Oaktree Specialty Lending Corporation · NASDAQ:OCSL

Oaktree Specialty Lending — Q3 2021 Earnings Presentation

21 slides from Oaktree Specialty Lending's earnings presentation, Aug 5, 2021

  1. Slide 1: Third Quarter 2021 Earnings Presentation

    OAKTREE OCSL Specialty Lending Corporation THIRD QUARTER 2021 AUGUST 5, 2021 EARNINGS PRESENTATION NASDAQ: OCSL

  2. Slide 2: Forward Looking Statements

    OAKTREE OCSL Specialty Lending Corporation Forward Looking Statements 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

  3. Slide 3: Highlights for the Quarter Ended June 30, 2021

    Highlights for the Quarter Ended June 30, 2021 NET ASSET VALUE PER SHARE $7.22, up 2% from $7.09 as of March 31, 2021 and up 9% from $6.61 as of December 31, 2019 (prior to the onset of the pandemic) Quarterly increase primarily due to realized and unrealized gains on certain debt and equity investm

  4. Slide 4: Portfolio Summary as of June 30, 2021

    OAKTREE OCSL | Specialty Lending Corporation Portfolio Summary as of June 30, 2021 PORTFOLIO CHARACTERISTICS PORTFOLIO COMPOSITION (At fair value) (As % of total portfolio at fair value; $ in millions) 4% First Lien – $1,580 $2.3bn 135 1% 8% Second Lien – $447 TOTAL INVESTMENTS PORTFOLIO COMPANIES 1

  5. Slide 5: Portfolio Diversity

    OAKTREE OCSL | Specialty Lending Corporation 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 8% Software 14.6% Top 10 Investments IT Services 9.5 20% Pharmac

  6. Slide 6: Investment Activity

    OAK TREE OSCL | Speciality Leading Corporation Investment Activity NEW INVESTMENT HIGHLIGHTS HISTORICAL FUNDED ORIGINATIONS AND EXITS ($ in millions) 350 $302 $300 $242 $229250 $178mm $165mm $199 $184 200 $161 $165 $171 $146 NEW INVESTMENT NEW INVESTMENT150 $128 COMMITMENTS FUNDINGS1 100500 6/30/20

  7. Slide 7: Investment Activity (continued)

    OAKTREE OCSL Specialty Lending Corporation 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)

  8. Slide 8: Financial Highlights

    OAKTREE OCSL | Specialty Lending Corporation Financial HighlightsAs of($ and number of shares in thousands, except per share amounts) 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020GAAP Net Investment Income per Share $0.20 $0.12 $0.07 $0.17 $0.12Adjusted Net Investment Income per Share1 $0.19 $0

  9. Slide 9: Portfolio Highlights

    OAKTREE OCSL | Specialty Lending Corporation Portfolio HighlightsAs of($ in thousands, at fair value) 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020Investments at Fair Value $2,339,301 $2,327,353 $1,712,324 $1,573,851 $1,561,153 Number of Portfolio Companies 135 137 115 113 119 Average Portfolio

  10. Slide 10: Investment Activity

    OAKTREE OCSL Specialty Lending Corporation Investment Activity As of ($ in thousands) 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 New Investment Commitments $178,400 $317,700 $286,300 $148,500 $260,500 New Funded Investment Activity1 $165,300 $301,800 $241,500 $146,300 $198,500 Proceeds from

  11. Slide 11: Net Asset Value Per Share Bridge

    OAKTREE OCSL | Specialty Lending Corporation Net Asset Value Per Share Bridge ADJUSTED NII $0.19 ADJUSTED NET REALIZED AND UNREALIZED GAINS (LOSSES), NET OF TAXES $0.09 ($0.03) $0.02 $0.20 $0.05 $0.03 $0.01 ($0.02) ($0.13) $8.00 7.50 7.00 6.50 6.00 5.50 5.00 4.50 4.00 $7.09 $7.22 3/31/21 NAV GAAP Ne

  12. Slide 12: Capital Structure Overview

    OAKTREE OCSL | Specialty Lending Corporation Capital Structure Overview FUNDING SOURCES 0.85x to 1.00x ($ in millions) Principal TARGET LEVERAGE RATIO Committed Outstanding Interest Rate MaturitySyndicated Credit Facility $950 $350 LIBOR + 2.00% 5/4/2026 Citibank Facility1 150 114 LIBOR + 1.70% / 2.

  13. Slide 13: Funding and Liquidity Metrics

    OAKTREE OSCL | Specialty Lending Corporation Funding and Liquidity Metrics LEVERAGE UTILIZATION LIQUIDITY OVERVIEW ($ in millions) ($ in millions) $1,800 $1,750 9/30/2020 12/31/2020 3/31/2021 6/30/2021 1,600 $1,440 Credit Facility Committed $700 $800 $1,140 $1,100 1,400 $636 $325 Credit Facility Dra

  14. Slide 14: Strategic Joint Ventures are Accretive to Earnings

    OAKTREE OCSL Specialty Lending Corporation 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 own

  15. Slide 15: Compelling Performance Under Oaktree Management

    Compelling Performance Under Oaktree ManagementNAV AND CUMULATIVE DISTRIBUTIONS PAID PER SHARE $10.009.008.00 $1.28 $1.41 $1.16 7.00 $0.56 $0.66 $0.75 $1.05 $0.47 $0.94 $0.18 $0.37 $0.09 $0.286.00 $0.855.004.00 $7.09 $7.22 $6.60 $6.60 $6.61 $6.85 $6.55 $6.49 $5.95 $6.09 $6.19 $6.09 $5.81 $5.87$5.343

  16. Slide 16: Opportunities to Increase Return on Equity

    Opportunities to Increase Return on Equity 1 ROTATE INTO HIGHER-YIELDING INVESTMENT • $142 million at fair value of senior secured loans priced at or below LIBOR + 4.50%1, including $67 million of investments that were acquired from OCSI • Exited $39 million of lower yielding senior secured loans du

  17. Slide 17: Appendix

    Appendix OAKTREE OCSL Specialty Lending Corporation

  18. Slide 18: Non-Core Investment Portfolio Detail

    Non-Core Investment Portfolio Detail NON-CORE INVESTMENT PORTFOLIO CHARACTERISTICS DEBT INVESTMENTS • $77 million at fair value in four companies • Received $10 million in partial prepayments and revolver paydowns across three investments during the quarter ended June 30, 2021 EQUITY INVESTMENTS1 •

  19. Slide 19: Quarterly Statement of Operations

    OAK TREE OSCL | Speciality Leading Corporation Quarterly Statement of Operations For the three months ended ($ in thousands) 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 INVESTMENT INCOME Interest income $51,999 $35,655 $31,633 $37,153 $30,112 PIK interest income 4,597 3,801 3,089 2,573 2,183

  20. Slide 20: Quarterly Statement of Operations (continued)

    OAK TREE OSCL | Speciality Leading Corporation Quarterly Statement of Operations (continued) For the t hree months ended ($ in thousands, except per share amounts) 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 NET REALIZED AND UNREALIZED GAINS (LOSSES) Net unrealized appreciation (depreciation)

  21. Slide 21: 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

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