Sixth Street Specialty Lending, Inc. (NYSE:TSLX) Q2 2024 Earnings Conference Call August 1, 2024 8:30 AM ET Company Participants Cami VanHorn - Head of Investor Relations Joshua Easterly - Chief Executive Officer & Chairman Robert Stanley - President Ian Simmonds - Chief Financial Officer Conference Call Participants Finian O'Shea - Wells Fargo Securities Brian Mckenna - Citizens' JMP Mark Hughes - Truist Securities Mickey Schleien - Ladenburg Kenneth Lee - RBC Paul Johnson - KBW Melissa Wedel - JPMorgan Br ...

Sixth Street (TSLX) reported $121.82 million in revenue for the quarter ended June 2024, representing a yearover-year increase of 13.2%. EPS of $0.58 for the same period compares to $0.58 a year ago. The reported revenue compares to the Zacks Consensus Estimate of $120.33 million, representing a surprise of +1.23%. The company delivered an EPS surprise of +1.75%, with the consensus EPS estimate being $0.57. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- a ...

Sixth Street (TSLX) came out with quarterly earnings of $0.58 per share, beating the Zacks Consensus Estimate of $0.57 per share. This compares to earnings of $0.58 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of 1.75%. A quarter ago, it was expected that this business development company would post earnings of $0.60 per share when it actually produced earnings of $0.58, delivering a surprise of -3.33%. Over the last four quar ...

Financial Performance - Sixth Street Specialty Lending, Inc. reported net investment income of $0.59 per share and net income of $0.51 per share for Q2 2024, reflecting annualized ROE of 13.9% and 11.9% respectively[1][2] - Adjusted net investment income and adjusted net income for Q2 2024 were $53.8 million ($0.58 per share) and $46.1 million ($0.50 per share), with annualized ROE of 13.5% and 11.6% respectively[2] - Total investment income for Q2 2024 was $121.8 million, up from $107.6 million in Q2 2023, primarily due to net funding activity and increased reference rates[18] - Net investment income for the three months ended June 30, 2024, was $55.1 million, compared to $48.8 million for the same period in 2023, reflecting a year-over-year increase of 12.8%[28] - Earnings per common share for the three months ended June 30, 2024, were $0.51, down from $0.63 in the same quarter of 2023[28] Dividends - The company declared a third quarter 2024 base dividend of $0.46 per share and a supplemental dividend of $0.06 per share[3][9] Investment Activity - New investment commitments for Q2 2024 amounted to $231.0 million, with $163.6 million funded across eight new portfolio companies[10][15] - New investment commitments for the quarter ended June 30, 2024, totaled $231.0 million, a decrease of 11.3% from $260.4 million in the same quarter of 2023[30] - The principal amount of investments funded during the quarter was $163.6 million, a decrease from $240.0 million in the same quarter of 2023[30] - The gross originations for the quarter were $1,858.8 million, compared to $1,522.9 million in the previous year, indicating a significant increase in investment activity[30] Assets and Liabilities - Total assets reached $3,387.0 million, an increase from $3,343.8 million, reflecting a growth of 1.30%[24] - Total liabilities decreased to $1,787.9 million from $1,847.4 million, a reduction of 3.22%[26] - As of June 30, 2024, the company had total principal debt outstanding of $1,785.0 million and a debt-to-equity ratio of 1.12x[16][20] Portfolio Composition - The company's portfolio consisted of 92.8% first-lien debt investments, with 99.6% of debt investments bearing interest at floating rates[11][12] - Total investments at fair value increased to $3,317.1 million as of June 30, 2024, compared to $3,283.1 million as of December 31, 2023, reflecting a growth of 1.04%[24] Expenses - Net expenses for Q2 2024 totaled $65.4 million, an increase from $57.9 million in Q2 2023, mainly due to rising reference rates affecting the weighted average interest rate on debt[18] - Total expenses for the three months ended June 30, 2024, were $65.7 million, an increase of 12.5% from $58.2 million in the same quarter of 2023[28] Net Asset Value - The reported net asset value (NAV) per share increased to $17.19 as of June 30, 2024, compared to $17.17 at March 31, 2024, driven by overearning of the base quarterly dividend[3][5] - Net asset value per share rose to $17.19 from $17.04, indicating an increase of 0.88%[26] Yield and Interest Rates - The weighted average total yield of debt and income-producing securities at fair value was 13.8% as of June 30, 2024[12][14] - Weighted average yield of debt and income-producing securities at fair value was 13.8%, down from 14.1%[24] - The weighted average interest rate of new investment commitments was 11.6%, down from 12.6% in the same quarter of 2023[30] Unrealized Gains and Losses - The company reported a net change in unrealized gains (losses) of $(9.5) million for the quarter, compared to a gain of $2.8 million in the same period of 2023[28]

Darrin Hughes/iStock via Getty Images Business development companies often invest in middle-market business debt. These are companies that are too small to make offerings on the bond markets but too large for a typical business loan. The typical loan that a BDC makes yields about prime plus 2 - 3%. On the liabilities side, BDCs use leverage to earn more, and the debt that BDCs incur is typically in the form of a bond, note, or baby bond. By law, BDCs are required to stay below a debt-to-equity ratio of 2. H ...

marchmeena29 My Rating History Sixth Street Lending's investment portfolio as of March 31, 2024 consisted primarily of First Lien investments that accounted for 92% of the business development company's portfolio, representing a 1 percentage point increase compared to the prior quarter. In terms of new investment fundings, 95% of new investments were once again made in First Liens, showing no deviation from second quarter origination levels. As a First Lien-centric BDC, I will compare Sixth Street Lending t ...

H97 ng are Buying stocks doesn't have to be a popularity contest. While not participating in the latest hot trends like NVIDIA (NVDA) or highly speculative GameStop (GME) won't make you the center of a party conversation, it's important to keep in mind that the turtle is the one that ends up winning the race over the hare. That's why I remain humble picking up undervalued names that don't necessarily scream as being 'hot stocks' of the moment. In the words of Jerry Rice: "Today I will do what others won't, ...

Financial Data and Key Metrics - Net asset value per share pro forma for the impact of the supplemental dividend was $17.11, with spillover income per share estimated at $1.06 [4] - Total commitments in Q1 were $264 million, with total fundings of $163 million across 9 new portfolio companies and upsizes to 5 existing investments [7] - Net funding activity was $54 million after $109 million of repayments [7] - Weighted average revenue and EBITDA of core portfolio companies were $275.5 million and $92.5 million, respectively [9] - Net asset value per share grew by 5.6% since the start of the rate hiking cycle, reaching $17.17 at quarter-end [10] - Total investment income for Q1 was $117.8 million, down 1.5% compared to $119.5 million in the prior quarter [12] - Adjusted net investment income per share was $0.58, with an annualized return on equity of 13.6% [95] - Total investments were $3.4 billion, up 3% from the prior quarter [101] Business Line Data and Key Metrics - 95% of total fundings in Q1 were in new investments, with 5% supporting upsizes to existing portfolio companies [7] - The weighted average rating of the portfolio improved to 1.15 from 1.16 last quarter [9] - 95% of fundings in Q1 were in first lien loans, bringing total first lien exposure to 92% across the portfolio [104] - New Q1 investments in Lane 1 had a weighted average yield at amortized cost of 11.3%, compared to 14.0% for Lane 2 assets [100] Market Data and Key Metrics - Fitch Ratings revised the company's outlook from stable to positive, with a BBB flat rating [5] - The company participated in several cross-platform deals, including the $4.4 billion acquisition of Alteryx [38] - The weighted average yield on debt and income-producing securities decreased slightly from 14.2% to 14.0% [106] Company Strategy and Industry Competition - The company emphasized its omnichannel sourcing capabilities and the value proposition of private credit [6] - The company is rotating out of the structured credit portfolio to crystallize returns and will opportunistically return to this theme [8] - The company highlighted its ability to access additional equity capital to generate attractive risk-adjusted returns [11] - The company amended its $1.7 billion secured credit facility, extending the final maturity on $1.5 billion of commitments through April 2029 [11] - The company is focused on maintaining a weighted average duration on liabilities that exceeds the weighted average life of assets funded by debt [42] - The company is selective in sector exposure, avoiding cyclical businesses and leaning into specific sector themes [90] Management Commentary on Operating Environment and Future Outlook - The company noted the increase in demand for financing solutions in public and private debt markets [32] - The company expects M&A activity to strengthen due to better financing costs and more parity between buyers and sellers [121] - The company remains optimistic about the ability of private credit portfolios to withstand macroeconomic headwinds [89] - The company anticipates the current environment will drive a dispersion between operating and GAAP earnings [88] - The company expects portfolio churn to increase with higher activity levels, driving additional economics [149] Other Important Information - The company declared a supplemental dividend of $0.06 per share and a base quarterly dividend of $0.46 per share [3][35] - The company added one new company to nonaccrual status, resulting in two portfolio companies on nonaccrual across the entire portfolio [107] - The company completed several capital markets transactions, including a bond offering, an equity raise, and a revolving credit facility extension [108] Q&A Session Summary Question: Trajectory of adjusted NII and impact of tighter spreads [46] - Adjusted NII stepped down $2.5 million sequentially, driven by a 5 basis point decline in base rates and tighter spreads [115] - The company remains comfortable with its guidance on adjusted NII for the year [47] Question: Competition and its impact on spreads and structure [157] - Competition has increased, primarily manifesting in compressed spreads, but the company remains selective to ensure it over-earns its cost of capital [33] - The weighted average number of covenants per credit agreement is 1.8%, consistent over time [157] Question: M&A activity and its impact on the portfolio [21] - The company expects M&A activity to strengthen, driven by better financing costs and more parity between buyers and sellers [121] - The company is seeing more opportunities in larger companies with bigger capital structures [126] Question: Portfolio churn and net portfolio growth [66] - The company expects portfolio churn to increase, driven by higher activity levels, but net portfolio growth may remain stable [67] - The company is focused on maintaining a stable balance sheet, with potential for slight growth [67] Question: Capital structure and liquidity [68] - The company has ample liquidity, with $764 million available after adjusting for unfunded commitments [139] - The company is not planning to issue additional bonds unless it can grow assets through an equity raise [82] Question: Opportunity set and complex investments [135] - The company is seeing opportunities in larger companies with complicated capital structures, such as Equinox [122] - The company expects more opportunities in good companies with bad balance sheets due to the higher-for-longer rate environment [151]

Exhibit 99.1 K FIRST QUARTER 2024 EARNINGS RESULTS Sixth Street Specialty Lending, Inc. Reports First Quarter Results; Declares a Second Quarter Base Dividend Per Share of $0.46, and a First Quarter Supplemental Dividend Per Share of $0.06. NEW YORK — May 1, 2024 — Sixth Street Specialty Lending, Inc. (NYSE: TSLX, or the "Company") today reported net investment income of $0.59 per share and net income of $0.53 per share for the first quarter ended March 31, 2024. These results correspond to an annualized re ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-36364 Sixth Street Specialty Lending, Inc. (Exact name of registrant as specified in its charter) Delaware 27-3380000 (State or ot ...