from a year ago.
The Zacks Consensus Estimate for HIVE Digital’s current-year earnings suggests a 34.6% year-over-year improvement. During the past month, HIVE has witnessed one upward estimate revision against none in the opposite direction. The consensus mark for current-year revenues is pegged at $127.2 million, an 11.1% increase from a year ago.
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Blue Owl Capital Corporation III (OBDE) : Free Stock Analysis Report