Blue Owl Capital (OBDC) Q2 Earnings Beat, Revenues Rise Y/Y
Blue Owl Capital Corporation OBDC reported second-quarter 2023 earnings per share of 48 cents, which beat the Zacks Consensus Estimate by 4.4%. The bottom line also improved 50% year over year.
The total investment income of OBDC amounted to $394.2 million, which increased 44.3% year over year. The top line beat the Zacks Consensus Estimate by 2.6%.
Strong quarterly results of OBDC were supported by growth in the portfolio, increased interest rates and record net investment income. However, the positives were partially offset by higher costs.
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 49.2% year over year to $186.7 million. The metric beat our estimate by 10.6%.
Total new investment commitments were $183 million across five new portfolio companies and six existing ones. The metric plunged 69.7% year over year in the quarter under review.
Blue Owl Capital ended the second quarter with investments in 187 portfolio companies, backed with an aggregate fair value of $12.9 billion. Based on the fair value, the average investment size in each portfolio company was $68.9 million as of Jun 30, 2023.
Total expenses escalated 40% year over year to $205.2 million in the second quarter. The metric was 2.1% higher than our estimate, primarily due to higher interest expenses, performance-based incentive fees and other general and administrative expenses.
The company recorded a net income of $195.6 million in the second quarter against $34.9 million loss in the prior-year quarter.
Financial Update (as of Jun 30, 2023)
Blue Owl Capital exited the second quarter with cash and restricted cash of $367.9 million, which declined from $445.1 million as of Dec 31, 2022. Total assets of $13.4 billion fell from $13.6 billion at 2022-end.
Debt was $7 billion, down from $7.3 billion at 2022-end. OBDC had $1.5 billion of undrawn capacity under its credit facilities.
Net cash from operating activities in the first half of 2023 was $542.8 million compared with the prior year’s figure of $74.7 million.
At the second-quarter end, net debt to equity was 1.14X compared with 1.19x at 2022-end.
Dividend & Repurchase Update
The board of directors at Blue Owl Capital declared a third-quarter 2023 dividend of 33 cents per share to be paid on or before Oct 13, 2023, to shareholders of record as of Sep 29. It also provided a second-quarter 2023 supplemental dividend of 7 cents per share.
OBDC brought in a share buyback program of $150 million on Nov 1, 2022, with a life span of 18 months. As of Jun 30, 2023, $75 million of OBDC stock was purchased, of which 66.6% was bought by OBDC at a price of $12.22 per share.
Outlook
Most of Blue Owl Capital’s assets are floating, so an improving interest rate environment is projected to drive net investment income. Included in Investment Income are Pre-Payment fees, which are expected to increase as the interest rate stabilizes, thereby increasing repayments.
Zacks Rank
Blue Owl Capital currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Players
Of the broader finance sector players that have reported second-quarter 2023 results so far, the bottom-line results of Assurant, Inc. AIZ, The Hartford Financial Services Group, Inc. HIG and Aflac Incorporated AFL beat the Zacks Consensus Estimate.
Assurant reported second-quarter 2023 net operating income of $3.89 per share, which beat the Zacks Consensus Estimate by 49.6%. The bottom line increased 32% from the year-ago quarter. Total revenues increased 6.4% year over year to $2.7 billion. The top line beat the consensus estimate by 4.3%.
Net investment income of AIZ was up 22.7% year over year to $112.9 million and beat the Zacks Consensus Estimate of $110 million. Revenues at the Global Housing segment increased 16% year over year at $561.8 million, while the same at the Global Lifestyle unit increased 5.3% year over year to $2.2 billion.
Hartford Financial’s second-quarter 2023 adjusted operating earnings of $1.88 per share outpaced the Zacks Consensus Estimate by 1.6%. However, the bottom line declined 13% year over year. Operating revenues of HIG rose 8.3% year over year to $4,078 million in the quarter under review. Yet, the top line missed the consensus mark by a whisker.
Net earned premiums of Hartford Financial amounted to $5,220 million, which improved 8.5% year over year in the second quarter. The Commercial Lines segment recorded revenues of $3,210 million in the second quarter, which rose 15.3% year over year. Core earnings fell 9% year over year to $493 million.
Aflac reported second-quarter 2023 adjusted earnings per share of $1.58, which beat the Zacks Consensus Estimate by 11.3%. The bottom line increased 7.5% year over year. AFL’s revenues dropped 2.7% year over year to $5,172 million in the quarter under review. The top line, however, beat the consensus mark by 14.5%. Adjusted net investment income fell 3% year over year to $892 million.
Aflac Japan’s adjusted revenues decreased 11.6% year over year to $2,710 million in the quarter under review. New annualized premium sales of the segment improved 26.6% year over year.
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Blue Owl Capital Corporation (OBDC) : Free Stock Analysis Report
