Carlyle Credit Solutions Sees Strong Q2 Income Growth

TL;DR

**Carlyle Credit Solutions is crushing it with a 32% jump in net assets, making it a solid buy for income-focused investors.**

AI Summary

Carlyle Credit Solutions, Inc. reported a net increase in net assets resulting from operations of $100.2 million for the six months ended June 30, 2025, a significant rise from $75.8 million for the same period in 2024. Total investment income for the six months ended June 30, 2025, was $175.5 million, up from $140.1 million in the prior year, primarily driven by increased interest income from debt investments. The company's net investment income also saw a healthy increase to $95.3 million for the first half of 2025, compared to $70.1 million in the first half of 2024. Expenses rose to $80.2 million for the six months ended June 30, 2025, from $70.0 million in the previous year, mainly due to higher interest and debt financing expenses. The company's investment portfolio continues to be diversified, with significant holdings in first-lien debt across various sectors like Healthcare & Pharmaceuticals and Diversified Financial Services. Unrealized appreciation on investments contributed $4.9 million to net assets for the six months ended June 30, 2025, a notable shift from an unrealized depreciation of $2.2 million in the same period of 2024. The strategic outlook remains focused on generating income through a diversified portfolio of debt investments.

Why It Matters

Carlyle Credit Solutions' robust performance, with a 32.2% increase in net assets from operations, signals a strong credit market and effective investment strategies, which is positive for investors seeking income-generating assets. This growth, particularly in first-lien debt, suggests resilience in their portfolio amidst potential economic fluctuations, offering a competitive edge against other BDCs. Employees benefit from a stable and growing company, while customers of the underlying portfolio companies gain access to crucial financing. The broader market sees this as an indicator of continued liquidity and confidence in private credit, potentially influencing capital allocation decisions across the financial sector.

Risk Assessment

Risk Level: medium — The company's significant exposure to first-lien debt, while generally lower risk, still carries credit risk from individual portfolio companies, as evidenced by the detailed list of investments. While unrealized appreciation of $4.9 million for the six months ended June 30, 2025, is positive, the nature of private credit investments means valuations can be subjective and subject to market volatility, posing a medium risk to investors.

Analyst Insight

Investors should consider Carlyle Credit Solutions for its strong income generation and diversified first-lien debt portfolio. Monitor interest rate trends and the credit quality of its underlying investments, but the current performance suggests a favorable outlook for continued dividends.

Financial Highlights

debt To Equity

N/A

revenue

$175.5M

operating Margin

54.3%

total Assets

N/A

total Debt

N/A

net Income

$100.2M

eps

N/A

gross Margin

N/A

cash Position

N/A

revenue Growth

+25.3%

Revenue Breakdown

Key Numbers

• $100.2M — Net increase in net assets from operations (for six months ended June 30, 2025, up from $75.8M in 2024)
• $175.5M — Total investment income (for six months ended June 30, 2025, up from $140.1M in 2024)
• $95.3M — Net investment income (for six months ended June 30, 2025, up from $70.1M in 2024)
• $80.2M — Total expenses (for six months ended June 30, 2025, up from $70.0M in 2024)
• $4.9M — Unrealized appreciation on investments (for six months ended June 30, 2025, a shift from $2.2M depreciation in 2024)
• 32.2% — Percentage increase in net assets from operations (comparing six months ended June 30, 2025, to 2024)

Key Players & Entities

• Carlyle Credit Solutions, Inc. (company) — filer of the 10-Q
• Bloomberg (company) — publisher of this analysis
• SEC (regulator) — regulates financial filings
• AAH Topco., LLC (company) — investment in Healthcare & Pharmaceuticals
• Appriss Health, LLC (company) — investment in Healthcare & Pharmaceuticals
• Artifact Bidco, Inc. (company) — investment in Software
• One Vanderbilt Avenue (location) — business address of Carlyle Credit Solutions
• New York (location) — city of business address

FAQ

Risk Factors

• Interest Rate Volatility [medium — market]: Fluctuations in interest rates can impact the fair value of debt investments and the company's net investment income. The company's portfolio is primarily composed of floating-rate debt, which offers some protection against rising rates but can be sensitive to significant declines.
• Credit Risk of Investments [high — financial]: The company's primary risk is the potential for default or credit deterioration of its debt investments. A significant portion of the portfolio is in first-lien debt, which generally has a higher recovery rate in the event of default, but concentrated exposure to specific industries or issuers could amplify losses.
• Reliance on Investment Management [medium — operational]: The company's performance is heavily dependent on the expertise of its investment manager, Carlyle. Any disruption in their ability to source, manage, and monitor investments could negatively impact returns.
• Regulatory Compliance [low — regulatory]: As a credit solutions provider, the company is subject to various financial regulations. Changes in regulations related to lending, capital requirements, or disclosure could increase compliance costs and impact operations.

Industry Context

Carlyle Credit Solutions operates within the competitive credit market, focusing on providing debt financing to middle-market companies. The industry is characterized by a demand for flexible capital solutions and is influenced by interest rate environments and overall economic health. Key competitors include other business development companies (BDCs) and private credit funds.

Regulatory Implications

As a regulated investment company, Carlyle Credit Solutions must adhere to specific rules regarding leverage, asset coverage, and distributions. Compliance with these regulations is crucial for maintaining its operating structure and investor confidence.

What Investors Should Do

1. Monitor interest income trends
2. Analyze expense management
3. Evaluate portfolio diversification and credit quality
4. Observe unrealized gains/losses

Key Dates

• 2025-06-30: End of Second Quarter Reporting Period — Marks the period for which the reported financial results are current.
• 2025-08-12: 10-Q Filing Date — The date the company officially submitted its quarterly report to the SEC, providing updated financial and operational information to investors.
• 2025-01-01: Start of Fiscal Year 2025 — Beginning of the period for which year-to-date financial performance is reported.
• 2024-06-30: End of Second Quarter 2024 — Provides a comparable period for year-over-year performance analysis.

Glossary

Net assets resulting from operations

The total increase or decrease in the company's net worth attributable to its core business activities during a specific period. (Indicates the profitability and growth of the company's investment activities.)

Investment income

Revenue generated from the company's investments, primarily interest earned on debt instruments and any dividends or capital gains. (A key driver of the company's overall financial performance.)

Net investment income

Investment income less operating expenses, excluding any incentive fees. (Represents the core income generated from the investment portfolio before management fees.)

Unrealized appreciation/depreciation

Changes in the fair value of investments that have not yet been sold. Appreciation increases net assets, while depreciation decreases them. (Reflects the impact of market fluctuations on the value of the company's holdings.)

First-lien debt

A type of debt that has the highest priority claim on a borrower's assets in the event of bankruptcy or liquidation. (Indicates a focus on lower-risk debt investments within the portfolio.)

Year-Over-Year Comparison

For the six months ended June 30, 2025, Carlyle Credit Solutions reported a substantial 32.2% increase in net assets from operations, reaching $100.2 million, compared to $75.8 million in the prior year. This growth was fueled by a 25.3% rise in total investment income to $175.5 million, primarily from debt investments. While total expenses also climbed by 14.6% to $80.2 million, the net investment income saw a robust increase of 35.9% to $95.3 million. A notable positive shift was the $4.9 million in unrealized appreciation on investments, contrasting with $2.2 million in depreciation during the same period last year, indicating improved market valuations for its portfolio.

Key Financial Figures

• $0.01 — hares of the registrant's common stock, $0.01 par value per share, outstanding at Aug

Filing Documents

• cars-20250630.htm (10-Q) — 5943KB
• cars_2025630x10-qxex311.htm (EX-31.1) — 9KB
• cars_2025630x10-qxex312.htm (EX-31.2) — 9KB
• cars_2025630x10-qex321.htm (EX-32.1) — 5KB
• cars_2025630x10-qxex322.htm (EX-32.2) — 5KB
• 0001702510-25-000109.txt ( ) — 26909KB
• cars-20250630.xsd (EX-101.SCH) — 64KB
• cars-20250630_cal.xml (EX-101.CAL) — 64KB
• cars-20250630_def.xml (EX-101.DEF) — 393KB
• cars-20250630_lab.xml (EX-101.LAB) — 714KB
• cars-20250630_pre.xml (EX-101.PRE) — 538KB
• cars-20250630_htm.xml (XML) — 6748KB

Financial Information

Part I. Financial Information

Financial Statements

Item 1. Financial Statements Consolidated Statements of Assets and Liabilities as of June 30, 2025 (unaudited) and December 31, 2024 2 Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024 (unaudited) 3 Consolidated Statements of Changes in Net Assets for the six months ended June 30, 2025 and 2024 (unaudited) 4 Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 (unaudited) 5 Consolidated Schedules of Investments as of June 30, 2025 (unaudited) and December 31, 2024 6

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 40

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 66

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 81

Controls and Procedures

Item 4. Controls and Procedures 82

Other Information

Part II. Other Information

Legal Proceedings

Item 1. Legal Proceedings 83

Risk Factors

Item 1A. Risk Factors 83

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 83

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 83

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 83

Other Information

Item 5. Other Information 84

Exhibits

Item 6. Exhibits 85

Signatures

Signatures 86 1 Table of Contents CARLYLE CREDIT SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (amounts in thousands, except share and per share data) June 30, 2025 December 31, 2024 ASSETS (unaudited) Investments—non-controlled/non-affiliated, at fair value (amortized cost of $ 2,292,211 and $ 2,008,800 , respectively) $ 2,248,876 $ 1,951,269 Cash, cash equivalents and restricted cash 73,570 108,453 Receivable for investments sold 1,197 2,140 Interest receivable 26,451 18,885 Receivable for issuance of common stock 22 22 Derivative assets, at fair value (Note 5) — 3,772 Prepaid expenses and other assets 11,739 10,619 Total assets $ 2,361,855 $ 2,095,160 LIABILITIES Debt and secured borrowings (Note 6) $ 830,410 $ 506,655 Payable for investments purchased 194 50,974 Interest and credit facility fees payable (Note 6) 8,975 6,104 Derivative liabilities, at fair value (Note 5) 4,402 — Dividend payable (Note 8) 13,310 13,091 Management and incentive fees payable (Note 4) 8,719 8,738 Administrative service fees payable (Note 4) 353 1,504 Common stock proceeds received in advance — 12,454 Other accrued expenses and liabilities 3,611 3,178 Total liabilities 869,974 602,698 Commitments and contingencies (Notes 7 and 11) NET ASSETS Common stock, $ 0.01 par value; 200,000,000 shares authorized; 78,099,761 and 76,812,863 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively 781 768 Paid-in capital in excess of par value 1,574,037 1,549,238 Total distributable earnings (loss) ( 82,937 ) ( 57,544 ) Total net assets $ 1,491,881 $ 1,492,462 NET ASSETS PER SHARE $ 19.10 $ 19.43 The accompanying notes are an integral part of these unaudited consolidated financial statements. 2 Table of Contents CARLYLE CREDIT SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands, except share and per share data) (unaudited) Three Months Ended June 30, Six Months Ende

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