Oaktree Specialty Lending Corporation (NASDAQ: OCSL) (“Oaktree
Specialty Lending” or the “Company”), a specialty finance company,
today announced its financial results for the fiscal quarter ended
June 30, 2024.
Financial Highlights for the Quarter Ended
June 30, 2024
- Total investment income was $95.0 million
($1.16 per share) for the third fiscal quarter of 2024, as compared
with $94.0 million ($1.18 per share) for the second fiscal quarter
of 2024. The increase was primarily driven by higher interest
income as a result of the growth in the investment portfolio and
higher original issue discount (“OID”) accretion driven by purchase
premium acceleration in the prior quarter from the repayment of
certain investments acquired in the mergers with Oaktree Strategic
Income Corporation (“OCSI”) and Oaktree Strategic Income II, Inc.
(“OSI2”). This was partially offset by the impact of certain
investments that were placed on non-accrual status and a decrease
in amendment fees. Adjusted total investment income was $95.6
million ($1.17 per share) for the third fiscal quarter, as compared
with $97.3 million ($1.22 per share) for the second fiscal quarter
of 2024. The decrease was primarily driven by lower interest income
due to the impact of certain investments that were placed on
non-accrual status and lower OID acceleration from investment
repayments as well as a decrease in amendment fees. This was
partially offset by higher coupon interest income as a result of
the growth in the investment portfolio.
- GAAP net investment income was $44.6 million
($0.54 per share) for the third fiscal quarter of 2024, as compared
with $41.4 million ($0.52 per share) for the second fiscal quarter
of 2024. The increase for the quarter was primarily driven by lower
part I incentive fees (net of fees waived) and higher total
investment income, partially offset by higher interest
expense.
- Adjusted net investment income was $45.2
million ($0.55 per share) for the third fiscal quarter of 2024, as
compared with $44.7 million ($0.56 per share) for the second fiscal
quarter of 2024. The increase for the quarter was primarily driven
by lower part I incentive fees (net of fees waived), partially
offset by lower adjusted total investment income and higher
interest expense. The per share decrease for the quarter was driven
by an increase in weighted average shares outstanding.
- Net asset value ("NAV") per share was $18.19
as of June 30, 2024, down as compared with $18.72 as of March
31, 2024. The decline from March 31, 2024 primarily reflected
unrealized losses on certain debt and equity investments.
- Waived part I incentive fees of $3.2 million
in addition to the $1.5 million of management fees waived for the
quarter ended June 30, 2024.
- Originated $338.7 million of new investment
commitments and received $185.5 million of proceeds from
prepayments, exits, other paydowns and sales during the quarter
ended June 30, 2024. The weighted average yield on new debt
investments was 11.1%.
- Total debt outstanding was $1,740.0 million as
of June 30, 2024. The total debt to equity ratio was 1.16x,
and the net debt to equity ratio was 1.10x, after adjusting for
cash and cash equivalents.
- Liquidity as of June 30, 2024 was
composed of $96.3 million of unrestricted cash and cash
equivalents and $827.5 million of undrawn capacity under the
Company's credit facilities (subject to borrowing base and other
limitations). Unfunded investment commitments were $291.4 million,
or $264.3 million excluding unfunded commitments to the
Company's joint ventures. Of the $264.3 million, approximately
$219.4 million can be drawn immediately with the remaining
amount subject to certain milestones that must be met by portfolio
companies or other restrictions.
- A quarterly cash distribution was declared of
$0.55 per share. The distribution is payable in cash on September
30, 2024 to stockholders of record on September 16, 2024.
Armen Panossian, Chief Executive Officer and Chief Investment
Officer, said “Our fiscal third quarter results were supported by
continued origination activity, which led to portfolio growth and
increased coupon interest income. Our originations in the third
quarter were $339 million of new investment commitments, while also
realizing repayments and sales of $186 million.”
“We remain focused on shifting our investment composition to
first lien loans and on improving our portfolio quality and
performance in this changing market environment. During the
quarter, however, we experienced challenges at certain portfolio
investments, resulting in a decline in NAV and an increase in
non-accruals,” Panossian added. “We continue to leverage our
expertise in navigating turnarounds with the goal of achieving
favorable outcomes on these investments and generating value for
our shareholders.”
“In addition to the permanent management fee reduction that went
into effect on July 1, 2024, we have announced an incentive fee
waiver as part of our third quarter results, which demonstrates our
commitment to shareholders. We remain confident in our strategy and
the ability of our portfolio to deliver sustainable and attractive
returns.”
Distribution Declaration
The Board of Directors declared a quarterly distribution of
$0.55 per share. The distribution is payable in cash on
September 30, 2024 to stockholders of record on
September 16, 2024.
Distributions are paid primarily from distributable (taxable)
income. To the extent taxable earnings for a fiscal taxable year
fall below the total amount of distributions for that fiscal year,
a portion of those distributions may be deemed a return of capital
to the Company’s stockholders.
Results of Operations
|
|
For the three months ended |
($ in thousands, except per
share data) |
|
June 30, 2024(unaudited) |
|
March 31, 2024(unaudited) |
|
June 30, 2023(unaudited) |
GAAP operating results: |
|
|
|
|
|
|
Interest income |
|
$ |
85,953 |
|
|
$ |
85,256 |
|
|
$ |
95,310 |
|
PIK interest income |
|
|
6,149 |
|
|
|
4,816 |
|
|
|
3,967 |
|
Fee income |
|
|
1,460 |
|
|
|
2,546 |
|
|
|
1,573 |
|
Dividend income |
|
|
1,404 |
|
|
|
1,411 |
|
|
|
1,050 |
|
Total investment income |
|
|
94,966 |
|
|
|
94,029 |
|
|
|
101,900 |
|
Net expenses |
|
|
50,391 |
|
|
|
52,662 |
|
|
|
53,487 |
|
Net investment income |
|
|
44,575 |
|
|
|
41,367 |
|
|
|
48,413 |
|
Net realized and unrealized gains (losses), net of taxes |
|
|
(43,455 |
) |
|
|
(32,030 |
) |
|
|
(11,728 |
) |
Net increase (decrease) in net assets resulting from
operations |
|
$ |
1,120 |
|
|
$ |
9,337 |
|
|
$ |
36,685 |
|
Total investment income per common share |
|
$ |
1.16 |
|
|
$ |
1.18 |
|
|
$ |
1.32 |
|
Net investment income per common share |
|
$ |
0.54 |
|
|
$ |
0.52 |
|
|
$ |
0.63 |
|
Net realized and unrealized gains (losses), net of taxes
per common share |
|
$ |
(0.53 |
) |
|
$ |
(0.40 |
) |
|
$ |
(0.15 |
) |
Earnings (loss) per common share — basic and
diluted |
|
$ |
0.01 |
|
|
$ |
0.12 |
|
|
$ |
0.48 |
|
Non-GAAP Financial
Measures1: |
|
|
|
|
|
|
Adjusted total investment income |
|
$ |
95,573 |
|
|
$ |
97,340 |
|
|
$ |
101,058 |
|
Adjusted net investment income |
|
$ |
45,182 |
|
|
$ |
44,678 |
|
|
$ |
47,571 |
|
Adjusted net realized and unrealized gains (losses), net of
taxes |
|
$ |
(44,055 |
) |
|
$ |
(35,344 |
) |
|
$ |
(11,116 |
) |
Adjusted earnings (loss) |
|
$ |
1,127 |
|
|
$ |
9,334 |
|
|
$ |
36,455 |
|
Adjusted total investment income per share |
|
$ |
1.17 |
|
|
$ |
1.22 |
|
|
$ |
1.31 |
|
Adjusted net investment income per share |
|
$ |
0.55 |
|
|
$ |
0.56 |
|
|
$ |
0.62 |
|
Adjusted net realized and unrealized gains (losses), net of
taxes per share |
|
$ |
(0.54 |
) |
|
$ |
(0.44 |
) |
|
$ |
(0.14 |
) |
Adjusted earnings (loss) per share |
|
$ |
0.01 |
|
|
$ |
0.12 |
|
|
$ |
0.47 |
|
______________________1 See Non-GAAP Financial Measures below
for a description of the non-GAAP measures and the reconciliations
from the most comparable GAAP financial measures to the Company's
non-GAAP measures, including on a per share basis. The Company's
management uses these non-GAAP financial measures internally to
analyze and evaluate financial results and performance and believes
that these non-GAAP financial measures are useful to investors as
an additional tool to evaluate ongoing results and trends for the
Company and to review the Company’s performance without giving
effect to non-cash income/gain/loss resulting from the merger of
OCSI with and into the Company in March 2021 (the "OCSI Merger")
and the merger of OSI2 with and into the Company in January 2023
(the "OSI2 Merger") and, in the case of adjusted net investment
income, without giving effect to capital gains incentive fees. The
presentation of non-GAAP measures is not intended to be a
substitute for financial results prepared in accordance with GAAP
and should not be considered in isolation.
|
|
As of |
($ in thousands, except per
share data and ratios) |
|
June 30, 2024(unaudited) |
|
March 31, 2024(unaudited) |
|
June 30, 2023(unaudited) |
Select balance sheet and other data: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
96,321 |
|
|
$ |
125,031 |
|
|
$ |
59,704 |
|
Investment portfolio at fair value |
|
|
3,121,703 |
|
|
|
3,047,445 |
|
|
|
3,135,619 |
|
Total debt outstanding (net of unamortized financing costs) |
|
|
1,697,164 |
|
|
|
1,635,642 |
|
|
|
1,740,066 |
|
Net assets |
|
|
1,496,133 |
|
|
|
1,524,099 |
|
|
|
1,509,441 |
|
Net asset value per share |
|
|
18.19 |
|
|
|
18.72 |
|
|
|
19.58 |
|
Total debt to equity ratio |
|
|
1.16 |
x |
|
|
1.10 |
x |
|
|
1.18 |
x |
Net debt to equity ratio |
|
|
1.10 |
x |
|
|
1.02 |
x |
|
|
1.14 |
x |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted total investment income for the quarter ended
June 30, 2024 was $95.6 million and included $86.6 million of
interest income from portfolio investments, $6.1 million of
payment-in-kind ("PIK") interest income, $1.5 million of fee income
and $1.4 million of dividend income. The $1.8 million decline in
adjusted total investment income was attributable to a $0.7 million
decrease in interest income, which was attributable to certain
investments that were placed on non-accrual status and lower OID
acceleration from investment repayments and was partially offset by
higher coupon interest income as a result of the growth in the
investment portfolio. Also contributing to the decline was a $1.1
million decrease in fee income which was primarily due to lower
amendment fees.
Net expenses for the quarter ended June 30, 2024 totaled
$50.4 million, down $2.3 million from the quarter ended March 31,
2024. The decrease for the quarter was primarily driven by $3.3
million lower part I incentive fees (net of fees waived) as a
result of the Part I incentive fees waived by Oaktree during the
quarter, partially offset by $0.6 million of higher interest
expense from an increase in borrowings and $0.2 million of higher
general and administrative expenses.
Adjusted net investment income was $45.2 million ($0.55 per
share) for the quarter ended June 30, 2024, as compared to
$44.7 million ($0.56 per share) for the quarter ended March 31,
2024. The increase of $0.5 million for the quarter reflected $2.3
million of lower net expenses, partially offset by $1.8 million of
lower adjusted total investment income. The per share decrease for
the quarter was driven by an increase in weighted average shares
outstanding.
Adjusted net realized and unrealized losses, net of taxes, was
$44.1 million for the quarter ended June 30, 2024, primarily
reflecting realized and unrealized losses on certain debt and
equity investments.
Portfolio and Investment Activity
|
|
As of |
($ in thousands) |
|
June 30, 2024(unaudited) |
|
March 31, 2024(unaudited) |
|
June 30, 2023(unaudited) |
Investments at fair value |
|
$ |
3,121,703 |
|
|
$ |
3,047,445 |
|
|
$ |
3,135,619 |
|
Number of portfolio companies |
|
|
158 |
|
|
|
151 |
|
|
|
156 |
|
Average portfolio company debt size |
|
$ |
19,900 |
|
|
$ |
20,100 |
|
|
$ |
19,800 |
|
|
|
|
|
|
|
|
Asset class: |
|
|
|
|
|
|
First lien debt |
|
|
82.5 |
% |
|
|
80.8 |
% |
|
|
76.5 |
% |
Second lien debt |
|
|
3.5 |
% |
|
|
5.4 |
% |
|
|
12.0 |
% |
Unsecured debt |
|
|
3.8 |
% |
|
|
2.6 |
% |
|
|
1.7 |
% |
Equity |
|
|
4.2 |
% |
|
|
4.8 |
% |
|
|
3.8 |
% |
JV interests |
|
|
6.0 |
% |
|
|
6.4 |
% |
|
|
6.0 |
% |
|
|
|
|
|
|
|
Non-accrual debt investments: |
|
|
|
|
|
|
Non-accrual investments at fair value |
|
$ |
110,599 |
|
|
$ |
69,128 |
|
|
$ |
91,152 |
|
Non-accrual investments at cost |
|
|
172,827 |
|
|
|
127,720 |
|
|
|
111,732 |
|
Non-accrual investments as a percentage of debt investments at fair
value |
|
|
3.7 |
% |
|
|
2.4 |
% |
|
|
3.1 |
% |
Non-accrual investments as a percentage of debt investments at
cost |
|
|
5.7 |
% |
|
|
4.3 |
% |
|
|
3.6 |
% |
Number of investments on non-accrual |
|
|
8 |
|
|
|
5 |
|
|
|
5 |
|
|
|
|
|
|
|
|
Interest rate type: |
|
|
|
|
|
|
Percentage floating-rate |
|
|
85.3 |
% |
|
|
85.4 |
% |
|
|
86.0 |
% |
Percentage fixed-rate |
|
|
14.7 |
% |
|
|
14.6 |
% |
|
|
14.0 |
% |
|
|
|
|
|
|
|
Yields: |
|
|
|
|
|
|
Weighted average yield on debt investments1 |
|
|
11.9 |
% |
|
|
12.2 |
% |
|
|
12.3 |
% |
Cash component of weighted average yield on debt investments |
|
|
10.6 |
% |
|
|
11.0 |
% |
|
|
11.4 |
% |
Weighted average yield on total portfolio investments2 |
|
|
11.5 |
% |
|
|
11.7 |
% |
|
|
11.8 |
% |
|
|
|
|
|
|
|
Investment activity: |
|
|
|
|
|
|
New investment commitments |
|
$ |
338,700 |
|
|
$ |
395,600 |
|
|
$ |
251,000 |
|
New funded investment activity3 |
|
$ |
293,200 |
|
|
$ |
377,400 |
|
|
$ |
243,300 |
|
Proceeds from prepayments, exits, other paydowns and sales |
|
$ |
185,500 |
|
|
$ |
322,600 |
|
|
$ |
261,000 |
|
Net new investments4 |
|
$ |
107,700 |
|
|
$ |
54,800 |
|
|
$ |
(17,700 |
) |
Number of new investment commitments in new portfolio
companies |
|
|
11 |
|
|
|
20 |
|
|
|
6 |
|
Number of new investment commitments in existing portfolio
companies |
|
|
9 |
|
|
|
15 |
|
|
|
4 |
|
Number of portfolio company exits |
|
|
3 |
|
|
|
15 |
|
|
|
16 |
|
______________________1 Annual stated yield earned plus net
annual amortization of OID or premium earned on accruing
investments, including the Company's share of the return on debt
investments in SLF JV I and Glick JV, and excluding any
amortization or accretion of interest income resulting solely from
the cost basis established by ASC 805 (see Non-GAAP Financial
Measures below) for the assets acquired in connection with the OCSI
Merger and OSI2 Merger.2 Annual stated yield earned plus net annual
amortization of OID or premium earned on accruing investments and
dividend income, including the Company's share of the return on
debt investments in SLF JV I and Glick JV, and excluding any
amortization or accretion of interest income resulting solely from
the cost basis established by ASC 805 for the assets acquired in
connection with the OCSI Merger and OSI2 Merger.3 New funded
investment activity includes drawdowns on existing revolver and
delayed draw term loan commitments.4 Net new investments consists
of new funded investment activity less proceeds from prepayments,
exits, other paydowns and sales.
As of June 30, 2024, the fair value of the investment
portfolio was $3.1 billion and was composed of investments in 158
companies. These included debt investments in 141 companies, equity
investments in 42 companies, and the Company's joint venture
investments in SLF JV I and OCSI Glick JV LLC ("Glick JV"). 27 of
the equity investments were in companies in which the Company also
had a debt investment.
As of June 30, 2024, 94.9% of the Company's portfolio at
fair value consisted of debt investments, including 82.5% of first
lien loans, 3.5% of second lien loans and 9.0% of unsecured debt
investments, including the debt investments in SLF JV I and Glick
JV. This compared to 80.8% of first lien loans, 5.4% of second lien
loans and 7.9% of unsecured debt investments, including the debt
investments in SLF JV I and Glick JV, as of March 31, 2024.
As of June 30, 2024, there were eight investments on
non-accrual status, which represented 5.7% and 3.7% of the debt
portfolio at cost and fair value, respectively. This is up from
five investments on non-accrual status in the prior quarter, which
represented 4.3% and 2.4% of the debt portfolio at cost and fair
value, respectively.
SLF JV I
The Company's investments in SLF JV I totaled $138.5 million at
fair value as of June 30, 2024, down 2.7% from $142.3 million
as of March 31, 2024. The decrease was primarily driven by SLF JV
I’s use of leverage and unrealized depreciation in the underlying
investment portfolio.
As of June 30, 2024, SLF JV I had $390.8 million in assets,
including senior secured loans to 49 portfolio companies. This
compared to $398.7 million in assets, including senior secured
loans to 54 portfolio companies, as of March 31, 2024. SLF JV I
generated cash interest income of $3.5 million for the Company
during the quarter ended June 30, 2024, consistent with the
prior quarter. In addition, SLF JV I generated dividend income of
$1.4 million for the Company during the quarter ended
June 30, 2024, consistent with the prior quarter. As of
June 30, 2024, SLF JV I had $72.0 million of undrawn capacity
(subject to borrowing base and other limitations) on its $270
million senior revolving credit facility, and its debt to equity
ratio was 1.3x.
Glick JV
The Company's investments in Glick JV totaled $49.9 million
at fair value as of June 30, 2024, down 2.8% from $51.3
million as of March 31, 2024. The decrease was primarily driven by
SLF JV I’s use of leverage and unrealized depreciation in the
underlying investment portfolio.
As of June 30, 2024, Glick JV had $150.2 million in
assets, including senior secured loans to 45 portfolio companies.
This compared to $154.7 million in assets, including senior secured
loans to 49 portfolio companies, as of March 31, 2024. Glick
JV generated cash interest income of $1.5 million during the
quarter ended June 30, 2024, consistent with the prior
quarter. As of June 30, 2024, Glick JV had $22.0 million of
undrawn capacity (subject to borrowing base and other limitations)
on its $100 million senior revolving credit facility, and its debt
to equity ratio was 1.5x.
Liquidity and Capital Resources
As of June 30, 2024, the Company had total principal value
of debt outstanding of $1,740.0 million, including $790.0 million
of outstanding borrowings under its revolving credit facilities,
$300.0 million of the 3.500% Notes due 2025, $350.0 million of the
2.700% Notes due 2027 and $300.0 million of the 7.100% Notes due
2029. The funding mix was composed of 45% secured and 55% unsecured
borrowings as of June 30, 2024. The Company was in compliance
with all financial covenants under its credit facilities as of
June 30, 2024.
As of June 30, 2024, the Company had $96.3 million of
unrestricted cash and cash equivalents and $827.5 million of
undrawn capacity on its credit facilities (subject to borrowing
base and other limitations). As of June 30, 2024, unfunded
investment commitments were $291.4 million, or $264.3 million
excluding unfunded commitments to the Company's joint ventures. Of
the $264.3 million, approximately $219.4 million could be drawn
immediately with the remaining amount subject to certain milestones
that must be met by portfolio companies or other restrictions. The
Company has analyzed cash and cash equivalents, availability under
its credit facilities, the ability to rotate out of certain assets
and amounts of unfunded commitments that could be drawn and
believes its liquidity and capital resources are sufficient to
invest in market opportunities as they arise.
As of June 30, 2024, the weighted average interest rate on
debt outstanding, including the effect of the interest rate swap
agreements, was 7.0%, unchanged from March 31, 2024.
The Company’s total debt to equity ratio was 1.16x and 1.10x as
of each of June 30, 2024 and March 31, 2024, respectively. The
Company's net debt to equity ratio was 1.10x and 1.02x as of each
of June 30, 2024 and March 31, 2024, respectively.
Non-GAAP Financial Measures
On a supplemental basis, the Company is disclosing certain
adjusted financial measures, each of which is calculated and
presented on a basis of methodology other than in accordance with
GAAP (“non-GAAP”). The Company's management uses these non-GAAP
financial measures internally to analyze and evaluate financial
results and performance and believes that these non-GAAP financial
measures are useful to investors as an additional tool to evaluate
ongoing results and trends for the Company and to review the
Company’s performance without giving effect to non-cash
income/gain/loss resulting from the OCSI Merger and the OSI2 Merger
and in the case of adjusted net investment income, without giving
effect to capital gains incentive fees. The presentation of the
below non-GAAP measures is not intended to be a substitute for
financial results prepared in accordance with GAAP and should not
be considered in isolation.
- "Adjusted Total Investment Income" and "Adjusted Total
Investment Income Per Share" – represents total investment
income excluding any amortization or accretion of interest income
resulting solely from the cost basis established by ASC 805 (see
below) for the assets acquired in connection with the OCSI Merger
and the OSI2 Merger.
- “Adjusted Net Investment Income” and “Adjusted Net
Investment Income Per Share” – represents net investment
income, excluding (i) any amortization or accretion of interest
income resulting solely from the cost basis established by ASC 805
(see below) for the assets acquired in connection with the OCSI
Merger and the OSI2 Merger and (ii) capital gains incentive fees
("Part II incentive fees").
- “Adjusted Net Realized and Unrealized Gains (Losses),
Net of Taxes” and “Adjusted Net Realized and Unrealized Gains
(Losses), Net of Taxes Per Share” – represents net
realized and unrealized gains (losses) net of taxes excluding any
net realized and unrealized gains (losses) resulting solely from
the cost basis established by ASC 805 (see below) for the assets
acquired in connection with the OCSI Merger and the OSI2
Merger.
- “Adjusted Earnings (Loss)” and “Adjusted Earnings
(Loss) Per Share” – represents the sum of (i) Adjusted Net
Investment Income and (ii) Adjusted Net Realized and Unrealized
Gains (Losses), Net of Taxes and includes the impact of Part II
incentive fees1, if any.
The OCSI Merger and the OSI2 Merger (the "Mergers") were
accounted for as asset acquisitions in accordance with the asset
acquisition method of accounting as detailed in ASC 805-50,
Business Combinations—Related Issues ("ASC 805"). The consideration
paid to each of the stockholders of OCSI and OSI2 were allocated to
the individual assets acquired and liabilities assumed based on the
relative fair values of the net identifiable assets acquired other
than "non-qualifying" assets, which established a new cost basis
for the acquired investments under ASC 805 that, in aggregate, was
different than the historical cost basis of the acquired
investments prior to the OCSI Merger or the OSI2 Merger, as
applicable. Additionally, immediately following the completion of
the Mergers, the acquired investments were marked to their
respective fair values under ASC 820, Fair Value Measurements,
which resulted in unrealized appreciation/depreciation. The new
cost basis established by ASC 805 on debt investments acquired will
accrete/amortize over the life of each respective debt investment
through interest income, with a corresponding adjustment recorded
to unrealized appreciation/depreciation on such investment acquired
through its ultimate disposition. The new cost basis established by
ASC 805 on equity investments acquired will not accrete/amortize
over the life of such investments through interest income and,
assuming no subsequent change to the fair value of the equity
investments acquired and disposition of such equity investments at
fair value, the Company will recognize a realized gain/loss with a
corresponding reversal of the unrealized appreciation/depreciation
on disposition of such equity investments acquired.
The Company’s management uses the non-GAAP financial measures
described above internally to analyze and evaluate financial
results and performance and to compare its financial results with
those of other business development companies that have not
adjusted the cost basis of certain investments pursuant to ASC 805.
The Company’s management believes "Adjusted Total Investment
Income", "Adjusted Total Investment Income Per Share", "Adjusted
Net Investment Income" and "Adjusted Net Investment Income Per
Share" are useful to investors as an additional tool to evaluate
ongoing results and trends for the Company without giving effect to
the income resulting from the new cost basis of the investments
acquired in the Mergers because these amounts do not impact the
fees payable to Oaktree Fund Advisors, LLC (the "Adviser") under
its second amended and restated advisory agreement (the "A&R
Advisory Agreement"), and specifically as its relates to "Adjusted
Net Investment Income" and "Adjusted Net Investment Income Per
Share", without giving effect to Part II incentive fees. In
addition, the Company’s management believes that “Adjusted Net
Realized and Unrealized Gains (Losses), Net of Taxes”, “Adjusted
Net Realized and Unrealized Gains (Losses), Net of Taxes Per
Share”, “Adjusted Earnings (Loss)” and “Adjusted Earnings (Loss)
Per Share” are useful to investors as they exclude the non-cash
income and gain/loss resulting from the Mergers and are used by
management to evaluate the economic earnings of its investment
portfolio. Moreover, these metrics more closely align the Company's
key financial measures with the calculation of incentive fees
payable to the Adviser under with the A&R Advisory Agreement
(i.e., excluding amounts resulting solely from the lower cost basis
of the acquired investments established by ASC 805 that would have
been to the benefit of the Adviser absent such exclusion).
________________________1 Adjusted earnings (loss) includes
accrued Part II incentive fees. As of and for the three months
ended June 30, 2024, there was no accrued Part II incentive fee
liability. Part II incentive fees are contractually calculated and
paid at the end of the fiscal year in accordance with the A&R
Advisory Agreement, which differs from Part II incentive fees
accrued under GAAP. For the three months ended June 30, 2024, no
amounts were payable under the A&R Advisory Agreement.
The following table provides a reconciliation of total
investment income (the most comparable U.S. GAAP measure) to
adjusted total investment income for the periods presented:
|
|
For the three months ended |
|
|
June 30, 2024(unaudited) |
|
March 31, 2024(unaudited) |
|
June 30, 2023(unaudited) |
($ in thousands, except per
share data) |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
GAAP total investment income |
|
$ |
94,966 |
|
|
$ |
1.16 |
|
|
$ |
94,029 |
|
|
$ |
1.18 |
|
|
$ |
101,900 |
|
|
$ |
1.32 |
|
Interest income amortization (accretion) related to merger
accounting adjustments |
|
|
607 |
|
|
|
0.01 |
|
|
|
3,311 |
|
|
|
0.04 |
|
|
|
(842 |
) |
|
|
(0.01 |
) |
Adjusted total investment income |
|
$ |
95,573 |
|
|
$ |
1.17 |
|
|
$ |
97,340 |
|
|
$ |
1.22 |
|
|
$ |
101,058 |
|
|
$ |
1.31 |
|
The following table provides a reconciliation of net investment
income (the most comparable U.S. GAAP measure) to adjusted net
investment income for the periods presented:
|
|
For the three months ended |
|
|
June 30, 2024(unaudited) |
|
March 31, 2024(unaudited) |
|
June 30, 2023(unaudited) |
($ in thousands, except per
share data) |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
GAAP net investment income |
|
$ |
44,575 |
|
|
$ |
0.54 |
|
|
$ |
41,367 |
|
|
$ |
0.52 |
|
|
$ |
48,413 |
|
|
$ |
0.63 |
|
Interest income amortization (accretion) related to merger
accounting adjustments |
|
|
607 |
|
|
|
0.01 |
|
|
|
3,311 |
|
|
|
0.04 |
|
|
|
(842 |
) |
|
|
(0.01 |
) |
Part II incentive fee |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Adjusted net investment income |
|
$ |
45,182 |
|
|
$ |
0.55 |
|
|
$ |
44,678 |
|
|
$ |
0.56 |
|
|
$ |
47,571 |
|
|
$ |
0.62 |
|
The following table provides a reconciliation of net realized
and unrealized gains (losses), net of taxes (the most comparable
U.S. GAAP measure) to adjusted net realized and unrealized gains
(losses), net of taxes for the periods presented:
|
|
For the three months ended |
|
|
June 30, 2024(unaudited) |
|
March 31, 2024(unaudited) |
|
June 30, 2023(unaudited) |
($ in thousands, except per
share data) |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
GAAP net realized and unrealized gains (losses), net of taxes |
|
$ |
(43,455 |
) |
|
$ |
(0.53 |
) |
|
$ |
(32,030 |
) |
|
$ |
(0.40 |
) |
|
$ |
(11,728 |
) |
|
$ |
(0.15 |
) |
Net realized and unrealized gains (losses) related to merger
accounting adjustments |
|
|
(600 |
) |
|
|
(0.01 |
) |
|
|
(3,314 |
) |
|
|
(0.04 |
) |
|
|
612 |
|
|
|
0.01 |
|
Adjusted net realized and unrealized gains (losses), net of
taxes |
|
$ |
(44,055 |
) |
|
$ |
(0.54 |
) |
|
$ |
(35,344 |
) |
|
$ |
(0.44 |
) |
|
$ |
(11,116 |
) |
|
$ |
(0.14 |
) |
The following table provides a reconciliation of net increase
(decrease) in net assets resulting from operations (the most
comparable U.S. GAAP measure) to adjusted earnings (loss) for the
periods presented:
|
|
For the three months ended |
|
|
June 30, 2024(unaudited) |
|
March 31, 2024(unaudited) |
|
June 30, 2023(unaudited) |
($ in thousands, except per
share data) |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
Net increase (decrease) in net assets resulting from
operations |
|
$ |
1,120 |
|
|
$ |
0.01 |
|
|
$ |
9,337 |
|
|
$ |
0.12 |
|
|
$ |
36,685 |
|
|
$ |
0.48 |
|
Interest income amortization (accretion) related to merger
accounting adjustments |
|
|
607 |
|
|
|
0.01 |
|
|
|
3,311 |
|
|
|
0.04 |
|
|
|
(842 |
) |
|
|
(0.01 |
) |
Net realized and unrealized gains (losses) related to merger
accounting adjustments |
|
|
(600 |
) |
|
|
(0.01 |
) |
|
|
(3,314 |
) |
|
|
(0.04 |
) |
|
|
612 |
|
|
|
0.01 |
|
Adjusted earnings (loss) |
|
$ |
1,127 |
|
|
$ |
0.01 |
|
|
$ |
9,334 |
|
|
$ |
0.12 |
|
|
$ |
36,455 |
|
|
$ |
0.47 |
|
Conference Call Information
Oaktree Specialty Lending will host a conference call to discuss
its third fiscal quarter 2024 results at 11:00 a.m. Eastern Time /
8:00 a.m. Pacific Time on August 1, 2024. The conference call may
be accessed by dialing (877) 507-3275 (U.S. callers) or +1 (412)
317-5238 (non-U.S. callers). All callers will need to reference
“Oaktree Specialty Lending” once connected with the operator.
Alternatively, a live webcast of the conference call can be
accessed through the Investors section of Oaktree Specialty
Lending’s website, www.oaktreespecialtylending.com. During the
conference call, the Company intends to refer to an investor
presentation that will be available on the Investors section of its
website.
For those individuals unable to listen to the live broadcast of
the conference call, a replay will be available on Oaktree
Specialty Lending’s website, or by dialing (877) 344-7529 (U.S.
callers) or +1 (412) 317-0088 (non-U.S. callers), access code
8388100, beginning approximately one hour after the broadcast.
About Oaktree Specialty Lending Corporation
Oaktree Specialty Lending Corporation (NASDAQ:OCSL) is a
specialty finance company dedicated to providing customized
one-stop credit solutions to companies with limited access to
public or syndicated capital markets. The Company's investment
objective is to generate current income and capital appreciation by
providing companies with flexible and innovative financing
solutions including first and second lien loans, unsecured and
mezzanine loans, and preferred equity. The Company is regulated as
a business development company under the Investment Company Act of
1940, as amended, and is externally managed by Oaktree Fund
Advisors, LLC, an affiliate of Oaktree Capital Management, L.P. For
additional information, please visit Oaktree Specialty Lending's
website at www.oaktreespecialtylending.com.
Forward-Looking Statements
Some of the statements in this press release constitute
forward-looking statements because they relate to future events,
future performance or financial condition. The forward-looking
statements may include statements as to: future operating results
of the Company and distribution projections; business prospects of
the Company and the prospects of its portfolio companies; and the
impact of the investments that the Company expects to make. In
addition, words such as “anticipate,” “believe,” “expect,” “seek,”
“plan,” “should,” “estimate,” “project” and “intend” indicate
forward-looking statements, although not all forward-looking
statements include these words. The forward-looking statements
contained in this press release involve risks and uncertainties.
Certain factors could cause actual results and conditions to differ
materially from those projected, including the uncertainties
associated with (i) changes in the economy, financial markets and
political environment, including the impacts of inflation and
elevated interest rates; (ii) risks associated with possible
disruption in the operations of the Company or the economy
generally due to terrorism, war or other geopolitical conflict
(including the current conflicts in Ukraine and Israel), natural
disasters, pandemics or cybersecurity incidents; (iii) future
changes in laws or regulations (including the interpretation of
these laws and regulations by regulatory authorities); (iv)
conditions in the Company’s operating areas, particularly with
respect to business development companies or regulated investment
companies; and (v) other considerations that may be disclosed from
time to time in the Company’s publicly disseminated documents and
filings. The Company has based the forward-looking statements
included in this press release on information available to it on
the date of this press release, and the Company assumes no
obligation to update any such forward-looking statements. The
Company undertakes no obligation to revise or update any
forward-looking statements, whether as a result of new information,
future events or otherwise, you are advised to consult any
additional disclosures that it may make directly to you or through
reports that the Company in the future may file with the Securities
and Exchange Commission, including annual reports on Form 10-K,
quarterly reports on Form 10-Q and current reports on Form 8-K.
Contacts
Investor Relations:Oaktree Specialty Lending CorporationDane
Kleven (213) 356-3260ocsl-ir@oaktreecapital.com
Media Relations:Financial Profiles, Inc.Moira Conlon (310)
478-2700mediainquiries@oaktreecapital.com
|
Oaktree Specialty Lending
CorporationConsolidated Statements of Assets and
Liabilities(in thousands, except per share
amounts) |
|
|
June 30, 2024(unaudited) |
|
March 31, 2024(unaudited) |
|
September 30,2023 |
ASSETS |
|
|
|
|
|
Investments at fair
value: |
|
|
|
|
|
Control investments (cost June 30, 2024: $369,660; cost March 31,
2024: $366,987; cost September 30, 2023: $345,245) |
$ |
299,072 |
|
|
$ |
313,979 |
|
|
$ |
297,091 |
|
Affiliate investments (cost
June 30, 2024: $38,101; cost March 31, 2024: $38,016; cost
September 30, 2023: $24,898) |
|
35,396 |
|
|
|
35,635 |
|
|
|
23,349 |
|
Non-control/Non-affiliate
investments (cost June 30, 2024: $2,885,171; cost March 31, 2024:
$2,838,769; cost September 30, 2023: $2,673,976) |
|
2,787,235 |
|
|
|
2,697,831 |
|
|
|
2,571,980 |
|
Total investments at
fair value (cost June 30, 2024:
$3,292,932; March 31, 2024: $3,243,772;
cost September 30, 2023: $3,044,119) |
|
3,121,703 |
|
|
|
3,047,445 |
|
|
|
2,892,420 |
|
Cash and cash equivalents |
|
96,321 |
|
|
|
125,031 |
|
|
|
136,450 |
|
Restricted cash |
|
10,993 |
|
|
|
12,461 |
|
|
|
9,089 |
|
Interest, dividends and fees
receivable |
|
27,609 |
|
|
|
36,504 |
|
|
|
44,570 |
|
Due from portfolio
companies |
|
954 |
|
|
|
1,797 |
|
|
|
6,317 |
|
Receivables from unsettled
transactions |
|
18,760 |
|
|
|
20,372 |
|
|
|
55,441 |
|
Due from broker |
|
30,310 |
|
|
|
40,630 |
|
|
|
54,260 |
|
Deferred financing costs |
|
12,418 |
|
|
|
11,113 |
|
|
|
12,541 |
|
Deferred offering costs |
|
78 |
|
|
|
90 |
|
|
|
160 |
|
Derivative assets at fair
value |
|
436 |
|
|
|
— |
|
|
|
4,910 |
|
Other assets |
|
2,599 |
|
|
|
2,496 |
|
|
|
1,681 |
|
Total
assets |
$ |
3,322,181 |
|
|
$ |
3,297,939 |
|
|
$ |
3,217,839 |
|
|
|
|
|
|
|
LIABILITIES AND NET ASSETS |
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Accounts payable, accrued expenses and other liabilities |
$ |
4,070 |
|
|
$ |
3,775 |
|
|
$ |
2,950 |
|
Base management fee and incentive fee payable |
|
15,415 |
|
|
|
18,556 |
|
|
|
19,547 |
|
Due to affiliate |
|
4,803 |
|
|
|
3,773 |
|
|
|
4,310 |
|
Interest payable |
|
19,329 |
|
|
|
16,069 |
|
|
|
16,007 |
|
Payables from unsettled transactions |
|
51,595 |
|
|
|
61,020 |
|
|
|
11,006 |
|
Derivative liabilities at fair value |
|
33,672 |
|
|
|
35,005 |
|
|
|
47,519 |
|
Deferred tax liability |
|
— |
|
|
|
— |
|
|
|
5 |
|
Credit facilities payable |
|
790,000 |
|
|
|
730,000 |
|
|
|
710,000 |
|
Unsecured notes payable (net of $5,468, $6,001 and $7,076 of
unamortized financing costs as of June 30, 2024, March 31, 2024 and
September 30, 2023, respectively) |
|
907,164 |
|
|
|
905,642 |
|
|
|
890,731 |
|
Total
liabilities |
|
1,826,048 |
|
|
|
1,773,840 |
|
|
|
1,702,075 |
|
Commitments and
contingencies |
|
|
|
|
|
Net
assets: |
|
|
|
|
|
Common stock, $0.01 par value per share, 250,000 shares
authorized; 82,245, 81,396 and 77,225 shares issued and outstanding
as of June 30, 2024, March 31, 2024 and September 30, 2023,
respectively |
|
822 |
|
|
|
814 |
|
|
|
772 |
|
Additional paid-in-capital |
|
2,264,449 |
|
|
|
2,248,363 |
|
|
|
2,166,330 |
|
Accumulated overdistributed earnings |
|
(769,138 |
) |
|
|
(725,078 |
) |
|
|
(651,338 |
) |
Total net assets
(equivalent to $18.19, $18.72 and
$19.63 per common share as of June 30, 2024, March 31, 2024 and
September 30, 2023, respectively) |
|
1,496,133 |
|
|
|
1,524,099 |
|
|
|
1,515,764 |
|
Total liabilities and
net assets |
$ |
3,322,181 |
|
|
$ |
3,297,939 |
|
|
$ |
3,217,839 |
|
|
Oaktree Specialty Lending
CorporationConsolidated Statements of
Operations(in thousands, except per share
amounts) |
|
|
Three months endedJune 30,
2024(unaudited) |
|
Three months endedMarch 31,
2024(unaudited) |
|
Three months endedJune 30,
2023(unaudited) |
|
Nine months endedJune 30,
2024(unaudited) |
|
Nine months endedJune 30,
2023(unaudited) |
Interest
income: |
|
|
|
|
|
|
|
|
|
Control investments |
$ |
5,924 |
|
|
$ |
5,949 |
|
|
$ |
5,568 |
|
|
$ |
17,878 |
|
|
$ |
15,326 |
|
Affiliate investments |
|
192 |
|
|
|
10 |
|
|
|
681 |
|
|
|
526 |
|
|
|
1,970 |
|
Non-control/Non-affiliate investments |
|
78,681 |
|
|
|
77,803 |
|
|
|
88,069 |
|
|
|
239,205 |
|
|
|
234,516 |
|
Interest on cash and cash equivalents |
|
1,156 |
|
|
|
1,494 |
|
|
|
992 |
|
|
|
5,014 |
|
|
|
2,221 |
|
Total interest income |
|
85,953 |
|
|
|
85,256 |
|
|
|
95,310 |
|
|
|
262,623 |
|
|
|
254,033 |
|
PIK interest
income: |
|
|
|
|
|
|
|
|
|
Control investments |
|
677 |
|
|
|
598 |
|
|
|
— |
|
|
|
1,819 |
|
|
|
— |
|
Affiliate investments |
|
11 |
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
|
|
— |
|
Non-control/Non-affiliate investments |
|
5,461 |
|
|
|
4,218 |
|
|
|
3,967 |
|
|
|
12,984 |
|
|
|
14,220 |
|
Total PIK interest income |
|
6,149 |
|
|
|
4,816 |
|
|
|
3,967 |
|
|
|
14,814 |
|
|
|
14,220 |
|
Fee
income: |
|
|
|
|
|
|
|
|
|
Control investments |
|
13 |
|
|
|
13 |
|
|
|
13 |
|
|
|
39 |
|
|
|
38 |
|
Affiliate investments |
|
— |
|
|
|
— |
|
|
|
5 |
|
|
|
5 |
|
|
|
15 |
|
Non-control/Non-affiliate investments |
|
1,447 |
|
|
|
2,533 |
|
|
|
1,555 |
|
|
|
5,269 |
|
|
|
5,921 |
|
Total fee income |
|
1,460 |
|
|
|
2,546 |
|
|
|
1,573 |
|
|
|
5,313 |
|
|
|
5,974 |
|
Dividend
income: |
|
|
|
|
|
|
|
|
|
Control investments |
|
1,400 |
|
|
|
1,400 |
|
|
|
1,050 |
|
|
|
4,200 |
|
|
|
3,150 |
|
Non-control/Non-affiliate investments |
|
4 |
|
|
|
11 |
|
|
|
— |
|
|
|
30 |
|
|
|
4 |
|
Total dividend income |
|
1,404 |
|
|
|
1,411 |
|
|
|
1,050 |
|
|
|
4,230 |
|
|
|
3,154 |
|
Total investment
income |
|
94,966 |
|
|
|
94,029 |
|
|
|
101,900 |
|
|
|
286,980 |
|
|
|
277,381 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
Base management fee |
|
11,781 |
|
|
|
11,604 |
|
|
|
11,983 |
|
|
|
34,862 |
|
|
|
33,383 |
|
Part I incentive fee |
|
8,341 |
|
|
|
8,452 |
|
|
|
9,590 |
|
|
|
25,821 |
|
|
|
26,300 |
|
Professional fees |
|
1,091 |
|
|
|
1,213 |
|
|
|
1,387 |
|
|
|
3,808 |
|
|
|
4,962 |
|
Directors fees |
|
160 |
|
|
|
160 |
|
|
|
160 |
|
|
|
480 |
|
|
|
480 |
|
Interest expense |
|
32,513 |
|
|
|
31,881 |
|
|
|
30,793 |
|
|
|
96,564 |
|
|
|
79,316 |
|
Administrator expense |
|
391 |
|
|
|
326 |
|
|
|
322 |
|
|
|
1,083 |
|
|
|
935 |
|
General and administrative expenses |
|
824 |
|
|
|
526 |
|
|
|
752 |
|
|
|
1,941 |
|
|
|
2,753 |
|
Total
expenses |
|
55,101 |
|
|
|
54,162 |
|
|
|
54,987 |
|
|
|
164,559 |
|
|
|
148,129 |
|
Management fees waived |
|
(1,500 |
) |
|
|
(1,500 |
) |
|
|
(1,500 |
) |
|
|
(4,500 |
) |
|
|
(4,025 |
) |
Part I incentive fees waived |
|
(3,210 |
) |
|
|
— |
|
|
|
— |
|
|
|
(3,210 |
) |
|
|
— |
|
Net expenses |
|
50,391 |
|
|
|
52,662 |
|
|
|
53,487 |
|
|
|
156,849 |
|
|
|
144,104 |
|
Net investment income
before taxes |
|
44,575 |
|
|
|
41,367 |
|
|
|
48,413 |
|
|
|
130,131 |
|
|
|
133,277 |
|
Excise tax |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(78 |
) |
Net investment
income |
|
44,575 |
|
|
|
41,367 |
|
|
|
48,413 |
|
|
|
130,131 |
|
|
|
133,199 |
|
Unrealized
appreciation (depreciation): |
|
|
|
|
|
|
|
|
|
Control investments |
|
(17,580 |
) |
|
|
(6,193 |
) |
|
|
734 |
|
|
|
(22,434 |
) |
|
|
(900 |
) |
Affiliate investments |
|
(324 |
) |
|
|
93 |
|
|
|
149 |
|
|
|
(1,156 |
) |
|
|
(302 |
) |
Non-control/Non-affiliate investments |
|
42,997 |
|
|
|
(21,396 |
) |
|
|
(6,497 |
) |
|
|
3,986 |
|
|
|
(36,296 |
) |
Foreign currency forward contracts |
|
1,106 |
|
|
|
2,244 |
|
|
|
4,575 |
|
|
|
(4,474 |
) |
|
|
(4,802 |
) |
Net unrealized appreciation (depreciation) |
|
26,199 |
|
|
|
(25,252 |
) |
|
|
(1,039 |
) |
|
|
(24,078 |
) |
|
|
(42,300 |
) |
Realized gains
(losses): |
|
|
|
|
|
|
|
|
|
Control investments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
786 |
|
|
|
— |
|
Non-control/Non-affiliate investments |
|
(69,163 |
) |
|
|
(5,433 |
) |
|
|
(4,294 |
) |
|
|
(87,936 |
) |
|
|
(14,404 |
) |
Foreign currency forward contracts |
|
(289 |
) |
|
|
(1,170 |
) |
|
|
(6,309 |
) |
|
|
2,642 |
|
|
|
(5,513 |
) |
Net realized gains (losses) |
|
(69,452 |
) |
|
|
(6,603 |
) |
|
|
(10,603 |
) |
|
|
(84,508 |
) |
|
|
(19,917 |
) |
(Provision) benefit
for taxes on realized and unrealized gains (losses) |
|
(202 |
) |
|
|
(175 |
) |
|
|
(86 |
) |
|
|
(553 |
) |
|
|
397 |
|
Net realized and
unrealized gains (losses), net of taxes |
|
(43,455 |
) |
|
|
(32,030 |
) |
|
|
(11,728 |
) |
|
|
(109,139 |
) |
|
|
(61,820 |
) |
Net increase
(decrease) in net assets resulting from operations |
$ |
1,120 |
|
|
$ |
9,337 |
|
|
$ |
36,685 |
|
|
$ |
20,992 |
|
|
$ |
71,379 |
|
Net investment income
per common share — basic and diluted |
$ |
0.54 |
|
|
$ |
0.52 |
|
|
$ |
0.63 |
|
|
$ |
1.63 |
|
|
$ |
1.89 |
|
Earnings (loss) per
common share — basic and diluted |
$ |
0.01 |
|
|
$ |
0.12 |
|
|
$ |
0.48 |
|
|
$ |
0.26 |
|
|
$ |
1.01 |
|
Weighted average common
shares outstanding — basic and diluted |
|
81,830 |
|
|
|
79,763 |
|
|
|
77,080 |
|
|
|
79,804 |
|
|
|
70,431 |
|
Oaktree Specialty Lending (NASDAQ:OCSL)
Gráfica de Acción Histórica
De Jul 2024 a Ago 2024
Oaktree Specialty Lending (NASDAQ:OCSL)
Gráfica de Acción Histórica
De Ago 2023 a Ago 2024