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 

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