Oaktree Specialty Lending Corporation Announces First Fiscal Quarter 2025 Financial Results
Oaktree Specialty Lending (NASDAQ: OCSL) reported its financial results for Q1 FY2025. Key highlights include:
Oaktree Capital purchased $100 million of OCSL shares at $17.63 per share (NAV as of January 31, 2025), representing a 10% premium to market price. Total investment income was $86.6 million ($1.05 per share), down from $94.7 million in Q4 2024. GAAP net investment income was $44.3 million ($0.54 per share), slightly lower than $44.9 million ($0.55 per share) in the previous quarter.
The company's NAV per share decreased to $17.63 from $18.09, primarily due to losses on debt and equity investments. The company originated $198.1 million in new investments while receiving $352.4 million from prepayments and exits. The Board declared a quarterly distribution of $0.40 per share plus a supplemental distribution of $0.07 per share, payable March 31, 2025.
Oaktree Specialty Lending (NASDAQ: OCSL) ha riportato i risultati finanziari per il primo trimestre dell'anno fiscale 2025. I principali punti salienti includono:
Oaktree Capital ha acquistato 100 milioni di dollari di azioni OCSL a 17,63 dollari per azione (NAV al 31 gennaio 2025), il che rappresenta un premio del 10% rispetto al prezzo di mercato. Il reddito totale da investimenti è stato di 86,6 milioni di dollari (1,05 dollari per azione), in calo rispetto ai 94,7 milioni di dollari del quarto trimestre 2024. Il reddito netto da investimenti secondo i principi contabili GAAP è stato di 44,3 milioni di dollari (0,54 dollari per azione), leggermente inferiore ai 44,9 milioni di dollari (0,55 dollari per azione) del trimestre precedente.
Il NAV per azione dell'azienda è sceso a 17,63 dollari rispetto ai 18,09 dollari, principalmente a causa delle perdite su investimenti in debito e capitale. L'azienda ha originato 198,1 milioni di dollari di nuovi investimenti mentre ha ricevuto 352,4 milioni di dollari da prepagamenti e uscite. Il Consiglio ha dichiarato una distribuzione trimestrale di 0,40 dollari per azione oltre a una distribuzione supplementare di 0,07 dollari per azione, pagabile il 31 marzo 2025.
Oaktree Specialty Lending (NASDAQ: OCSL) informó sus resultados financieros para el primer trimestre del año fiscal 2025. Los puntos destacados incluyen:
Oaktree Capital compró 100 millones de dólares en acciones de OCSL a 17,63 dólares por acción (NAV al 31 de enero de 2025), lo que representa una prima del 10% sobre el precio de mercado. Los ingresos totales por inversiones fueron de 86,6 millones de dólares (1,05 dólares por acción), una disminución con respecto a los 94,7 millones de dólares en el cuarto trimestre de 2024. Los ingresos netos por inversiones bajo los principios de contabilidad GAAP fueron de 44,3 millones de dólares (0,54 dólares por acción), ligeramente inferiores a los 44,9 millones de dólares (0,55 dólares por acción) del trimestre anterior.
El NAV por acción de la empresa disminuyó a 17,63 dólares desde 18,09 dólares, principalmente debido a pérdidas en inversiones de deuda y capital. La empresa originó 198,1 millones de dólares en nuevas inversiones mientras recibió 352,4 millones de dólares por pagos anticipados y salidas. La Junta declaró una distribución trimestral de 0,40 dólares por acción más una distribución suplementaria de 0,07 dólares por acción, pagadera el 31 de marzo de 2025.
Oaktree Specialty Lending (NASDAQ: OCSL)는 2025 회계연도 1분기 재무 결과를 보고했습니다. 주요 하이라이트는 다음과 같습니다:
Oaktree Capital은 주당 17.63달러(2025년 1월 31일 기준 NAV)로 OCSL 주식을 1억 달러어치 구매하였으며, 이는 시장 가격 대비 10%의 프리미엄을 나타냅니다. 전체 투자 수익은 8천660만 달러(주당 1.05달러)로, 2024년 4분기 9천470만 달러에서 감소했습니다. GAAP 기준의 순 투자 수익은 4천430만 달러(주당 0.54달러)로, 지난 분기 4천490만 달러(주당 0.55달러)보다 약간 낮았습니다.
회사의 주당 NAV는 18.09달러에서 17.63달러로 감소했으며, 이는 주로 부채 및 주식 투자에서의 손실 때문입니다. 회사는 1억 9천810만 달러의 신규 투자를 창출하였고, 선불 및 매각으로부터 3억 5천240만 달러를 수령했습니다. 이사회는 주당 0.40달러의 분기 배당금과 함께 주당 0.07달러의 추가 배당금을 선언하였으며, 이는 2025년 3월 31일에 지급됩니다.
Oaktree Specialty Lending (NASDAQ: OCSL) a annoncé ses résultats financiers pour le premier trimestre de l'exercice 2025. Les principaux points à retenir incluent :
Oaktree Capital a acheté pour 100 millions de dollars d'actions OCSL à 17,63 dollars par action (NAV au 31 janvier 2025), représentant une prime de 10 % par rapport au prix du marché. Le revenu total d'investissement s'est établi à 86,6 millions de dollars (1,05 dollar par action), en baisse par rapport à 94,7 millions de dollars au quatrième trimestre 2024. Le revenu net d'investissement selon les normes GAAP était de 44,3 millions de dollars (0,54 dollar par action), légèrement inférieur aux 44,9 millions de dollars (0,55 dollar par action) du trimestre précédent.
Le NAV par action de la société a diminué à 17,63 dollars contre 18,09 dollars, principalement en raison de pertes sur des investissements en dette et en actions. La société a généré 198,1 millions de dollars de nouveaux investissements tout en recevant 352,4 millions de dollars d'avance et de sorties. Le Conseil a déclaré une distribution trimestrielle de 0,40 dollar par action ainsi qu'une distribution complémentaire de 0,07 dollar par action, payable le 31 mars 2025.
Oaktree Specialty Lending (NASDAQ: OCSL) hat seine finanziellen Ergebnisse für das erste Quartal des Geschäftsjahres 2025 bekannt gegeben. Zu den wichtigsten Punkten gehören:
Oaktree Capital kaufte Aktien von OCSL im Wert von 100 Millionen US-Dollar zu einem Preis von 17,63 US-Dollar pro Aktie (NAV zum 31. Januar 2025), was einem Aufschlag von 10% auf den Marktpreis entspricht. Das Gesamteinkommen aus Investitionen betrug 86,6 Millionen US-Dollar (1,05 US-Dollar pro Aktie), ein Rückgang von 94,7 Millionen US-Dollar im vierten Quartal 2024. Das GAAP-Nettoinvestitionseinkommen betrug 44,3 Millionen US-Dollar (0,54 US-Dollar pro Aktie), etwas niedriger als die 44,9 Millionen US-Dollar (0,55 US-Dollar pro Aktie) im vorhergehenden Quartal.
Der NAV pro Aktie des Unternehmens sank auf 17,63 US-Dollar von 18,09 US-Dollar, hauptsächlich aufgrund von Verlusten bei Kredit- und Eigenkapitalinvestitionen. Das Unternehmen generierte 198,1 Millionen US-Dollar an neuen Investitionen und erhielt 352,4 Millionen US-Dollar aus Vorabzahlungen und Ausstiegen. Der Vorstand erklärte eine vierteljährliche Ausschüttung von 0,40 US-Dollar pro Aktie sowie eine zusätzliche Ausschüttung von 0,07 US-Dollar pro Aktie, die am 31. März 2025 fällig ist.
- Oaktree Capital's $100M share purchase at 10% premium to market price
- Implementation of total return hurdle resulting in $6.4M waived incentive fees
- Strong liquidity position with $112.9M cash and $957.5M undrawn credit capacity
- Declared $0.40 quarterly dividend plus $0.07 supplemental dividend
- Total investment income decreased to $86.6M from $94.7M QoQ
- NAV per share declined to $17.63 from $18.09
- Non-accrual investments increased to 5.1% of debt portfolio at cost vs 4.9% in previous quarter
- Net realized and unrealized losses of $37.1M for the quarter
Insights
The Q1 FY2025 results present a complex picture of OCSL's strategic positioning and operational performance. The headline
However, operational metrics show some pressure points. Total investment income declined by
The portfolio's defensive positioning is evident in its
The modified dividend policy, featuring a
LOS ANGELES, Feb. 04, 2025 (GLOBE NEWSWIRE) -- 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 December 31, 2024.
Financial Highlights for the Quarter Ended December 31, 2024
- Oaktree Capital I, L.P. purchased
$100.0 million of shares of OCSL common stock on February 3, 2025 at the Company's net asset value as of January 31, 2025, which was$17.63 per share and represented a10% premium to the closing stock price and resulted in a nearly7% increase to NAV. The equity raise will help grow OCSL's asset base and further diversify the portfolio.
- Implemented total return hurdle resulting in waived Part I incentive fees of
$6.4 million for the quarter ended December 31, 2024. In connection with the institution of this incentive fee cap, the calculation of the Part I incentive fee will consider capital gains and losses when determining Part I incentive fees payable. This new arrangement includes a lookback provision that commences effective October 1, 2024, and will build over time to a rolling 12 quarter lookback by the Company's 2027 fiscal year-end.
- Total investment income was
$86.6 million ($1.05 per share) for the first fiscal quarter of 2025, as compared with$94.7 million ($1.15 per share) for the fourth fiscal quarter of 2024. Adjusted total investment income was$87.1 million ($1.06 per share) for the first fiscal quarter, as compared with$95.0 million ($1.16 per share) for the fourth fiscal quarter of 2024. The decrease was driven by (i) lower interest income, which was attributable to decreases in reference rates, the impact of certain investments that were placed on non-accrual status, a smaller investment portfolio and lower original issue discount (“OID”) acceleration from investment repayments, (ii) lower fee income from a decrease in prepayment fees and (iii) lower dividend income from the Company's investment in Senior Loan Fund JV I, LLC ("SLF JV I").
- GAAP net investment income was
$44.3 million ($0.54 per share) for the first fiscal quarter of 2025, as compared with$44.9 million ($0.55 per share) for the fourth fiscal quarter of 2024. The decrease for the quarter was primarily driven by lower total investment income and higher operating expenses, partially offset by lower interest expense and lower management and income-based ("Part I") incentive fees (net of fees waived).
- Adjusted net investment income was
$44.7 million ($0.54 per share) for the first fiscal quarter of 2025, as compared with$45.2 million ($0.55 per share) for the fourth fiscal quarter of 2024. The decrease for the quarter was primarily driven by lower adjusted total investment income and higher operating expenses, partially offset by lower interest expense and lower management and Part I incentive fees (net of fees waived).
- Net asset value ("NAV") per share was
$17.63 as of December 31, 2024, down as compared with$18.09 as of September 30, 2024. The decline from September 30, 2024 primarily reflected losses on certain debt and equity investments.
- Originated
$198.1 million of new investment commitments and received$352.4 million of proceeds from prepayments, exits, other paydowns and sales during the quarter ended December 31, 2024. The weighted average yield on new debt investments was9.6% .
- Total debt outstanding was
$1,610.0 million as of December 31, 2024. The total debt to equity ratio was 1.11x, and the net debt to equity ratio was 1.03x, after adjusting for cash and cash equivalents.
- Liquidity as of December 31, 2024 was composed of
$112.9 million of unrestricted cash and cash equivalents and$957.5 million of undrawn capacity under the Company's credit facilities (subject to borrowing base and other limitations). Unfunded investment commitments were$302.3 million , or$275.2 million excluding unfunded commitments to the Company's joint ventures. Of the$275.2 million , approximately$243.7 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 and supplemental cash distribution was declared of
$0.40 per share and$0.07 per share, respectively, payable in cash on March 31, 2025 to stockholders of record on March 17, 2025. The modification to the dividend policy introduces a stable base dividend, which is anticipated to be sustainable across market cycles, amid fluctuations in rates and spreads.
Armen Panossian, Chief Executive Officer and Co-Chief Investment Officer said, “We had several positive outcomes within the portfolio, but continued to face challenges with several names. We remain focused on our underperforming borrowers, working through each situation to identify the appropriate course of action."
“We remain committed to our shareholders and growing our business. As part of that process, Oaktree has purchased
Distribution Declaration
The Board of Directors declared a quarterly distribution of
Distributions are paid primarily from distributable (taxable) income. To the extent taxable earnings for a fiscal taxable year fall below the total amount of distributions for that fiscal year, a portion of those distributions may be deemed a return of capital to the Company’s stockholders.
Results of Operations
| For the three months ended | ||||||||||||
| ($ in thousands, except per share data) | December 31, 2024 (unaudited) | September 30, 2024 (unaudited) | December 31, 2023 (unaudited) | |||||||||
| GAAP operating results: | ||||||||||||
| Interest income | $ | 78,422 | $ | 83,626 | $ | 91,414 | ||||||
| PIK interest income | 5,728 | 6,018 | 3,849 | |||||||||
| Fee income | 1,679 | 3,897 | 1,307 | |||||||||
| Dividend income | 818 | 1,144 | 1,415 | |||||||||
| Total investment income | 86,647 | 94,685 | 97,985 | |||||||||
| Net expenses | 42,082 | 49,764 | 53,796 | |||||||||
| Net investment income before taxes | 44,565 | 44,921 | 44,189 | |||||||||
| (Provision) benefit for taxes on net investment income | (263 | ) | — | — | ||||||||
| Net investment income | 44,302 | 44,921 | 44,189 | |||||||||
| Net realized and unrealized gains (losses), net of taxes | (37,063 | ) | (8,008 | ) | (33,654 | ) | ||||||
| Net increase (decrease) in net assets resulting from operations | $ | 7,239 | $ | 36,913 | $ | 10,535 | ||||||
| Total investment income per common share | $ | 1.05 | $ | 1.15 | $ | 1.26 | ||||||
| Net investment income per common share | $ | 0.54 | $ | 0.55 | $ | 0.57 | ||||||
| Net realized and unrealized gains (losses), net of taxes per common share | $ | (0.45 | ) | $ | (0.10 | ) | $ | (0.43 | ) | |||
| Earnings (loss) per common share — basic and diluted | $ | 0.09 | $ | 0.45 | $ | 0.14 | ||||||
| Non-GAAP Financial Measures1: | ||||||||||||
| Adjusted total investment income | $ | 87,070 | $ | 95,000 | $ | 98,014 | ||||||
| Adjusted net investment income | $ | 44,725 | $ | 45,236 | $ | 44,218 | ||||||
| Adjusted net realized and unrealized gains (losses), net of taxes | $ | (37,124 | ) | $ | (8,322 | ) | $ | (32,858 | ) | |||
| Adjusted earnings (loss) | $ | 7,601 | $ | 36,914 | $ | 11,360 | ||||||
| Adjusted total investment income per share | $ | 1.06 | $ | 1.16 | $ | 1.26 | ||||||
| Adjusted net investment income per share | $ | 0.54 | $ | 0.55 | $ | 0.57 | ||||||
| Adjusted net realized and unrealized gains (losses), net of taxes per share | $ | (0.45 | ) | $ | (0.10 | ) | $ | (0.42 | ) | |||
| Adjusted earnings (loss) per share | $ | 0.09 | $ | 0.45 | $ | 0.15 | ||||||
______________________
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 merger of Oaktree Strategic Income II, Inc. ("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) | December 31, 2024 (unaudited) | September 30, 2024 | December 31, 2023 (unaudited) | |||||||||
| Select balance sheet and other data: | ||||||||||||
| Cash and cash equivalents | $ | 112,913 | $ | 63,966 | $ | 112,369 | ||||||
| Investment portfolio at fair value | 2,835,294 | 3,021,279 | 3,018,552 | |||||||||
| Total debt outstanding (net of unamortized financing costs) | 1,577,795 | 1,638,693 | 1,622,717 | |||||||||
| Net assets | 1,449,815 | 1,487,811 | 1,511,651 | |||||||||
| Net asset value per share | 17.63 | 18.09 | 19.14 | |||||||||
| Total debt to equity ratio | 1.11x | 1.12x | 1.10x | |||||||||
| Net debt to equity ratio | 1.03x | 1.07x | 1.02x | |||||||||
Adjusted total investment income for the quarter ended December 31, 2024 was
Net expenses for the quarter ended December 31, 2024 totaled
Adjusted net investment income was
Adjusted net realized and unrealized losses, net of taxes, were
Portfolio and Investment Activity
| As of | ||||||||||||
| ($ in thousands) | December 31, 2024 (unaudited) | September 30, 2024 (unaudited) | December 31, 2023 (unaudited) | |||||||||
| Investments at fair value | $ | 2,835,294 | $ | 3,021,279 | $ | 3,018,552 | ||||||
| Number of portfolio companies | 136 | 144 | 146 | |||||||||
| Average portfolio company debt size | $ | 22,000 | $ | 22,000 | $ | 20,200 | ||||||
| Asset class: | ||||||||||||
| First lien debt | 81.8 | % | 81.7 | % | 77.9 | % | ||||||
| Second lien debt | 3.0 | % | 3.5 | % | 8.4 | % | ||||||
| Unsecured debt | 3.9 | % | 3.6 | % | 2.5 | % | ||||||
| Equity | 4.8 | % | 5.0 | % | 4.8 | % | ||||||
| JV interests | 6.5 | % | 6.1 | % | 6.4 | % | ||||||
| Non-accrual debt investments: | ||||||||||||
| Non-accrual investments at fair value | $ | 105,326 | $ | 114,292 | $ | 120,713 | ||||||
| Non-accrual investments at cost | 138,703 | 140,748 | 174,897 | |||||||||
| Non-accrual investments as a percentage of debt investments at fair value | 3.9 | % | 4.0 | % | 4.2 | % | ||||||
| Non-accrual investments as a percentage of debt investments at cost | 5.1 | % | 4.9 | % | 5.9 | % | ||||||
| Number of investments on non-accrual | 9 | 9 | 7 | |||||||||
| Interest rate type: | ||||||||||||
| Percentage floating-rate | 87.6 | % | 88.4 | % | 84.3 | % | ||||||
| Percentage fixed-rate | 12.4 | % | 11.6 | % | 15.7 | % | ||||||
| Yields: | ||||||||||||
| Weighted average yield on debt investments1 | 10.7 | % | 11.2 | % | 12.2 | % | ||||||
| Cash component of weighted average yield on debt investments | 9.5 | % | 10.0 | % | 11.1 | % | ||||||
| Weighted average yield on total portfolio investments2 | 10.2 | % | 10.7 | % | 11.7 | % | ||||||
| Investment activity: | ||||||||||||
| New investment commitments | $ | 198,100 | $ | 259,000 | $ | 370,300 | ||||||
| New funded investment activity3 | $ | 201,300 | $ | 232,700 | $ | 367,600 | ||||||
| Proceeds from prepayments, exits, other paydowns and sales | $ | 352,400 | $ | 338,300 | $ | 213,500 | ||||||
| Net new investments4 | $ | (151,100 | ) | $ | (105,600 | ) | $ | 154,100 | ||||
| Number of new investment commitments in new portfolio companies | 5 | 9 | 14 | |||||||||
| Number of new investment commitments in existing portfolio companies | 8 | 10 | 10 | |||||||||
| Number of portfolio company exits | 13 | 23 | 10 | |||||||||
______________________
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 December 31, 2024, the fair value of the investment portfolio was
As of December 31, 2024,
As of December 31, 2024, there were nine investments on non-accrual status, which represented
SLF JV I
The Company's investments in SLF JV I totaled
As of December 31, 2024, SLF JV I had
Glick JV
The Company's investments in Glick JV totaled
As of December 31, 2024, Glick JV had
Liquidity and Capital Resources
As of December 31, 2024, the Company had total principal value of debt outstanding of
As of December 31, 2024, the Company had
As of December 31, 2024, the weighted average interest rate on debt outstanding, including the effect of the interest rate swap agreements was
The Company’s total debt to equity ratio was 1.11x and 1.12x as of each of December 31, 2024 and September 30, 2024, respectively. The Company's net debt to equity ratio was 1.03x and 1.07x as of each of December 31, 2024 and September 30, 2024, respectively.
Incentive Fee Lookback
Effective as of October 1, 2024, Oaktree has agreed to waive incentive fees on income to institute an incentive fee cap (also known as a “total return hurdle”) in the calculation of the Part I Incentive Fee, which will consider capital gains and losses. This new arrangement includes a lookback provision that commences effective October 1, 2024, and will build over time to a rolling 12-quarter lookback by the Company's 2027 fiscal year-end. Additional details regarding this new arrangement can be found in the Company's Form 10-Q filed on February 4, 2025.
Purchase Agreement
On January 31, 2025, the Company and Oaktree Capital I, L.P., an affiliate of the Adviser, entered into a purchase agreement pursuant to which Oaktree Capital I, L.P. purchased 5,672,149 shares of the Company’s common stock on February 3, 2025 for an aggregate purchase price of
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 investment advisory agreement (as amended and restated from time to time, 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 | ||||||||||||||||||||||||
| December 31, 2024 (unaudited) | September 30, 2024 (unaudited) | December 31, 2023 (unaudited) | ||||||||||||||||||||||
| ($ in thousands, except per share data) | Amount | Per Share | Amount | Per Share | Amount | Per Share | ||||||||||||||||||
| GAAP total investment income | $ | 86,647 | $ | 1.05 | $ | 94,685 | $ | 1.15 | $ | 97,985 | $ | 1.26 | ||||||||||||
| Interest income amortization (accretion) related to merger accounting adjustments | 423 | 0.01 | 315 | — | 29 | — | ||||||||||||||||||
| Adjusted total investment income | $ | 87,070 | $ | 1.06 | $ | 95,000 | $ | 1.16 | $ | 98,014 | $ | 1.26 | ||||||||||||
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 | ||||||||||||||||||||||||
| December 31, 2024 (unaudited) | September 30, 2024 (unaudited) | December 31, 2023 (unaudited) | ||||||||||||||||||||||
| ($ in thousands, except per share data) | Amount | Per Share | Amount | Per Share | Amount | Per Share | ||||||||||||||||||
| GAAP net investment income | $ | 44,302 | $ | 0.54 | $ | 44,921 | $ | 0.55 | $ | 44,189 | $ | 0.57 | ||||||||||||
| Interest income amortization (accretion) related to merger accounting adjustments | 423 | 0.01 | 315 | — | 29 | — | ||||||||||||||||||
| Part II incentive fee | — | — | — | — | — | — | ||||||||||||||||||
| Adjusted net investment income | $ | 44,725 | $ | 0.54 | $ | 45,236 | $ | 0.55 | $ | 44,218 | $ | 0.57 | ||||||||||||
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 | ||||||||||||||||||||||||
| December 31, 2024 (unaudited) | September 30, 2024 (unaudited) | December 31, 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 | $ | (37,063 | ) | $ | (0.45 | ) | $ | (8,008 | ) | $ | (0.10 | ) | $ | (33,654 | ) | $ | (0.43 | ) | ||||||
| Net realized and unrealized gains (losses) related to merger accounting adjustments | (61 | ) | — | (314 | ) | — | 796 | 0.01 | ||||||||||||||||
| Adjusted net realized and unrealized gains (losses), net of taxes | $ | (37,124 | ) | $ | (0.45 | ) | $ | (8,322 | ) | $ | (0.10 | ) | $ | (32,858 | ) | $ | (0.42 | ) | ||||||
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 | ||||||||||||||||||||||||
| December 31, 2024 (unaudited) | September 30, 2024 (unaudited) | December 31, 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 | $ | 7,239 | $ | 0.09 | $ | 36,913 | $ | 0.45 | $ | 10,535 | $ | 0.14 | ||||||||||||
| Interest income amortization (accretion) related to merger accounting adjustments | 423 | 0.01 | 315 | — | 29 | — | ||||||||||||||||||
| Net realized and unrealized gains (losses) related to merger accounting adjustments | (61 | ) | — | (314 | ) | — | 796 | 0.01 | ||||||||||||||||
| Adjusted earnings (loss) | $ | 7,601 | $ | 0.09 | $ | 36,914 | $ | 0.45 | $ | 11,360 | $ | 0.15 | ||||||||||||
Conference Call Information
Oaktree Specialty Lending will host a conference call to discuss its first fiscal quarter 2025 results at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time on February 4, 2025. 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 1211943, 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 Corporation
Dane Kleven
(213) 356-3260
ocsl-ir@oaktreecapital.com
Media Relations:
Financial Profiles, Inc.
Moira Conlon
(310) 478-2700
mediainquiries@oaktreecapital.com
| Oaktree Specialty Lending Corporation Consolidated Statements of Assets and Liabilities (in thousands, except per share amounts) | |||||||
| December 31, 2024 (unaudited) | September 30, 2024 | ||||||
| ASSETS | |||||||
| Investments at fair value: | |||||||
| Control investments (cost December 31, 2024: | $ | 267,782 | $ | 289,404 | |||
| Affiliate investments (cost December 31, 2024: | 35,180 | 35,677 | |||||
| Non-control/Non-affiliate investments (cost December 31, 2024: | 2,532,332 | 2,696,198 | |||||
| Total investments at fair value (cost December 31, 2024: | 2,835,294 | 3,021,279 | |||||
| Cash and cash equivalents | 112,913 | 63,966 | |||||
| Restricted cash | 13,159 | 14,577 | |||||
| Interest, dividends and fees receivable | 25,290 | 38,804 | |||||
| Due from portfolio companies | 408 | 12,530 | |||||
| Receivables from unsettled transactions | 55,661 | 17,548 | |||||
| Due from broker | 21,880 | 17,060 | |||||
| Deferred financing costs | 10,936 | 11,677 | |||||
| Deferred offering costs | 162 | 125 | |||||
| Derivative assets at fair value | 6,652 | — | |||||
| Other assets | 1,437 | 775 | |||||
| Total assets | $ | 3,083,792 | $ | 3,198,341 | |||
| LIABILITIES AND NET ASSETS | |||||||
| Liabilities: | |||||||
| Accounts payable, accrued expenses and other liabilities | $ | 3,371 | $ | 3,492 | |||
| Base management fee and incentive fee payable | 8,930 | 15,517 | |||||
| Due to affiliate | 1,508 | 4,088 | |||||
| Interest payable | 17,600 | 16,231 | |||||
| Payables from unsettled transactions | — | 15,666 | |||||
| Derivative liabilities at fair value | 24,759 | 16,843 | |||||
| Deferred tax liability | 14 | — | |||||
| Credit facilities payable | 660,000 | 710,000 | |||||
| Unsecured notes payable (net of | 917,795 | 928,693 | |||||
| Total liabilities | 1,633,977 | 1,710,530 | |||||
| Commitments and contingencies | |||||||
| Net assets: | |||||||
| Common stock, | 822 | 822 | |||||
| Additional paid-in-capital | 2,264,449 | 2,264,449 | |||||
| Accumulated overdistributed earnings | (815,456 | ) | (777,460 | ) | |||
| Total net assets (equivalent to | 1,449,815 | 1,487,811 | |||||
| Total liabilities and net assets | $ | 3,083,792 | $ | 3,198,341 | |||
| Oaktree Specialty Lending Corporation Consolidated Statements of Operations (in thousands, except per share amounts) | ||||||||||||
| Three months ended December 31, 2024 (unaudited) | Three months ended September 30, 2024 (unaudited) | Three months ended December 31, 2023 (unaudited) | ||||||||||
| Interest income: | ||||||||||||
| Control investments | $ | 5,226 | $ | 6,012 | $ | 6,005 | ||||||
| Affiliate investments | 166 | 159 | 324 | |||||||||
| Non-control/Non-affiliate investments | 71,809 | 76,476 | 82,721 | |||||||||
| Interest on cash and cash equivalents | 1,221 | 979 | 2,364 | |||||||||
| Total interest income | 78,422 | 83,626 | 91,414 | |||||||||
| PIK interest income: | ||||||||||||
| Control investments | 830 | 765 | 544 | |||||||||
| Affiliate investments | 28 | 45 | — | |||||||||
| Non-control/Non-affiliate investments | 4,870 | 5,208 | 3,305 | |||||||||
| Total PIK interest income | 5,728 | 6,018 | 3,849 | |||||||||
| Fee income: | ||||||||||||
| Control investments | — | 12 | 13 | |||||||||
| Affiliate investments | — | — | 5 | |||||||||
| Non-control/Non-affiliate investments | 1,679 | 3,885 | 1,289 | |||||||||
| Total fee income | 1,679 | 3,897 | 1,307 | |||||||||
| Dividend income: | ||||||||||||
| Control investments | 700 | 1,050 | 1,400 | |||||||||
| Non-control/Non-affiliate investments | 118 | 94 | 15 | |||||||||
| Total dividend income | 818 | 1,144 | 1,415 | |||||||||
| Total investment income | 86,647 | 94,685 | 97,985 | |||||||||
| Expenses: | ||||||||||||
| Base management fee | 8,144 | 8,550 | 11,477 | |||||||||
| Part I incentive fee | 7,913 | 8,943 | 9,028 | |||||||||
| Professional fees | 1,067 | 862 | 1,504 | |||||||||
| Directors fees | 160 | 160 | 160 | |||||||||
| Interest expense | 30,562 | 32,058 | 32,170 | |||||||||
| Administrator expense | 437 | 465 | 366 | |||||||||
| General and administrative expenses | 926 | 704 | 591 | |||||||||
| Total expenses | 49,209 | 51,742 | 55,296 | |||||||||
| Management fees waived | (750 | ) | (750 | ) | (1,500 | ) | ||||||
| Part I incentive fees waived | (6,377 | ) | (1,228 | ) | — | |||||||
| Net expenses | 42,082 | 49,764 | 53,796 | |||||||||
| Net investment income before taxes | 44,565 | 44,921 | 44,189 | |||||||||
| (Provision) benefit for taxes on net investment income | (263 | ) | — | — | ||||||||
| Net investment income | 44,302 | 44,921 | 44,189 | |||||||||
| Unrealized appreciation (depreciation): | ||||||||||||
| Control investments | (23,230 | ) | (12,909 | ) | 1,339 | |||||||
| Affiliate investments | 320 | 207 | (925 | ) | ||||||||
| Non-control/Non-affiliate investments | (7,198 | ) | 60,159 | (17,615 | ) | |||||||
| Foreign currency forward contracts | 10,494 | (4,278 | ) | (7,824 | ) | |||||||
| Net unrealized appreciation (depreciation) | (19,614 | ) | 43,179 | (25,025 | ) | |||||||
| Realized gains (losses): | ||||||||||||
| Control investments | — | — | 786 | |||||||||
| Affiliate investments | (288 | ) | — | — | ||||||||
| Non-control/Non-affiliate investments | (17,056 | ) | (50,349 | ) | (13,340 | ) | ||||||
| Foreign currency forward contracts | 34 | (1,499 | ) | 4,101 | ||||||||
| Net realized gains (losses) | (17,310 | ) | (51,848 | ) | (8,453 | ) | ||||||
| (Provision) benefit for taxes on realized and unrealized gains (losses) | (139 | ) | 661 | (176 | ) | |||||||
| Net realized and unrealized gains (losses), net of taxes | (37,063 | ) | (8,008 | ) | (33,654 | ) | ||||||
| Net increase (decrease) in net assets resulting from operations | $ | 7,239 | $ | 36,913 | $ | 10,535 | ||||||
| Net investment income per common share — basic and diluted | $ | 0.54 | $ | 0.55 | $ | 0.57 | ||||||
| Earnings (loss) per common share — basic and diluted | $ | 0.09 | $ | 0.45 | $ | 0.14 | ||||||
| Weighted average common shares outstanding — basic and diluted | 82,245 | 82,245 | 77,840 | |||||||||
1 Adjusted earnings (loss) includes accrued Part II incentive fees. As of and for the three months ended December 31, 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 December 31, 2024, no amounts were payable under the A&R Advisory Agreement.
FAQ
What was OCSL's total investment income for Q1 FY2025?
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What dividends did OCSL declare for Q1 FY2025?
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