LOS ANGELES, CA, Nov. 19, 2024 (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 and year ended September 30, 2024.
Financial Highlights for the Quarter and Year Ended September 30, 2024
- Total investment income was $94.7 million ($1.15 per share) and $381.7 million ($4.75 per share) for the fourth fiscal quarter of 2024 and full year, as compared with $95.0 million ($1.16 per share) and $379.3 million ($5.26 per share) for the third fiscal quarter of 2024 and full year of 2023. Adjusted total investment income was $95.0 million ($1.16 per share) and $385.9 million ($4.80 per share) for the fourth fiscal quarter and full year ended September 30, 2024, as compared with $95.6 million ($1.17 per share) and $376.4 million ($5.22 per share) for the third fiscal quarter of 2024 and full year of 2023. The decrease for the quarter was primarily driven by lower interest income due to the impact of certain investments that were placed on non-accrual status, partially offset by higher original issue discount ("OID") acceleration from investment repayments and higher prepayment fee income. The increase for the full year was primarily driven by higher interest income, which was attributable to a larger investment portfolio and higher OID acceleration from investment repayments, higher prepayment and amendment fees and higher dividend income from the Company's investment in Senior Loan Fund JV I, LLC ("SLF JV I"). This was partially offset by the impact of certain investments that were placed on non-accrual status.
- GAAP net investment income was $44.9 million ($0.55 per share) and $175.1 million ($2.18 per share) for the fourth fiscal quarter and full year, as compared with $44.6 million ($0.54 per share) and $180.7 million ($2.51 per share) for the third fiscal quarter of 2024 and full year of 2023. The increase for the quarter was primarily driven by lower management fees (net of fees waived) and lower interest expense, partially offset by higher income-based ("Part I") incentive fees (net of fees waived) and lower total investment income. The decrease for the full year was primarily driven by higher interest expense, partially offset by higher total investment income, lower management fees and part I incentive fees (net of fees waived) and lower operating expenses.
- Adjusted net investment income was $45.2 million ($0.55 per share) and $179.3 million and ($2.23 per share) for the fourth fiscal quarter and full year, as compared with $45.2 million ($0.55 per share) and $177.8 million ($2.47 per share) for the third fiscal quarter of 2024 and full year of 2023. The increase on a total dollar basis for the full year was primarily driven by higher adjusted total investment income, lower management fees and part I incentive fees (net of fees waived) and lower operating expenses, partially offset by higher interest expense.
- Net asset value ("NAV") per share was $18.09 as of September 30, 2024, down as compared with $18.19 and $19.63 as of June 30, 2024 and September 30, 2023, respectively. The decline from June 30, 2024 and September 30, 2023 primarily reflected losses on certain debt and equity investments.
- Waived part I incentive fees of $1.2 million for the quarter ended September 30, 2024, and, effective July 1, 2024, base management fees were reduced from an annual rate of 1.50% to 1.00% of total gross assets, excluding cash and cash equivalents.
- Originated $259.0 million of new investment commitments and received $338.3 million of proceeds from prepayments, exits, other paydowns and sales during the quarter ended September 30, 2024. The weighted average yield on new debt investments was 9.9%.
- Total debt outstanding was $1,660.0 million as of September 30, 2024. The total debt to equity ratio was 1.12x, and the net debt to equity ratio was 1.07x, after adjusting for cash and cash equivalents.
- Liquidity as of September 30, 2024 was composed of $64.0 million of unrestricted cash and cash equivalents and $907.5 million of undrawn capacity under the Company's credit facilities (subject to borrowing base and other limitations). Unfunded investment commitments were $311.4 million, or $284.3 million excluding unfunded commitments to the Company's joint ventures. Of the $284.3 million, approximately $247.6 million can be drawn immediately with the remaining amount subject to certain milestones that must be met by portfolio companies or other restrictions.
- A quarterly cash distribution was declared of $0.55 per share. The distribution is payable in cash on December 31, 2024 to stockholders of record on December 16, 2024.
"During the quarter, we successfully restructured several names that were previously on non-accrual status,” Panossian noted. "However, unique challenges that impacted a handful of additional portfolio companies caused a slight decline in NAV and additional names on non-accrual status. While this has been a challenging year, we remain confident in the overall credit quality of our portfolio and in our ability to achieve successful outcomes for our shareholders by leveraging the extensive resources and turnaround expertise of the Oaktree platform.”
Distribution Declaration
The Board of Directors declared a quarterly distribution of $0.55 per share. The distribution is payable in cash on December 31, 2024 to stockholders of record on December 16, 2024.
Distributions are paid primarily from distributable (taxable) income. To the extent taxable earnings for a fiscal taxable year fall below the total amount of distributions for that fiscal year, a portion of those distributions may be deemed a return of capital to the Company's stockholders.
Results of Operations
| For the three months ended | For the year ended | |||||||||||||||||||
| ($ in thousands, except per share data) | September 30, 2024 (unaudited) | June 30, 2024 (unaudited) | September 30, 2023
(unaudited) | September 30, 2024 | September 30, 2023 | |||||||||||||||
| GAAP operating results: | ||||||||||||||||||||
| Interest income | $ | 83,626 | $ | 85,953 | $ | 94,732 | $ | 346,249 | $ | 348,765 | ||||||||||
| PIK interest income | 6,018 | 6,149 | 5,544 | 20,832 | 19,764 | |||||||||||||||
| Fee income | 3,897 | 1,460 | 572 | 9,210 | 6,546 | |||||||||||||||
| Dividend income | 1,144 | 1,404 | 1,057 | 5,374 | 4,211 | |||||||||||||||
| Total investment income | 94,685 | 94,966 | 101,905 | 381,665 | 379,286 | |||||||||||||||
| Net expenses | 49,764 | 50,391 | 54,407 | 206,613 | 198,511 | |||||||||||||||
| Excise tax | - | - | - | - | (78 | ) | ||||||||||||||
| Net investment income | 44,921 | 44,575 | 47,498 | 175,052 | 180,697 | |||||||||||||||
| Net realized and unrealized gains (losses), net of taxes | (8,008 | ) | (43,455 | ) | (1,546 | ) | (117,147 | ) | (63,366 | ) | ||||||||||
| Net increase (decrease) in net assets resulting from operations | $ | 36,913 | $ | 1,120 | $ | 45,952 | $ | 57,905 | $ | 117,331 | ||||||||||
| Total investment income per common share | $ | 1.15 | $ | 1.16 | $ | 1.32 | $ | 4.75 | $ | 5.26 | ||||||||||
| Net investment income per common share | $ | 0.55 | $ | 0.54 | $ | 0.62 | $ | 2.18 | $ | 2.51 | ||||||||||
| Net realized and unrealized gains (losses), net of taxes per common share | $ | (0.10 | ) | $ | (0.53 | ) | $ | (0.02 | ) | $ | (1.46 | ) | $ | (0.88 | ) | |||||
| Earnings (loss) per common share - basic and diluted | $ | 0.45 | $ | 0.01 | $ | 0.60 | $ | 0.72 | $ | 1.63 | ||||||||||
| Non-GAAP Financial Measures1: | ||||||||||||||||||||
| Adjusted total investment income | $ | 95,000 | $ | 95,573 | $ | 102,157 | $ | 385,927 | $ | 376,389 | ||||||||||
| Adjusted net investment income | $ | 45,236 | $ | 45,182 | $ | 47,750 | $ | 179,314 | $ | 177,800 | ||||||||||
| Adjusted net realized and unrealized gains (losses), net of taxes | $ | (8,322 | ) | $ | (44,055 | ) | $ | (1,668 | ) | $ | (120,579 | ) | $ | (40,175 | ) | |||||
| Adjusted earnings (loss) | $ | 36,914 | $ | 1,127 | $ | 46,082 | $ | 58,735 | $ | 137,625 | ||||||||||
| Adjusted total investment income per share | $ | 1.16 | $ | 1.17 | $ | 1.32 | $ | 4.80 | $ | 5.22 | ||||||||||
| Adjusted net investment income per share | $ | 0.55 | $ | 0.55 | $ | 0.62 | $ | 2.23 | $ | 2.47 | ||||||||||
| Adjusted net realized and unrealized gains (losses), net of taxes per share | $ | (0.10 | ) | $ | (0.54 | ) | $ | (0.02 | ) | $ | (1.50 | ) | $ | (0.56 | ) | |||||
| Adjusted earnings (loss) per share | $ | 0.45 | $ | 0.01 | $ | 0.60 | $ | 0.73 | $ | 1.91 | ||||||||||
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