Oaktree Specialty Lending Corporation Announces Second Fiscal Quarter 2025 Financial Results
LOS ANGELES, CA, May 01, 2025 (GLOBE NEWSWIRE) -- Oaktree Specialty Lending Corporation $(OCSL)$ ("Oaktree Specialty Lending" or the "Company"), a specialty finance company, today announced its financial results for the fiscal quarter ended March 31, 2025.
Financial Highlights for the Quarter Ended March 31, 2025
-- Total investment income was $77.6 million ($0.90 per share) for the
second fiscal quarter of 2025, as compared with $86.6 million ($1.05 per
share) for the first fiscal quarter of 2025. Adjusted total investment
income was $77.2 million ($0.90 per share) for the second fiscal quarter
of 2025, as compared with $87.1 million ($1.06 per share) for the first
fiscal quarter of 2025. The decrease was driven by lower interest income,
which was primarily attributable to a smaller average investment
portfolio, the impact of certain investments that were placed on
non-accrual status and decreases in reference rates.
-- GAAP net investment income was $39.1 million ($0.45 per share) for the
second fiscal quarter of 2025, as compared with $44.3 million ($0.54 per
share) for the first fiscal quarter of 2025. The decrease for the quarter
was primarily driven by lower total investment income, partially offset
by lower interest expense and income-based ("Part I") incentive fees (net
of fees waived).
-- Adjusted net investment income was $38.7 million ($0.45 per share) for
the second fiscal quarter of 2025, as compared with $44.7 million ($0.54
per share) for the first fiscal quarter of 2025. The decrease for the
quarter was primarily driven by lower adjusted total investment income,
partially offset by lower interest expense and lower Part I incentive
fees (net of fees waived).
-- Net asset value ("NAV") per share was $16.75 as of March 31, 2025, down
as compared with $17.63 as of December 31, 2024. The decline from
December 31, 2024 primarily reflected losses on certain debt and equity
investments.
-- Originated $407.0 million of new investment commitments and received
$279.4 million of proceeds from prepayments, exits, other paydowns and
sales during the quarter ended March 31, 2025. The weighted average yield
on new debt investments was 9.5%.
-- Total debt outstanding was $1,470.0 million as of March 31, 2025. The
total debt to equity ratio was 1.00x, and the net debt to equity ratio
was 0.93x, after adjusting for cash and cash equivalents.
-- 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 a 10% premium to the
closing stock price.
-- The Company issued $300 million of unsecured notes during the quarter
ended March 31, 2025 that mature on February 27, 2030 and bear interest
at a rate of 6.340%. In connection with the issuance of the 2030 Notes,
the Company entered into an interest rate swap agreement under which the
Company receives a fixed interest rate of 6.340% and pays a floating
interest rate of the three-month SOFR plus 2.192% on a notional amount of
$300.0 million. Additionally, the Company repaid $300 million of
unsecured notes that matured on February 25, 2025.
-- Liquidity as of March 31, 2025 was composed of $97.8 million of
unrestricted cash and cash equivalents and over $1.0 billion of undrawn
capacity under the Company's credit facilities (subject to borrowing base
and other limitations). Unfunded investment commitments were $299.8
million, or $272.6 million excluding unfunded commitments to the
Company's joint ventures. Of the $272.6 million, approximately
$252.0 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 $0.02 per share, respectively, payable in cash on June 30, 2025
to stockholders of record on June 16, 2025.
"Certain challenged portfolio company investments weighed on our results in the second quarter. We are focused on resolving these issues while also positioning our portfolio to deliver more consistent performance going forward," stated Armen Panossian, Chief Executive Officer and Co-Chief Investment Officer.
"We are focused on further diversifying our portfolio by selectively investing in companies we believe are well positioned to deliver attractive returns given overall market uncertainty caused by tariffs, inflation and high interest rates. Historically, in periods of market volatility, our firm-wide DNA has enabled us to capitalize on opportunities while others are sidelined, and we have ample dry powder for new investments."
Distribution Declaration
The Board of Directors declared a quarterly distribution of $0.40 per share, payable in cash on June 30, 2025 to stockholders of record on June 16, 2025. The Board of Directors also declared a supplemental distribution of $0.02 per share, payable in cash on June 30, 2025 to stockholders of record on June 16, 2025.
Distributions are paid primarily from distributable (taxable) income. To the extent taxable earnings for a fiscal taxable year fall below the total amount of distributions for that fiscal year, a portion of those distributions may be deemed a return of capital to the Company's stockholders.
Results of Operations
For the three months ended
($ in thousands, December 31,
except per share March 31, 2025 2024 March 31, 2024
data) (unaudited) (unaudited) (unaudited)
-------------- -------------- --------------
GAAP operating
results:
Interest
income $ 70,523 $ 78,422 $ 85,256
PIK interest
income 4,531 5,728 4,816
Fee income 1,742 1,679 2,546
Dividend
income 772 818 1,411
--------- --------- ---------
Total
investment
income 77,568 86,647 94,029
Net expenses 38,235 42,082 52,662
--------- --------- ---------
Net
investment
income
before
taxes 39,333 44,565 41,367
(Provision)
benefit for
taxes on
net
investment
income (278) (263) --
--------- --------- ---------
Net
investment
income 39,055 44,302 41,367
--------- --------- ---------
Net realized
and
unrealized
gains
(losses),
net of
taxes (75,304) (37,063) (32,030)
--------- --------- ---------
Net increase
(decrease)
in net
assets
resulting
from
operations $ (36,249) $ 7,239 $ 9,337
========= ========= =========
Total
investment
income per
common
share $ 0.90 $ 1.05 $ 1.18
Net
investment
income per
common
share $ 0.45 $ 0.54 $ 0.52
Net realized
and
unrealized
gains
(losses),
net of
taxes per
common
share $ (0.88) $ (0.45) $ (0.40)
Earnings
(loss) per
common
share --
basic and
diluted $ (0.42) $ 0.09 $ 0.12
Non-GAAP
Financial
Measures(1) :
Adjusted
total
investment
income $ 77,195 $ 87,070 $ 97,340
Adjusted net
investment
income $ 38,682 $ 44,725 $ 44,678
Adjusted net
realized
and
unrealized
gains
(losses),
net of
taxes $ (75,248) $ (37,124) $ (35,344)
Adjusted
earnings
(loss) $ (36,566) $ 7,601 $ 9,334
Adjusted
total
investment
income per
share $ 0.90 $ 1.06 $ 1.22
Adjusted net
investment
income per
share $ 0.45 $ 0.54 $ 0.56
Adjusted net
realized
and
unrealized
gains
(losses),
net of
taxes per
share $ (0.88) $ (0.45) $ (0.44)
Adjusted
earnings
(loss) per
share $ (0.43) $ 0.09 $ 0.12
(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 March 31, December March 31,
per share data and 2025 31, 2024 2024
ratios) (unaudited) (unaudited) (unaudited)
----------- ----------- -----------
Select balance sheet
and other data:
Cash and cash
equivalents $ 97,838 $ 112,913 $ 125,031
Investment portfolio
at fair value 2,892,771 2,835,294 3,047,445
Total debt
outstanding (net of
unamortized
financing costs) 1,448,486 1,577,795 1,635,642
Net assets 1,475,113 1,449,815 1,524,099
Total debt to equity
ratio 1.00 x 1.11 x 1.10 x
Net debt to equity
ratio 0.93 x 1.03 x 1.02 x
Adjusted total investment income for the quarter ended March 31, 2025 was $77.2 million and included $70.2 million of interest income from portfolio investments, $4.5 million of payment-in-kind ("PIK") interest income, $1.7 million of fee income and $0.8 million of dividend income. The $9.9 million quarterly decline in adjusted total investment income was primarily due to a $9.9 million decrease in interest income, which was primarily attributable to a smaller average investment portfolio, the impact of certain investments that were placed on non-accrual status and decreases in reference rates.
Net expenses for the quarter ended March 31, 2025 totaled $38.2 million, down $3.8 million from the quarter ended December 31, 2024. The decrease for the quarter was primarily driven by $2.4 million of lower interest expense due to lower outstanding borrowings and lower reference rates on the Company's floating rate debt and $1.5 million of lower Part I incentive fees (net of fees waived).
Adjusted net investment income was $38.7 million ($0.45 per share) for the quarter ended March 31, 2025, which was down from $44.7 million ($0.54 per share) for the quarter ended December 31, 2024. The decline of $6.0 million primarily reflected $9.9 million of lower adjusted total investment income, offset by $3.9 million of lower net expenses.
Adjusted net realized and unrealized losses, net of taxes, were $75.2 million for the quarter ended March 31, 2025.
Portfolio and Investment Activity
As of
----------------------------------------------
December 31,
March 31, 2025 2024 March 31, 2024
($ in thousands) (unaudited) (unaudited) (unaudited)
-------------- -------------- --------------
Investments at
fair value $2,892,771 $2,835,294 $3,047,445
Number of
portfolio
companies 152 136 151
Average
portfolio
company debt
size $ 19,700 $ 22,000 $ 20,100
Asset class:
First lien debt 80.9% 81.8% 80.8%
Second lien
debt 3.4% 3.0% 5.4%
Unsecured debt 5.0% 3.9% 2.6%
Equity 4.6% 4.8% 4.8%
JV interests 6.1% 6.5% 6.4%
Non-accrual
debt
investments:
Non-accrual
investments at
fair value $ 125,643 $ 105,326 $ 69,128
Non-accrual
investments at
cost 217,401 138,703 127,720
Non-accrual
investments as
a percentage
of debt
investments at
fair value 4.6% 3.9% 2.4%
Non-accrual
investments as
a percentage
of debt
investments at
cost 7.6% 5.1% 4.3%
Number of
investments on
non-accrual 10 9 5
Interest rate
type:
Percentage
floating-rate 89.8% 87.6% 85.4%
Percentage
fixed-rate 10.2% 12.4% 14.6%
Yields:
Weighted
average yield
on debt
investments(1) 10.2% 10.7% 12.2%
Cash component
of weighted
average yield
on debt
investments 9.3% 9.5% 11.0%
Weighted
average yield
on total
portfolio
investments(2) 9.8% 10.2% 11.7%
Investment
activity:
New investment
commitments $ 407,000 $ 198,100 $ 395,600
New funded
investment
activity(3) $ 405,800 $ 201,300 $ 377,400
Proceeds from
prepayments,
exits, other
paydowns and
sales $ 279,400 $ 352,400 $ 322,600
Net new
investments(4) $ 126,400 $ (151,100) $ 54,800
Number of new
investment
commitments in
new portfolio
companies 24 5 20
Number of new
investment
commitments in
existing
portfolio
companies 8 8 15
Number of
portfolio
company exits 8 13 15
(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 March 31, 2025, the fair value of the investment portfolio was $2.9 billion and was composed of investments in 152 companies. These included debt investments in 131 companies, equity investments in 40 companies, and the Company's joint venture investments in SLF JV I and OCSI Glick JV LLC ("Glick JV"). 21 of the equity investments were in companies in which the Company also had a debt investment.
As of March 31, 2025, 94.9% of the Company's portfolio at fair value consisted of debt investments, including 80.9% of first lien loans, 3.4% of second lien loans and 10.6% of unsecured debt investments, including the debt investments in SLF JV I and Glick JV. This compared to 81.8% of first lien loans, 3.0% of second lien loans and 9.6% of unsecured debt investments, including the debt investments in SLF JV I and Glick JV, as of December 31, 2024.
As of March 31, 2025, there were ten investments on non-accrual status, which represented 7.6% and 4.6% of the debt portfolio at cost and fair value, respectively. As of December 31, 2024, there were nine investments on non-accrual status, which represented 5.1% and 3.9% of the debt portfolio at cost and fair value, respectively.
SLF JV I
The Company's investments in SLF JV I totaled $128.6 million at fair value as of March 31, 2025, down 5.0% from $135.4 million as of December 31, 2024. The decrease was primarily driven by SLF JV I's use of leverage and unrealized depreciation in the underlying investment portfolio.
As of March 31, 2025, SLF JV I had $374.7 million in assets, including senior secured loans to 52 portfolio companies. This compared to $344.9 million in assets, including senior secured loans to 42 portfolio companies, as of December 31, 2024. SLF JV I generated cash interest income of $3.2 million for the Company during the quarter ended March 31, 2025, down from $3.4 million in the prior quarter. In addition, SLF JV I generated dividend income of $0.7 million for the Company during the quarter ended March 31, 2025, flat from the prior quarter. As of March 31, 2025, SLF JV I had $73.0 million of undrawn capacity (subject to borrowing base and other limitations) on its $270 million senior revolving credit facility, and its debt to equity ratio was 1.3x.
Glick JV
The Company's investments in Glick JV totaled $47.3 million at fair value as of March 31, 2025, down 4.6% from $49.6 million as of December 31, 2024. The decrease was primarily driven by Glick JV's use of leverage and unrealized depreciation in the underlying investment portfolio.
As of March 31, 2025, Glick JV had $125.1 million in assets, including senior secured loans to 41 portfolio companies. This compared to $127.9 million in assets, including senior secured loans to 39 portfolio companies, as of December 31, 2024. Glick JV generated cash interest income of $1.3 million for the Company during the quarter ended March 31, 2025, down from $1.4 million in the prior quarter. As of March 31, 2025, Glick JV had $31.0 million of undrawn capacity (subject to borrowing base and other limitations) on its $100 million senior revolving credit facility, and its debt to equity ratio was 1.3x.
Liquidity and Capital Resources
As of March 31, 2025, the Company had total principal value of debt outstanding of $1,470.0 million, including $520.0 million of outstanding borrowings under its revolving credit facilities, $350.0 million of the 2.700% Notes due 2027, $300.0 million of the 7.100% Notes due 2029 and $300.0 million of the 6.340% Notes due 2030. The funding mix was composed of 35% secured and 65% unsecured borrowings as of March 31, 2025. The Company was in compliance with all financial covenants under its credit facilities as of March 31, 2025.
As of March 31, 2025, the Company had $97.8 million of unrestricted cash and cash equivalents and over $1.0 billion of undrawn capacity on its credit facilities (subject to borrowing base and other limitations). As of March 31, 2025, unfunded investment commitments were $299.8 million, or $272.6 million excluding unfunded commitments to the Company's joint ventures. Of the $272.6 million, approximately $252.0 million could be drawn immediately with the remaining amount subject to certain milestones that must be met by portfolio companies or other restrictions. The Company has analyzed cash and cash equivalents, availability under its credit facilities, the ability to rotate out of certain assets and amounts of unfunded commitments that could be drawn and believes its liquidity and capital resources are sufficient to invest in market opportunities as they arise.
As of March 31, 2025, the weighted average interest rate on debt outstanding, including the effect of the interest rate swap agreements was 6.7%, up from 6.2% as of December 31, 2024, primarily driven by the impact of the repayment of the 3.500% Notes due 2025 and the issuance of the 6.340% Notes due 2030.
The Company's total debt to equity ratio was 1.00x and 1.11x as of each of March 31, 2025 and December 31, 2024, respectively. The Company's net debt to equity ratio was 0.93x and 1.03x as of each of March 31, 2025 and December 31, 2024, respectively.
Recent Developments
Syndicated Facility
On April 8, 2025, the Company entered into an amendment to its amended and restated senior secured credit facility (the "Syndicated Facility"), among other things, (1) generally reduce interest rate margins from 2.00% plus a SOFR adjustment (ranging between 0.11448% and 0.26161%) to 1.875% plus a SOFR adjustment of 0.10% on SOFR loans and from 1.00% to 0.875% plus a SOFR adjustment of 0.10% on alternate base rate loans, (2) remove the Consolidated Interest Coverage Ratio covenant, (3) decrease the facility size from $1.218 billion to $1.160 billion, (4) increase the "accordion" feature to allow expansion of the facility to $1.50 billion, and (5) extend the reinvestment period and final maturity date to April 8, 2029, and April 8, 2030, respectively.
Non-GAAP Financial Measures
On a supplemental basis, the Company is disclosing certain adjusted financial measures, each of which is calculated and presented on a basis of methodology other than in accordance with GAAP ("non-GAAP"). The Company's management uses these non-GAAP financial measures internally to analyze and evaluate financial results and performance and believes that these non-GAAP financial measures are useful to investors as an additional tool to evaluate ongoing results and trends for the Company and to review the Company's performance without giving effect to non-cash income/gain/loss resulting from the OCSI Merger and the OSI2 Merger and in the case of adjusted net investment income, without giving effect to capital gains incentive fees. The presentation of the below non-GAAP measures is not intended to be a substitute for financial results prepared in accordance with GAAP and should not be considered in isolation.
-- "Adjusted Total Investment Income" and "Adjusted Total Investment Income
Per Share" -- represents total investment income excluding any
amortization or accretion of interest income resulting solely from the
cost basis established by ASC 805 (see below) for the assets acquired in
connection with the OCSI Merger and the OSI2 Merger.
-- "Adjusted Net Investment Income" and "Adjusted Net Investment Income Per
Share" -- represents net investment income, excluding (i) any
amortization or accretion of interest income resulting solely from the
cost basis established by ASC 805 (see below) for the assets acquired in
connection with the OCSI Merger and the OSI2 Merger and (ii) capital
gains incentive fees ("Part II incentive fees").
-- "Adjusted Net Realized and Unrealized Gains (Losses), Net of Taxes" and
"Adjusted Net Realized and Unrealized Gains (Losses), Net of Taxes Per
Share" -- represents net realized and unrealized gains (losses) net of
taxes excluding any net realized and unrealized gains (losses) resulting
solely from the cost basis established by ASC 805 (see below) for the
assets acquired in connection with the OCSI Merger and the OSI2 Merger.
-- "Adjusted Earnings (Loss)" and "Adjusted Earnings (Loss) Per Share" --
represents the sum of (i) Adjusted Net Investment Income and (ii)
Adjusted Net Realized and Unrealized Gains (Losses), Net of Taxes and
includes the impact of Part II incentive fees1, if any.
The OCSI Merger and the OSI2 Merger (the "Mergers") were accounted for as asset acquisitions in accordance with the asset acquisition method of accounting as detailed in ASC 805-50, Business Combinations--Related Issues ("ASC 805"). The consideration paid to each of the stockholders of OCSI and OSI2 were allocated to the individual assets acquired and liabilities assumed based on the relative fair values of the net identifiable assets acquired other than "non-qualifying" assets, which established a new cost basis for the acquired investments under ASC 805 that, in aggregate, was different than the historical cost basis of the acquired investments prior to the OCSI Merger or the OSI2 Merger, as applicable. Additionally, immediately following the completion of the Mergers, the acquired investments were marked to their respective fair values under ASC 820, Fair Value Measurements, which resulted in unrealized appreciation/depreciation. The new cost basis established by ASC 805 on debt investments acquired will accrete/amortize over the life of each respective debt investment through interest income, with a corresponding adjustment recorded to unrealized appreciation/depreciation on such investment acquired through its ultimate disposition. The new cost basis established by ASC 805 on equity investments acquired will not accrete/amortize over the life of such investments through interest income and, assuming no subsequent change to the fair value of the equity investments acquired and disposition of such equity investments at fair value, the Company will recognize a realized gain/loss with a corresponding reversal of the unrealized appreciation/depreciation on disposition of such equity investments acquired.
The Company's management uses the non-GAAP financial measures described above internally to analyze and evaluate financial results and performance and to compare its financial results with those of other business development companies that have not adjusted the cost basis of certain investments pursuant to ASC 805. The Company's management believes "Adjusted Total Investment Income", "Adjusted Total Investment Income Per Share", "Adjusted Net Investment Income" and "Adjusted Net Investment Income Per Share" are useful to investors as an additional tool to evaluate ongoing results and trends for the Company without giving effect to the income resulting from the new cost basis of the investments acquired in the Mergers because these amounts do not impact the fees payable to Oaktree Fund Advisors, LLC (the "Adviser") under its 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
March 31, 2025 December 31, 2024 March 31, 2024
(unaudited) (unaudited) (unaudited)
------------------ ----------------- ----------------
($ in thousands,
except per share Per Per Per
data) Amount Share Amount Share Amount Share
-------- -------- ------- -------- ------- -------
GAAP total
investment
income $77,568 $ 0.90 $86,647 $ 1.05 $94,029 $ 1.18
Interest
income
amortization
(accretion)
related to
merger
accounting
adjustments (373) -- 423 0.01 3,311 0.04
------ ------- ------ ------- ------ ------
Adjusted
total
investment
income $77,195 $ 0.90 $87,070 $ 1.06 $97,340 $ 1.22
====== ======= ====== ======= ====== ======
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
March 31, 2025 December 31, 2024 March 31, 2024
(unaudited) (unaudited) (unaudited)
------------------ ----------------- ----------------
($ in thousands,
except per share Per Per Per
data) Amount Share Amount Share Amount Share
-------- -------- ------- -------- ------- -------
GAAP net
investment
income $39,055 $ 0.45 $44,302 $ 0.54 $41,367 $ 0.52
Interest
income
amortization
(accretion)
related to
merger
accounting
adjustments (373) -- 423 0.01 3,311 0.04
Part II
incentive
fee -- -- -- -- -- --
------ ------- ------ ------- ------ ------
Adjusted net
investment
income $38,682 $ 0.45 $44,725 $ 0.54 $44,678 $ 0.56
====== ======= ====== ======= ====== ======
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
March 31, 2025 December 31, 2024 March 31, 2024
(unaudited) (unaudited) (unaudited)
------------------ ------------------ ------------------
($ in thousands,
except per share Per Per Per
data) Amount Share Amount Share Amount Share
--------- ------- --------- ------- --------- -------
GAAP net
realized
and
unrealized
gains
(losses),
net of
taxes $(75,304) $(0.88) $(37,063) $(0.45) $(32,030) $(0.40)
Net realized
and
unrealized
gains
(losses)
related to
merger
accounting
adjustments 56 -- (61) -- (3,314) (0.04)
------- ----- ------- ----- ------- -----
Adjusted net
realized
and
unrealized
gains
(losses),
net of
taxes $(75,248) $(0.88) $(37,124) $(0.45) $(35,344) $(0.44)
======= ===== ======= ===== ======= =====
The following table provides a reconciliation of net increase (decrease) in net assets resulting from operations (the most comparable U.S. GAAP measure) to adjusted earnings (loss) for the periods presented:
For the three months ended
March 31, 2025 December 31, 2024 March 31, 2024
(unaudited) (unaudited) (unaudited)
------------------ ----------------- -----------------
($ in thousands,
except per share Per Per Per
data) Amount Share Amount Share Amount Share
--------- ------- ------- -------- -------- -------
Net increase
(decrease)
in net
assets
resulting
from
operations $(36,249) $(0.42) $7,239 $ 0.09 $ 9,337 $ 0.12
Interest
income
amortization
(accretion)
related to
merger
accounting
adjustments (373) -- 423 0.01 3,311 0.04
Net realized
and
unrealized
gains
(losses)
related to
merger
accounting
adjustments 56 -- (61) -- (3,314) (0.04)
------- ----- ----- ------- ------ -----
Adjusted
earnings
(loss) $(36,566) $(0.43) $7,601 $ 0.09 $ 9,334 $ 0.12
======= ===== ===== ======= ====== =====
Conference Call Information
Oaktree Specialty Lending will host a conference call to discuss its second fiscal quarter 2025 results at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time on May 1, 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 3296634, 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 or potential disruptions in the Company's operations, the economy, financial markets or political environment, including those caused by tariffs and trade disputes with other countries, inflation and an elevated interest rate environment; (ii) risks associated with possible disruption in the operations of the Company or the economy generally due to terrorism, war or other geopolitical conflict, 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
Clark Koury
(213) 830-6222
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)
March 31, December
2025 31, 2024 September
(unaudited) (unaudited) 30, 2024
----------- ----------- -----------
ASSETS
Investments at fair value:
Control investments (cost
March 31, 2025: $375,317;
cost December 31, 2024:
$374,509; cost September
30, 2024: $372,901) $ 230,904 $ 267,782 $ 289,404
Affiliate investments
(cost March 31, 2025:
$35,295; cost December
31, 2024: $37,358; cost
September 30, 2024:
$38,175) 32,475 35,180 35,677
Non-control/Non-affiliate
investments (cost March
31, 2025: $2,703,644;
cost December 31, 2024:
$2,576,053; cost
September 30, 2024:
$2,733,843) 2,629,392 2,532,332 2,696,198
--------- --------- ---------
Total investments at fair
value (cost March 31,
2025: $3,114,256; cost
December 31, 2024:
$2,987,920; September 30,
2024: $3,144,919) 2,892,771 2,835,294 3,021,279
Cash and cash equivalents 97,838 112,913 63,966
Restricted cash 10,370 13,159 14,577
Interest, dividends and
fees receivable 22,768 25,290 38,804
Due from portfolio
companies 317 408 12,530
Receivables from unsettled
transactions 18,526 55,661 17,548
Due from broker 25,190 21,880 17,060
Deferred financing costs 10,196 10,936 11,677
Deferred offering costs 161 162 125
Derivative assets at fair
value -- 6,652 --
Other assets 1,030 1,437 775
--------- --------- ---------
Total assets $3,079,167 $3,083,792 $3,198,341
========= ========= =========
LIABILITIES AND NET ASSETS
Liabilities:
Accounts payable,
accrued expenses and
other liabilities $ 3,451 $ 3,371 $ 3,492
Base management fee and
incentive fee payable 7,332 8,930 15,517
Due to affiliate 1,277 1,508 4,088
Interest payable 14,087 17,600 16,231
Payables from unsettled
transactions 110,202 -- 15,666
Derivative liabilities
at fair value 19,219 24,759 16,843
Deferred tax liability -- 14 --
Credit facilities
payable 520,000 660,000 710,000
Unsecured notes payable
(net of $7,573, $4,401
and $4,935 of
unamortized financing
costs as of March 31,
2025, December 31,
2024 and September 30,
2024, respectively) 928,486 917,795 928,693
--------- --------- ---------
Total liabilities 1,604,054 1,633,977 1,710,530
--------- --------- ---------
Commitments and
contingencies
Net assets:
Common stock, $0.01 par
value per share,
250,000 shares
authorized; 88,086,
82,245 and 82,245
shares issued and
outstanding as of
March 31, 2025,
December 31, 2024 and
September 30, 2024,
respectively 881 822 822
Additional
paid-in-capital 2,367,337 2,264,449 2,264,449
Accumulated
overdistributed
earnings (893,105) (815,456) (777,460)
--------- --------- ---------
Total net assets
(equivalent to $16.75,
$17.63 and $18.09 per
common share as of March
31, 2025, December 31,
2024 and September 30,
2024, respectively) 1,475,113 1,449,815 1,487,811
--------- --------- ---------
Total liabilities and net
assets $3,079,167 $3,083,792 $3,198,341
========= ========= =========
Oaktree Specialty Lending Corporation
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three months
Three months ended Three months Six months Six months
ended March December 31, ended March ended March ended March
31, 2025 2024 31, 2024 31, 2025 31, 2024
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
------------- ------------- ------------- ------------- -------------
Interest income:
Control investments $ 4,884 $ 5,226 $ 5,949 $ 10,110 $ 11,954
Affiliate investments 159 166 10 325 334
Non-control/Non-affiliate
investments 63,915 71,809 77,803 135,724 160,524
Interest on cash and cash
equivalents 1,565 1,221 1,494 2,786 3,858
------- --- ------- --- ------- --- -------- ------- ---
Total interest income 70,523 78,422 85,256 148,945 176,670
------- --- ------- --- ------- --- -------- ------- ---
PIK interest income:
Control investments -- 830 598 830 1,142
Affiliate investments 27 28 -- 55 --
Non-control/Non-affiliate
investments 4,504 4,870 4,218 9,374 7,523
------- --- ------- --- ------- --- -------- ------- ---
Total PIK interest income 4,531 5,728 4,816 10,259 8,665
------- --- ------- --- ------- --- -------- ------- ---
Fee income:
Control investments -- -- 13 -- 26
Affiliate investments -- -- -- -- 5
Non-control/Non-affiliate
investments 1,742 1,679 2,533 3,421 3,822
------- --- ------- --- ------- --- -------- ------- ---
Total fee income 1,742 1,679 2,546 3,421 3,853
------- --- ------- --- ------- --- -------- ------- ---
Dividend income:
Control investments 700 700 1,400 1,400 2,800
Non-control/Non-affiliate
investments 72 118 11 190 26
------- --- ------- --- ------- --- -------- ------- ---
Total dividend income 772 818 1,411 1,590 2,826
------- --- ------- --- ------- --- -------- ------- ---
Total investment income 77,568 86,647 94,029 164,215 192,014
------- --- ------- --- ------- --- -------- ------- ---
Expenses:
Base management fee 7,515 8,144 11,604 15,659 23,081
Part I incentive fee 6,733 7,913 8,452 14,646 17,480
Professional fees 1,227 1,067 1,213 2,294 2,717
Directors fees 160 160 160 320 320
Interest expense 28,191 30,562 31,881 58,753 64,051
Administrator expense 388 437 326 825 692
General and administrative
expenses 937 926 526 1,863 1,117
------- --- ------- --- ------- --- -------- ------- ---
Total expenses 45,151 49,209 54,162 94,360 109,458
Management fees waived (183) (750) (1,500) (933) (3,000)
Part I incentive fees
waived (6,733) (6,377) -- (13,110) --
------- ------- ------- --- -------- ------- ---
Net expenses 38,235 42,082 52,662 80,317 106,458
------- --- ------- --- ------- --- -------- ------- ---
Net investment income before
taxes 39,333 44,565 41,367 83,898 85,556
(Provision) benefit for
taxes on net investment
income (278) (263) -- $(541.SI)$ --
------- ------- ------- --- -------- ------- ---
Net investment income 39,055 44,302 41,367 83,357 85,556
------- --- ------- --- ------- --- -------- ------- ---
Unrealized appreciation
(depreciation):
Control investments (37,686) (23,230) (6,193) (60,916) (4,854)
Affiliate investments (642) 320 93 (322) (832)
Non-control/Non-affiliate
investments (28,975) (7,198) (21,396) (36,173) (39,011)
Foreign currency forward
contracts (14,720) 10,494 2,244 (4,226) (5,580)
------- ------- --- ------- --- -------- -------
Net unrealized
appreciation
(depreciation) (82,023) (19,614) (25,252) (101,637) (50,277)
------- ------- ------- -------- -------
Realized gains (losses):
Control investments 13 -- -- 13 786
Affiliate investments 333 (288) -- 45 --
Non-control/Non-affiliate
investments (1,547) (17,056) (5,433) (18,603) (18,773)
Foreign currency forward
contracts 7,906 34 (1,170) 7,940 2,931
------- --- ------- --- ------- -------- ------- ---
Net realized gains
(losses) 6,705 (17,310) (6,603) (10,605) (15,056)
------- --- ------- ------- -------- -------
(Provision) benefit for taxes
on realized and unrealized
gains (losses) 14 (139) (175) (125) (351)
------- --- ------- ------- -------- -------
Net realized and unrealized
gains (losses), net of
taxes (75,304) (37,063) (32,030) (112,367) (65,684)
------- ------- ------- -------- -------
Net increase (decrease) in
net assets resulting from
operations $(36,249) $ 7,239 $ 9,337 $ (29,010) $ 19,872
======= ======= === ======= === ======== ======= ===
Net investment income per
common share -- basic and
diluted $ 0.45 $ 0.54 $ 0.52 $ 0.99 $ 1.09
Earnings (loss) per common
share -- basic and diluted $ (0.42) $ 0.09 $ 0.12 $ (0.35) $ 0.25
Weighted average common
shares outstanding -- basic
and diluted 85,916 82,245 79,763 84,061 78,797
(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.
(END) Dow Jones Newswires
May 01, 2025 06:00 ET (10:00 GMT)
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