LIEN — Chicago Atlantic BDC, Inc.

Summary of Chicago Atlantic BDC, Inc. Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Net Investment Income: Reached a record $10 million, or $0.44 per share, up from $8.3 million ($0.36 per share) in Q4 2025.
• Gross Investment Income: Increased to $16.7 million from $14.2 million in the previous quarter, primarily due to higher interest income.
• Net Expenses: Rose to $6.7 million from $5.9 million, driven by increased interest expenses from credit facility utilization.
• Net Assets: Increased to $304.2 million, with a net asset value per share of $13.33, up from $13.30 in Q4 2025.
• Debt Levels: Company had $54.5 million of debt outstanding, resulting in a low debt-to-equity ratio of 0.18x compared to the BDC average of 1.3x.
• Dividend: Maintained a $0.34 dividend for the seventh consecutive quarter.

2. Strategic Updates and Business Highlights

• Chicago Atlantic BDC focuses on lending primarily to the cannabis industry, benefiting from limited competition.
• Funded a record $93.9 million across seven portfolio companies, including three new borrowers.
• 100% of the debt portfolio is senior secured, with 94% insulated from interest rate declines through fixed-rate structures or interest rate floors.
• The company filed a shelf registration statement to issue up to $500 million in securities, primarily targeting debt securities to enhance liquidity.

3. Forward Guidance and Outlook

• Anticipates continued growth in the cannabis sector, particularly following recent federal policy shifts that could enhance credit quality for borrowers.
• The company expects to maintain a disciplined underwriting approach while exploring opportunities in both cannabis and non-cannabis sectors.
• The origination pipeline totals approximately $810 million, with $482 million in cannabis opportunities and $328 million in non-cannabis opportunities.

4. Bad News, Challenges, or Points of Concern

• The company recognized a net unrealized loss of $1.4 million due to widening spreads, not reflecting underlying credit performance.
• There is ongoing uncertainty in the regulatory environment, which could impact future lending competition and market dynamics.
• The company remains cautious about the broader economic landscape and potential market-driven repricing events affecting BDCs.

5. Notable Q&A Insights

• Management emphasized that the shelf registration is primarily for future debt capital raising, with no specific rates or timing discussed.
• The company aims to stay well below the BDC average for leverage, indicating a conservative approach to debt.
• There is a notable increase in M&A activity within the cannabis sector, driven by recent regulatory changes, although management noted that not all transactions may be publicly announced.
• The non-cannabis origination pipeline has grown significantly, but the company maintains that its focus will remain on cannabis lending as regulatory conditions improve.

Overall, Chicago Atlantic BDC reported strong financial results and maintained a positive outlook, particularly in light of favorable regulatory developments in the cannabis sector, while also acknowledging the need for cautious management of risks and market conditions.