Sixth Street Specialty Lending, Inc. · NYSE:TSLX
Sixth Street Specialty Lending — Q4 2023 Earnings Presentation
23 slides from Sixth Street Specialty Lending's earnings presentation, Feb 16, 2024
Slide 1: Sixth Street Specialty Lending Earnings Presentation
SIXTH STREET SPECIALTY LENDING EARNINGS PRESENTATION Quarter Ended December 31, 2023
Slide 2: Disclaimer and Forward-Looking Statement
DISCLAIMER AND FORWARD-LOOKING STATEMENT References in this presentation (“Presentation”) to “TSLX,” “we,” “us,” “our” and “the Company” refer to Sixth Street Specialty Lending, Inc. This Presentation includes forward-looking statements about TSLX that involve substantial risks and uncertainties. Th
Slide 3: Overview
OVERVIEW Specialty Lending Company Focused on Providing Financing Solutions $39.65 $39.05 $38.30 $37.65 $36.99 $36.42 $35.66$35.50 $35.10 $34.46 $33.70 $32.85 $31.83 $31.03 $29.58 $29.22 $28.64 $28.17 $28.41 19.8320.36 $27.43 19.31 18.81 $26.61$26.83 17.8118.26 $26.03 16.0116.5316.98 $25.49 15.53 $2
Slide 4: 2023 Annual Results - Snapshot
2023 ANNUAL RESULTS - SNAPSHOT Net Income Net Investment Income 2023 / 2023 Adj.1 $222.0 / $226.4 million $2.61 / $2.66 per share 2023 / 2023 Adj.1 $196.4 / $200.8 million $2.31 / $2.36 per share 2022 / 2022 Adj.1 $108.1 / $99.2 million $1.38 / $1.27 per share 2022 / 2022 Adj.1 $166.3 / $157.5 milli
Slide 5: Delivering Through-the-Cycle Returns
DELIVERING THROUGH-THE-CYCLE RETURNS TSLX Annual Returns Since IPO ROE on Adj. Net Income Economic Return 19.7% 19.1% 15.4% 15.9% 16.2% 15.5% 14.7% 15.5% 16.1% 14.5% 10.8% 11.9% 12.1% 11.7% 11.6% 11.3% 10.0% 7.6% 7.6% 7.6% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Net Income / Share $1.68 $1
Slide 6: Highlights
HIGHLIGHTS • Core focus on investing in middle-market loans to US based companies – Target EBITDA: $10 million to $250 million Broadly Distributed, – Portfolio weighted average EBITDA: $79.3 million1 Scaled Senior Floating • Target investment hold size of $30 million to $100 million Rate-focused Por
Slide 7: Financial Highlights
FINANCIAL HIGHLIGHTS DOLLAR AMOUNTS IN THOUSANDS Except Per Share Data; Per Share Data is Based on Weighted Average Shares Outstanding During the Period, Except as Otherwise Noted Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Net Investment Income Per Share $0.65 $0.53 $0.58 $0.57 $0.62 Net Income (Loss)
Slide 8: Portfolio Highlights - Selected Metrics
PORTFOLIO HIGHLIGHTS – SELECTED METRICS DOLLAR AMOUNTS IN THOUSANDS December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 Investments at Fair Value $2,787,925 $2,918,584 $3,088,987 $3,113,277 $3,283,065 Number of Portfolio Companies 121 127 130 131 136 Average Investmen
Slide 9: Quarterly Statements of Financial Condition
QUARTERLY STATEMENTS OF FINANCIAL CONDITION DOLLAR AMOUNTS IN THOUSANDS Except Per Share Data; Per Share Data is Based on Ending Shares Outstanding December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 Assets Investments at Fair Value $2,787,925 $2,918,584 $3,088,987 $3
Slide 10: Net Asset Value Bridge - Q4'23
NET ASSET VALUE BRIDGE – Q4’23 $0.01 ($0.04) $0.01 $0.62 ($0.46) $17.03 $0.13 $0.02 $17.04 $16.97 ($0.15) $16.96 $16.90 ($0.08) ($0.07) 9/30/23 Q3'23 9/30/23 Q4'23 Q4'23 Q4'23 Q4'23 NAV Q4'23 Q3'23 Q4'23 Q4'23 12/31/23 Q4'23 12/31/23 NAV Supplemental Adjusted NAV1 Adjusted Net Reversal of Reversal o
Slide 11: Net Asset Value Bridge - 2023
NET ASSET VALUE BRIDGE – 2023 ($0.05) ($0.18) $2.36 ($1.84) $0.14 ($0.23) $17.04 $16.96 $0.55 ($0.08) $16.48 $16.51 $0.07 $16.39 ($0.17) ($0.09) 12/31/2022 Q4'22 12/31/22 2023 2023 2023 2023 Q1'23 - Q3'23 NAV 2023 2023 2023 2023 12/31/23 Q4'23 12/31/23 NAV Supplemental Adjusted NAV 1 Adjusted Net Ac
Slide 12: Operating Results Detail
OPERATING RESULTS DETAIL DOLLAR AMOUNTS IN THOUSANDS Except Per Share Data; Per Share Data is Based on Weighted Average Shares Outstanding During the Period, Except as Otherwise Noted For Year Ended For Three Months Ended 2022 2023 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 In
Slide 13: Portfolio Highlights - Funding Activity
PORTFOLIO HIGHLIGHTS – FUNDING ACTIVITY Q4’23 Commitments and Net Funding • New investment commitments and fundings totaled $316.4 million and $277.9 million, respectively. The fundings were distributed across 9 new portfolio companies and 5 upsizes to existing portfolio companies • Paydowns and sal
Slide 14: Portfolio Highlights - Asset Mix
PORTFOLIO HIGHLIGHTS – ASSET MIX New Investment Fundings End of Period Investments $ Millions by Par Value $ Millions by Fair Value First Lien Second Lien Structured Credit First Lien Second Lien Structured Credit Mezzanine Equity & Other Mezzanine Equity & Other $212 $139 $240 $152 $278 $2,788 $2,9
Slide 15: Portfolio Highlights - Diversification Across Borrowers & Industries
PORTFOLIO HIGHLIGHTS – DIVERSIFICATION ACROSS BORROWERS & INDUSTRIES Top 10 Borrower Diversification Industry Diversification ReliaQuest, LLC IBM Watson (Merative LP) Business Services Internet Services TRP Assets LLC BCTO Ace Purchaser, Inc. Human Resource Support Services Financial Services PaySca
Slide 16: Portfolio Highlights - Net Interest Margin Analysis
PORTFOLIO HIGHLIGHTS – NET INTEREST MARGIN ANALYSIS Net Interest Margin Weighted Average Total Yield on Debt and Income Producing Securities at Amortized Cost 1 Weighted Average Interest Rate of Debt and Income Producing Securities at Fair Value Weighted Average Spread Over Reference Rate of All Flo
Slide 17: Liquidity Management
LIQUIDITY MANAGEMENT CASH AND CASH EQUIVALENTS Unrestricted Cash Totaled $1.2 Million as of December 31, 2023. Restricted Cash Related to Interest Rate Swaps Totaled $24.0 Million 1 5 Revolving Credit Facility Unsecured Notes $1.685 Billion Committed; Uncommitted Accordion Size: $348 Million $300 Mi
Slide 18: Strong Liquidity and Funding Profile
STRONG LIQUIDITY AND FUNDING PROFILE CAPITAL & LIQUIDITY ROBUST BALANCE SHEET 1,3 LIQUIDITY VS. NEAR-TERM OBLIGATIONS ($ in Millions) As of December 31, 2023 / $ Millions $1,135 Near-term Obligations $1.2 Cash $348 Total Undrawn Revolver $226 Liquidity: $ 1,134 Capacity1 $1,1352 $551 Secured Revolve
Slide 19: Distribution Information Since IPO
DISTRIBUTION INFORMATION SINCE IPO Date Declared Record Date Payment Date Amount Per Share March 26, 2014 March 31, 2014 April 30, 2014 $0.38 May 6, 2014 June 30, 2014 July 31, 2014 $0.38 August 4, 2014 September 30, 2014 October 31, 2014 $0.38 November 3, 2014 December 31, 2014 January 30, 2015 $0.
Slide 20: Distribution Information Since IPO (Continued)
DISTRIBUTION INFORMATION SINCE IPO (CONTINUED) Date Declared Record Date Payment Date Amount Per Share February 17, 2021 (Q4’20 Supplemental) February 26, 2021 March 31, 2021 $0.05 February 17, 2021 March 15, 2021 April 15, 2021 $0.41 February 17, 2021 (Special) March 25, 2021 April 8, 2021 $1.25 Ma
Slide 21: Footnotes
FOOTNOTES Slide 3: Overview 1. Reflects NAV per share adjusted for the supplemental dividend per share related to Q4 2023 earnings 2. Moody’s rating updated 9/18/2023; S&P rating affirmed on 2/7/2023; Fitch rating affirmed on 4/3/2023; KBRA affirmed 5/26/2023 Slide 4: 2023 Annual Results – Snapshot
Slide 22: Footnotes
FOOTNOTES Slide 9: Quarterly Statements of Financial Condition 1. Net of Deferred Financing Costs and Interest Rate Fair Value Hedging. Deferred Financing Costs total $17.8M at 12/31/22, $16.5M at 3/31/23, $20.5M at 6/30/23, $23.4M at 9/30/23 and $21.9M at 12/31/23. Fair value hedge on interest rate
Slide 23: Contact Us
CONTACT US: TSLX Investor Relations IRTSLX@sixthstreet.com (469) 621-2033 VISIT US: www.sixthstreetspecialtylending.com 23 SIXTH STREET SPECIALTY LENDING
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