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    Oaktree Specialty Lending Corporation Announces Second Fiscal Quarter 2025 Financial Results

    5/1/25 6:00:00 AM ET
    $OCSL
    Finance: Consumer Services
    Finance
    Get the next $OCSL alert in real time by email

    LOS ANGELES, CA, May 01, 2025 (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 ended March 31, 2025.

    Financial Highlights for the Quarter Ended March 31, 2025

    • Total investment income was $77.6 million ($0.90 per share) for the second fiscal quarter of 2025, as compared with $86.6 million ($1.05 per share) for the first fiscal quarter of 2025. Adjusted total investment income was $77.2 million ($0.90 per share) for the second fiscal quarter of 2025, as compared with $87.1 million ($1.06 per share) for the first fiscal quarter of 2025. The decrease was driven by lower interest income, which was primarily attributable to a smaller average investment portfolio, the impact of certain investments that were placed on non-accrual status and decreases in reference rates.
    • GAAP net investment income was $39.1 million ($0.45 per share) for the second fiscal quarter of 2025, as compared with $44.3 million ($0.54 per share) for the first fiscal quarter of 2025. The decrease for the quarter was primarily driven by lower total investment income, partially offset by lower interest expense and income-based ("Part I") incentive fees (net of fees waived).
    • Adjusted net investment income was $38.7 million ($0.45 per share) for the second fiscal quarter of 2025, as compared with $44.7 million ($0.54 per share) for the first fiscal quarter of 2025. The decrease for the quarter was primarily driven by lower adjusted total investment income, partially offset by lower interest expense and lower Part I incentive fees (net of fees waived).
    • Net asset value ("NAV") per share was $16.75 as of March 31, 2025, down as compared with $17.63 as of December 31, 2024. The decline from December 31, 2024 primarily reflected losses on certain debt and equity investments.
    • Originated $407.0 million of new investment commitments and received $279.4 million of proceeds from prepayments, exits, other paydowns and sales during the quarter ended March 31, 2025. The weighted average yield on new debt investments was 9.5%.
    • Total debt outstanding was $1,470.0 million as of March 31, 2025. The total debt to equity ratio was 1.00x, and the net debt to equity ratio was 0.93x, after adjusting for cash and cash equivalents.
    • Oaktree Capital I, L.P. purchased $100.0 million of shares of OCSL common stock on February 3, 2025 at the Company's net asset value as of January 31, 2025, which was $17.63 per share and represented a 10% premium to the closing stock price.
    • The Company issued $300 million of unsecured notes during the quarter ended March 31, 2025 that mature on February 27, 2030 and bear interest at a rate of 6.340%. In connection with the issuance of the 2030 Notes, the Company entered into an interest rate swap agreement under which the Company receives a fixed interest rate of 6.340% and pays a floating interest rate of the three-month SOFR plus 2.192% on a notional amount of $300.0 million. Additionally, the Company repaid $300 million of unsecured notes that matured on February 25, 2025.
    • Liquidity as of March 31, 2025 was composed of $97.8 million of unrestricted cash and cash equivalents and over $1.0 billion of undrawn capacity under the Company's credit facilities (subject to borrowing base and other limitations). Unfunded investment commitments were $299.8 million, or $272.6 million excluding unfunded commitments to the Company's joint ventures. Of the $272.6 million, approximately $252.0 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 and supplemental cash distribution was declared of $0.40 per share and $0.02 per share, respectively, payable in cash on June 30, 2025 to stockholders of record on June 16, 2025.

    "Certain challenged portfolio company investments weighed on our results in the second quarter. We are focused on resolving these issues while also positioning our portfolio to deliver more consistent performance going forward," stated Armen Panossian, Chief Executive Officer and Co-Chief Investment Officer.

    "We are focused on further diversifying our portfolio by selectively investing in companies we believe are well positioned to deliver attractive returns given overall market uncertainty caused by tariffs, inflation and high interest rates. Historically, in periods of market volatility, our firm-wide DNA has enabled us to capitalize on opportunities while others are sidelined, and we have ample dry powder for new investments."

    Distribution Declaration

    The Board of Directors declared a quarterly distribution of $0.40 per share, payable in cash on June 30, 2025 to stockholders of record on June 16, 2025. The Board of Directors also declared a supplemental distribution of $0.02 per share, payable in cash on June 30, 2025 to stockholders of record on June 16, 2025.

    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

     
    ($ in thousands, except per share data)March 31, 2025

    (unaudited)
     December 31, 2024

    (unaudited)
     March 31, 2024

    (unaudited)


     
    GAAP operating results:            
    Interest income$70,523  $78,422  $85,256  
    PIK interest income 4,531   5,728   4,816  
    Fee income 1,742   1,679   2,546  
    Dividend income 772   818   1,411  
    Total investment income 77,568   86,647   94,029  
    Net expenses 38,235   42,082   52,662  
    Net investment income before taxes 39,333   44,565   41,367  
    (Provision) benefit for taxes on net investment income (278)  (263)  —  
    Net investment income 39,055   44,302   41,367  
    Net realized and unrealized gains (losses), net of taxes (75,304)  (37,063)  (32,030) 
    Net increase (decrease) in net assets resulting from operations$(36,249) $7,239  $9,337  
    Total investment income per common share$0.90  $1.05  $1.18  
    Net investment income per common share$0.45  $0.54  $0.52  
    Net realized and unrealized gains (losses), net of taxes per common share$(0.88) $(0.45) $(0.40) 
    Earnings (loss) per common share — basic and diluted$(0.42) $0.09  $0.12  
    Non-GAAP Financial Measures1:            
    Adjusted total investment income$77,195  $87,070  $97,340  
    Adjusted net investment income$38,682  $44,725  $44,678  
    Adjusted net realized and unrealized gains (losses), net of taxes$(75,248) $(37,124) $(35,344) 
    Adjusted earnings (loss)$(36,566) $7,601  $9,334  
    Adjusted total investment income per share$0.90  $1.06  $1.22  
    Adjusted net investment income per share$0.45  $0.54  $0.56  
    Adjusted net realized and unrealized gains (losses), net of taxes per share$(0.88) $(0.45) $(0.44) 
    Adjusted earnings (loss) per share$(0.43) $0.09  $0.12  
                 
    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 financial measures internally to analyze and evaluate financial results and performance and believes that these non-GAAP financial measures are useful to investors as an additional tool to evaluate ongoing results and trends for the Company and to review the Company's performance without giving effect to non-cash income/gain/loss resulting from the merger of Oaktree Strategic Income Corporation ("OCSI") with and into the Company in March 2021 (the "OCSI Merger") and the merger of Oaktree Strategic Income II, Inc. ("OSI2") with and into the Company in January 2023 (the "OSI2 Merger") and, in the case of adjusted net investment income, without giving effect to capital gains incentive fees. The presentation of non-GAAP measures is not intended to be a substitute for financial results prepared in accordance with GAAP and should not be considered in isolation.
     



     As of

     
    ($ in thousands, except per share data and ratios)March 31, 2025

    (unaudited)


     December 31, 2024

    (unaudited)


     March 31, 2024

    (unaudited)


     
    Select balance sheet and other data:            
    Cash and cash equivalents$97,838  $112,913  $125,031  
    Investment portfolio at fair value 2,892,771   2,835,294   3,047,445  
    Total debt outstanding (net of unamortized financing costs) 1,448,486   1,577,795   1,635,642  
    Net assets 1,475,113   1,449,815   1,524,099  
    Total debt to equity ratio 1.00x  1.11x  1.10x 
    Net debt to equity ratio 0.93x  1.03x  1.02x 
     

    Adjusted total investment income for the quarter ended March 31, 2025 was $77.2 million and included $70.2 million of interest income from portfolio investments, $4.5 million of payment-in-kind ("PIK") interest income, $1.7 million of fee income and $0.8 million of dividend income. The $9.9 million quarterly decline in adjusted total investment income was primarily due to a $9.9 million decrease in interest income, which was primarily attributable to a smaller average investment portfolio, the impact of certain investments that were placed on non-accrual status and decreases in reference rates.

    Net expenses for the quarter ended March 31, 2025 totaled $38.2 million, down $3.8 million from the quarter ended December 31, 2024. The decrease for the quarter was primarily driven by $2.4 million of lower interest expense due to lower outstanding borrowings and lower reference rates on the Company's floating rate debt and $1.5 million of lower Part I incentive fees (net of fees waived).

    Adjusted net investment income was $38.7 million ($0.45 per share) for the quarter ended March 31, 2025, which was down from $44.7 million ($0.54 per share) for the quarter ended December 31, 2024. The decline of $6.0 million primarily reflected $9.9 million of lower adjusted total investment income, offset by $3.9 million of lower net expenses.

    Adjusted net realized and unrealized losses, net of taxes, were $75.2 million for the quarter ended March 31, 2025.

    Portfolio and Investment Activity

     As of

     
    ($ in thousands)March 31, 2025

    (unaudited)
     December 31, 2024

    (unaudited)
     March 31, 2024

    (unaudited)


     
    Investments at fair value$2,892,771  $2,835,294  $3,047,445  
    Number of portfolio companies 152   136   151  
    Average portfolio company debt size$19,700  $22,000  $20,100  
                 
    Asset class:            
    First lien debt 80.9%  81.8%  80.8% 
    Second lien debt 3.4%  3.0%  5.4% 
    Unsecured debt 5.0%  3.9%  2.6% 
    Equity 4.6%  4.8%  4.8% 
    JV interests 6.1%  6.5%  6.4% 
                 
    Non-accrual debt investments:            
    Non-accrual investments at fair value$125,643  $105,326  $69,128  
    Non-accrual investments at cost 217,401   138,703   127,720  
    Non-accrual investments as a percentage of debt investments at fair value 4.6%  3.9%  2.4% 
    Non-accrual investments as a percentage of debt investments at cost 7.6%  5.1%  4.3% 
    Number of investments on non-accrual 10   9   5  
                 
    Interest rate type:            
    Percentage floating-rate 89.8%  87.6%  85.4% 
    Percentage fixed-rate 10.2%  12.4%  14.6% 
                 
    Yields:            
    Weighted average yield on debt investments1 10.2%  10.7%  12.2% 
    Cash component of weighted average yield on debt investments 9.3%  9.5%  11.0% 
    Weighted average yield on total portfolio investments2 9.8%  10.2%  11.7% 
                 
    Investment activity:            
    New investment commitments$407,000  $198,100  $395,600  
    New funded investment activity3$405,800  $201,300  $377,400  
    Proceeds from prepayments, exits, other paydowns and sales$279,400  $352,400  $322,600  
    Net new investments4$126,400  $(151,100) $54,800  
    Number of new investment commitments in new portfolio companies 24   5   20  
    Number of new investment commitments in existing portfolio companies 8   8   15  
    Number of portfolio company exits 8   13   15  
                 
    1 Annual stated yield earned plus net annual amortization of OID or premium earned on accruing investments, including the Company's share of the return on debt investments in SLF JV I and Glick JV, and excluding any amortization or accretion of interest income resulting solely from the cost basis established by ASC 805 (see Non-GAAP Financial Measures below) for the assets acquired in connection with the OCSI Merger and OSI2 Merger.
    2 Annual stated yield earned plus net annual amortization of OID or premium earned on accruing investments and dividend income, including the Company's share of the return on debt investments in SLF JV I and Glick JV, and excluding any amortization or accretion of interest income resulting solely from the cost basis established by ASC 805 for the assets acquired in connection with the OCSI Merger and OSI2 Merger.
    3 New funded investment activity includes drawdowns on existing revolver and delayed draw term loan commitments.
    4 Net new investments consists of new funded investment activity less proceeds from prepayments, exits, other paydowns and sales.
     

    As of March 31, 2025, the fair value of the investment portfolio was $2.9 billion and was composed of investments in 152 companies. These included debt investments in 131 companies, equity investments in 40 companies, and the Company's joint venture investments in SLF JV I and OCSI Glick JV LLC ("Glick JV"). 21 of the equity investments were in companies in which the Company also had a debt investment.

    As of March 31, 2025, 94.9% of the Company's portfolio at fair value consisted of debt investments, including 80.9% of first lien loans, 3.4% of second lien loans and 10.6% of unsecured debt investments, including the debt investments in SLF JV I and Glick JV. This compared to 81.8% of first lien loans, 3.0% of second lien loans and 9.6% of unsecured debt investments, including the debt investments in SLF JV I and Glick JV, as of December 31, 2024.

    As of March 31, 2025, there were ten investments on non-accrual status, which represented 7.6% and 4.6% of the debt portfolio at cost and fair value, respectively. As of December 31, 2024, there were nine investments on non-accrual status, which represented 5.1% and 3.9% of the debt portfolio at cost and fair value, respectively.

    SLF JV I

    The Company's investments in SLF JV I totaled $128.6 million at fair value as of March 31, 2025, down 5.0% from $135.4 million as of December 31, 2024. The decrease was primarily driven by SLF JV I's use of leverage and unrealized depreciation in the underlying investment portfolio.

    As of March 31, 2025, SLF JV I had $374.7 million in assets, including senior secured loans to 52 portfolio companies. This compared to $344.9 million in assets, including senior secured loans to 42 portfolio companies, as of December 31, 2024. SLF JV I generated cash interest income of $3.2 million for the Company during the quarter ended March 31, 2025, down from $3.4 million in the prior quarter. In addition, SLF JV I generated dividend income of $0.7 million for the Company during the quarter ended March 31, 2025, flat from the prior quarter. As of March 31, 2025, SLF JV I had $73.0 million of undrawn capacity (subject to borrowing base and other limitations) on its $270 million senior revolving credit facility, and its debt to equity ratio was 1.3x.

    Glick JV

    The Company's investments in Glick JV totaled $47.3 million at fair value as of March 31, 2025, down 4.6% from $49.6 million as of December 31, 2024. The decrease was primarily driven by Glick JV's use of leverage and unrealized depreciation in the underlying investment portfolio.

    As of March 31, 2025, Glick JV had $125.1 million in assets, including senior secured loans to 41 portfolio companies. This compared to $127.9 million in assets, including senior secured loans to 39 portfolio companies, as of December 31, 2024. Glick JV generated cash interest income of $1.3 million for the Company during the quarter ended March 31, 2025, down from $1.4 million in the prior quarter. As of March 31, 2025, Glick JV had $31.0 million of undrawn capacity (subject to borrowing base and other limitations) on its $100 million senior revolving credit facility, and its debt to equity ratio was 1.3x.

    Liquidity and Capital Resources

    As of March 31, 2025, the Company had total principal value of debt outstanding of $1,470.0 million, including $520.0 million of outstanding borrowings under its revolving credit facilities, $350.0 million of the 2.700% Notes due 2027, $300.0 million of the 7.100% Notes due 2029 and $300.0 million of the 6.340% Notes due 2030. The funding mix was composed of 35% secured and 65% unsecured borrowings as of March 31, 2025. The Company was in compliance with all financial covenants under its credit facilities as of March 31, 2025.

    As of March 31, 2025, the Company had $97.8 million of unrestricted cash and cash equivalents and over $1.0 billion of undrawn capacity on its credit facilities (subject to borrowing base and other limitations). As of March 31, 2025, unfunded investment commitments were $299.8 million, or $272.6 million excluding unfunded commitments to the Company's joint ventures. Of the $272.6 million, approximately $252.0 million could be drawn immediately with the remaining amount subject to certain milestones that must be met by portfolio companies or other restrictions. The Company has analyzed cash and cash equivalents, availability under its credit facilities, the ability to rotate out of certain assets and amounts of unfunded commitments that could be drawn and believes its liquidity and capital resources are sufficient to invest in market opportunities as they arise.

    As of March 31, 2025, the weighted average interest rate on debt outstanding, including the effect of the interest rate swap agreements was 6.7%, up from 6.2% as of December 31, 2024, primarily driven by the impact of the repayment of the 3.500% Notes due 2025 and the issuance of the 6.340% Notes due 2030.

    The Company's total debt to equity ratio was 1.00x and 1.11x as of each of March 31, 2025 and December 31, 2024, respectively. The Company's net debt to equity ratio was 0.93x and 1.03x as of each of March 31, 2025 and December 31, 2024, respectively.

    Recent Developments

    Syndicated Facility

    On April 8, 2025, the Company entered into an amendment to its amended and restated senior secured credit facility (the "Syndicated Facility"), among other things, (1) generally reduce interest rate margins from 2.00% plus a SOFR adjustment (ranging between 0.11448% and 0.26161%) to 1.875% plus a SOFR adjustment of 0.10% on SOFR loans and from 1.00% to 0.875% plus a SOFR adjustment of 0.10% on alternate base rate loans, (2) remove the Consolidated Interest Coverage Ratio covenant, (3) decrease the facility size from $1.218 billion to $1.160 billion, (4) increase the "accordion" feature to allow expansion of the facility to $1.50 billion, and (5) extend the reinvestment period and final maturity date to April 8, 2029, and April 8, 2030, respectively.

    Non-GAAP Financial Measures

    On a supplemental basis, the Company is disclosing certain adjusted financial measures, each of which is calculated and presented on a basis of methodology other than in accordance with GAAP ("non-GAAP"). The Company's management uses these non-GAAP financial measures internally to analyze and evaluate financial results and performance and believes that these non-GAAP financial measures are useful to investors as an additional tool to evaluate ongoing results and trends for the Company and to review the Company's performance without giving effect to non-cash income/gain/loss resulting from the OCSI Merger and the OSI2 Merger and in the case of adjusted net investment income, without giving effect to capital gains incentive fees. The presentation of the below non-GAAP measures is not intended to be a substitute for financial results prepared in accordance with GAAP and should not be considered in isolation.

    • "Adjusted Total Investment Income" and "Adjusted Total Investment Income Per Share" – represents total investment income excluding any amortization or accretion of interest income resulting solely from the cost basis established by ASC 805 (see below) for the assets acquired in connection with the OCSI Merger and the OSI2 Merger.
    • "Adjusted Net Investment Income" and "Adjusted Net Investment Income Per Share" – represents net investment income, excluding (i) any amortization or accretion of interest income resulting solely from the cost basis established by ASC 805 (see below) for the assets acquired in connection with the OCSI Merger and the OSI2 Merger and (ii) capital gains incentive fees ("Part II incentive fees").
    • "Adjusted Net Realized and Unrealized Gains (Losses), Net of Taxes" and "Adjusted Net Realized and Unrealized Gains (Losses), Net of Taxes Per Share" – represents net realized and unrealized gains (losses) net of taxes excluding any net realized and unrealized gains (losses) resulting solely from the cost basis established by ASC 805 (see below) for the assets acquired in connection with the OCSI Merger and the OSI2 Merger.
    • "Adjusted Earnings (Loss)" and "Adjusted Earnings (Loss) Per Share" – represents the sum of (i) Adjusted Net Investment Income and (ii) Adjusted Net Realized and Unrealized Gains (Losses), Net of Taxes and includes the impact of Part II incentive fees1, if any.

    The OCSI Merger and the OSI2 Merger (the "Mergers") were accounted for as asset acquisitions 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 each of the stockholders of OCSI and OSI2 were allocated to the individual assets acquired and liabilities assumed based on the relative fair values of the net identifiable assets acquired other than "non-qualifying" assets, which established a new cost basis for the acquired investments under ASC 805 that, in aggregate, was different than the historical cost basis of the acquired investments prior to the OCSI Merger or the OSI2 Merger, as applicable. Additionally, immediately following the completion of the Mergers, the acquired investments were marked to their respective fair values under ASC 820, Fair Value Measurements, which resulted in unrealized appreciation/depreciation. The new cost basis established by ASC 805 on debt investments acquired will accrete/amortize over the life of each respective debt investment through interest income, with a corresponding adjustment recorded to unrealized appreciation/depreciation on such investment acquired through its ultimate disposition. The new cost basis established by ASC 805 on equity investments acquired will not accrete/amortize over the life of such investments through interest income and, assuming no subsequent change to the fair value of the equity investments acquired and disposition of such equity investments at fair value, the Company will recognize a realized gain/loss with a corresponding reversal of the unrealized appreciation/depreciation on disposition of such equity investments acquired.

    The Company's management uses the non-GAAP financial measures described above internally to analyze and evaluate financial results and performance and to compare its financial results with those of other business development companies that have not adjusted the cost basis of certain investments pursuant to ASC 805. The Company's management believes "Adjusted Total Investment Income", "Adjusted Total Investment Income Per Share", "Adjusted Net Investment Income" and "Adjusted Net Investment Income Per Share" are useful to investors as an additional tool to evaluate ongoing results and trends for the Company without giving effect to the income resulting from the new cost basis of the investments acquired in the Mergers because these amounts do not impact the fees payable to Oaktree Fund Advisors, LLC (the "Adviser") under its investment advisory agreement (as amended and restated from time to time, the "A&R Advisory Agreement"), and specifically as its relates to "Adjusted Net Investment Income" and "Adjusted Net Investment Income Per Share", without giving effect to Part II incentive fees. In addition, the Company's management believes that "Adjusted Net Realized and Unrealized Gains (Losses), Net of Taxes", "Adjusted Net Realized and Unrealized Gains (Losses), Net of Taxes Per Share", "Adjusted Earnings (Loss)" and "Adjusted Earnings (Loss) Per Share" are useful to investors as they exclude the non-cash income and gain/loss resulting from the Mergers and are used by management to evaluate the economic earnings of its investment portfolio. Moreover, these metrics more closely align the Company's key financial measures with the calculation of incentive fees payable to the Adviser under with the A&R Advisory Agreement (i.e., excluding amounts resulting solely from the lower cost basis of the acquired investments established by ASC 805 that would have been to the benefit of the Adviser absent such exclusion).

    The following table provides a reconciliation of total investment income (the most comparable U.S. GAAP measure) to adjusted total investment income for the periods presented:

     For the three months ended

     
     March 31, 2025

    (unaudited)
     December 31, 2024

    (unaudited)
     March 31, 2024

    (unaudited)


     
    ($ in thousands, except per share data)Amount Per Share Amount Per Share Amount Per Share

     
    GAAP total investment income$77,568  $0.90 $86,647 $1.05 $94,029 $1.18 
    Interest income amortization (accretion) related to merger

    accounting adjustments
     (373)  —  423  0.01  3,311  0.04 
    Adjusted total investment income$77,195  $0.90 $87,070 $1.06 $97,340 $1.22 
     

    The following table provides a reconciliation of net investment income (the most comparable U.S. GAAP measure) to adjusted net investment income for the periods presented:

     For the three months ended

     
     March 31, 2025

    (unaudited)
     December 31, 2024

    (unaudited)
     March 31, 2024

    (unaudited)


     
    ($ in thousands, except per share data)Amount Per Share Amount Per Share Amount Per Share

     
    GAAP net investment income$39,055  $0.45 $44,302 $0.54 $41,367 $0.52 
    Interest income amortization (accretion) related to merger

    accounting adjustments
     (373)  —  423  0.01  3,311  0.04 
    Part II incentive fee —   —  —  —  —  — 
    Adjusted net investment income$38,682  $0.45 $44,725 $0.54 $44,678 $0.56 
     

    The following table provides a reconciliation of net realized and unrealized gains (losses), net of taxes (the most comparable U.S. GAAP measure) to adjusted net realized and unrealized gains (losses), net of taxes for the periods presented:

     For the three months ended

     
     March 31, 2025

    (unaudited)
     December 31, 2024

    (unaudited)
     March 31, 2024

    (unaudited)


     
    ($ in thousands, except per share data)Amount Per Share Amount Per Share Amount Per Share

     
    GAAP net realized and unrealized gains (losses), net of taxes$(75,304) $(0.88) $(37,063) $(0.45) $(32,030) $(0.40) 
    Net realized and unrealized gains (losses) related to merger

    accounting adjustments
     56   —   (61)  —   (3,314)  (0.04) 
    Adjusted net realized and unrealized gains (losses), net of taxes$(75,248) $(0.88) $(37,124) $(0.45) $(35,344) $(0.44) 
     

    The following table provides a reconciliation of net increase (decrease) in net assets resulting from operations (the most comparable U.S. GAAP measure) to adjusted earnings (loss) for the periods presented:

     For the three months ended

     
     March 31, 2025

    (unaudited)
     December 31, 2024

    (unaudited)
     March 31, 2024

    (unaudited)


     
    ($ in thousands, except per share data)Amount Per Share Amount Per Share Amount Per Share

     
    Net increase (decrease) in net assets resulting from operations$(36,249) $(0.42) $7,239  $0.09 $9,337  $0.12  
    Interest income amortization (accretion) related to merger

    accounting adjustments
     (373)  —   423   0.01  3,311   0.04  
    Net realized and unrealized gains (losses) related to merger

    accounting adjustments
     56   —   (61)  —  (3,314)  (0.04) 
    Adjusted earnings (loss)$(36,566) $(0.43) $7,601  $0.09 $9,334  $0.12  
     

    Conference Call Information

    Oaktree Specialty Lending will host a conference call to discuss its second fiscal quarter 2025 results at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time on May 1, 2025. The conference call may be accessed by dialing (877) 507-3275 (U.S. callers) or +1 (412) 317-5238 (non-U.S. callers). All callers will need to reference "Oaktree Specialty Lending" once connected with the operator. Alternatively, a live webcast of the conference call can be accessed through the Investors section of Oaktree Specialty Lending's website, www.oaktreespecialtylending.com. During the conference call, the Company intends to refer to an investor presentation that will be available on the Investors section of its website.

    For those individuals unable to listen to the live broadcast of the conference call, a replay will be available on Oaktree Specialty Lending's website, or by dialing (877) 344-7529 (U.S. callers) or +1 (412) 317-0088 (non-U.S. callers), access code 3296634, beginning approximately one hour after the broadcast.

    About Oaktree Specialty Lending Corporation

    Oaktree Specialty Lending Corporation (NASDAQ:OCSL) is a specialty finance company dedicated to providing customized one-stop credit solutions to companies with limited access to public or syndicated capital markets. The Company's investment objective is to generate current income and capital appreciation by providing companies with flexible and innovative financing solutions including first and second lien loans, unsecured and mezzanine loans, and preferred equity. The Company is regulated as a business development company under the Investment Company Act of 1940, as amended, and is externally managed by Oaktree Fund Advisors, LLC, an affiliate of Oaktree Capital Management, L.P. For additional information, please visit Oaktree Specialty Lending's website at www.oaktreespecialtylending.com.

    Forward-Looking Statements

    Some of the statements in this press release constitute forward-looking statements because they relate to future events, future performance or financial condition. The forward-looking statements may include statements as to: future operating results of the Company and distribution projections; business prospects of the Company and the prospects of its portfolio companies; and the impact of the investments that the Company expects to make. In addition, words such as "anticipate," "believe," "expect," "seek," "plan," "should," "estimate," "project" and "intend" indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this press release involve risks and uncertainties. Certain factors could cause actual results and conditions to differ materially from those projected, including the uncertainties associated with (i) changes or potential disruptions in the Company's operations, the economy, financial markets or political environment, including those caused by tariffs and trade disputes with other countries, inflation and an elevated interest rate environment; (ii) risks associated with possible disruption in the operations of the Company or the economy generally due to terrorism, war or other geopolitical conflict, natural disasters, pandemics or cybersecurity incidents; (iii) future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities); (iv) conditions in the Company's operating areas, particularly with respect to business development companies or regulated investment companies; and (v) other considerations that may be disclosed from time to time in the Company's publicly disseminated documents and filings. The Company has based the forward-looking statements included in this press release on information available to it on the date of this press release, and the Company assumes no obligation to update any such forward-looking statements. The Company undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that it may make directly to you or through reports that the Company in the future may file with the Securities and Exchange Commission, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

    Contacts

    Investor Relations:

    Oaktree Specialty Lending Corporation

    Clark Koury

    (213) 830-6222

    [email protected]

    Media Relations:

    Financial Profiles, Inc.

    Moira Conlon

    (310) 478-2700

    [email protected]

    Oaktree Specialty Lending Corporation

    Consolidated Statements of Assets and Liabilities

    (in thousands, except per share amounts)
     
     March 31, 2025

    (unaudited)
     December 31, 2024

    (unaudited)
     September 30, 2024

     
    ASSETS            
    Investments at fair value:            
    Control investments (cost March 31, 2025: $375,317; cost December 31, 2024: $374,509;

    cost September 30, 2024: $372,901)
    $230,904  $267,782  $289,404  
    Affiliate investments (cost March 31, 2025: $35,295; cost December 31, 2024: $37,358;

    cost September 30, 2024: $38,175)
     32,475   35,180   35,677  
    Non-control/Non-affiliate investments (cost March 31, 2025: $2,703,644; cost December 31,

    2024: $2,576,053; cost September 30, 2024: $2,733,843)
     2,629,392   2,532,332   2,696,198  
    Total investments at fair value (cost March 31, 2025: $3,114,256; cost December 31,

    2024: $2,987,920; September 30, 2024: $3,144,919)
     2,892,771   2,835,294   3,021,279  
    Cash and cash equivalents 97,838   112,913   63,966  
    Restricted cash 10,370   13,159   14,577  
    Interest, dividends and fees receivable 22,768   25,290   38,804  
    Due from portfolio companies 317   408   12,530  
    Receivables from unsettled transactions 18,526   55,661   17,548  
    Due from broker 25,190   21,880   17,060  
    Deferred financing costs 10,196   10,936   11,677  
    Deferred offering costs 161   162   125  
    Derivative assets at fair value —   6,652   —  
    Other assets 1,030   1,437   775  
    Total assets$3,079,167  $3,083,792  $3,198,341  
                 
    LIABILITIES AND NET ASSETS            
    Liabilities:            
    Accounts payable, accrued expenses and other liabilities$3,451  $3,371  $3,492  
    Base management fee and incentive fee payable 7,332   8,930   15,517  
    Due to affiliate 1,277   1,508   4,088  
    Interest payable 14,087   17,600   16,231  
    Payables from unsettled transactions 110,202   —   15,666  
    Derivative liabilities at fair value 19,219   24,759   16,843  
    Deferred tax liability —   14   —  
    Credit facilities payable 520,000   660,000   710,000  
    Unsecured notes payable (net of $7,573, $4,401 and $4,935 of unamortized financing costs

    as of March 31, 2025, December 31, 2024 and September 30, 2024, respectively)
     928,486   917,795   928,693  
    Total liabilities 1,604,054   1,633,977   1,710,530  
    Commitments and contingencies             
    Net assets:            
    Common stock, $0.01 par value per share, 250,000 shares authorized; 88,086, 82,245 and

    82,245 shares issued and outstanding as of March 31, 2025, December 31, 2024 and

    September 30, 2024, respectively
     881   822   822  
    Additional paid-in-capital 2,367,337   2,264,449   2,264,449  
    Accumulated overdistributed earnings (893,105)  (815,456)  (777,460) 
    Total net assets (equivalent to $16.75, $17.63 and $18.09 per common share as of March

    31, 2025, December 31, 2024 and September 30, 2024, respectively)
     1,475,113   1,449,815   1,487,811  
    Total liabilities and net assets$3,079,167  $3,083,792  $3,198,341  
     



    Oaktree Specialty Lending Corporation

    Consolidated Statements of Operations

    (in thousands, except per share amounts)
     
     Three months ended

    March 31, 2025 (unaudited)
     Three months ended

    December 31, 2024 (unaudited)
     Three months ended

    March 31, 2024 (unaudited)
     Six months ended

    March 31, 2025 (unaudited)
     Six months ended

    March 31, 2024 (unaudited)

     
    Interest income:                    
    Control investments$4,884  $5,226  $5,949  $10,110  $11,954  
    Affiliate investments 159   166   10   325   334  
    Non-control/Non-affiliate investments 63,915   71,809   77,803   135,724   160,524  
    Interest on cash and cash equivalents 1,565   1,221   1,494   2,786   3,858  
    Total interest income 70,523   78,422   85,256   148,945   176,670  
    PIK interest income:                    
    Control investments —   830   598   830   1,142  
    Affiliate investments 27   28   —   55   —  
    Non-control/Non-affiliate investments 4,504   4,870   4,218   9,374   7,523  
    Total PIK interest income 4,531   5,728   4,816   10,259   8,665  
    Fee income:                    
    Control investments —   —   13   —   26  
    Affiliate investments —   —   —   —   5  
    Non-control/Non-affiliate investments 1,742   1,679   2,533   3,421   3,822  
    Total fee income 1,742   1,679   2,546   3,421   3,853  
    Dividend income:                    
    Control investments 700   700   1,400   1,400   2,800  
    Non-control/Non-affiliate investments 72   118   11   190   26  
    Total dividend income 772   818   1,411   1,590   2,826  
    Total investment income 77,568   86,647   94,029   164,215   192,014  
    Expenses:                    
    Base management fee 7,515   8,144   11,604   15,659   23,081  
    Part I incentive fee 6,733   7,913   8,452   14,646   17,480  
    Professional fees 1,227   1,067   1,213   2,294   2,717  
    Directors fees 160   160   160   320   320  
    Interest expense 28,191   30,562   31,881   58,753   64,051  
    Administrator expense 388   437   326   825   692  
    General and administrative expenses 937   926   526   1,863   1,117  
    Total expenses 45,151   49,209   54,162   94,360   109,458  
    Management fees waived (183)  (750)  (1,500)  (933)  (3,000) 
    Part I incentive fees waived (6,733)  (6,377)  —   (13,110)  —  
    Net expenses 38,235   42,082   52,662   80,317   106,458  
    Net investment income before taxes 39,333   44,565   41,367   83,898   85,556  
    (Provision) benefit for taxes on net investment

    income
     (278)  (263)  —   (541)  —  
    Net investment income 39,055   44,302   41,367   83,357   85,556  
    Unrealized appreciation (depreciation):                    
    Control investments (37,686)  (23,230)  (6,193)  (60,916)  (4,854) 
    Affiliate investments (642)  320   93   (322)  (832) 
    Non-control/Non-affiliate investments (28,975)  (7,198)  (21,396)  (36,173)  (39,011) 
    Foreign currency forward contracts (14,720)  10,494   2,244   (4,226)  (5,580) 
    Net unrealized appreciation (depreciation)  (82,023)  (19,614)  (25,252)  (101,637)  (50,277) 
    Realized gains (losses):                     
    Control investments 13   —   —   13   786  
    Affiliate investments 333   (288)  —   45   —  
    Non-control/Non-affiliate investments (1,547)  (17,056)  (5,433)  (18,603)  (18,773) 
    Foreign currency forward contracts 7,906   34   (1,170)  7,940   2,931  
    Net realized gains (losses) 6,705   (17,310)  (6,603)  (10,605)  (15,056) 
    (Provision) benefit for taxes on realized

    and unrealized gains (losses)
     14   (139)  (175)  (125)  (351) 
    Net realized and unrealized gains (losses), net

    of taxes
     (75,304)  (37,063)  (32,030)  (112,367)  (65,684) 
    Net increase (decrease) in net assets resulting

    from operations
    $(36,249) $7,239  $9,337  $(29,010) $19,872  
    Net investment income per common share —

    basic and diluted
    $0.45  $0.54  $0.52  $0.99  $1.09  
    Earnings (loss) per common share —

    basic and diluted
    $(0.42) $0.09  $0.12  $(0.35) $0.25  
    Weighted average common shares outstanding —

    basic and diluted
     85,916   82,245   79,763   84,061   78,797  
     




    1 Adjusted earnings (loss) includes accrued Part II incentive fees. As of and for the three months ended December 31, 2024, there was no accrued Part II incentive fee liability. Part II incentive fees are contractually calculated and paid at the end of the fiscal year in accordance with the A&R Advisory Agreement, which differs from Part II incentive fees accrued under GAAP. For the three months ended December 31, 2024, no amounts were payable under the A&R Advisory Agreement.



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