Oaktree Specialty Lending Corporation · NASDAQ:OCSL
Oaktree Specialty Lending — Q4 2022 Earnings Presentation
26 slides from Oaktree Specialty Lending's earnings presentation, Nov 15, 2022
Slide 1: Fourth Quarter 2022 Earnings Presentation
fourth quarter 2022 earnings presentation november 15, 2022 nasdaq: ocsl
Slide 2: Forward Looking Statements & Legal Disclosures
Forward Looking Statements & Legal Disclosures Some of the statements in this presentation constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this presentation may include statements
Slide 3: Forward Looking Statements & Legal Disclosures (continued)
Forward Looking Statements & Legal Disclosures (continued) Calculation of Assets Under Management References to total "assets under management" or "AUM" represent assets managed by Oaktree and a proportionate amount of the AUM reported by DoubleLine Capital LP ("DoubleLine Capital"), in which Oaktre
Slide 4: Highlights for the Quarter Ended September 30, 2022
Highlights for the Quarter Ended September 30, 2022 • $0.18 per share as compared with $0.17 per share for the quarter ended June 30, 2022 adjusted net investment income1 • GAAP net investment income was $0.20 per share as compared with $0.22 per share for the quarter ended June 30, 2022 • The incre
Slide 5: Portfolio Summary
Portfolio Summary portfolio characteristics portfolio composition (At fair value) (As % of total portfolio at fair value; $ in millions) 4% 2% First Lien – $1,776 $2.5bn 149 7% Second Lien – $390 total investments portfolio companies 16% Unsecured – $57 Equity – $104 71% Joint Ventures – $167 10.6%
Slide 6: Portfolio Diversity
Portfolio Diversity diversity by investment size portfolio by industry1 (As % of total portfolio at fair value) (As % of total portfolio at fair value) Industry % of Portfolio Joint Ventures 7% Software 15.9% Top 10 Investments IT Services 7.0 20% Pharmaceuticals 4.8 Biotechnology 4.3 Specialty Reta
Slide 7: Investment Activity
Investment Activity new investment highlights historical funded originations and exits ($ in millions) $500 $416 400 $97mm $85mm 300 $202 $241 $235 $236 new investment new investment $180 200 $130 $130 $146 commitments fundings1 $85 100 0 9/30/21 12/31/21 3/31/22 6/30/22 9/30/22 New Funded Investmen
Slide 8: Investment Activity (continued)
Investment Activity (continued) new investment commitment detail ($ in millions) Security Type Market Investment Number of Unsecured & Private Primary Secondary Avg. Secondary Fiscal Quarter Commitments Deals First Lien Second Lien Other Placement (Public) (Public) Purchase Price 2Q2020 $273 39 $210
Slide 9: Financial Highlights
Financial Highlights As of ($ and number of shares in thousands, except per share amounts) 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 GAAP Net Investment Income per Share $0.20 $0.22 $0.22 $0.18 $0.18 Adjusted Net Investment Income per Share1 $0.18 $0.17 $0.18 $0.17 $0.16 Net Realized and Un
Slide 10: Portfolio Highlights
Portfolio Highlights As of ($ in thousands, at fair value) 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 Investments at Fair Value $2,494,111 $2,565,389 $2,644,775 $2,558,623 $2,556,629 Number of Portfolio Companies 149 151 146 140 138 Average Portfolio Company Debt Investment Size $16,500 $16,
Slide 11: Investment Activity
Investment Activity As of ($ in thousands) 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 New Investment Commitments $97,000 $131,900 $227,900 $299,900 $385,000 New Funded Investment Activity1 $84,500 $130,000 $236,200 $240,800 $416,400 Proceeds from Prepayments, Exits, Other Paydowns and Sales
Slide 12: Net Asset Value Per Share Bridge
Net Asset Value Per Share Bridge adjusted net realized and unrealized adjusted nii gains (losses), net of taxes $7.50 $0.18 ($0.11) ($0.01) ($0.11) 7.00 ($0.01) $0.01 $0.20 ($0.17) 6.50 6.00 5.50 $6.89 $6.79 5.00 4.50 4.00 6/30/22 NAV GAAP Net Investment Interest Income Net Unrealized Net Realized G
Slide 13: Capital Structure Overview
Capital Structure Overview funding sources ($ in millions) 0.90x to 1.25x Principal target leverage ratio Committed Outstanding Interest Rate Maturity Syndicated Credit Facility $1,000 $540 LIBOR + 2.00% 5/4/2026 Citibank Facility 200 160 LIBOR + 1.25%-2.25%1 11/18/2024 Investment 2025 Notes 300 300
Slide 14: Funding and Liquidity Metrics
Funding and Liquidity Metrics leverage utilization liquidity overview ($ in millions) ($ in millions) $2,000 $1,850 $1,850 $1,850 $1,850 12/31/2021 3/31/2022 6/30/2022 9/30/2022 1,800 Credit Facilities Committed $1,200 $1,200 $1,200 $1,200 1,600 $455 $455 $500 $550 Credit Facilities Drawn (650) (745
Slide 15: Strategic Joint Ventures are Accretive to Earnings
Strategic Joint Ventures are Accretive to Earnings ocsl’s joint ventures are income-enhancing vehicles that primarily invest in senior secured loans of middle market companies and other corporate debt securities Key Attributes of Joint Ventures: • Equity ownership: 87.5% OCSL and 12.5% joint venture
Slide 16: Compelling Performance Under Oaktree Management
Compelling Performance Under Oaktree Management nav and cumulative distributions paid per share $10.00 9.00 $1.71 $1.87 8.00 $1.55 $1.41 $2.03 $2.20 $1.28 $1.16 7.00 $0.56 $0.66 $0.75 $1.05 $0.47 $0.94 $0.18 $0.37 $0.09 $0.28 6.00 $0.85 5.00 $7.09 $7.22 $7.28 $7.34 $7.26 4.00 $6.85 $6.89 $6.79 $6.55
Slide 17: Strong Earnings and Dividend Growth in FY 2022
Strong Earnings and Dividend Growth in FY 2022 adjusted net investment income per share and roe quarterly dividends declared per share ($ in millions) ($ in millions) 1 16% increase from September 30, 2021 9.6% LTM return on adjusted NII $0.20 $0.20 $0.18 $0.180 $0.18 0.18 $0.17 $0.17 0.18 $0.170 $0
Slide 18: Opportunities to Increase Return on Equity
Opportunities to Increase Return on Equity 1 2 3 4 continue rotating into positioned for cont’d operate within target optimize higher-yielding interest rate increases leverage range joint ventures investments • 86% of the debt portfolio at • Recently revised target • Opportunity to improve the • Opp
Slide 19: Appendix
OCSL | Specialty Lending Corporation
Slide 20: Total Merger Consideration
Total Merger Consideration merger consideration highlights illustrative example1 ($ and share amounts in millions, except per share data) Total merger consideration will be based on the net asset values of OCSL and OSI2 $18.50 $6.79 osi2 nav ocsl nav • OCSL to acquire 100% of OSI2 in a stock-for-sto
Slide 21: OCSL & OSI2 Comparison
OCSL & OSI2 Comparison portfolio and balance sheet metrics (At fair value, $ in thousands) OCSL OSI2 Combined Company Portfolio: Investments at Fair Value $2,494,111 $559,313 $3,053,424 Top 10 Investments (%) 20.0% 23.8% 22.3% Number of Portfolio Companies 149 115 158 First Lien (%) 71% 85% 74% Seco
Slide 22: Non-Core Investment Portfolio Detail
Non-Core Investment Portfolio Detail non-core investment portfolio characteristics non-core portfolio composition (At fair value; $ in millions) debt investments $120 • $36 million at fair value in two companies 100 • Received a $2 million paydown on one investment during the 80 $71 quarter ended Se
Slide 23: Quarterly Statement of Operations
Quarterly Statement of Operations For the three months ended ($ in thousands) 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 investment income Interest income $61,719 $54,728 $57,019 $55,450 $55,094 PIK interest income 6,011 5,178 4,674 4,663 4,960 Fee income 1,539 2,275 1,905 912 645 Dividend i
Slide 24: Quarterly Statement of Operations (continued)
Quarterly Statement of Operations (continued) For the three months ended ($ in thousands, except per share amounts) 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 net realized and unrealized gains (losses) Net unrealized appreciation (depreciation) $(17,869) $(86,755) $(27,038) $(4,586) $(2,098)
Slide 25: Non-GAAP Disclosures
Non-GAAP Disclosures On March 19, 2021, the Company completed the Merger. The Merger was accounted for as an asset acquisition 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 OCSI’s s
Slide 26: Contact Us
contact us: visit us: Investor Relations oaktreespecialtylending.com Michael Mosticchio (212) 284-1900 ocsl-ir@oaktreecapital.com
Oaktree Specialty Lending — Q4 2022 Earnings Presentation on 6ix