Blue Owl Capital Corporation OBDC reported fourth-quarter 2023 earnings per share (EPS) of 51 cents, which beat the Zacks Consensus Estimate by 6.3%. The bottom line also improved 24.4% year over year.
The total investment income of OBDC amounted to $411.2 million, which increased 17.3% year over year. The top line beat the Zacks Consensus Estimate by 3.5%.
Strong fourth-quarter results of OBDC were supported by growth in the portfolio, improved interest rates and record net investment income. However, the positives were partially offset by increased costs.
Blue Owl Capital Corporation Price, Consensus and EPS Surprise
Blue Owl Capital Corporation Price, Consensus and EPS Surprise
Blue Owl Capital Corporation price-consensus-eps-surprise-chart | Blue Owl Capital Corporation Quote
Q4 Update
Net investment income increased 22.5% year over year to $199 million. The metric beat our estimate by 5.3%.
Total new investment commitments (net of sell downs) were $1.3 billion across 17 new portfolio companies and 14 existing ones. The metric rose more than five-fold year over year in the quarter under review.
Blue Owl Capital ended the fourth quarter with investments in 193 portfolio companies, backed with an aggregate fair value of $12.7 billion. Based on the fair value, the average investment size in each portfolio company was $65.9 million as of Dec 31, 2023.
Total expenses escalated 11.7% year over year to $207.9 million in the fourth quarter. The metric was 3.5% higher than our estimate, primarily due to higher interest expenses, performance-based incentive fees, management fees and other general and administrative expenses.
The company recorded a net income of $189 million in the fourth quarter compared with $191.9 million in the year-ago period.
Full-Year Update
Total investment income of $1.6 billion increased 31.6% year over year in 2023.
Net investment income of $1.93 per share improved 36.9% year over year in 2023.
Financial Update (as of Dec 31, 2023)
Blue Owl Capital exited the fourth quarter with cash and restricted cash of $659.7 million, which improved from $445.1 million as of Dec 31, 2022. Total assets of $13.5 billion fell from $13.6 billion at 2022-end.
Debt was $7.1 billion, down from $7.3 billion at 2022-end. OBDC had $1.4 billion of undrawn capacity under its credit facilities.
Net cash from operating activities in 2023 was $1.1 billion compared with the prior-year figure of $217.3 million.
At the fourth-quarter end, net debt to equity was 1.09X compared with 1.19x at 2022-end.
Dividend & Repurchase Update
The board of directors at Blue Owl Capital declared a first-quarter 2024 dividend of 37 cents per share, an increase of 2 cents, to be paid on or before Apr 15, 2024, to shareholders of record as of Mar 29. It also provided a fourth-quarter 2023 supplemental dividend of 8 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 Dec 31, 2023, $50 million of OBDC stock was purchased. The company did not make share repurchases under this program in the fourth quarter, leaving it with a remaining fund of $100 million.
Zacks Rank
Blue Owl Capital currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Players
Of the insurance industry players that have reported fourth-quarter 2023 results so far, the bottom-line results of RLI Corp. RLI, RenaissanceRe Holdings Ltd. RNR and Kinsale Capital Group, Inc. KNSL beat their respective Zacks Consensus Estimate.
RLI reported fourth-quarter 2023 operating earnings of $1.54 per share, beating the Zacks Consensus Estimate by 6.9%. The bottom line improved 0.6% from the year-ago quarter. Operating revenues for the reported quarter were $378.4 million, up 15% year over year. The top line, however, missed the consensus estimate by 2%.
Gross premiums written increased 13% year over year to $434.4 million. Net investment income of RLI increased 14.4% year over year to $32.5 million. The investment portfolio’s total return was 6.4%. Underwriting income of $59.8 million increased 10.9%. The combined ratio deteriorated 60 bps year over year to 82.7%.
RenaissanceRe’s fourth-quarter 2023 operating income of $11.77 per share beat the Zacks Consensus Estimate by 44.8%. The bottom line increased 60.6% year over year. Total operating revenues increased 42.5% year over year to $2.6 billion in the fourth quarter. The top line outpaced the consensus mark by 19.6%.
RNR’s net premiums earned improved 38.5% year over year to $2.2 billion. The net investment income amounted to $377 million, which increased 11.6% year over year in the quarter under review. It reported an underwriting income of $541 million, which surged 71% year over year. The combined ratio improved 450 bps year over year to 76% in the fourth quarter.
Kinsale Capital delivered fourth-quarter 2023 net operating earnings of $3.87 per share, which outpaced the Zacks Consensus Estimate by 12.5%. The bottom line increased 48.8% year over year. Operating revenues jumped 41.5% year over year to about $351.2 million. Revenues beat the consensus estimate by 3.8%. Gross written premiums of $395.2 million rose 33.8% year over year.
Net written premiums of KNSL climbed 26.5% year over year to $306.3 million. Its underwriting income was $84.8 million, which grew 42.6% year over year. The combined ratio improved 100 bps to 72.1% in the quarter under review. While the expense ratio improved 190 bps to 19.9% in the quarter, the loss ratio deteriorated 90 bps to 52.2%.
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