Group 1 - Oaktree Specialty Lending Corporation (NASDAQ: OCSL) experienced a decline in its net asset value during the December quarter due to necessary write-downs of investment values [1] Group 2 - The company is under scrutiny for its investment strategies and the impact of market conditions on its asset valuations [1]

Core Viewpoint - Oaktree Specialty Lending Corporation has announced a public offering of $300 million in notes with a 6.340% interest rate, maturing on February 27, 2030, aimed at reducing debt and supporting general corporate purposes [1][2]. Group 1: Offering Details - The company priced an underwritten public offering of $300 million aggregate principal amount of 6.340% notes due 2030 [1]. - The notes may be redeemed at the company's option at any time at par plus a "make-whole" premium [1]. - The offering is expected to close on February 27, 2025, subject to customary closing conditions [3]. Group 2: Use of Proceeds - Oaktree Specialty Lending Corporation plans to use the net proceeds from this offering to reduce outstanding debt under its revolving credit facilities and for general corporate purposes [2]. Group 3: Company Overview - Oaktree Specialty Lending Corporation is a specialty finance company focused on providing customized credit solutions to companies with limited access to capital markets [6]. - The company's investment objective is to generate current income and capital appreciation through flexible financing solutions, including first and second lien loans, unsecured and mezzanine loans, and preferred equity [6]. - The company is regulated as a business development company under the Investment Company Act of 1940 and is externally managed by Oaktree Fund Advisors, LLC [6].

Group 1 - Oaktree Specialty Lending (NASDAQ: OCSL) is predicted to face near-term dividend cuts, indicating potential financial challenges ahead [1] - The article compares OCSL with BlackRock TCP Capital Corp, suggesting a broader context of performance within the Business Development Company (BDC) sector [1] Group 2 - The author has extensive experience in financial management and has contributed to the development of financial strategies for top-tier corporates [1] - Efforts have been made to institutionalize the REIT framework in Latvia to enhance liquidity in pan-Baltic capital markets [1] - The author has also worked on national SOE financing guidelines and frameworks to channel private capital into affordable housing [1]

Earnings Presentation NASDAQ: OCSL First Quarter 2025 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 ...

Core Viewpoint - Oaktree Specialty Lending (OCSL) reported quarterly earnings of $0.54 per share, matching the Zacks Consensus Estimate, but down from $0.57 per share a year ago [1]. Financial Performance - The company posted revenues of $86.65 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 4.34%, and down from $97.99 million year-over-year [2]. - Oaktree Specialty Lending has not surpassed consensus EPS estimates over the last four quarters [2]. - The current consensus EPS estimate for the upcoming quarter is $0.53 on revenues of $87.94 million, and for the current fiscal year, it is $2.06 on revenues of $352.18 million [7]. Stock Performance - Oaktree Specialty Lending shares have increased by approximately 4.4% since the beginning of the year, outperforming the S&P 500's gain of 1.9% [3]. - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6]. Industry Outlook - The Financial - Miscellaneous Services industry, to which Oaktree Specialty Lending belongs, is currently in the top 30% of over 250 Zacks industries, suggesting a favorable industry outlook [8]. - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Oaktree's stock performance [5]. Future Considerations - The sustainability of Oaktree's stock price movement will largely depend on management's commentary during the earnings call and future earnings expectations [3][4]. - Investors are encouraged to monitor changes in earnings estimates for the coming quarters and the current fiscal year [7].

Financial Performance - Total investment income for Q1 2025 was $86.6 million ($1.05 per share), down from $94.7 million ($1.15 per share) in Q4 2024, primarily due to lower interest income and fee income [3]. - GAAP net investment income for Q1 2025 was $44.3 million ($0.54 per share), compared to $44.9 million ($0.55 per share) in Q4 2024, reflecting higher operating expenses [3]. - Adjusted total investment income for Q1 2025 was $87.1 million, down from $95.0 million in Q4 2024, primarily due to a decrease in interest income [8]. - Adjusted net investment income was $44.7 million ($0.54 per share) for Q1 2025, down from $45.2 million ($0.55 per share) in Q4 2024 [11]. - The net investment income per common share for the quarter was $0.54, slightly down from $0.55 in the previous quarter [46]. - The company reported a net increase in net assets resulting from operations of $7,239 thousand for the three months ended December 31, 2024, down from $36,913 thousand in the previous quarter [46]. Investment Activity - The company originated $198.1 million in new investment commitments and received $352.4 million from prepayments and exits during the quarter [3]. - New investment commitments totaled $198.1 million, down from $259.0 million in the prior quarter, with net new investments at $(151.1) million [1]. - The number of portfolio companies decreased to 136 from 144 in the previous quarter, with the average debt size per company remaining stable at $22,000 [1]. - As of December 31, 2024, the fair value of the investment portfolio was $2.8 billion, consisting of investments in 136 companies [16]. Asset and Liability Management - Total debt outstanding was $1,610.0 million as of December 31, 2024, with a total debt to equity ratio of 1.11x [3]. - The company's total debt to equity ratio was 1.11x, slightly down from 1.12x in the previous quarter [27]. - The total principal value of debt outstanding was $1.61 billion, with a funding mix of 41% secured and 59% unsecured borrowings [23]. - The company’s total liabilities decreased to $1,633,977 thousand as of December 31, 2024, from $1,710,530 thousand as of September 30, 2024, a reduction of approximately 4.5% [44]. - As of December 31, 2024, the company had $112.9 million in unrestricted cash and $957.5 million of undrawn capacity on its credit facilities [25]. Distribution and Earnings - A quarterly distribution of $0.40 per share and a supplemental distribution of $0.07 per share were declared, payable on March 31, 2025 [5]. - Adjusted Earnings for the three months ended December 31, 2024, amounted to $7,601,000, or $0.09 per share [36]. - The net increase in net assets resulting from operations for the three months ended December 31, 2024, was $7,239,000, or $0.09 per share [36]. Market and Economic Conditions - Forward-looking statements indicate potential risks including economic changes, geopolitical conflicts, and regulatory conditions [40]. - Total assets decreased to $3,083,792 thousand as of December 31, 2024, from $3,198,341 thousand as of September 30, 2024, representing a decline of approximately 3.6% [44]. - Total investments at fair value decreased to $2,835,294 thousand as of December 31, 2024, down from $3,021,279 thousand as of September 30, 2024, a decrease of about 6.2% [44]. Conference and Regulatory Information - The company will host a conference call on February 4, 2025, to discuss its first fiscal quarter 2025 results [37]. - Oaktree Specialty Lending Corporation is regulated as a business development company under the Investment Company Act of 1940 [39]. - The company aims to provide customized credit solutions to companies with limited access to public capital markets [39].

Core Viewpoint - Oaktree Specialty Lending Corporation reported its financial results for the fiscal quarter ended December 31, 2024, highlighting a decrease in total investment income and net asset value, while also announcing a significant equity raise and changes to its incentive fee structure to enhance shareholder value [1][2][3]. Financial Highlights - Oaktree Capital I, L.P. purchased $100 million of OCSL common stock at a net asset value of $17.63 per share, representing a 10% premium to the closing stock price, resulting in a nearly 7% increase to NAV [2][29]. - Total investment income for the quarter was $86.6 million ($1.05 per share), down from $94.7 million ($1.15 per share) in the previous quarter [2][6]. - GAAP net investment income was $44.3 million ($0.54 per share), slightly down from $44.9 million ($0.55 per share) in the prior quarter [2][10]. - Net asset value per share decreased to $17.63 from $18.09 as of September 30, 2024, primarily due to losses on certain investments [2][8]. Investment Activity - The company originated $198.1 million in new investment commitments and received $352.4 million from prepayments and exits during the quarter [2][12]. - The weighted average yield on new debt investments was 9.6% [2][12]. Debt and Liquidity - Total debt outstanding was $1,610 million, with a total debt to equity ratio of 1.11x and a net debt to equity ratio of 1.03x [2][27]. - As of December 31, 2024, liquidity included $112.9 million in unrestricted cash and $957.5 million in undrawn capacity under credit facilities [2][25]. Dividend Declaration - A quarterly cash distribution of $0.40 per share and a supplemental distribution of $0.07 per share were declared, payable on March 31, 2025 [4][5]. Changes in Fee Structure - The company implemented a total return hurdle, waiving $6.4 million in Part I incentive fees for the quarter, with a new calculation method that considers capital gains and losses [2][28]. - This new arrangement includes a lookback provision that will build to a rolling 12-quarter lookback by the end of the 2027 fiscal year [2][28]. Portfolio Composition - As of December 31, 2024, the investment portfolio was valued at $2.8 billion, consisting of 136 companies, with 94.4% in debt investments [2][16][17]. - Non-accrual investments at fair value were $105.3 million, representing 3.9% of debt investments at fair value [12][18].

Investment Portfolio - As of December 31, 2024, the company held $2,835.3 million in investments at fair value, down from $3,021.3 million at September 30, 2024, primarily due to sales of investments and net realized and unrealized losses during the quarter [322]. - Approximately 91.9% of the company's total assets represented investments at fair value as of December 31, 2024, compared to 94.5% as of September 30, 2024 [323]. - The fair value of investments is determined quarterly, with 96.8% of the portfolio valued based on market quotations or corroborated by independent valuation firms as of December 31, 2024 [320]. - The company invests primarily in below investment grade securities, which are often characterized as high yield or junk [306]. - The investment portfolio composition at cost as of December 31, 2024, included 82.13% in senior secured debt and 4.59% in common equity and warrants [330]. - The fair value of senior secured debt as of December 31, 2024, was 84.79%, while common equity and warrants accounted for 2.49% [330]. - The company’s investments primarily consist of loans, common and preferred equity, and warrants in privately-held companies [329]. - The company’s joint venture, SLF JV I, co-invests in senior secured loans of middle-market companies and is managed by a four-person Board of Directors [334]. - The company recorded net realized losses of $17.3 million for the three months ended December 31, 2024, compared to $8.5 million in 2023 [353]. - Net unrealized depreciation for the three months ended December 31, 2024 was $19.6 million, an improvement from $25.0 million in 2023 [355]. Financial Performance - For the three months ended December 31, 2024, the company originated $198.1 million of investment commitments and funded $201.3 million of investments [330]. - As of December 31, 2024, the total investment income was $86.6 million, a decrease of $11.3 million or 11.6% compared to $98.0 million for the same period in 2023 [349]. - Net expenses for the three months ended December 31, 2024 were $42.1 million, down by $11.7 million or 21.8% from $53.8 million in 2023 [350]. - Net investment income for the three months ended December 31, 2024 increased by $0.1 million compared to the same period in 2023, despite a decrease in total investment income [351]. - The company had $1,612.9 million in senior securities and an asset coverage ratio of 187.89% [358]. - For the three months ended December 31, 2024, net cash provided by operating activities was $144.0 million, primarily from $352.5 million of principal payments and sale proceeds [359]. Debt and Liquidity - The total debt outstanding as of December 31, 2024, was $1.610 billion, with a weighted average interest rate of 6.841% for the three months ended December 31, 2024 [380]. - The company reported $957.5 million of undrawn capacity on credit facilities as of December 31, 2024, and $660.0 million of borrowings outstanding [361]. - The company had $302.3 million of unfunded commitments as of December 31, 2024, with $275.2 million allocated for debt and equity financing to portfolio companies [363]. - The company has sufficient liquidity and capital resources to invest in market opportunities as they arise [365]. - The company had $430.0 million of borrowings outstanding under the Syndicated Facility as of December 31, 2024, with interest expense recorded at $9.5 million for the quarter [380]. - Outstanding borrowings under the OSI2 Citibank Facility were $230 million as of December 31, 2024, with a fair value of $230 million, and a weighted average interest rate of 7.412% for the three months ended December 31, 2024 [383]. Interest Rate Risk Management - The company monitors macroeconomic conditions, including inflation and interest rates, which may impact market supply and demand [309][310]. - A hypothetical 250 basis point increase in interest rates would result in a net increase in net assets from operations of $28.1 million, while a 250 basis point decrease would lead to a net decrease of $27.3 million [410][411]. - The company has a risk management procedure in place to monitor and manage interest rate risks, with ongoing assessments of interest rate exposure [408]. - The company regularly measures exposure to interest rate risk and may engage in hedging transactions as necessary [411]. Shareholder Distributions - The company declared a quarterly distribution of $0.55 per share on November 8, 2023, totaling $41.7 million [373]. - On January 27, 2025, the Board of Directors declared quarterly and supplemental distributions of $0.40 per share and $0.07 per share, payable on March 31, 2025 [401]. - Oaktree Capital I, L.P. purchased 5,672,149 shares of the company's common stock for an aggregate price of $100.0 million, at a price of $17.63 per share, which was the company's net asset value as of January 31, 2025 [402]. Management and Governance - The company is externally managed by Oaktree, which provides investment advisory and administrative services [304][305]. - The company entered into a letter agreement with Oaktree for the waiver of certain portions of the incentive fee on income [403]. - Oaktree has agreed to ensure that the sales price per share in the at-the-market offering will not be less than the current net asset value per share [404][405]. - The company has qualified as a Regulated Investment Company (RIC) and intends to distribute at least 90% of its annual taxable income to stockholders [392][395]. Valuation and Methodology - The company utilizes various valuation techniques, including transaction precedent and enterprise value analysis, to determine fair value of investments [317]. - The company’s valuation methodology for investments involves significant management judgment, and estimated fair values may differ from realizable amounts [407].

Core Viewpoint - Oaktree Specialty Lending Corporation will report its financial results for the first fiscal quarter ended December 31, 2024, on February 4, 2025, before the market opens [2]. Group 1: Financial Reporting - The financial results will be discussed in a conference call scheduled for February 4, 2025, at 11:00 a.m. Eastern Time [2]. - The conference call can be accessed via phone or through a live webcast on the company's website [2]. - A replay of the conference call will be available approximately one hour after the live broadcast [3]. Group 2: Company Overview - Oaktree Specialty Lending Corporation is a specialty finance company focused on providing customized credit solutions to companies with limited access to capital markets [4]. - The company's investment objective includes generating current income and capital appreciation through various financing solutions such as first and second lien loans, unsecured and mezzanine loans, and preferred equity [4]. - Oaktree Specialty Lending is regulated as a business development company under the Investment Company Act of 1940 and is managed by Oaktree Fund Advisors, LLC, an affiliate of Oaktree Capital Management, L.P. [4].

Core Viewpoint - Oaktree Specialty Lending Corporation (NASDAQ: OCSL) has faced significant underperformance compared to the broader market, but it remains well-positioned for future growth despite short-term challenges [1]. Group 1: Company Overview - OCSL has a diversified portfolio with high debt yields, which contributes to its risk reduction strategy [1]. - The company is focused on GARP (Growth at a Reasonable Price) and value stocks, emphasizing high-quality, reasonably priced businesses with strong competitive advantages and significant growth potential [1]. Group 2: Investment Strategy - The investment approach prioritizes fundamentals, seeking stocks that are trading at a discount to their intrinsic value, with a clear margin of safety [1]. - The long-term investment horizon is set at 5-7 years, aiming for wealth accumulation through compounding while emphasizing downside protection [1].