Morgan Stanley Direct Lending Fund functions as a business development company (BDC) specializing in finance, primarily providing capital to mid-sized enterprises. Its ...
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$1.90 per share
Est. EPS $0.44 · Revenue $87.52M · 4 analysts
Est. EPS $0.45 · Revenue $88.78M · 4 analysts
Est. EPS $1.81 · Revenue $354.17M · 4 analysts
EPS $0.34 · Revenue $65.44M
| Metric | Latest | YoYYoY means Year-over-Year. It compares the latest annual value with the previous annual value to show long-term trend strength. | QoQQoQ means Quarter-over-Quarter. It compares the latest quarter with the immediately previous quarter to show short-term momentum changes. |
|---|---|---|---|
| RevenueThe total money that came through the front door from selling things, before paying a single bill. Think of it as the grand total of every credit card swipe from customers. (YoY compares this year to last year's performance, while QoQ compares the current three months to the previous three). | $387.0M | +16.4% | +10.1% |
| Net IncomeThe absolute bottom line. If the company paid every single supplier, employee, banker, and tax collector, this is the actual money left in their pocket at the end of the day. | $122.1M | -43.4% | +275.8% |
| Gross MarginThe basic markup. If they sell a $100 pair of sneakers, this percentage tells you how much of that price tag is profit right after paying for the rubber and shoelaces, but before paying for things like store rent or TV commercials. | +81.0% | +28.6% | -23.1% |
| Operating MarginThe 'day job' efficiency score. Out of every dollar a customer spends, this shows how many cents the company keeps after making the product AND paying for all the everyday corporate overhead (like salaries, marketing, and keeping the lights on). | +66.7% | +1.7% | +68.4% |
| Net MarginThe final take-home percentage. When you strip away every conceivable cost, tax, and interest payment, this is the exact number of cents the company truly gets to keep from every dollar in sales. | +31.5% | -51.3% | +259.7% |
| Free Cash FlowThe holy grail of corporate cash. It's the spendable, physical money left over after the business pays for its daily operations AND buys the big, expensive upgrades (like new factories or servers) it needs to survive. This is the 'free' money they can use to pay dividends or buy back stock. | $150.9M | -25.1% | +20.2% |
| FCF MarginThe ultimate cash conversion rate. It shows how good the company is at turning regular sales directly into cold, hard, spendable cash. A high percentage means the business is an absolute cash-printing machine. | +39.0% | -35.6% | +9.2% |
| Debt / EquityThe financial risk gauge. It compares how much of the company's empire was built using borrowed money (loans) versus the owners' own money (shareholders). A high number means they are heavily leveraged and playing a riskier game; a low number means they are playing it safe. | 119.4% | +11.4% | -1.0% |
| Current RatioThe 12-month survival check. It simply compares the cash they have right now (plus things they can quickly turn into cash) against the immediate bills they absolutely must pay this year. A score above 1 means they have enough in the wallet to cover the upcoming bills without panicking. | 1.33x | -2.2% | +34.1% |
| Total AssetsThe absolute size of the company's empire. It bundles together absolutely everything of value they own—from the cash in the register and the inventory in the warehouse, to the software patents in the vault and the factories on the ground. | $3.9B | +0.2% | -3.0% |
| Metric | Annual (A vs E) | Annual Surprise | Quarter (A vs E) | Quarter Surprise |
|---|---|---|---|---|
| EPS Surprise | 1.40 vs 2.02 | -30.7% | 0.09 vs 0.44 | -79.3% |
| Revenue Surprise | $387.0M vs $398.1M | -2.8% | $82.6M vs $87.5M | -5.6% |
| Date | Executive | Title | Security | Side | Shares | Price |
|---|---|---|---|---|---|---|
| Mar 5, 2026 | Day Jeff M. | officer: Co-President | Common Stock, par value $0.001 per share | A | 5,000 | $14.89 |
| Mar 3, 2026 | Mizrachi Orit | officer: See Remarks | Common Stock, par value $0.001 per share | A | 1,000 | $14.49 |
| Mar 3, 2026 | MILLER DAVID N | director | Common Stock, par value $0.001 per share | A | 5,000 | $14.69 |
| Mar 2, 2026 | MILLER DAVID N | director | Common Stock, par value $0.001 per share | A | 5,000 | $14.68 |
| Mar 2, 2026 | Occi Michael Jr. | director, officer: Chief Executive Officer | Common Stock, par value $0.001 per share | A | 7,000 | $14.87 |
Operator: Welcome to Morgan Stanley Direct Lending Fund's second quarter 2026 earnings call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the prepared remarks. As a reminder, this conference call is being recorded. At this time, I'd like to turn the call over to Sanna Johnson, Head of Investor Relations. Please go ahead. Sanna Johnson: Good morning. Welcome to Morgan Stanley Direct Lending Fund's second quarter 2026 earnings call. I am joined this morning by Michael Occi, Chief Executive Officer, Jeff Day, Co-President, David Pessah, Chief Financial Officer, and Rebecca Shaoul, Head of Portfolio Management. Morgan Stanley Direct Lending Fund's second quarter 2026 financial results were released yesterday after market close and can be accessed on the investor relations section of our website at www.msdl.com. We have arranged for a replay of today's events that will be accessible from the Morgan Stanley Direct Lending Fund website. During this call, I want to remind you that we may make Forward-Looking statements based on current expectations. The statements on this call that are not purely historical are Forward-Looking statements. These Forward-Looking statements are not a guarantee of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the Forward-Looking statements, including, and without limitation, market conditions, uncertainty surrounding interest rates, changing economic conditions, and other factors we have identified in our filings with the SEC. Although we believe that the assumptions on which these Forward-Looking statements are based are reasonable, any of those assumptions can prove to be inaccurate, and as a result, the Forward-Looking statements based on those assumptions can be incorrect. You should not place undue reliance on these Forward-Looking statements. The Forward-Looking statements contained on this call are made as of the date hereof. We assume no obligation to update the Forward-Looking statements or subsequent events. To obtain copies of SEC-related filings, please visit our website. With that, I will now turn the call over to Michael Occi. Michael Occi: Good morning, everyone, and thank you for joining us today. I'll begin with our second quarter performance and outlook before turning the call over to Jeff to discuss the market environment and deployment activity. David will then review our financial results in greater detail, after which we will open the call up for Q&A. Beginning with operating results, we generated net investment income of $0.45 per share compared with $0.47 per share in the prior quarter. Second quarter earnings reflected a growing contribution from the Capstone JV, offset by the income drag associated with new non-accruals added during the quarter and higher other financing costs. For the third quarter, the board declared a dividend of $0.45 per …
| Name | Title | Gender | Year Born | Status |
|---|---|---|---|---|
Erin Hood | Secretary | Female | — | Active |
Hope Lynne Brown Saxton | Chief Compliance Officer | Female | 1974 | Active |
Michael Occi Jr. | Chief Executive Officer & Director | Male | 1984 | Active |
Orit Mizrachi | Co- President & COO | Female | 1973 | Active |
Sanna Johnson | Investor Relations Contact | Female | — | Active |
Ashwin Krishnan | Chief Investment Officer | Male | 1977 | Active |
David Pessah | Chief Financial Officer | Male | 1986 | Active |
Jeffrey Day | Co-President | Male | 1977 | Active |
Externally managed BDCs face structural challenges, notably high fees and misaligned incentives, making them difficult portfolio inclusions. I favor internally managed BDCs for long-term value, but selectively own some external names as well. There could be two motives for owning external ones: 1) tactical trades (high risk, high retur) and 2) long-term income compounding.
I'm downgrading the Morgan Stanley Direct Lending Fund to a "Sell" due to rising non-accruals and deteriorating fundamentals. Q2 saw NII per share fall to $0.55 and non-accruals spike from 1.5% to 2.9%, driving a $0.31 NAV decline. Dividend coverage is thin, with base coverage at ~90% on a cash basis and limited prospects for sustainable growth.
The lion's share of BDC players has cut their dividends in the past 12-month period (especially, if we count in supplemental payments). For most BDCs that haven't done that yet, it is only a matter of time before they arrive at such a decision. Among these BDCs, we can also find so-called blue-chip BDCs that some investors view as truly durable income compounders.
Morgan Stanley Direct Lending Fund NYSE: MSDL reported second-quarter net investment income of $38.2 million, or $0.45 per share, down from $0.47 per share in the prior quarter, as higher contributions from its Capstone joint venture were offset by new non-accruals and increased financing costs.
Morgan Stanley Direct Lending Fund (MSDL) Q2 2026 Earnings Call Transcript
