Oaktree Specialty Lending Corporation ( OCSL ) supported its dividend with net investment income in the December quarter, and the BDC now has two consecutive quarters of NII growth under its belt. The investment firm's high non-accrualsAnalyst’s Disclosure: I/we have a beneficial long position in the shares of OCSL, ARCC, OBDC, FSK either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than f ...

Core Insights - The article highlights the extensive experience of Roberts Berzins in financial management, particularly in shaping financial strategies for top-tier corporates and executing large-scale financings [1] - It emphasizes Berzins' contributions to institutionalizing the REIT framework in Latvia, aimed at enhancing the liquidity of pan-Baltic capital markets [1] - The article also notes Berzins' involvement in developing national SOE financing guidelines and frameworks to channel private capital into affordable housing [1] Group 1 - Roberts Berzins has over a decade of experience in financial management [1] - He has significantly contributed to the institutionalization of the REIT framework in Latvia [1] - Berzins is a CFA Charterholder and holds an ESG investing certificate [1] Group 2 - He has worked on developing national SOE financing guidelines [1] - Berzins has focused on creating frameworks for channeling private capital into affordable housing [1] - He is actively involved in thought-leadership activities to support pan-Baltic capital markets [1]

Core Insights - Oaktree Specialty Lending (OCSL) reported a solid start to fiscal 2026, with adjusted net investment income (NII) rising to $36.1 million or $0.41 per share, compared to $35.4 million or $0.40 per share in the prior quarter, indicating stable earnings despite lower base rates [2][4] - The company declared a quarterly cash dividend of $0.40 per share, fully covered by earnings, reflecting a commitment to returning value to shareholders [1][4] Financial Performance - Adjusted total investment income decreased to $74.5 million from $76.9 million in the previous quarter, primarily due to lower interest income from reduced reference rates [1] - Net expenses decreased modestly, aided by a $4 million reduction in Part I incentive fees [1] - Net asset value (NAV) per share fell to $16.30 from $16.64, largely due to markdowns, with Pluralsight being the largest detractor [4][11] Portfolio Deployment and Metrics - New funded investments totaled $314 million, increasing the portfolio size to approximately $2.95 billion, with a weighted average yield on debt of about 9.3% [4][5][6] - Non-accruals represented 3.1% of the debt portfolio, with management focused on reducing these and reinvesting proceeds [3][8] - The average position in the portfolio represents less than 1% of fair value, with no single position exceeding 2% [6] Market Conditions and Strategy - Private credit conditions reflect a bifurcation in the economy, with strong companies retaining access to capital while weaker ones face challenges [12] - Management believes private credit spreads have bottomed at SOFR plus 450 to 475 basis points, with potential for stability in 2026 [13] - The company has emphasized a disciplined approach to payment-in-kind (PIK) interest, which represented 6.3% of adjusted total investment income in the quarter [14] Software and AI Focus - Software investments accounted for approximately 23% of the portfolio, with a focus on high-switching-cost providers and a coherent AI roadmap [15] - The firm has become more selective in its software underwriting, adding criteria to assess risk related to AI [15][16] Liquidity and Leverage - OCSL ended the quarter with approximately $576 million in liquidity, including $81 million in cash and $495 million in undrawn revolving credit capacity [17] - Net leverage increased to 1.07x from 0.97x, reflecting higher deployment, while the long-term target leverage range remains between 0.9x and 1.25x [17]

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Financial Data and Key Metrics Changes - Adjusted Net Investment Income for Q1 2026 was $36.1 million, or $0.41 per share, up from $35.4 million or $0.40 per share in the prior quarter [4][19] - NAV per share decreased to $16.30 from $16.64 in the previous quarter due to unrealized depreciation on certain investments [19] - Adjusted total investment income decreased to $74.5 million from $76.9 million in the prior quarter, primarily due to lower interest income [19][20] Business Line Data and Key Metrics Changes - New funded investments totaled $314 million, up from $220 million in the prior quarter, reflecting a 42% sequential increase [6][16] - Non-accruals represented 3.1% of the total debt portfolio, stable sequentially and down nearly 85 basis points year-over-year [7][18] - The weighted average yield on debt investments was 9.3%, with first lien senior secured debt comprising 85% of the total portfolio [15][21] Market Data and Key Metrics Changes - Current trends in private credit show a bifurcation in the economy, with companies of scale having ample access to capital while struggling companies face limited access [9] - Spreads in private credit have bottomed out at SOFR +450-475 basis points, with expectations for stability in 2026 [10] - The median portfolio EBITDA increased from $150 million to $190 million sequentially, driven by new originations in larger companies [30] Company Strategy and Development Direction - The company remains focused on disciplined capital deployment into income-generating assets and reducing non-accruals to improve earnings power [5][6] - Oaktree is prioritizing loans to businesses with resilient models and defensible market positions, particularly in the software sector [10][12] - The company is monitoring the impact of AI on private credit and is cautious about potential disruptions in the software industry [11][38] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding middle-market M&A activity improving over the year, despite current lower volumes [9] - The company is focused on maintaining strong alignment with shareholders while navigating an evolving credit landscape [8] - Concerns were raised about the long-term refinanceability of loans in the software sector due to potential AI disruptions [38][39] Other Important Information - The company ended the quarter with over $576 million in available liquidity, including $81 million in cash [21][22] - The joint ventures held $511 million of investments, generating ROEs of 12% in aggregate [22] Q&A Session Summary Question: Can you provide insight into the portion of the portfolio that is underperforming? - Management indicated that underperforming assets include non-accruals and positions trading below par, with most below-par loans being public positions [24][25] Question: What drove the increase in median portfolio EBITDA? - The increase was primarily driven by new originations funded in the fourth quarter, which were larger companies, contributing to a mix shift [30] Question: Can you discuss the unrealized appreciation and markdowns in the quarter? - Pluralsight was the largest driver of markdowns, accounting for about 38% of the total mark, with some smaller marks in other private positions [32] Question: How is the company characterizing top-line growth and EBITDA trends in the software sector? - Management noted that it is too early to see performance degradation in software names, but concerns exist regarding long-term refinanceability due to AI risks [36][38]

Financial Data and Key Metrics Changes - Adjusted Net Investment Income for Q1 2026 was $36.1 million, or $0.41 per share, up from $35.4 million or $0.40 per share in the prior quarter [4][21] - NAV per share decreased to $16.30 from $16.64 in the previous quarter due to unrealized depreciation on certain investments [21] - Adjusted total investment income decreased to $74.5 million from $76.9 million, primarily due to lower interest income [22][23] Business Line Data and Key Metrics Changes - New funded investments totaled $314 million, up from $220 million in the prior quarter, reflecting a 42% sequential increase [6][17] - Non-accruals represented 3.1% of the total debt portfolio, stable sequentially and down nearly 85 basis points year-over-year [7][20] - The average all-in spread and yield of new private investments was 525 basis points and 9%, respectively [6] Market Data and Key Metrics Changes - Current trends in private credit show a bifurcation in the economy, with companies of scale having ample access to capital while struggling companies face limited access [9] - After the Fed rate cut in September, spreads in private credit have stabilized at SOFR plus 450-475 basis points [10] - The median portfolio EBITDA increased from $150 million to $190 million sequentially, driven by new originations in larger companies [34] Company Strategy and Development Direction - The company is focused on deploying capital into income-generating assets and reducing non-accruals to improve earnings power [5][6] - There is a commitment to disciplined underwriting and selectivity in investment opportunities, particularly in resilient market-leading businesses [11][12] - The company is monitoring the impact of AI on private credit and the broader economy, emphasizing the importance of execution and speed of adoption [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the stability of spreads in 2026 and the potential for increased middle-market M&A activity [10][12] - Concerns were raised about the long-term impact of AI on software companies, particularly regarding their refinanceability [40][42] - The company remains constructive on the long-term outlook for private credit, emphasizing the importance of active portfolio management [13] Other Important Information - The company declared a quarterly cash dividend of $0.40 per share, payable on March 31, 2026 [5] - The weighted average interest rate on debt outstanding was 6.1%, down from 6.5% in the prior quarter [24] - The company has approximately $576 million in liquidity, including $81 million in cash and $495 million in undrawn capacity on its credit facility [24] Q&A Session Summary Question: Can you provide insight into the portion of the portfolio that is underperforming? - Management indicated that underperforming assets include non-accruals and positions trading below par, with most below-par loans being public positions [27][28] Question: What drove the increase in median portfolio EBITDA? - The increase was primarily driven by new originations funded in the fourth quarter, which were larger companies, contributing to a mix shift [34][35] Question: Can you discuss the unrealized appreciation and markdowns in the quarter? - The largest driver of unrealized depreciation was Pluralsight, accounting for about 38% of the total mark, with some smaller marks in other private positions [36][37] Question: How does the company view top-line growth and EBITDA trends in the software sector? - Management believes it is too early to see performance degradation in software names, but concerns exist regarding long-term refinanceability due to potential AI disruption [40][42]

Financial Data and Key Metrics Changes - Adjusted Net Investment Income for Q1 2026 was $36.1 million, or $0.41 per share, a modest increase from $35.4 million or $0.40 per share in the prior quarter [3][20] - NAV per share decreased to $16.30 from $16.64 in the previous quarter due to unrealized depreciation on certain investments [20] - Adjusted total investment income decreased to $74.5 million from $76.9 million, primarily due to lower interest income [20][21] - Net leverage ratio increased to 1.07 times from 0.97 times, reflecting strong deployments during the quarter [22] Business Line Data and Key Metrics Changes - New funded investments totaled $314 million, up from $220 million in the prior quarter, indicating a 42% sequential increase [5][16] - Non-accruals represented 3.1% of the total debt portfolio, stable sequentially and down nearly 85 basis points year-over-year [5][19] - The weighted average yield on debt investments was 9.3%, with first lien senior secured debt comprising 85% of the total portfolio [15][22] Market Data and Key Metrics Changes - The private credit market is experiencing a bifurcation, with companies of scale and profitability having ample access to capital, while struggling companies face limited access [8] - Spreads in private credit have bottomed out at SOFR plus 450-475 basis points, with expectations for stability in 2026 [9][10] - Median portfolio EBITDA increased from $150 million to $190 million sequentially, driven by new originations of larger companies [33] Company Strategy and Development Direction - The company is focused on disciplined capital deployment into income-generating assets and reducing non-accruals to improve earnings power [4][5] - There is a commitment to strong alignment with shareholders while navigating an evolving credit landscape [6] - The company is prioritizing loans to businesses with resilient models and defensible market positions, particularly in the software sector [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the middle-market M&A activity improving over the year, despite current lower volumes [8] - The impact of AI on private credit is being closely monitored, with expectations of uneven outcomes across different players [10][11] - The company remains constructive on the long-term outlook for private credit, emphasizing disciplined underwriting and active portfolio management [12] Other Important Information - The company declared a quarterly cash dividend of $0.40 per share, payable on March 31, 2026 [4] - The company ended the quarter with over $576 million in available liquidity, including $81 million in cash [23] Q&A Session Summary Question: Can you provide insight into the portion of the portfolio that is underperforming? - Management indicated that underperforming assets include non-accruals and positions trading below par, with most stress observed in public positions [26][27] Question: What drove the increase in median portfolio EBITDA? - The increase was primarily driven by new originations funded in the fourth quarter, which were larger companies, contributing to a mix shift [33] Question: Can you elaborate on the unrealized appreciation and markdowns in the quarter? - The largest driver of unrealized depreciation was Pluralsight, accounting for about 38% of the total mark, with some smaller marks in other private positions [35] Question: How does the company view top-line growth and EBITDA trends in the software sector? - Management noted that it is too early to see performance degradation in software names, but concerns exist regarding long-term refinanceability due to potential AI disruption [39][40]

Earnings Presentation NASDAQ: OCSL First Quarter 2026 Forward Looking Statements & Legal Disclosures 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 operating results and distribution projections; the ability of Oaktree Fund Advisors, LLC (together with its affiliates, "Oaktree") to impl ...

分组1 - Oaktree Specialty Lending (OCSL) reported quarterly earnings of $0.41 per share, exceeding the Zacks Consensus Estimate of $0.38 per share, but down from $0.54 per share a year ago, representing an earnings surprise of +8.84% [1] - The company posted revenues of $75.1 million for the quarter ended December 2025, missing the Zacks Consensus Estimate by 0.32%, and down from $86.65 million year-over-year [2] - Oaktree Specialty Lending shares have declined approximately 4.7% since the beginning of the year, while the S&P 500 has gained 1.1% [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is $0.38 on revenues of $74.58 million, and for the current fiscal year, it is $1.54 on revenues of $300.09 million [7] - The Zacks Industry Rank for Financial - Miscellaneous Services is in the top 36% of over 250 Zacks industries, indicating that the industry outlook can significantly impact stock performance [8]

Financial Performance - Adjusted net investment income for Q1 2026 was $36.1 million, or $0.41 per share, compared to $35.4 million, or $0.40 per share, in Q4 2025, reflecting a $0.7 million increase primarily due to lower net expenses [9]. - Total investment income for Q1 2026 was $75.1 million, down from $77.3 million in Q4 2025, driven by lower interest income and lower original issue discount acceleration, partially offset by higher fee income [5]. - GAAP net investment income for the quarter ended December 31, 2025, was $36.7 million, or $0.42 per share [30]. - Adjusted total investment income for the quarter ended December 31, 2025, was $74.5 million, or $0.85 per share [30]. - Net investment income for the three months ended December 31, 2025, was $36,703, compared to $35,802 for the previous quarter, indicating a slight increase of 2.5% [39]. Asset and Investment Overview - Net asset value (NAV) per share decreased to $16.30 as of December 31, 2025, from $16.64 as of September 30, 2025, primarily due to unrealized depreciation on certain investments [5]. - Total assets as of December 31, 2025, increased to $3,098,251, up from $3,002,991 as of September 30, 2025, reflecting a growth of approximately 3.2% [37]. - Total investments at fair value reached $2,949,092 as of December 31, 2025, compared to $2,847,782 as of September 30, 2025, marking an increase of about 3.6% [37]. - The investment portfolio at fair value was $2.949 billion, consisting of investments in 167 companies, with 95.4% of the portfolio in debt investments [14]. Debt and Liquidity - Total debt outstanding was $1.615 billion as of December 31, 2025, with a total debt to equity ratio of 1.12x [7]. - The weighted average interest rate on debt outstanding was 6.1%, down from 6.5% as of September 30, 2025 [24]. - Liquidity as of December 31, 2025, included $80.8 million in unrestricted cash and $495.0 million in undrawn capacity under the credit facility [5]. - The Company had $80.8 million of unrestricted cash and cash equivalents and $495.0 million of undrawn capacity on its credit facility as of December 31, 2025 [23]. Investment Commitments and Performance - New investment commitments for the quarter totaled $316.6 million, with a weighted average yield on new debt investments of 8.7% [5]. - The company experienced a net increase in net assets resulting from operations of $5.6 million for the quarter [6]. - The company reported a net increase in net assets resulting from operations of $5,608 for the three months ended December 31, 2025, down from $24,578 in the previous quarter [39]. Non-Accrual Investments - Non-accrual investments at fair value were $87.2 million, representing 3.1% of debt investments at fair value [15]. - As of December 31, 2025, there were eleven investments on non-accrual status, representing 6.5% and 3.1% of the debt portfolio at cost and fair value, respectively [17]. Unrealized Depreciation - Unrealized depreciation for control investments was $(8,960) for the quarter, compared to $(3,524) in the previous quarter, reflecting a significant increase in losses [39]. Future Outlook - The company anticipates potential risks related to economic conditions, including inflation and elevated interest rates, which may impact future performance [34].