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 and
year ended September 30, 2019.
Financial Highlights for the Quarter and Year Ended
September 30, 2019
- Total investment income was $34.5 million
($0.24 per share) and $147.7 million ($1.05 per share) for the
fourth fiscal quarter and full fiscal year of 2019, respectively,
as compared with $36.7 million ($0.26 per share) and $138.7 million
($0.98 per share) for the third fiscal quarter of 2019 and the full
fiscal year of 2018, respectively. The increase in investment
income for the full year was primarily due to higher levels of
original issue discount ("OID") accretion and call protection fees
earned on exits of certain investments.
- Net investment income was $16.3 million ($0.12
per share) and $67.9 million ($0.48 per share) for the fourth
fiscal quarter and full fiscal year of 2019, respectively, as
compared with $16.6 million ($0.12 per share) and $60.0 million
($0.43 per share) for the third fiscal quarter of 2019 and the full
fiscal year of 2018, respectively. The increase in net investment
income for the full year was primarily due to higher levels of
investment income and lower professional fees and general and
administration expenses.
- Net asset value ("NAV") per share was $6.60 as
of September 30, 2019, flat as compared to $6.60 as of June
30, 2019 and up 8% from $6.09 as of September 30, 2018. The
increase in NAV was primarily due to capital gains realized through
the monetization of investments and appreciation of certain debt
and equity investments.
- Originated $138.4 million of new investment
commitments and received $139.0 million of proceeds from
prepayments, exits, other paydowns and sales during the quarter
ended September 30, 2019.
- A quarterly distribution was declared of
$0.095 per share, payable on December 31, 2019 to stockholders of
record on December 13, 2019.
Mathew Pendo, President and Chief Operating Officer, said, “The
fourth quarter of 2019 capped another strong fiscal year for OCSL.
NAV grew by more than 8 percent over the last twelve months. We
also made further progress reducing risk in the portfolio,
successfully exiting $60 million of non-core investments during the
quarter, including a par recovery from a large investment on
non-accrual. Looking ahead, with $385 million of dry powder, we
remain well-positioned to take advantage of future investment
opportunities.”
Armen Panossian, who was appointed Chief Executive Officer and
Chief Investment Officer in September 2019, said, “The team
managing OCSL has done a superb job growing NAV and repositioning
the portfolio for stronger risk-adjusted returns over the past two
years. I look forward to building on these accomplishments by
continuing to execute on our strategic plan while maintaining our
disciplined and risk-controlled investment approach.”
Distribution Declaration
The Board of Directors declared a quarterly distribution of
$0.095 per share, payable on December 31, 2019 to stockholders of
record on December 13, 2019.
Distributions are paid primarily from distributable (taxable)
income. To the extent taxable earnings for a fiscal taxable year
fall below the total amount of distributions for that fiscal year,
a portion of those distributions may be deemed a return of capital
to the Company’s stockholders.
Results of Operations
|
|
For the three months ended |
|
For the year ended |
($ in thousands, except per
share data) |
|
September 30, 2019(unaudited) |
|
June 30, 2019 (unaudited) |
|
September 30, 2018(unaudited) |
|
September 30, 2019 |
|
September 30, 2018 |
GAAP operating results: |
|
|
|
|
|
|
|
|
|
|
Interest income |
|
$ |
30,662 |
|
|
$ |
32,910 |
|
|
$ |
35,306 |
|
|
$ |
133,670 |
|
|
$ |
118,511 |
|
PIK interest income |
|
1,187 |
|
|
1,198 |
|
|
499 |
|
|
5,497 |
|
|
5,769 |
|
Fee income |
|
2,550 |
|
|
1,826 |
|
|
2,034 |
|
|
6,710 |
|
|
9,432 |
|
Dividend income |
|
114 |
|
|
735 |
|
|
381 |
|
|
1,825 |
|
|
5,010 |
|
Total investment income |
|
34,513 |
|
|
36,669 |
|
|
38,220 |
|
|
147,702 |
|
|
138,722 |
|
Net expenses |
|
18,238 |
|
|
20,061 |
|
|
21,189 |
|
|
79,793 |
|
|
78,676 |
|
Net investment income |
|
16,275 |
|
|
16,608 |
|
|
17,031 |
|
|
67,909 |
|
|
60,046 |
|
Net realized and unrealized gains (losses), net of taxes |
|
(2,304 |
) |
|
3,378 |
|
|
16,300 |
|
|
58,251 |
|
|
(13,284 |
) |
Net increase (decrease) in net assets resulting from
operations |
|
$ |
13,971 |
|
|
$ |
19,986 |
|
|
$ |
33,331 |
|
|
$ |
126,160 |
|
|
$ |
46,762 |
|
Net investment income per common share |
|
$ |
0.12 |
|
|
$ |
0.12 |
|
|
$ |
0.12 |
|
|
$ |
0.48 |
|
|
$ |
0.43 |
|
Net realized and unrealized gains (losses), net of taxes per common
share |
|
$ |
(0.02 |
) |
|
$ |
0.02 |
|
|
$ |
0.12 |
|
|
$ |
0.41 |
|
|
$ |
(0.10 |
) |
Earnings (loss) per common share — basic and diluted |
|
$ |
0.10 |
|
|
$ |
0.14 |
|
|
$ |
0.24 |
|
|
$ |
0.89 |
|
|
$ |
0.33 |
|
Non-GAAP Financial Measures (1): |
|
|
|
|
|
|
|
|
|
|
Adjusted net investment income |
|
$ |
16,713 |
|
|
$ |
17,293 |
|
|
$ |
17,031 |
|
|
$ |
69,032 |
|
|
$ |
60,046 |
|
Adjusted net investment income per common share |
|
$ |
0.12 |
|
|
$ |
0.12 |
|
|
$ |
0.12 |
|
|
$ |
0.49 |
|
|
$ |
0.43 |
|
__________
(1 |
) |
See Non-GAAP Financial Measures —
Adjusted Net Investment Income below for a description of this
non-GAAP measure and a reconciliation from net investment income to
adjusted net investment income, including on a weighted-average per
share basis. The Company's management uses this non-GAAP financial
measure internally to analyze and evaluate financial results and
performance and believes that this non-GAAP financial measure is
useful to investors as an additional tool to evaluate ongoing
results and trends for the Company without giving effect to capital
gains incentive fees. The presentation of adjusted net investment
income 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) |
|
September 30, 2019 |
|
June 30, 2019(unaudited) |
|
September 30, 2018 |
Select balance sheet and other data: |
|
|
|
|
|
|
Investment portfolio at fair value |
|
$ |
1,438,042 |
|
|
$ |
1,455,031 |
|
|
$ |
1,491,201 |
|
Total debt outstanding |
|
473,367 |
|
|
537,278 |
|
|
637,213 |
|
Net assets |
|
930,630 |
|
|
930,050 |
|
|
858,035 |
|
Net asset value per share |
|
6.60 |
|
|
6.60 |
|
|
6.09 |
|
Total leverage |
|
0.51x |
|
|
0.58x |
|
|
0.75x |
|
Total investment income for the quarter ended September 30,
2019 was $34.5 million and included $30.7 million of interest
income from portfolio investments, $1.2 million of payment-in-kind
("PIK") interest income, $2.6 million of fee income and $0.1
million of dividend income. Total investment income decreased by
$2.2 million as compared to the quarter ended June 30, 2019,
primarily due to significant call protection fees earned in
connection with exits that occurred during the prior quarter, lower
interest income earned due to decreases in LIBOR on our floating
rate investments and lower dividend income resulting from the sale
of an aircraft in our aircraft leasing portfolio company that
occurred during the quarter ended June 30, 2019. PIK interest
income represented 3.4% of total investment income for the quarter
ended September 30, 2019.
Total investment income for the year ended September 30,
2019 was $147.7 million and included $133.7 million of interest
income from portfolio investments, $5.5 million of PIK interest
income, $6.7 million of fee income and $1.8 million of dividend
income. Total investment income increased by $9.0 million as
compared to the year ended September 30, 2018, primarily due to
higher levels of OID accretion and call protection fees earned on
exits of certain investments that occurred during the year,
partially offset by lower dividend income.
Net expenses for the quarter totaled $18.2 million, down $1.8
million from the quarter ended June 30, 2019. The decrease in net
expenses was primarily driven by lower interest expense resulting
from a lower amount of borrowings outstanding and decreases in
LIBOR during the quarter and a decrease in incentive fees, net of
fees waived, mostly due to lower levels of investment income.
Net expenses for the year totaled $79.8 million, up $1.1 million
from the year ended September 30, 2018. The increase in net
expenses was primarily due to higher incentive fees resulting from
higher investment income and capital gains realized through the
monetization of certain investments and appreciation of certain
debt and equity investments, partially offset by lower interest
expense resulting from a lower amount of borrowings outstanding
during the year, lower professional fees and lower general and
administrative expenses.
Net realized and unrealized losses, net of taxes, were $2.3
million for the quarter, primarily reflecting unrealized
depreciation on certain debt and equity investments. Net realized
and unrealized gains, net of taxes, were $58.3 million for the
year, primarily resulting from capital gains realized through the
monetization of certain investments and unrealized appreciation of
certain debt and equity investments.
Portfolio and Investment Activity
|
|
As of |
($ in thousands) |
|
September
30, (unaudited) |
|
June 30, 2019(unaudited) |
|
September 30, 2018(unaudited) |
Investments at fair value |
|
$ |
1,438,042 |
|
|
$ |
1,455,031 |
|
|
$ |
1,491,201 |
|
Number of portfolio companies |
|
104 |
|
|
105 |
|
|
113 |
|
Average portfolio company debt size |
|
$ |
15,300 |
|
|
$ |
15,400 |
|
|
$ |
14,800 |
|
|
|
|
|
|
|
|
Asset class: |
|
|
|
|
|
|
Senior secured debt |
|
78.6% |
|
|
79.7% |
|
|
75.4% |
|
Unsecured debt |
|
5.7% |
|
|
7.0% |
|
|
11.0% |
|
Equity |
|
6.7% |
|
|
4.3% |
|
|
4.4% |
|
SLF JV I |
|
8.8% |
|
|
8.8% |
|
|
8.7% |
|
Limited partnership interests |
|
0.2% |
|
|
0.2% |
|
|
0.5% |
|
|
|
|
|
|
|
|
Non-accrual debt investments: |
|
|
|
|
|
|
Non-accrual investments at fair value |
|
$ |
2,706 |
|
|
$ |
86,796 |
|
|
$ |
98,760 |
|
Non-accrual investments as a percentage of debt investments |
|
0.2% |
|
|
6.4% |
|
|
7.0% |
|
Number of investments on non-accrual |
|
3 |
|
|
5 |
|
|
8 |
|
|
|
|
|
|
|
|
Interest rate type: |
|
|
|
|
|
|
Percentage floating-rate |
|
89.8% |
|
|
88.5% |
|
|
83.2% |
|
Percentage fixed-rate |
|
10.2% |
|
|
11.5% |
|
|
16.8% |
|
|
|
|
|
|
|
|
Yields: |
|
|
|
|
|
|
Weighted average yield on debt investments (1) |
|
8.9% |
|
|
8.7% |
|
|
8.4% |
|
Cash component of weighted average yield on debt investments |
|
8.1% |
|
|
8.0% |
|
|
8.2% |
|
Weighted average yield on total portfolio investments (2) |
|
8.2% |
|
|
8.2% |
|
|
8.1% |
|
|
|
|
|
|
|
|
Investment activity: |
|
|
|
|
|
|
New investment commitments |
|
$ |
138,400 |
|
|
$ |
66,800 |
|
|
$ |
228,400 |
|
New funded investment activity (3) |
|
$ |
128,500 |
|
|
$ |
74,100 |
|
|
$ |
218,400 |
|
Proceeds from prepayments, exits, other paydowns and sales |
|
$ |
139,000 |
|
|
$ |
138,300 |
|
|
$ |
267,500 |
|
Net new investments (4) |
|
$ |
(10,500 |
) |
|
$ |
(64,200 |
) |
|
$ |
(49,100 |
) |
Number of new investment commitments in new portfolio
companies |
|
5 |
|
|
3 |
|
|
13 |
|
Number of new investment commitments in existing portfolio
companies |
|
4 |
|
|
4 |
|
|
3 |
|
Number of portfolio company exits |
|
7 |
|
|
8 |
|
|
18 |
|
__________
(1) |
Annual stated yield earned plus net annual amortization of original
issue discount or premium earned on accruing investments, including
the Company's share of the return on debt investments in the SLF JV
I. |
(2) |
Annual stated yield earned plus
net annual amortization of original issue discount or premium
earned on accruing investments and dividend income, including the
Company's share of the return on debt investments in the SLF JV
I. |
(3) |
New funded investment activity
includes drawdowns on existing revolver commitments. |
(4) |
Net new investments consists of
new funded investment activity less proceeds from prepayments,
exits, other paydowns and sales. |
As of September 30, 2019, the fair value of the investment
portfolio was $1.4 billion and was comprised of investments in 104
companies. These included debt investments in 79 companies, equity
investments in 33 companies, including our limited partnership
interests in two private equity funds, and our investment in Senior
Loan Fund JV I, LLC (“SLF JV I”). Nine of the equity investments
were in companies in which the Company also had a debt
investment.
As of September 30, 2019, 91.0% of the Company's portfolio
as of September 30, 2019 consisted of debt investments,
including 53.5% of first liens, 25.1% of second liens and 12.4% of
unsecured debt investments, including the debt investments in SLF
JV I at fair value.
As of September 30, 2019, there were three investments on
which the Company had stopped accruing cash and/or PIK interest or
OID income that, in the aggregate, represented 4.3% of the
Company's debt portfolio at cost and 0.2% at fair value. During the
three months ended September 30, 2019, the Company removed two
investments from non-accrual status in connection with an exit and
restructuring.
As of September 30, 2019, SLF JV I had $360.9 million in
assets, including senior secured loans to 51 portfolio companies.
The joint venture generated income of $2.3 million for the Company
during the quarter ended September 30, 2019. As of
September 30, 2019, SLF JV I had $79.8 million of undrawn
capacity on its senior revolving credit facility.
Over time, the Company intends to rotate out of the remaining
investments it has identified as non-core investments, which is
approximately $200 million at fair value as of September 30,
2019. It will also seek to redeploy non-income generating
investments comprised of equity investments, limited partnership
interests and loans currently on non-accrual status into
proprietary investments with higher yields. Certain additional
information on such categorization and the portfolio composition is
included in investor presentations that the Company files with the
Securities and Exchange Commission ("SEC").
Liquidity and Capital Resources
As of September 30, 2019, the Company had $15.4 million of
cash and cash equivalents, total principal value of debt
outstanding of $476.1 million and $385.2 million of undrawn
capacity on its credit facility, subject to borrowing base and
other limitations. The weighted average interest rate on debt
outstanding was 4.8% and 5.1% as of September 30, 2019 and
June 30, 2019, respectively.
The Company’s total leverage ratio was 0.51x and 0.58x
debt-to-equity as of September 30, 2019 and June 30, 2019,
respectively.
Non-GAAP Financial Measures
Adjusted Net Investment Income
On a supplemental basis, the Company is disclosing adjusted net
investment income and per share adjusted net investment income,
each of which is a financial measure that is calculated and
presented on a basis of methodology other than in accordance with
U.S. GAAP (“non-GAAP”). Adjusted net investment income represents
net investment income, excluding capital gains incentive fees
("Part II incentive fee"). The Company's management uses this
non-GAAP financial measure internally to analyze and evaluate
financial results and performance and believes that this non-GAAP
financial measure is useful to investors as an additional tool to
evaluate ongoing results and trends for the Company without giving
effect to capital gains incentive fees. The Company’s investment
advisory agreement provides that a capital gains-based incentive
fee is determined and paid annually with respect to realized
capital gains (but not unrealized capital appreciation) to the
extent such realized capital gains exceed realized capital losses
and unrealized capital depreciation on a cumulative basis. Refer to
Note 11 – Related Party Transactions in our Annual Report on Form
10-K for further discussion. The Company believes that adjusted net
investment income is a useful performance measure because it
reflects the net investment income produced on the Company's
investments during a period without giving effect to any changes in
the value of such investments and any related capital gains
incentive fees between periods. The presentation of adjusted net
investment income is not intended to be a substitute for financial
results prepared in accordance with GAAP and should not be
considered in isolation.
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 (dollars in thousands,
except per share amounts; unaudited):
|
|
For the three months ended |
|
For the year ended |
|
|
September 30, 2019 |
|
June 30, 2019 |
|
September 30, 2018 |
|
September 30, 2019 |
|
September 30, 2018 |
($ in thousands, except per
share data) |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
Net investment income |
|
$ |
16,275 |
|
|
$ |
0.12 |
|
|
$ |
16,608 |
|
|
$ |
0.12 |
|
|
$ |
17,031 |
|
|
$ |
0.12 |
|
|
$ |
67,909 |
|
|
$ |
0.48 |
|
|
$ |
60,046 |
|
|
$ |
0.43 |
|
Part II incentive fee (net of waivers) |
|
438 |
|
|
— |
|
|
685 |
|
|
— |
|
|
— |
|
|
— |
|
|
1,123 |
|
|
0.01 |
|
|
— |
|
|
— |
|
Adjusted net investment income |
|
$ |
16,713 |
|
|
$ |
0.12 |
|
|
$ |
17,293 |
|
|
$ |
0.12 |
|
|
$ |
17,031 |
|
|
$ |
0.12 |
|
|
$ |
69,032 |
|
|
$ |
0.49 |
|
|
$ |
60,046 |
|
|
$ |
0.43 |
|
Conference Call Information
Oaktree Specialty Lending will host a conference call to discuss
its fourth fiscal quarter and full year 2019 results at 11:00 a.m.
Eastern Time / 8:00 a.m. Pacific Time on November 20, 2019. The
conference call may be accessed by dialing (877) 507-3275 (U.S.
callers) or +1 (412) 317-5238 (non-U.S. callers), participant
password “Oaktree Specialty Lending.” During the earnings
conference call, Oaktree Specialty Lending intends to refer to an
investor presentation that will be available on the Investors
section of the Oaktree Specialty Lending website,
www.oaktreespecialtylending.com. Alternatively, a live webcast of
the conference call can be accessed on Oaktree Specialty Lending’s
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
10135791, 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 firm seeks 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. Oaktree
Specialty Lending is managed by 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 or
our future performance or financial condition. The forward-looking
statements may include statements as to: our future operating
results and distribution projections; our business prospects and
the prospects of our portfolio companies; and the impact of the
investments that we expect 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. Our actual results could
differ materially from those implied or expressed in the
forward-looking statements for any reason, including the factors
set forth in “Risk Factors” and elsewhere in our annual report on
Form 10-K and our quarterly reports on Form 10-Q. Other factors
that could cause actual results to differ materially include:
changes in the economy, financial markets and political
environment; risks associated with possible disruption in our
operations or the economy generally due to terrorism or natural
disasters; future changes in laws or regulations (including the
interpretation of these laws and regulations by regulatory
authorities) and conditions in our operating areas, particularly
with respect to business development companies or regulated
investment companies; and other considerations that may be
disclosed from time to time in our publicly disseminated documents
and filings.
We have based the forward-looking statements included in this
presentation on information available to us on the date of this
presentation, and we assume no obligation to update any such
forward-looking statements. Although we undertake 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 we may make
directly to you or through reports that we in the future may file
with the SEC, 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 CorporationMichael
Mosticchio(212) 284-1900ocsl-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)
|
September 30, 2019 |
|
June 30, 2019 (unaudited) |
|
September 30, 2018 |
ASSETS |
|
|
|
|
|
Investments at fair
value: |
|
|
|
|
|
Control investments (cost
September 30, 2019: $224,255; cost June 30, 2019: $190,181; cost
September 30, 2018: $213,470) |
$ |
209,178 |
|
|
$ |
175,052 |
|
|
$ |
196,874 |
|
Affiliate investments (cost
September 30, 2019: $8,449; cost June 30, 2019: $5,064; cost
September 30, 2018: $1,080) |
9,170 |
|
|
5,964 |
|
|
2,161 |
|
Non-control/Non-affiliate
investments (cost September 30, 2019: $1,280,310; cost June 30,
2019: $1,337,252; cost September 30, 2018: $1,392,383) |
1,219,694 |
|
|
1,274,015 |
|
|
1,292,166 |
|
Total investments at fair
value (cost September 30, 2019: $1,513,014; cost June 30, 2019:
$1,532,497; cost September 30, 2018: $1,606,933) |
1,438,042 |
|
|
1,455,031 |
|
|
1,491,201 |
|
Cash and cash equivalents |
15,406 |
|
|
5,637 |
|
|
13,380 |
|
Restricted cash |
— |
|
|
— |
|
|
109 |
|
Interest, dividends and fees
receivable |
11,167 |
|
|
13,156 |
|
|
10,272 |
|
Due from portfolio companies |
2,616 |
|
|
1,850 |
|
|
1,357 |
|
Receivables from unsettled
transactions |
4,586 |
|
|
4 |
|
|
26,760 |
|
Deferred financing costs |
6,396 |
|
|
6,759 |
|
|
5,209 |
|
Derivative assets at fair
value |
490 |
|
|
— |
|
|
162 |
|
Other assets |
2,335 |
|
|
2,579 |
|
|
3,008 |
|
Total
assets |
$ |
1,481,038 |
|
|
$ |
1,485,016 |
|
|
$ |
1,551,458 |
|
|
|
|
|
|
|
LIABILITIES AND NET ASSETS |
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Accounts payable, accrued expenses and other liabilities |
$ |
1,589 |
|
|
$ |
1,078 |
|
|
$ |
3,581 |
|
Base management fee and incentive fee payable |
10,167 |
|
|
9,987 |
|
|
8,223 |
|
Due to affiliate |
2,689 |
|
|
3,431 |
|
|
3,274 |
|
Interest payable |
2,296 |
|
|
2,267 |
|
|
3,365 |
|
Payable to syndication partners |
— |
|
|
— |
|
|
109 |
|
Payables from unsettled transactions |
59,596 |
|
|
— |
|
|
37,236 |
|
Derivative liability at fair value |
— |
|
|
206 |
|
|
— |
|
Deferred tax liability |
704 |
|
|
719 |
|
|
422 |
|
Credit facility payable |
314,825 |
|
|
369,825 |
|
|
241,000 |
|
Unsecured notes payable (net of $2,708, $2,808 and $3,483 of
unamortized financing costs as of September 30, 2019, June 30, 2019
and September 30, 2018, respectively) |
158,542 |
|
|
158,442 |
|
|
386,485 |
|
Secured borrowings at fair value (proceeds September 30, 2019: $0;
proceeds June 30, 2019: $11,502; proceeds September 30, 2018:
$12,314) |
— |
|
|
9,011 |
|
|
9,728 |
|
Total
liabilities |
550,408 |
|
|
554,966 |
|
|
693,423 |
|
Commitments and
contingencies |
|
|
|
|
|
Net assets: |
|
|
|
|
|
Common stock, $0.01 par value per share, 250,000 shares
authorized; 140,961 shares issued and outstanding as of September
30, 2019, June 30, 2019 and September 30, 2018 |
1,409 |
|
|
1,409 |
|
|
1,409 |
|
Additional paid-in-capital |
1,487,774 |
|
|
1,492,739 |
|
|
1,492,739 |
|
Accumulated overdistributed earnings |
(558,553 |
) |
|
(564,098 |
) |
|
(636,113 |
) |
Total net assets
(equivalent to $6.60, $6.60 and $6.09 per common share as of
September 30, 2019, June 30, 2019 and September 30, 2018,
respectively) |
930,630 |
|
|
930,050 |
|
|
858,035 |
|
Total liabilities and net
assets |
$ |
1,481,038 |
|
|
$ |
1,485,016 |
|
|
$ |
1,551,458 |
|
Oaktree Specialty Lending
CorporationConsolidated Statements of
Operations(in thousands, except per share
amounts)
|
Three months ended September 30, 2019
(unaudited) |
|
Three months ended June 30, 2019 (unaudited) |
|
Three months ended September 30, 2018
(unaudited) |
|
Year ended September 30, 2019 |
|
Year ended September 30, 2018 |
Interest
income: |
|
|
|
|
|
|
|
|
|
Control investments |
$ |
2,836 |
|
|
$ |
2,859 |
|
|
$ |
3,687 |
|
|
$ |
11,886 |
|
|
$ |
12,698 |
|
Affiliate investments |
101 |
|
|
70 |
|
|
— |
|
|
206 |
|
|
2,027 |
|
Non-control/Non-affiliate investments |
27,640 |
|
|
29,850 |
|
|
31,496 |
|
|
120,888 |
|
|
103,223 |
|
Interest on cash and cash equivalents |
85 |
|
|
131 |
|
|
123 |
|
|
690 |
|
|
563 |
|
Total interest income |
30,662 |
|
|
32,910 |
|
|
35,306 |
|
|
133,670 |
|
|
118,511 |
|
PIK interest
income: |
|
|
|
|
|
|
|
|
|
Control investments |
— |
|
|
— |
|
|
— |
|
|
67 |
|
|
3,446 |
|
Affiliate investments |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
416 |
|
Non-control/Non-affiliate investments |
1,187 |
|
|
1,198 |
|
|
499 |
|
|
5,430 |
|
|
1,907 |
|
Total PIK interest income |
1,187 |
|
|
1,198 |
|
|
499 |
|
|
5,497 |
|
|
5,769 |
|
Fee income: |
|
|
|
|
|
|
|
|
|
Control investments |
6 |
|
|
6 |
|
|
6 |
|
|
25 |
|
|
951 |
|
Affiliate investments |
5 |
|
|
5 |
|
|
— |
|
|
19 |
|
|
48 |
|
Non-control/Non-affiliate investments |
2,539 |
|
|
1,815 |
|
|
2,028 |
|
|
6,666 |
|
|
8,433 |
|
Total fee income |
2,550 |
|
|
1,826 |
|
|
2,034 |
|
|
6,710 |
|
|
9,432 |
|
Dividend
income: |
|
|
|
|
|
|
|
|
|
Control investments |
114 |
|
|
735 |
|
|
381 |
|
|
1,825 |
|
|
5,010 |
|
Total dividend income |
114 |
|
|
735 |
|
|
381 |
|
|
1,825 |
|
|
5,010 |
|
Total investment
income |
34,513 |
|
|
36,669 |
|
|
38,220 |
|
|
147,702 |
|
|
138,722 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
Base management fee |
5,496 |
|
|
5,548 |
|
|
5,767 |
|
|
22,343 |
|
|
22,652 |
|
Part I incentive fee |
3,545 |
|
|
3,787 |
|
|
3,675 |
|
|
14,873 |
|
|
10,485 |
|
Part II incentive fee |
(403 |
) |
|
607 |
|
|
— |
|
|
10,194 |
|
|
— |
|
Professional fees |
720 |
|
|
721 |
|
|
859 |
|
|
2,906 |
|
|
5,696 |
|
Directors fees |
142 |
|
|
143 |
|
|
143 |
|
|
570 |
|
|
650 |
|
Interest expense |
6,960 |
|
|
7,592 |
|
|
9,323 |
|
|
32,426 |
|
|
35,728 |
|
Administrator expense |
388 |
|
|
384 |
|
|
336 |
|
|
1,941 |
|
|
1,687 |
|
General and administrative expenses |
549 |
|
|
645 |
|
|
794 |
|
|
2,530 |
|
|
3,120 |
|
Total
expenses |
17,397 |
|
|
19,427 |
|
|
20,897 |
|
|
87,783 |
|
|
80,018 |
|
Fees waived |
841 |
|
|
634 |
|
|
292 |
|
|
(7,990 |
) |
|
(1,342 |
) |
Net expenses |
18,238 |
|
|
20,061 |
|
|
21,189 |
|
|
79,793 |
|
|
78,676 |
|
Net investment
income |
16,275 |
|
|
16,608 |
|
|
17,031 |
|
|
67,909 |
|
|
60,046 |
|
Unrealized appreciation
(depreciation): |
|
|
|
|
|
|
|
|
|
Control investments |
52 |
|
|
3,419 |
|
|
26,081 |
|
|
1,519 |
|
|
115,906 |
|
Affiliate investments |
(179 |
) |
|
— |
|
|
— |
|
|
(360 |
) |
|
(2,159 |
) |
Non-control/Non-affiliate investments |
2,621 |
|
|
20,744 |
|
|
21,039 |
|
|
39,689 |
|
|
(13,657 |
) |
Secured borrowings |
(2,624 |
) |
|
— |
|
|
(87 |
) |
|
(2,719 |
) |
|
2,353 |
|
Foreign currency forward contracts |
695 |
|
|
(768 |
) |
|
162 |
|
|
328 |
|
|
162 |
|
Net unrealized appreciation (depreciation) |
565 |
|
|
23,395 |
|
|
47,195 |
|
|
38,457 |
|
|
102,605 |
|
Realized gains
(losses): |
|
|
|
|
|
|
|
|
|
Control investments |
— |
|
|
— |
|
|
(31,331 |
) |
|
— |
|
|
(122,801 |
) |
Affiliate investments |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,048 |
|
Non-control/Non-affiliate investments |
(6,248 |
) |
|
(21,112 |
) |
|
1,494 |
|
|
15,300 |
|
|
6,042 |
|
Secured borrowings |
2,625 |
|
|
— |
|
|
— |
|
|
2,625 |
|
|
— |
|
Foreign currency forward contracts |
1,097 |
|
|
1,268 |
|
|
(436 |
) |
|
2,880 |
|
|
(436 |
) |
Net realized gains (losses) |
(2,526 |
) |
|
(19,844 |
) |
|
(30,273 |
) |
|
20,805 |
|
|
(115,147 |
) |
Redemption premium on
unsecured notes payable |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(120 |
) |
Provision for income tax
(expense) benefit |
(343 |
) |
|
(173 |
) |
|
(622 |
) |
|
(1,011 |
) |
|
(622 |
) |
Net realized and
unrealized gains (losses), net of taxes |
(2,304 |
) |
|
3,378 |
|
|
16,300 |
|
|
58,251 |
|
|
(13,284 |
) |
Net increase (decrease)
in net assets resulting from operations |
$ |
13,971 |
|
|
$ |
19,986 |
|
|
$ |
33,331 |
|
|
$ |
126,160 |
|
|
$ |
46,762 |
|
Net investment income per
common share — basic and diluted |
$ |
0.12 |
|
|
$ |
0.12 |
|
|
$ |
0.12 |
|
|
$ |
0.48 |
|
|
$ |
0.43 |
|
Earnings (loss) per
common share — basic and diluted |
$ |
0.10 |
|
|
$ |
0.14 |
|
|
$ |
0.24 |
|
|
$ |
0.89 |
|
|
$ |
0.33 |
|
Weighted average common
shares outstanding — basic and diluted |
140,961 |
|
|
140,961 |
|
|
140,961 |
|
|
140,961 |
|
|
140,961 |
|
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