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, 2023.
Financial Highlights for the Quarter and Year
Ended September 30,
20231
- Total investment income was $101.9 million
($1.32 per share) and $379.3 million ($5.26 per share) for the
fourth fiscal quarter and full year, as compared with $101.9
million ($1.32 per share) and $262.5 million ($4.32 per share) for
the third fiscal quarter of 2023 and the full year of 2022.
Adjusted total investment income was $102.2 million ($1.32 per
share) and $376.4 million ($5.22 per share) for fiscal quarter and
full year ended September 30, 2023, as compared with $101.1
million ($1.31 per share) and $251.3 million ($4.14 per share) for
the third fiscal quarter of 2023 and the full year of 2022. The
increase for the quarter was primarily driven by higher original
issue discount (“OID”) acceleration from investment repayments,
partially offset by lower fee income. The increase for the full
year was primarily driven by the impact of higher base rates on the
Company’s floating rate debt portfolio and the growth of the
investment portfolio from the assets acquired in the merger with
Oaktree Strategic Income II, Inc. (“OSI2”) (the “OSI2
Merger”).
- GAAP net investment income was $47.5 million
($0.62 per share) and $180.7 million ($2.51 per share) for the
fourth fiscal quarter and full year, as compared with $48.4 million
($0.63 per share) and $148.6 million ($2.45 per share) for the
third fiscal quarter of 2023 and full year of 2022. The decrease
for the quarter was primarily driven by higher interest expense,
partially offset by lower base management fees (net of waivers).
The increase for the full year was primarily driven by higher
adjusted total investment income, partially offset by higher
interest expense, incentive and base management fees, and other
operating expenses.
- Adjusted net investment income was $47.8
million ($0.62 per share) and $177.8 million ($2.47 per share) for
the fourth fiscal quarter and full year, as compared with $47.6
million ($0.62 per share) and $128.6 million ($2.12 per share) for
the third fiscal quarter of 2023 and the full year of 2022. The
increase for the full year was primarily driven by higher adjusted
total investment income, partially offset by higher interest
expense, incentive and base management fees, and other operating
expenses.
- Net asset value ("NAV") per share was $19.63
as of September 30, 2023, up slightly as compared with $19.58
as of June 30, 2023 and down from $20.38 as of September 30, 2022.
The increase from June 30, 2023 was mainly the result of
undistributed net investment income. The decline from September 30,
2022 primarily reflected credit spread widening on debt investments
that drove unrealized losses on certain investments and the impact
of the December 2022 special distribution.
- Originated $87.5 million of new investment
commitments and received $364.4 million of proceeds from
prepayments, exits, other paydowns and sales during the quarter
ended September 30, 2023. The weighted average yield on new
debt investments was 12.0%.
- Total debt outstanding was $1,660.0 million as
of September 30, 2023. The total debt to equity ratio was
1.10x, and the net debt to equity ratio was 1.01x, after adjusting
for cash and cash equivalents.
- The Company issued $300 million of unsecured
notes during the quarter ended September 30, 2023 that
mature on February 15, 2029 and bear interest at a rate of 7.100%.
In connection with the issuance of the 2027 Notes, the Company
entered into an interest rate swap agreement under which the
Company receives a fixed interest rate of 7.100% and pays a
floating rate of the three-month SOFR plus 3.1255% on a notional
amount of $300 million.
- Liquidity as of September 30, 2023 was
composed of $136.5 million of unrestricted cash and cash
equivalents and $907.5 million of undrawn capacity under the
Company's credit facilities (subject to borrowing base and other
limitations). Unfunded investment commitments were $232.7 million,
or $205.6 million excluding unfunded commitments to the
Company's joint ventures. Of the $205.6 million, approximately
$154.2 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 December
29, 2023 to stockholders of record on December 15, 2023.
- A special cash distributions was declared of
$0.07 per share. The distribution is payable in cash on
December 29, 2023 to stockholders of record on
December 15, 2023.
_________________1 The Company completed a 1-for-3 reverse stock
split on January 20, 2023, effective as of the commencement of
trading on January 23, 2023. All share amounts and per share
information included in this press release reflect the reverse
stock split on a retroactive basis
Armen Panossian, Chief Executive Officer and Chief Investment
Officer, said, “We delivered solid fourth quarter results,
culminating a fiscal year defined by strong earnings growth and
attractive new deployment activity. We produced record adjusted net
investment income for the year, driven by higher base rates that
highlighted the power of our predominantly floating rate loan
portfolio, as well as our ability to deploy capital at wider
spreads. This enabled us to generate an ROE of over 12% for the
year.”
“Additionally, our merger with Oaktree Strategic Income II, Inc.
contributed to our record results. The transaction, which closed in
January and proved accretive to earnings, created greater scale and
financial flexibility that we believe will drive continued positive
investment performance. We also strengthened our capital structure
in August through the issuance of $300 million of notes due 2029,
creating additional flexibility and increased investment capacity
that positions OCSL to prudently pursue new investment
opportunities and favorable returns for our shareholders.”
Distribution Declaration
The Board of Directors declared quarterly and special
distributions of $0.55 per share and $0.07 per share, respectively.
The distributions are payable in cash on December 29, 2023 to
stockholders of record on December 15, 2023.
Distributions are paid primarily from distributable (taxable)
income. To the extent taxable earnings for a fiscal taxable year
fall below the total amount of distributions for that fiscal year,
a portion of those distributions may be deemed a return of capital
to the Company’s stockholders.
Results of Operations
|
|
For the three months ended |
|
For the year ended |
($
in thousands, except per share data) |
|
September 30, 2023 (unaudited) |
|
June 30, 2023 (unaudited) |
|
September 30, 2022 (unaudited) |
|
September 30, 2023 |
|
September 30, 2022 |
GAAP operating results: |
|
|
|
|
|
|
|
|
|
|
Interest income |
|
$ |
94,732 |
|
|
$ |
95,310 |
|
|
$ |
61,719 |
|
|
$ |
348,765 |
|
|
$ |
228,916 |
|
PIK interest income |
|
|
5,544 |
|
|
|
3,967 |
|
|
|
6,011 |
|
|
|
19,764 |
|
|
|
20,526 |
|
Fee income |
|
|
572 |
|
|
|
1,573 |
|
|
|
1,539 |
|
|
|
6,546 |
|
|
|
6,631 |
|
Dividend income |
|
|
1,057 |
|
|
|
1,050 |
|
|
|
875 |
|
|
|
4,211 |
|
|
|
6,447 |
|
Total investment income |
|
|
101,905 |
|
|
|
101,900 |
|
|
|
70,144 |
|
|
|
379,286 |
|
|
|
262,520 |
|
Net expenses |
|
|
54,407 |
|
|
|
53,487 |
|
|
|
34,286 |
|
|
|
198,511 |
|
|
|
110,591 |
|
(Provision) benefit for taxes on net investment income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,308 |
) |
Excise tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(78 |
) |
|
|
— |
|
Net investment income |
|
|
47,498 |
|
|
|
48,413 |
|
|
|
35,858 |
|
|
|
180,697 |
|
|
|
148,621 |
|
Net realized and unrealized gains (losses), net of taxes |
|
|
(1,546 |
) |
|
|
(11,728 |
) |
|
|
(22,650 |
) |
|
|
(63,366 |
) |
|
|
(119,398 |
) |
Net increase (decrease) in net assets resulting from
operations |
|
$ |
45,952 |
|
|
$ |
36,685 |
|
|
$ |
13,208 |
|
|
$ |
117,331 |
|
|
$ |
29,223 |
|
Total investment income per common share |
|
$ |
1.32 |
|
|
$ |
1.32 |
|
|
$ |
1.15 |
|
|
$ |
5.26 |
|
|
$ |
4.32 |
|
Net investment income per common share |
|
$ |
0.62 |
|
|
$ |
0.63 |
|
|
$ |
0.59 |
|
|
$ |
2.51 |
|
|
$ |
2.45 |
|
Net realized and unrealized gains (losses), net of taxes
per common share |
|
$ |
(0.02 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.37 |
) |
|
$ |
(0.88 |
) |
|
$ |
(1.97 |
) |
Earnings (loss) per common share — basic and
diluted |
|
$ |
0.60 |
|
|
$ |
0.48 |
|
|
$ |
0.22 |
|
|
$ |
1.63 |
|
|
$ |
0.48 |
|
Non-GAAP Financial
Measures1: |
|
|
|
|
|
|
|
|
|
|
Adjusted total investment income |
|
$ |
102,157 |
|
|
$ |
101,058 |
|
|
$ |
67,971 |
|
|
$ |
376,389 |
|
|
$ |
251,303 |
|
Adjusted net investment income |
|
$ |
47,750 |
|
|
$ |
47,571 |
|
|
$ |
33,685 |
|
|
$ |
177,800 |
|
|
$ |
128,613 |
|
Adjusted net realized and unrealized gains (losses), net of
taxes |
|
$ |
(1,668 |
) |
|
$ |
(11,116 |
) |
|
$ |
(20,477 |
) |
|
$ |
(40,175 |
) |
|
$ |
(108,183 |
) |
Adjusted earnings (loss) |
|
$ |
46,082 |
|
|
$ |
36,455 |
|
|
$ |
13,208 |
|
|
$ |
137,625 |
|
|
$ |
29,221 |
|
Adjusted total investment income per share |
|
$ |
1.32 |
|
|
$ |
1.31 |
|
|
$ |
1.11 |
|
|
$ |
5.22 |
|
|
$ |
4.14 |
|
Adjusted net investment income per share |
|
$ |
0.62 |
|
|
$ |
0.62 |
|
|
$ |
0.55 |
|
|
$ |
2.47 |
|
|
$ |
2.12 |
|
Adjusted net realized and unrealized gains (losses), net of
taxes per share |
|
$ |
(0.02 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.34 |
) |
|
$ |
(0.56 |
) |
|
$ |
(1.78 |
) |
Adjusted earnings (loss) per share |
|
$ |
0.60 |
|
|
$ |
0.47 |
|
|
$ |
0.22 |
|
|
$ |
1.91 |
|
|
$ |
0.48 |
|
______________________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
Oaktree Strategic Income Corporation ("OCSI") with and into the
Company in March 2021 (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
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) |
|
September 30, 2023 |
|
June 30, 2023 (unaudited) |
|
September 30, 2022 |
Select balance sheet and other data: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
136,450 |
|
$ |
59,704 |
|
$ |
23,528 |
Investment portfolio at fair value |
|
|
2,892,420 |
|
|
3,135,619 |
|
|
2,494,111 |
Total debt outstanding (net of unamortized financing costs) |
|
|
1,600,731 |
|
|
1,740,066 |
|
|
1,301,043 |
Net assets |
|
|
1,515,764 |
|
|
1,509,441 |
|
|
1,245,563 |
Net asset value per share |
|
|
19.63 |
|
|
19.58 |
|
|
20.38 |
Total debt to equity ratio |
|
1.10x |
|
1.18x |
|
1.08x |
Net debt to equity ratio |
|
1.01x |
|
1.14x |
|
1.06x |
|
|
|
|
|
|
|
Adjusted total investment income for the quarter ended
September 30, 2023 was $102.2 million and included $95.0
million of interest income from portfolio investments, $5.5 million
of payment-in-kind ("PIK") interest income, $0.6 million of fee
income and $1.1 million of dividend income. The $1.1 million
sequential increase in adjusted total investment income was
attributable to a $2.1 million increase in interest income mainly
due to higher OID acceleration from exited investments, partially
offset by a $1.0 million decrease in fee income mainly driven by
lower commitment and exit fees.
Adjusted total investment income for the full year ended
September 30, 2023 was $376.4 million and included $345.9
million of interest income from portfolio investments, $19.8
million of PIK interest income, $6.5 million of fee income and $4.2
million of dividend income. The $125.1 million year-over-year
increase was primarily driven by $127.4 million of higher interest
income principally due to the growth in the size of the investment
portfolio following the merger with OSI2 as well as the impact of
higher base rates on the Company’s floating rate debt portfolio.
This was partially offset by $2.2 million of lower dividend
income.
Net expenses for the quarter ended September 30, 2023
totaled $54.4 million, up $0.9 million from the quarter ended June
30, 2023. The increase in net expenses was primarily driven by $1.5
million of higher interest expense due to the impact of rising
interest rates on the Company’s floating rate liabilities. This was
partially offset by a $0.5 million decrease in base management fees
during the quarter due to a decrease in the size of the investment
portfolio.
Net expenses for full-year ended September 30, 2023 totaled
$198.5 million, up $87.9 million from the year ended September 30,
2022. The increase was primarily driven by $64.7 million of higher
interest expense due to the impact of rising interest rates on the
Company’s floating rate liabilities and an increase in average
borrowings outstanding. Further contributing to the increase were
$9.2 million of higher part I incentive fees as a result of higher
adjusted net investment income during the year, an $8.8 million
reversal of previously accrued capital gains incentive fees in the
prior year, $2.8 million of higher management fees (net of waivers)
as a result of a larger investment portfolio and a $2.4 million
increase professional fees and general and administrative expenses
during the year.
Adjusted net investment income was $47.8 million ($0.62 per
share) for the quarter ended September 30, 2023, up slightly
from $47.6 million ($0.62 per share) for the quarter ended June 30,
2023. The increase of $0.2 million primarily reflected $1.1 million
of higher adjusted total investment income, partially offset by
$0.9 million of higher net expenses.
Adjusted net investment income was $177.8 million ($2.47 per
share) for the full year 2023, up from $128.6 million ($2.12 per
share) for the year ended September 30, 2022. The increase of $49.2
million primarily reflected $125.1 million of higher adjusted total
investment income and a $3.3 million decrease in the provision for
income taxes on net investment income, partially offset by $64.7
million of higher interest expense, $9.2 million of higher part I
incentive fees, $2.8 million of higher management fees (net of
waivers) and a $2.4 million increase in professional fees and
general and administrative expenses during the year.
Adjusted net realized and unrealized losses, net of taxes, was
$1.7 million for the quarter ended September 30, 2023,
primarily reflecting the impact of the provision for income taxes.
Adjusted net realized and unrealized losses, net of taxes, was
$40.2 million for the year ended September 30, 2023, primarily
reflecting realized and unrealized losses on certain debt and
equity investments.
Portfolio and Investment Activity
|
|
As of |
($
in thousands) |
|
September 30, 2023 (unaudited) |
|
June 30, 2023 (unaudited) |
|
September 30, 2022 (unaudited) |
Investments at fair value |
|
$ |
2,892,420 |
|
|
$ |
3,135,619 |
|
|
$ |
2,494,111 |
|
Number of portfolio companies |
|
|
143 |
|
|
|
156 |
|
|
|
149 |
|
Average portfolio company debt size |
|
$ |
19,800 |
|
|
$ |
19,800 |
|
|
$ |
16,500 |
|
|
|
|
|
|
|
|
Asset class: |
|
|
|
|
|
|
Senior secured debt |
|
|
86.5 |
% |
|
|
88.5 |
% |
|
|
86.9 |
% |
Unsecured debt |
|
|
1.9 |
% |
|
|
1.7 |
% |
|
|
2.3 |
% |
Equity |
|
|
5.0 |
% |
|
|
3.8 |
% |
|
|
4.2 |
% |
JV interests |
|
|
6.6 |
% |
|
|
6.0 |
% |
|
|
6.7 |
% |
|
|
|
|
|
|
|
Non-accrual debt investments: |
|
|
|
|
|
|
Non-accrual investments at fair value |
|
$ |
48,743 |
|
|
$ |
91,152 |
|
|
$ |
— |
|
Non-accrual investments as a percentage of debt investments at fair
value |
|
|
1.8 |
% |
|
|
3.1 |
% |
|
|
— |
% |
Non-accrual investments as a percentage of debt investments at
cost |
|
|
2.4 |
% |
|
|
3.6 |
% |
|
|
— |
% |
Number of investments on non-accrual |
|
|
4 |
|
|
|
5 |
|
|
|
— |
|
|
|
|
|
|
|
|
Interest rate type: |
|
|
|
|
|
|
Percentage floating-rate |
|
|
86.2 |
% |
|
|
86.0 |
% |
|
|
86.5 |
% |
Percentage fixed-rate |
|
|
13.8 |
% |
|
|
14.0 |
% |
|
|
13.5 |
% |
|
|
|
|
|
|
|
Yields: |
|
|
|
|
|
|
Weighted average yield on debt investments1 |
|
|
12.7 |
% |
|
|
12.3 |
% |
|
|
10.6 |
% |
Cash component of weighted average yield on debt investments |
|
|
11.2 |
% |
|
|
11.4 |
% |
|
|
9.3 |
% |
Weighted average yield on total portfolio investments2 |
|
|
12.0 |
% |
|
|
11.8 |
% |
|
|
10.2 |
% |
|
|
|
|
|
|
|
Investment activity: |
|
|
|
|
|
|
New investment commitments |
|
$ |
87,500 |
|
|
$ |
251,000 |
|
|
$ |
97,000 |
|
New funded investment activity3 |
|
$ |
117,100 |
|
|
$ |
243,300 |
|
|
$ |
84,500 |
|
Proceeds from prepayments, exits, other paydowns and sales |
|
$ |
364,400 |
|
|
$ |
261,000 |
|
|
$ |
146,100 |
|
Net new investments4 |
|
$ |
(247,300 |
) |
|
$ |
(17,700 |
) |
|
$ |
(61,600 |
) |
Number of new investment commitments in new portfolio
companies |
|
|
3 |
|
|
|
6 |
|
|
|
6 |
|
Number of new investment commitments in existing portfolio
companies |
|
|
3 |
|
|
|
4 |
|
|
|
5 |
|
Number of portfolio company exits |
|
|
16 |
|
|
|
16 |
|
|
|
8 |
|
______________________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 September 30, 2023, the fair value of the investment
portfolio was $2.9 billion and was composed of investments in 143
companies. These included debt investments in 129 companies, equity
investments in 42 companies, and the Company's joint venture
investments in SLF JV I LLC ("SLF JV I") and OCSI Glick JV LLC
("Glick JV"). 30 of the equity investments were in companies in
which the Company also had a debt investment.
As of September 30, 2023, 94.0% of the Company's portfolio
at fair value consisted of debt investments, including 76.4% of
first lien loans, 10.1% of second lien loans and 7.5% of unsecured
debt investments, including the debt investments in SLF JV I and
Glick JV. This compared to 76.5% of first lien loans, 12.0% of
second lien loans and 6.8% of unsecured debt investments, including
the debt investments in SLF JV I and Glick JV, as of June 30,
2023.
As of September 30, 2023, there were four investments on
non-accrual status, which represented 2.4% and 1.8% of the debt
portfolio at cost and fair value, respectively. This is down from
five investments on non-accrual status in the prior quarter, which
represented 3.6% and 3.1% of the debt portfolio at cost and fair
value, respectively.
SLF JV I
The Company's investments in SLF JV I totaled $141.5 million at
fair value as of September 30, 2023, up 1% from $140.6 million
as of June 30, 2023. The increase was primarily driven by SLF JV
I’s use of leverage and unrealized appreciation in the underlying
investment portfolio.
As of September 30, 2023, SLF JV I had $376.1 million in
assets, including senior secured loans to 48 portfolio
companies. This compared to $370.2 million in assets,
including senior secured loans to 52 portfolio companies, as of
June 30, 2023. As of September 30, 2023, no investments held
by SLF JV I were on non-accrual status. SLF JV I generated cash
interest income of $3.5 million for the Company during the quarter
ended September 30, 2023, up from $3.4 million in the prior
quarter. In addition, SLF JV I generated dividend income of
$1.1 million for the Company during the quarter ended
September 30, 2023, flat as compared to the prior quarter. As
of September 30, 2023, SLF JV I had $121.0 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 1.2x.
Glick JV
The Company's investments in Glick JV totaled $50.0 million
at fair value as of September 30, 2023, up 1% from $49.6
million as of June 30, 2023. The increase was primarily driven by
Glick JV I’s use of leverage and unrealized appreciation in the
underlying investment portfolio.
As of September 30, 2023, Glick JV had $141.2 million
in assets, including senior secured loans to 38 portfolio
companies. This compared to $126.8 million in assets, including
senior secured loans to 37 portfolio companies, as of June 30,
2023. As of September 30, 2023, no investments held by
Glick JV were on non-accrual status. Glick JV generated cash
interest income of $1.5 million during the quarter ended
September 30, 2023, up as compared to $1.4 million in the
prior quarter. As of September 30, 2023, Glick JV had $27.0
million of undrawn capacity (subject to borrowing base and other
limitations) on its $80 million senior revolving credit facility,
and its debt to equity ratio was 1.2x.
Liquidity and Capital Resources
As of September 30, 2023, the Company had total principal
value of debt outstanding of $1,660.0 million, including $710.0
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 43% secured
and 57% unsecured borrowings as of September 30, 2023. The
Company was in compliance with all financial covenants under its
credit facilities as of September 30, 2023.
On August 15, 2023, the Company issued $300.0 million in
aggregate principal amount of the 2029 Notes for net proceeds of
$292.9 million after deducting OID of $3.5 million,
underwriting commissions and discounts of $3.0 million and
offering costs of $0.6 million. Interest on the 2029 Notes is
paid semi-annually on February 15 and August 15 at a rate of 7.100%
per annum. In connection with the issuance of the 2029 Notes, the
Company entered into an interest rate swap agreement under which
the Company receives a fixed interest rate of 7.100% and pays a
floating rate of the three-month SOFR plus 3.1255% on a notional
amount of $300 million.
As of September 30, 2023, the Company had $136.5 million of
unrestricted cash and cash equivalents and $907.5 million of
undrawn capacity on its credit facilities (subject to borrowing
base and other limitations). As of September 30, 2023,
unfunded investment commitments were $232.7 million, or $205.6
million excluding unfunded commitments to the Company's joint
ventures. Of the $205.6 million, approximately $154.2 million could
be drawn immediately with the remaining amount subject to certain
milestones that must be met by portfolio companies. 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 take advantage of
market opportunities in the current economic climate.
As of September 30, 2023, the weighted average interest
rate on debt outstanding, including the effect of the interest rate
swap agreement, was 7.0%, up from 6.6% as of June 30, 2023,
primarily driven by the impact of higher interest rates on the
Company’s floating rate liabilities and the issuance of the 2029
Notes.
The Company’s total debt to equity ratio was 1.10x and 1.18x as
of September 30, 2023 and June 30, 2023, respectively. The
Company's net debt to equity ratio was 1.01x and 1.14x as of
September 30, 2023 and June 30, 2023, 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.
_____________________1 Adjusted earnings (loss) includes accrued
Part II incentive fees. As of and for the three months and year
ended September 30, 2023, 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 year ended September 30, 2023, no
amounts were payable under the A&R Advisory Agreement.
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).
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 |
|
For the year ended |
|
|
September 30, 2023(unaudited) |
|
June 30, 2023 (unaudited) |
|
September 30, 2022(unaudited) |
|
September 30, 2023 |
|
September 30, 2022 |
($
in thousands, except per share data) |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
GAAP total investment income |
|
$ |
101,905 |
|
$ |
1.32 |
|
$ |
101,900 |
|
|
$ |
1.32 |
|
|
$ |
70,144 |
|
|
$ |
1.15 |
|
|
$ |
379,286 |
|
|
$ |
5.26 |
|
|
$ |
262,520 |
|
|
$ |
4.32 |
|
Less: Interest income accretion related to merger accounting
adjustments |
|
|
252 |
|
|
— |
|
|
(842 |
) |
|
|
(0.01 |
) |
|
|
(2,173 |
) |
|
|
(0.04 |
) |
|
|
(2,897 |
) |
|
|
(0.04 |
) |
|
|
(11,217 |
) |
|
|
(0.18 |
) |
Adjusted total investment income |
|
$ |
102,157 |
|
$ |
1.32 |
|
$ |
101,058 |
|
|
$ |
1.31 |
|
|
$ |
67,971 |
|
|
$ |
1.11 |
|
|
$ |
376,389 |
|
|
$ |
5.22 |
|
|
$ |
251,303 |
|
|
$ |
4.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
For the year ended |
|
|
September 30, 2023(unaudited) |
|
June 30, 2023 (unaudited) |
|
September 30, 2022(unaudited) |
|
September 30, 2023 |
|
September 30, 2022 |
($
in thousands, except per share data) |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
GAAP net investment income |
|
$ |
47,498 |
|
$ |
0.62 |
|
$ |
48,413 |
|
|
$ |
0.63 |
|
|
$ |
35,858 |
|
|
$ |
0.59 |
|
|
$ |
180,697 |
|
|
$ |
2.51 |
|
|
$ |
148,621 |
|
|
$ |
2.45 |
|
Less: Interest income accretion related to merger accounting
adjustments |
|
|
252 |
|
|
— |
|
|
(842 |
) |
|
|
(0.01 |
) |
|
|
(2,173 |
) |
|
|
(0.04 |
) |
|
|
(2,897 |
) |
|
|
(0.04 |
) |
|
|
(11,217 |
) |
|
|
(0.18 |
) |
Add: Part II incentive fee |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(8,791 |
) |
|
|
(0.14 |
) |
Adjusted net investment income |
|
$ |
47,750 |
|
$ |
0.62 |
|
$ |
47,571 |
|
|
$ |
0.62 |
|
|
$ |
33,685 |
|
|
$ |
0.55 |
|
|
$ |
177,800 |
|
|
$ |
2.47 |
|
|
$ |
128,613 |
|
|
$ |
2.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
For the year ended |
|
|
September 30, 2023(unaudited) |
|
June 30, 2023 (unaudited) |
|
September 30, 2022(unaudited) |
|
September 30, 2023 |
|
September 30, 2022 |
($
in thousands, except per share data) |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
GAAP net realized and unrealized gains (losses), net of taxes |
|
$ |
(1,546 |
) |
|
$ |
(0.02 |
) |
|
$ |
(11,728 |
) |
|
$ |
(0.15 |
) |
|
$ |
(22,650 |
) |
|
$ |
(0.37 |
) |
|
$ |
(63,366 |
) |
|
$ |
(0.88 |
) |
|
$ |
(119,398 |
) |
|
$ |
(1.97 |
) |
Less: Net realized and unrealized losses (gains) related to merger
accounting adjustments |
|
|
(122 |
) |
|
|
— |
|
|
|
612 |
|
|
|
0.01 |
|
|
|
2,173 |
|
|
|
0.04 |
|
|
|
23,191 |
|
|
|
0.32 |
|
|
|
11,215 |
|
|
|
0.18 |
|
Adjusted net realized and unrealized gains (losses), net of
taxes |
|
$ |
(1,668 |
) |
|
$ |
(0.02 |
) |
|
$ |
(11,116 |
) |
|
$ |
(0.14 |
) |
|
$ |
(20,477 |
) |
|
$ |
(0.34 |
) |
|
$ |
(40,175 |
) |
|
$ |
(0.56 |
) |
|
$ |
(108,183 |
) |
|
$ |
(1.78 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
For the year ended |
|
|
September 30, 2023(unaudited) |
|
June 30, 2023 (unaudited) |
|
September 30, 2022(unaudited) |
|
September 30, 2023 |
|
September 30, 2022 |
($
in thousands, except per share data) |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
Net increase (decrease) in net assets resulting from
operations |
|
$ |
45,952 |
|
|
$ |
0.60 |
|
$ |
36,685 |
|
|
$ |
0.48 |
|
|
$ |
13,208 |
|
|
$ |
0.22 |
|
|
$ |
117,331 |
|
|
$ |
1.63 |
|
|
$ |
29,223 |
|
|
$ |
0.48 |
|
Less: Interest income accretion related to merger accounting
adjustments |
|
|
252 |
|
|
|
— |
|
|
(842 |
) |
|
|
(0.01 |
) |
|
|
(2,173 |
) |
|
|
(0.04 |
) |
|
|
(2,897 |
) |
|
|
(0.04 |
) |
|
|
(11,217 |
) |
|
|
(0.18 |
) |
Less: Net realized and unrealized losses (gains) related to merger
accounting adjustments |
|
|
(122 |
) |
|
|
— |
|
|
612 |
|
|
|
0.01 |
|
|
|
2,173 |
|
|
|
0.04 |
|
|
|
23,191 |
|
|
|
0.32 |
|
|
|
11,215 |
|
|
|
0.18 |
|
Adjusted earnings (loss) |
|
$ |
46,082 |
|
|
$ |
0.60 |
|
$ |
36,455 |
|
|
$ |
0.47 |
|
|
$ |
13,208 |
|
|
$ |
0.22 |
|
|
$ |
137,625 |
|
|
$ |
1.91 |
|
|
$ |
29,221 |
|
|
$ |
0.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conference Call Information
Oaktree Specialty Lending will host a conference call to discuss
its fourth fiscal quarter and full year 2023 results at 11:00 a.m.
Eastern Time / 8:00 a.m. Pacific Time on November 14, 2023. 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
4395893, 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
rising 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 CorporationMichael
Mosticchio (212) 284-1900ocsl-ir@oaktreecapital.com
Media Relations:Financial Profiles, Inc.Moira Conlon (310)
478-2700mediainquiries@oaktreecapital.com
Oaktree Specialty Lending Corporation |
Consolidated Statements of Assets and
Liabilities |
(in thousands, except per share amounts) |
|
|
September 30, 2023 |
|
June 30, 2023 (unaudited) |
|
September 30, 2022 |
ASSETS |
|
|
|
|
|
Investments at fair value: |
|
|
|
|
|
Control investments (cost September 30, 2023: $345,245; cost June
30, 2023: $285,236; cost September 30, 2022: $260,305) |
$ |
297,091 |
|
|
$ |
238,196 |
|
|
$ |
214,165 |
|
Affiliate investments (cost September 30, 2023: $24,898; cost June
30, 2023: $25,370; cost September 30, 2022: $27,353) |
|
23,349 |
|
|
|
23,911 |
|
|
|
26,196 |
|
Non-control/Non-affiliate investments (cost September 30, 2023:
$2,673,976; cost June 30, 2023: $2,985,679; cost September 30,
2022: $2,330,096) |
|
2,571,980 |
|
|
|
2,873,512 |
|
|
|
2,253,750 |
|
Total investments at fair value (cost September 30,
2023: $3,044,119; cost June 30,
2023: $3,296,285; cost September 30, 2022:
$2,617,754) |
|
2,892,420 |
|
|
|
3,135,619 |
|
|
|
2,494,111 |
|
Cash and cash equivalents |
|
136,450 |
|
|
|
59,704 |
|
|
|
23,528 |
|
Restricted cash |
|
9,089 |
|
|
|
12,956 |
|
|
|
2,836 |
|
Interest, dividends and fees receivable |
|
44,570 |
|
|
|
29,457 |
|
|
|
35,598 |
|
Due
from portfolio companies |
|
6,317 |
|
|
|
2,080 |
|
|
|
22,495 |
|
Receivables from unsettled transactions |
|
55,441 |
|
|
|
39,261 |
|
|
|
4,692 |
|
Due
from broker |
|
54,260 |
|
|
|
39,990 |
|
|
|
45,530 |
|
Deferred financing costs |
|
12,541 |
|
|
|
13,284 |
|
|
|
7,350 |
|
Deferred offering costs |
|
160 |
|
|
|
186 |
|
|
|
32 |
|
Deferred tax asset, net |
|
— |
|
|
|
2,695 |
|
|
|
1,687 |
|
Derivative assets at fair value |
|
4,910 |
|
|
|
49 |
|
|
|
6,789 |
|
Other assets |
|
1,681 |
|
|
|
693 |
|
|
|
1,665 |
|
Total assets |
$ |
3,217,839 |
|
|
$ |
3,335,974 |
|
|
$ |
2,646,313 |
|
|
|
|
|
|
|
LIABILITIES AND NET ASSETS |
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Accounts payable, accrued expenses and other liabilities |
$ |
2,950 |
|
|
$ |
3,412 |
|
|
$ |
3,701 |
|
Base management fee and incentive fee payable |
|
19,547 |
|
|
|
20,072 |
|
|
|
15,940 |
|
Due to affiliate |
|
4,310 |
|
|
|
7,724 |
|
|
|
3,180 |
|
Interest payable |
|
16,007 |
|
|
|
12,907 |
|
|
|
7,936 |
|
Payables from unsettled transactions |
|
11,006 |
|
|
|
2,785 |
|
|
|
26,981 |
|
Derivative liability at fair value |
|
47,519 |
|
|
|
39,567 |
|
|
|
41,969 |
|
Deferred tax liability |
|
5 |
|
|
|
— |
|
|
|
— |
|
Credit facilities payable |
|
710,000 |
|
|
|
1,135,000 |
|
|
|
700,000 |
|
Unsecured notes payable (net of $7,076, $3,909 and $5,020 of
unamortized financing costs as of September 30, 2023, June 30, 2023
and September 30, 2022, respectively) |
|
890,731 |
|
|
|
605,066 |
|
|
|
601,043 |
|
Total liabilities |
|
1,702,075 |
|
|
|
1,826,533 |
|
|
|
1,400,750 |
|
Commitments and contingencies |
|
|
|
|
|
Net assets: |
|
|
|
|
|
Common stock, $0.01 par value per share, 250,000 shares
authorized; 77,225, 77,080 and 61,125 shares issued and outstanding
as of September 30, 2023, June 30, 2023 and September 30,
2022, respectively |
|
772 |
|
|
|
771 |
|
|
|
611 |
|
Additional paid-in-capital |
|
2,166,330 |
|
|
|
2,163,528 |
|
|
|
1,827,721 |
|
Accumulated overdistributed earnings |
|
(651,338 |
) |
|
|
(654,858 |
) |
|
|
(582,769 |
) |
Total net assets (equivalent to $19.63, $19.58 and $20.38
per common share as of September 30, 2023, June 30, 2023 and
September 30, 2022, respectively) |
|
1,515,764 |
|
|
|
1,509,441 |
|
|
|
1,245,563 |
|
Total liabilities and net assets |
$ |
3,217,839 |
|
|
$ |
3,335,974 |
|
|
$ |
2,646,313 |
|
Oaktree Specialty Lending Corporation |
Consolidated Statements of Operations |
(in thousands, except per share amounts) |
|
|
Three months ended September 30, 2023
(unaudited) |
|
Three months ended June 30, 2023 (unaudited) |
|
Three months ended September 30, 2022
(unaudited) |
|
Year endedSeptember
30,2023 |
|
Year endedSeptember
30,2022 |
Interest income: |
|
|
|
|
|
|
|
|
|
Control investments |
$ |
5,877 |
|
|
$ |
5,568 |
|
|
$ |
3,829 |
|
|
$ |
21,203 |
|
|
$ |
14,043 |
|
Affiliate investments |
|
650 |
|
|
|
681 |
|
|
|
574 |
|
|
|
2,620 |
|
|
|
1,744 |
|
Non-control/Non-affiliate investments |
|
86,346 |
|
|
|
88,069 |
|
|
|
57,021 |
|
|
|
320,862 |
|
|
|
212,677 |
|
Interest on cash and cash equivalents |
|
1,859 |
|
|
|
992 |
|
|
|
295 |
|
|
|
4,080 |
|
|
|
452 |
|
Total interest income |
|
94,732 |
|
|
|
95,310 |
|
|
|
61,719 |
|
|
|
348,765 |
|
|
|
228,916 |
|
PIK interest income: |
|
|
|
|
|
|
|
|
|
Control investments |
|
309 |
|
|
|
— |
|
|
|
— |
|
|
|
309 |
|
|
|
— |
|
Non-control/Non-affiliate investments |
|
5,235 |
|
|
|
3,967 |
|
|
|
6,011 |
|
|
|
19,455 |
|
|
|
20,526 |
|
Total PIK interest income |
|
5,544 |
|
|
|
3,967 |
|
|
|
6,011 |
|
|
|
19,764 |
|
|
|
20,526 |
|
Fee income: |
|
|
|
|
|
|
|
|
|
Control investments |
|
13 |
|
|
|
13 |
|
|
|
12 |
|
|
|
51 |
|
|
|
50 |
|
Affiliate investments |
|
5 |
|
|
|
5 |
|
|
|
5 |
|
|
|
20 |
|
|
|
20 |
|
Non-control/Non-affiliate investments |
|
554 |
|
|
|
1,555 |
|
|
|
1,522 |
|
|
|
6,475 |
|
|
|
6,561 |
|
Total fee income |
|
572 |
|
|
|
1,573 |
|
|
|
1,539 |
|
|
|
6,546 |
|
|
|
6,631 |
|
Dividend income: |
|
|
|
|
|
|
|
|
|
Control investments |
|
1,050 |
|
|
|
1,050 |
|
|
|
875 |
|
|
|
4,200 |
|
|
|
6,366 |
|
Non-control/Non-affiliate investments |
|
7 |
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
|
|
81 |
|
Total dividend income |
|
1,057 |
|
|
|
1,050 |
|
|
|
875 |
|
|
|
4,211 |
|
|
|
6,447 |
|
Total investment income |
|
101,905 |
|
|
|
101,900 |
|
|
|
70,144 |
|
|
|
379,286 |
|
|
|
262,520 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
Base management fee |
|
11,516 |
|
|
|
11,983 |
|
|
|
9,703 |
|
|
|
44,899 |
|
|
|
39,556 |
|
Part I incentive fee |
|
9,531 |
|
|
|
9,590 |
|
|
|
6,986 |
|
|
|
35,831 |
|
|
|
26,644 |
|
Part II incentive fee |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(8,791 |
) |
Professional fees |
|
1,282 |
|
|
|
1,387 |
|
|
|
1,389 |
|
|
|
6,244 |
|
|
|
4,418 |
|
Directors fees |
|
160 |
|
|
|
160 |
|
|
|
160 |
|
|
|
640 |
|
|
|
603 |
|
Interest expense |
|
32,326 |
|
|
|
30,793 |
|
|
|
15,751 |
|
|
|
111,642 |
|
|
|
46,929 |
|
Administrator expense |
|
317 |
|
|
|
322 |
|
|
|
278 |
|
|
|
1,252 |
|
|
|
1,246 |
|
General and administrative expenses |
|
775 |
|
|
|
752 |
|
|
|
769 |
|
|
|
3,528 |
|
|
|
2,986 |
|
Total expenses |
|
55,907 |
|
|
|
54,987 |
|
|
|
35,036 |
|
|
|
204,036 |
|
|
|
113,591 |
|
Fees waived |
|
(1,500 |
) |
|
|
(1,500 |
) |
|
|
(750 |
) |
|
|
(5,525 |
) |
|
|
(3,000 |
) |
Net expenses |
|
54,407 |
|
|
|
53,487 |
|
|
|
34,286 |
|
|
|
198,511 |
|
|
|
110,591 |
|
Net investment income before taxes |
|
47,498 |
|
|
|
48,413 |
|
|
|
35,858 |
|
|
|
180,775 |
|
|
|
151,929 |
|
(Provision) benefit for taxes on net investment income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,308 |
) |
Excise tax |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(78 |
) |
|
|
— |
|
Net investment income |
|
47,498 |
|
|
|
48,413 |
|
|
|
35,858 |
|
|
|
180,697 |
|
|
|
148,621 |
|
Unrealized appreciation (depreciation): |
|
|
|
|
|
|
|
|
|
Control investments |
|
(1,114 |
) |
|
|
734 |
|
|
|
(6,754 |
) |
|
|
(2,014 |
) |
|
|
(33,306 |
) |
Affiliate investments |
|
(90 |
) |
|
|
149 |
|
|
|
33 |
|
|
|
(392 |
) |
|
|
(683 |
) |
Non-control/Non-affiliate investments |
|
10,088 |
|
|
|
(6,497 |
) |
|
|
(16,803 |
) |
|
|
(26,208 |
) |
|
|
(107,136 |
) |
Foreign currency forward contracts |
|
4,861 |
|
|
|
4,575 |
|
|
|
5,655 |
|
|
|
59 |
|
|
|
4,877 |
|
Net unrealized appreciation (depreciation) |
|
13,745 |
|
|
|
(1,039 |
) |
|
|
(17,869 |
) |
|
|
(28,555 |
) |
|
|
(136,248 |
) |
Realized gains (losses): |
|
|
|
|
|
|
|
|
|
Control investments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,868 |
|
Non-control/Non-affiliate investments |
|
(12,986 |
) |
|
|
(4,294 |
) |
|
|
(4,303 |
) |
|
|
(27,390 |
) |
|
|
1,585 |
|
Foreign currency forward contracts |
|
(252 |
) |
|
|
(6,309 |
) |
|
|
1,547 |
|
|
|
(5,765 |
) |
|
|
13,726 |
|
Net realized gains (losses) |
|
(13,238 |
) |
|
|
(10,603 |
) |
|
|
(2,756 |
) |
|
|
(33,155 |
) |
|
|
17,179 |
|
(Provision) benefit for taxes on realized and unrealized
gains (losses) |
|
(2,053 |
) |
|
|
(86 |
) |
|
|
(2,025 |
) |
|
|
(1,656 |
) |
|
|
(329 |
) |
Net realized and unrealized gains (losses), net of
taxes |
|
(1,546 |
) |
|
|
(11,728 |
) |
|
|
(22,650 |
) |
|
|
(63,366 |
) |
|
|
(119,398 |
) |
Net increase (decrease) in net assets resulting from
operations |
$ |
45,952 |
|
|
$ |
36,685 |
|
|
$ |
13,208 |
|
|
$ |
117,331 |
|
|
$ |
29,223 |
|
Net investment income per common share — basic and
diluted |
$ |
0.62 |
|
|
$ |
0.63 |
|
|
$ |
0.59 |
|
|
$ |
2.51 |
|
|
$ |
2.45 |
|
Earnings (loss) per common share — basic and
diluted |
$ |
0.60 |
|
|
$ |
0.48 |
|
|
$ |
0.22 |
|
|
$ |
1.63 |
|
|
$ |
0.48 |
|
Weighted average common shares outstanding — basic and
diluted |
|
77,130 |
|
|
|
77,080 |
|
|
|
61,125 |
|
|
|
72,119 |
|
|
|
60,727 |
|
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