Oaktree Specialty Lending Corporation Announces First Fiscal Quarter 2018 Financial Results
First Fiscal Quarter 2018 Highlights
- Total investment income of
$33.9 million , or$0.24 per share; - Net investment income of
$13.3 million , or$0.09 per share; - Net asset value per share as of
December 31, 2017 of$5.81 ; - Originated
$183.0 million of new investment commitments and received$196.4 million in connection with nine full repayments and exits of investments; and - Entered into a new secured revolving credit facility, increasing its total capacity to
$600 million from$525 million and extending the reinvestment period and maturity date toNovember 29, 2020 andNovember 29, 2021 , respectively.
Management Commentary
“Since we began managing
Portfolio and Investment Activity
As of December 31, 2017, the fair value of the investment portfolio was
At fair value, 91.9% of the Company's portfolio as of
As of December 31, 2017, SLF JV I had
The weighted average yield on the Company's debt investments as of December 31, 2017, including the return on our mezzanine note investments in SLF JV I, was 9.0%.
As of December 31, 2017,
During the quarter ended December 31, 2017, the Company originated
During the quarter, the Company received
Results of Operations
Total investment income for the quarter ended December 31, 2017 was
Net expenses for the quarter were
Net unrealized depreciation on the investment portfolio for the quarter was
Liquidity and Capital Resources
As of December 31, 2017, the Company had
As of December 31, 2017, the Company’s total leverage ratio was 0.77x debt-to-equity.
During the quarter ended
Dividend Declaration
The Board of Directors declared a quarterly dividend of
Dividends are paid primarily from distributable (taxable) income. To the extent taxable earnings for a fiscal taxable year fall below the total amount of dividend distributions for that fiscal year, a portion of those distributions may be deemed a return of capital to the Company’s stockholders.
Portfolio Asset Quality
As of December 31, 2017, there were eight investments on which the Company had stopped accruing cash and/or PIK interest or original issue discount ("OID") income that, in the aggregate, represented 14.5% of the debt portfolio at cost and 3.2% at fair value.
($ in thousands) | |||||||
Non-Accrual - Debt Investments | As of December 31, 2017 | As of September 30, 2017 | |||||
Non-Accrual Investments at Fair Value | $ | 41,458 | $ | 67,015 | |||
Non-Accrual Investments/Total Investments at Fair Value | 3.2% | 4.7% | |||||
Oaktree Specialty Lending Corporation | |||||||
Consolidated Statements of Assets and Liabilities | |||||||
(in thousands, except per share amounts) | |||||||
December 31, 2017 (unaudited) |
September 30, 2017 |
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ASSETS | |||||||
Investments at fair value: | |||||||
Control investments (cost December 31, 2017: $438,415; cost September 30, 2017: $444,826) | $ | 297,534 | $ | 305,271 | |||
Affiliate investments (cost December 31, 2017: $33,397; cost September 30, 2017: $33,743) | 36,469 | 36,983 | |||||
Non-control/Non-affiliate investments (cost December 31, 2017: $1,204,629; cost September 30, 2017 $1,279,096) | 1,081,401 | 1,199,501 | |||||
Total investments at fair value (cost December 31, 2017: $1,676,441; cost September 30, 2017: $1,757,665) | 1,415,404 | 1,541,755 | |||||
Cash and cash equivalents | 45,435 | 53,018 | |||||
Restricted cash | 319 | 6,895 | |||||
Interest, dividends and fees receivable | 9,082 | 6,892 | |||||
Due from portfolio companies | 5,368 | 5,670 | |||||
Receivables from unsettled transactions | 8,869 | — | |||||
Deferred financing costs | 6,443 | 1,304 | |||||
Other assets | 3,260 | 514 | |||||
Total assets | $ | 1,494,180 | $ | 1,616,048 | |||
LIABILITIES AND NET ASSETS | |||||||
Liabilities: | |||||||
Accounts payable, accrued expenses and other liabilities | $ | 3,490 | $ | 2,417 | |||
Base management fee and Part I incentive fee payable | 6,286 | 6,750 | |||||
Due to affiliate | 1,534 | 1,815 | |||||
Interest payable | 6,547 | 3,167 | |||||
Amounts payable to syndication partners | — | 1 | |||||
Director fees payable | 176 | 184 | |||||
Payables from unsettled transactions | 33,465 | 58,691 | |||||
Credit facilities payable | 205,000 | 255,995 | |||||
Unsecured notes payable (net of $4,432 and $4,737 of unamortized financing costs as of December 31, 2017 and September 30, 2017, respectively) | 406,486 | 406,115 | |||||
Secured borrowings at fair value (proceeds of $13,489 as of December 31, 2017 and September 30, 2017) | 11,601 | 13,256 | |||||
Total liabilities | 674,585 | 748,391 | |||||
Commitments and contingencies | |||||||
Net assets: | |||||||
Common stock, $0.01 par value, 250,000 shares authorized; 140,961 shares issued and outstanding at December 31, 2017 and September 30, 2017 | 1,409 | 1,409 | |||||
Additional paid-in-capital | 1,579,278 | 1,579,278 | |||||
Net unrealized depreciation on investments and secured borrowings | (259,149 | ) | (215,677 | ) | |||
Net realized loss on investments and secured borrowings | (478,301 | ) | (478,010 | ) | |||
Accumulated overdistributed net investment income | (23,642 | ) | (19,343 | ) | |||
Total net assets (equivalent to $5.81 and $6.16 per common share at December 31, 2017 and September 30, 2017, respectively) | 819,595 | 867,657 | |||||
Total liabilities and net assets | $ | 1,494,180 | $ | 1,616,048 | |||
Oaktree Specialty Lending Corporation | ||||||||||||
Consolidated Statements of Operations | ||||||||||||
(in thousands, except per share amounts) | ||||||||||||
(unaudited) | ||||||||||||
Three months ended December 31, 2017 |
Three months ended September 30, 2017 |
Three months ended December 31, 2016 |
||||||||||
Interest income: | ||||||||||||
Control investments | $ | 3,203 | $ | 3,126 | $ | 4,445 | ||||||
Affiliate investments | 949 | 978 | 1,008 | |||||||||
Non-control/Non-affiliate investments | 25,565 | 26,935 | 38,301 | |||||||||
Interest on cash and cash equivalents | 221 | 313 | 119 | |||||||||
Total interest income | 29,938 | 31,352 | 43,873 | |||||||||
PIK interest income: | ||||||||||||
Control investments | 1,191 | 1,186 | 1,560 | |||||||||
Affiliate investments | 176 | 196 | 201 | |||||||||
Non-control/Non-affiliate investments | 500 | 746 | 1,076 | |||||||||
Total PIK interest income | 1,867 | 2,128 | 2,837 | |||||||||
Fee income: | ||||||||||||
Control investments | 120 | 315 | 309 | |||||||||
Affiliate investments | 4 | 12 | 482 | |||||||||
Non-control/Non-affiliate investments | 907 | 1,355 | 2,777 | |||||||||
Total fee income | 1,031 | 1,682 | 3,568 | |||||||||
Dividend and other income: | ||||||||||||
Control investments | 1,040 | 570 | 1,462 | |||||||||
Non-control/Non-affiliate investments | — | — | 20 | |||||||||
Total dividend and other income | 1,040 | 570 | 1,482 | |||||||||
Total investment income | 33,876 | 35,732 | 51,760 | |||||||||
Expenses: | ||||||||||||
Base management fee | 5,590 | 6,808 | 8,614 | |||||||||
Part I incentive fee | 830 | — | 4,063 | |||||||||
Professional fees | 2,898 | 1,964 | 1,064 | |||||||||
Board of Directors fees | 176 | 277 | 197 | |||||||||
Interest expense | 9,584 | 12,772 | 13,189 | |||||||||
Administrator expense | 494 | 660 | 531 | |||||||||
General and administrative expenses | 1,116 | 1,845 | 1,468 | |||||||||
Loss on legal settlements | — | — | 3 | |||||||||
Total expenses | 20,688 | 24,326 | 29,129 | |||||||||
Fees Waived |
(134 | ) | (58 | ) | (61 | ) | ||||||
Insurance recoveries | — | — | (602 | ) | ||||||||
Net expenses | 20,554 | 24,268 | 28,466 | |||||||||
Net investment income | 13,322 | 11,464 | 23,294 | |||||||||
Unrealized appreciation (depreciation) on investments: | ||||||||||||
Control investments | (1,326 | ) | (83,359 | ) | 1,339 | |||||||
Affiliate investments | (168 | ) | (73 | ) | 26 | |||||||
Non-control/Non-affiliate investments | (43,633 | ) | (33,008 | ) | (75,721 | ) | ||||||
Net unrealized depreciation on investments | (45,127 | ) | (116,440 | ) | (74,356 | ) | ||||||
Net unrealized (appreciation) depreciation on secured borrowings | 1,655 | — | (84 | ) | ||||||||
Realized gain (loss) on investments and secured borrowings: | ||||||||||||
Control investments | — | (728 | ) | (23,624 | ) | |||||||
Non-control/Non-affiliate investments | (291 | ) | (19,765 | ) | 528 | |||||||
Net realized loss on investments and secured borrowings | (291 | ) | (20,493 | ) | (23,096 | ) | ||||||
Net decrease in net assets resulting from operations | $ | (30,441 | ) | $ | (125,469 | ) | $ | (74,242 | ) | |||
Net investment income per common share — basic | $ | 0.09 | $ | 0.08 | $ | 0.16 | ||||||
Loss per common share — basic | $ | (0.22 | ) | $ | (0.89 | ) | $ | (0.52 | ) | |||
Weighted average common shares outstanding — basic | 140,961 | 140,961 | 142,853 | |||||||||
Net investment income per common share — diluted | $ | 0.09 | $ | 0.08 | $ | 0.16 | ||||||
Loss per common share — diluted | $ | (0.22 | ) | $ | (0.89 | ) | $ | (0.52 | ) | |||
Weighted average common shares outstanding — diluted | 140,961 | 140,961 | 142,853 | |||||||||
Distributions per common share | $ | 0.125 | $ | 0.125 | $ | 0.18 | ||||||
Conference Call Information
About
Forward-Looking Statements
Some of the statements in this press release constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements may include statements as to: our future operating results and distribution projections; our business prospects and the prospects of our portfolio companies; and the impact of the investments that we expect 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. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Risk Factors” and elsewhere in our annual report on Form 10-K. Other factors that could cause actual results to differ materially include: changes in the economy, financial markets and political environment; risks associated with possible disruption in our operations or the economy generally due to terrorism or natural disasters; future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities) and conditions in our operating areas, particularly with respect to business development companies or regulated investment companies; and other considerations that may be disclosed from time to time in our publicly disseminated documents and filings.
We have based the forward-looking statements included in this presentation on information available to us on the date of this presentation, and we assume no obligation to update any such forward-looking statements. Although we undertake 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 we may make directly to you or through reports that we in the future may file with the
Contacts
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(212) 284-1900
ocsl-ir@oaktreecapital.com
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