Oaktree Specialty Lending Corporation · NASDAQ:OCSL
Oaktree Specialty Lending — Q4 2018 Earnings Presentation
21 slides from Oaktree Specialty Lending's earnings presentation, Nov 29, 2018
Slide 1: Fourth Quarter Fiscal Year 2018 Earnings Presentation
Fourth Quarter Fiscal Year 2018 Earnings Presentation November 29, 2018 Nasdaq: OCSL Exhibit 99.2
Slide 2: Forward Looking Statements
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 may include statements as to: our future o
Slide 3: Accomplishments Since Oaktree Became Investment Adviser on October 17, 2017
Accomplishments Since Oaktree Became Investment Adviser on October 17, 2017 Significant Progress Rotating Portfolio NAV Stabilization Improved Capital Structure Reduced Operating Costs ($ in millions, at fair value) 1 Operating Expenses2 Portfolio Assets NAV Per Share Key Accomplishments ($ in milli
Slide 4: Q4 2018 Highlights
Q4 2018 Highlights Net asset value per share increased by $0.14 to $6.09 NAV continues to remain stable, increasing $0.28 per share or approximately 5% since December 31, 2017 Third consecutive quarter of NAV growth Realized gains resulting from monetizations of investments and unrealized write-ups
Slide 5: Historical Portfolio Progression
Non-core Investments: 24% of portfolio Non-core Investments: 63% of portfolio Historical Portfolio Progression Non-core private loans and non-accruals currently represent only 14% of OCSL’s portfolio, down from 43% of the portfolio as of September 30, 2017 ($ in millions, at fair value) Portfolio by
Slide 6: Non-core Investment Portfolio Detail
Note:Numbers may not sum due to rounding. Non-core Investment Portfolio Detail Non-core Investment Portfolio Characteristics Private Loans $93 million at fair value in seven companies Net leverage through tranche: 3.9x Average debt price: 90.1% Equity Investments $69 million at fair value in 27 equi
Slide 7: Portfolio Summary as of September 30, 2018
Portfolio Summary as of September 30, 2018 (As % of total portfolio, at fair value; $ in millions) (As % of total portfolio, at fair value) Portfolio Composition Top 10 Industries1 Portfolio Characteristics (at fair value) Note:Numbers rounded to the nearest million or percentage point. 1Excludes th
Slide 8: Portfolio Diversity
Portfolio Diversity OCSL’s portfolio is diverse across investments and industries (At fair value) Portfolio by Industry1,2 Diversity by Investment Size Top 10 Investments 25% Next 15 Investments 25% Remaining 87 Investments 41% Kemper JV 9% Average Investment Size $13 million1 1Excludes investments
Slide 9: Debt Portfolio Company Metrics
Debt Portfolio Company Metrics OCSL’s portfolio has transitioned into higher quality, larger borrowers with lower leverage, reflecting our defensive investment approach Debt Portfolio Company EBITDA Debt Portfolio Company Leverage1 Median Debt Portfolio Company EBITDA ($ in millions) OCSL’s debt por
Slide 10: Q4 2018 Portfolio Originations
Q4 2018 Portfolio Originations1 $228 million of new commitments $218 million in 13 new portfolio companies and $10 million in 3 existing portfolio companies Diversified across 12 industries 8.4% weighted average yield at cost on new investments2 88% of new debt investment commitments at floating rat
Slide 11: Historical Financial Information
Historical Financial Information ($ in thousands, except per share amounts) Operating Results Q4’18 Q3’18 Q2’18 Q1’18 Q4’17 Sep-18 Jun-18 Mar-18 Dec-17 Sep-17 Interest income $35,306 $26,634 $26,633 $29,938 $31,352 PIK interest income 499 1,457 1,946 1,867 2,128 Fee income 2,034 2,425 3,942 1,031 1,
Slide 12: Historical Financial Information (continued)
Historical Financial Information (continued) ($ in thousands, except per share amounts) Select Balance Sheet and Other Data Q4’18 Q3’18 Q2’18 Q1’18 Q4’17 Sep-18 Jun-18 Mar-18 Dec-17 Sep-17 Investment Portfolio (at fair value) $1,491,201 $1,520,518 $1,400,684 $1,415,404 $1,541,755 Total Debt Outstand
Slide 13: Historical Portfolio Activity
Historical Portfolio Activity ($ in thousands) As of and for Three Months Ended Q4’18 Q3’18 Q2’18 Q1’18 Q4’17 Sep-18 Jun-18 Mar-18 Dec-17 Sep-17 Investments at Fair Value $1,491,201 $1,520,518 $1,400,684 $1,415,404 $1,541,755 Number of Portfolio Companies 113 116 115 122 125 Average Portfolio Compan
Slide 14: Net Asset Value Per Share Bridge
Net Asset Value Per Share Bridge ($0.095) Note:Net asset value per share amounts are based on the shares outstanding at each respective quarter end. Net investment income per share, net unrealized appreciation / (depreciation), and net realized gain / (loss) are based on the weighted average number
Slide 15: Capital Structure Overview
Capital Structure Overview Funding Sources as of September 30, 2018 Capacity Outstanding Interest Rate Maturity Syndicated Credit Facility $600.0 million $241.0 million LIBOR+2.25%-2.75% November 2021 2019 Notes2 $228.8 million $228.8 million 4.875% March 2019 2024 Notes $75.0 million $75.0 million
Slide 16: Opportunities to Increase Return on Equity
Opportunities to Increase Return on Equity Redeploy non-interest generating investments comprised of equity, limited partnership interests and loans on non-accrual Received proceeds of $17 million from sales of limited partnership interests and exited one investment on non-accrual during the quarter
Slide 17: Appendix
OAKTREE OCSL | Specialty Lending Corporation Appendix
Slide 18: Portfolio Summary: Core vs. Non-core Assets
Portfolio Summary: Core vs. Non-core Assets1 $1.0 billion (76% of the total portfolio at fair value) Average debt price: 99.6% Represents 69 companies, increase from 66 in Q3 2018 $228 million of investments originated during Q4 2018 Non-core Investments Performing Investments $185 million (14% of t
Slide 19: Non-core: Performing Investments
Non-core: Performing Investments Investment Portfolio Characteristics Debt investments – $84 million at fair value in 10 companies $31 million – publicly quoted liquid positions 4 companies $53 million – privately placed debt investments 6 companies Net leverage through tranche: 3.2x Average debt pr
Slide 20: Non-core: Underperforming Investments
Non-core: Underperforming Investments Non-core: Underperforming by Type Investment Portfolio Characteristics (As % of non-core underperforming investment portfolio, at fair value; $ in millions) $139 million total debt investments $99 million on non-accrual Represents 8 companies Average debt price:
Slide 21: Contact: Investor Relations
Contact: Michael Mosticchio, Investor Relations ocsl-ir@oaktreecapital.com
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